Exhibit 99(d)(1)
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KTI, INC.
Issuer
8 3/4 % CONVERTIBLE SUBORDINATED NOTES DUE 2004
INDENTURE
Dated as of July 31, 1998
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
Trustee
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CROSS-REFERENCE TABLE*
Trust Indenture Indenture Section
Act Section
310(a)(1)............................................. 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.
(a)(4)............................................ N.A.
(a)(5)............................................ 7.10
(b)............................................... 7.10
(c)............................................... N.A.
311(a)................................................ 7.11
(b)............................................... 7.11
(c)............................................... N.A.
312(a)................................................ 2.5
(b)............................................... 11.3
(c)............................................... 11.3
313(a)................................................ 7.6
(b)(1)............................................ 10.3
(b)(2)............................................ 7.7
(c)............................................... 7.6; 11.2
(d)............................................... 7.6
314(a)................................................ 4.3; 11.2
(b)............................................... 10.2
(c)(1)............................................ 11.4
(c)(2)............................................ 11.4
(c)(3)............................................ N.A.
(d)............................................... 10.3, 10.4, 10.5
(e)............................................... 11.5
(f)............................................... N.A.
315(a)................................................ 7.1
(b)............................................... 7.5; 11.2
(c)............................................... 7.1
(d)............................................... 7.1
(e)............................................... 6.11
316(a)(last sentence)................................. 2.9
(a)(1)(A)......................................... 6.5
(a)(1)(B)......................................... 6.4
(a)(2)............................................ N.A.
(b)............................................... 6.7
(c)............................................... 2.12
317(a)(1)............................................. 6.8
(a)(2)............................................ 6.9
(b)............................................... 2.4
318(a)................................................ 11.1
(b)............................................... N.A.
(c)............................................... 11.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
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TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.1. DEFINITIONS...........................................................................1
SECTION 1.2. OTHER DEFINITIONS.....................................................................6
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.....................................6
SECTION 1.4. RULES OF CONSTRUCTION.................................................................7
ARTICLE 2 THE NOTES..............................................................................................7
SECTION 2.1. FORM AND DATING.......................................................................7
SECTION 2.2. EXECUTION AND AUTENTICATION...........................................................8
SECTION 2.3. REGISTRAR AND PAYING AGENT............................................................9
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST...................................................9
SECTION 2.5. HOLDER LISTS..........................................................................9
SECTION 2.6. TRANSFER AND EXCHANGE................................................................10
SECTION 2.7. REPLACEMENT NOTES....................................................................12
SECTION 2.8. OUTSTANDING NOTES....................................................................12
SECTION 2.9. TREASURY NOTES.......................................................................13
SECTION 2.10. TEMPORARY NOTES......................................................................13
SECTION 2.11. CANCELLATION.........................................................................13
SECTION 2.12. DEFAULTED INTEREST...................................................................13
ARTICLE 3 REDEMPTION AND PREPAYMENT.............................................................................14
SECTION 3.1. NOTICES TO TRUSTEE...................................................................14
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED....................................................14
SECTION 3.3. NOTICE OF REDEMPTION.................................................................14
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.......................................................15
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE..........................................................15
SECTION 3.6. NOTES REDEEMED IN PART...............................................................15
SECTION 3.7. OPTIONAL REDEMPTION..................................................................16
SECTION 3.8. NO MANDATORY REDEMPTION..............................................................16
ARTICLE 4 COVENANTS.............................................................................................16
SECTION 4.1. PAYMENT OF NOTES.....................................................................16
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY......................................................17
SECTION 4.3. REPORTS..............................................................................17
SECTION 4.4. COMPLIANCE CERTIFICATE...............................................................17
SECTION 4.5. TAXES................................................................................18
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SECTION 4.6. STAY, EXTENSION AND USURY LAWS.......................................................18
SECTION 4.7. CORPORATE EXISTENCE..................................................................18
SECTION 4.8. OFFER TO REPURCHASE UPON CHANGE OF CONTROL...........................................19
ARTICLE 5 SUCCESSORS............................................................................................20
SECTION 5.1. MERGER, CONSOLIDATION OR SALE OF ASSETS..............................................20
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED....................................................21
ARTICLE 6 DEFAULTS AND REMEDIES.................................................................................21
SECTION 6.1. EVENTS OF DEFAULT....................................................................21
SECTION 6.2. ACCELERATION.........................................................................22
SECTION 6.3. OTHER REMEDIES.......................................................................22
SECTION 6.4. WAIVER OF PAST DEFAULTS..............................................................22
SECTION 6.5. CONTROL BY MAJORITY..................................................................23
SECTION 6.6. LIMITATION ON SUITS..................................................................23
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT........................................23
SECTION 6.8. COLLECTION SUIT BY TRUSTEE...........................................................24
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.....................................................24
SECTION 6.10. PRIORITIES...........................................................................24
SECTION 6.11. UNDERTAKING FOR COSTS................................................................25
ARTICLE 7 TRUSTEE...............................................................................................25
SECTION 7.1. DUTIES OF TRUSTEE....................................................................25
SECTION 7.2. RIGHTS OF TRUSTEE....................................................................26
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.........................................................27
SECTION 7.4. TRUSTEE'S DISCLAIMER.................................................................27
SECTION 7.5. NOTICE OF DEFAULTS...................................................................27
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES...........................................28
SECTION 7.7. COMPENSATION AND INDEMNITY...........................................................28
SECTION 7.8. REPLACEMENT OF TRUSTEE...............................................................29
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.....................................................30
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION........................................................30
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY......................................................................30
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................30
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.............................30
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.......................................................31
SECTION 8.3. COVENANT DEFEASANCE..................................................................31
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE...........................................31
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES
TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS...........................................................................33
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SECTION 8.6. REPAYMENT TO COMPANY.................................................................33
SECTION 8.7. REINSTATEMENT........................................................................34
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER......................................................................34
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES..................................................34
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.....................................................35
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT..................................................36
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS....................................................36
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.....................................................36
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC......................................................36
ARTICLE 10 SUBORDINATION........................................................................................36
SECTION 10.1. AGREEMENT TO SUBORDINATE.............................................................36
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.................................................37
SECTION 10.3. DEFAULT ON SENIOR DEBT...............................................................37
SECTION 10.4. ACCELERATION OF NOTES................................................................38
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER..................................................38
SECTION 10.6. NOTICE BY COMPANY....................................................................38
SECTION 10.7. SUBROGATION..........................................................................39
SECTION 10.8. RELATIVE RIGHTS......................................................................39
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.........................................39
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.............................................39
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT...................................................40
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION................................................40
SECTION 10.13. AMENDMENTS...........................................................................40
ARTICLE 11 CONVERSION OF NOTES..................................................................................40
SECTION 11.1. RIGHT TO CONVERT.....................................................................40
SECTION 11.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.........................41
SECTION 11.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES...........................................42
SECTION 11.4. CONVERSION PRICE.....................................................................42
SECTION 11.5. ADJUSTMENT OF CONVERSION PRICE.......................................................42
SECTION 11.6. EFFECTIVE OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE.......................................................................46
SECTION 11.7. TAXES ON SHARES ISSUED...............................................................46
SECTION 11.8. RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
LISTING OF COMMON STOCK..............................................................47
SECTION 11.9. COMMON STOCK ISSUABLE UPON CONVERSION................................................47
SECTION 11.10. RESPONSIBILITY OF TRUSTEE............................................................47
SECTION 11.11. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS...........................................48
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ARTICLE 12 MISCELLANEOUS........................................................................................48
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.........................................................48
SECTION 12.2. NOTICES..............................................................................49
SECTION 12.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES........................50
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITONS PRECEDENT....................................50
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION........................................50
SECTION 12.6. RULES BY TRUSTEE AND AGENTS..........................................................51
SECTION 12.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND SHAREHOLDERS...........................................................51
SECTION 12.8. GOVERNING LAW........................................................................51
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS........................................51
SECTION 12.10. SUCCESSORS...........................................................................51
SECTION 12.11. SEVERABILITY.........................................................................51
SECTION 12.12. COUNTERPART ORIGINALS................................................................51
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.....................................................52
EXHIBITS
Exhibit A Form of Note.................................................................................A-1
1. This should be included only if the Debenture is issued in global form.
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This Indenture, dated as of July 31, 1998 is between KTI, Inc., a New
Jersey corporation (the "Company"), and SunTrust Bank, Central Florida, National
Association, as Trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 8 3/4%
Convertible Subordinated Notes duE August 25, 2004 (the "Notes").
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Affiliate" of any specified Person means an "affiliate" of such
Person, as such term is defined for purposes of Rule 144 under the Securities
Act.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of beneficial interests in a Global Note, the rules and procedures of the
Depository that apply to such transfer and exchange.
"Bankruptcy Law" means Title 11, United States Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Change of Control" means the occurrence of any of the following: (a)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one transaction or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, (b) the adoption of a plan relating to the
liquidation or dissolution of the Company, (c) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act), other than a group including any one of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly through one or more intermediaries, of more than
50% of the voting
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power of the outstanding voting stock of the Company, unless the Closing Price
per share of Common Stock for any five Trading Days within the period of ten
consecutive Trading Days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the Conversion Price in effect on
each such Trading Day, or (d) the first day on which more than a majority of the
Board of Directors are not Continuing Directors; provided, however, that a
transaction in which the Company becomes a subsidiary of another entity shall
not constitute a Change of Control if (i) the shareholders of the Company
immediately prior to such transaction "beneficially own" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, at least a majority of the voting
power of the outstanding voting stock of the Company immediately following the
consummation of such transaction and (ii) immediately following the consummation
of such transaction, no "person" or "group" (as such terms are defined above),
other than such other entity (but including holders of equity interests of such
other entity), "beneficially owns" (as such term is defined above), directly or
indirectly through one or more intermediaries, more than 50% of the voting power
of the outstanding voting stock of the Company.
"Closing Price" means, for each Trading Day, the last reported sale
price regular way on the principal exchange, including the NASDAQ National
Market, on which the applicable security is listed or quoted or, if the
applicable security is not so listed or quoted, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company for that
purpose. In the event that the Closing Price cannot be determined as aforesaid,
the Board of Directors of the Company shall determine the Closing Price on the
basis of such quotations as it in good faith considers appropriate.
"Common Stock" means the common stock, no par value, of the Company,
and any other capital stock of the Company into which such common stock may be
converted or reclassified or that may be issued in respect of, in exchange for,
or in substitution for such common stock by reason of any stock splits, stock
dividends, distributions, mergers, consolidations or other like events.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (a) was a member of the
Board of Directors on the date of original issuance of the Preferred Stock or
(b) was nominated for election to the Board of Directors with the approval of,
or whose election to the Board of Directors was ratified by, at least two-thirds
of the Continuing Directors who were members of the Board of Directors at the
time of such nomination or election.
"Conversion Price" means the conversion price of the Notes as set forth
in Section 11.4 hereof.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.2 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facility" means that certain line of credit pursuant to a Loan
and Security Agreement dated as of October 29, 1996, as amended from time to
time by and between the
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Company, its Subsidiaries and KeyBank, National Association, including any
related notes, guarantees, collateral documents, instruments and agreement
executed in connection therewith, in each case as amended, restated, modified,
supplemented, extended, renewed, replaced, refinanced or restructured from time
to time, whether by the same or any other agent or agents, lender or group of
lenders, whether represented by one or more agreements and whether one or more
Subsidiaries are added or removed as borrowers or guarantors thereunder or as
parties thereto.
"Default" means any event that with the passage of time or the giving
of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of Exhibit A
attached hereto (but without including the text referred to in footnotes 1 and 2
thereto).
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the amount that a willing buyer would pay a
willing seller in an arm's-length transaction.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Note" means a permanent global debenture that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A, and that is
deposited with the Note Custodian and registered in the name of the Depository.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means any indebtedness, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing capital lease obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any hedging obligations, except any such balance that constitutes
an accrued expense or trade payable if and to the extent any of the foregoing
indebtedness (other than letters
3
of credit and hedging obligations) would appear as a liability upon a balance
sheet prepared in accordance with GAAP.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds an interest through a
Participant.
"Institutional Accredited Investor" means an "accredited investor" as
defined in Rule 501(a)(1), (2) (3) or (7) under the Securities Act.
"Junior Securities" means all classes of Common Stock of the Company
and each other class of capital stock or series of preferred stock established
after July 1, 1997 by the Board of Directors the terms of which do not expressly
provide that it ranks senior to or on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company.
"Legal Holiday" means a Saturday, a Sunday or any day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no additional interest
shall be payable on such day for the intervening period.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease intended as security, any option or other agreement to sell
or give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction other than a financing statement covering leased
goods under lease not intended as security).
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Preferred Stock by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.5 hereof.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel at the Company's sole election
may be an employee of or counsel to the Company, any Subsidiary of the Company
or the Trustee.
"Participant" means with respect to the Depository, a Person who has an
account with the Depository.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Preferred Stock" means the 8 3/4% Series B Convertible Exchangeable
Preferred Stock, which shall be exchanged by the Company for the Notes.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 7, 1997, by and between the Company and Credit
Research & Trading LLC, as such agreement may be amended, modified or
supplemented from time to time.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Department of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restated Certificate of Incorporation" means the amendment to the
restated certificate of incorporation duly filed with the Secretary of State of
the State of New Jersey on August 8, 1997 with respect to the Preferred Stock.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (a) all obligations of the Company under the Credit
Facility, as it may be amended, modified, restated, supplemented, deferred,
extended, renewed, replaced, refunded or refinanced from time to time, and (b)
any other Indebtedness of the Company, whether outstanding on the date of
issuance of the Notes or thereafter incurred, unless the instrument under which
such Indebtedness is incurred expressly provides that it is subordinated in
right of payment to any Senior Debt; provided, however, that Senior Debt will
not include (i) any liability for federal, state, local or other taxes owed or
owing by the Company, (ii) any Indebtedness of the Company to any of its
Subsidiaries or (iii) any trade payables.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act as such Regulation is in effect on
the date hereof.
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"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trading Day" means any day on which the NASDAQ National Market or
other applicable stock exchange or market on which the Common Stock is listed or
quoted is open for business.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
SECTION 1.2. OTHER DEFINITIONS.
Defined in
Term Section
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"Change of Control Offer".................... 4.8
"Change of Control Payment".................. 4.8
"Change of Control Payment Date"............. 4.8
"Conversion Date"............................ 11.2
"Conversion Price"........................... 11.4
"Covenant Defeasance"........................ 8.3
"DTC"........................................ 2.3
"Event of Default"........................... 6.1
"Legal Defeasance"........................... 8.2
"Paying Agent"............................... 2.3
"Payment Default"............................ 6.1
"Payment Blockage Notice".................... 10.3
"Registrar".................................. 2.3
"Representative"............................. 10.5
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. Any terms
incorporated in this Indenture that are defined by the TIA, defined by the TIA
by reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.
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SECTION 1.4. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) the words "include", "includes", and "including" shall be
deemed to be followed by the phrase "without limitation"; and
(7) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of
successor sections or rules adopted by the SEC from time to
time.
ARTICLE 2
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be issued in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
(a) Global Notes. Notes issued in exchange for the Preferred
Stock may be issued initially in the form of one or more Global Notes, which
shall be deposited on behalf of the Holders of the Notes represented thereby
with a custodian of the Depository, and registered in the name of the Depository
or a nominee of the Depository, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of the
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depository or its nominee as hereinafter
provided.
Each Global Note shall represent such of the outstanding Notes
as shall be specified therein and each 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 reduced or increased, as
7
appropriate, to reflect exchanges, redemptions and transfers of interests. 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 Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.6 hereof.
Except as set forth in Section 2.6 hereof, the Global Notes
may be transferred, in whole and not in part, only to another nominee of the
Depository or to a successor of the Depository or its nominee.
(b) Book-Entry Provisions. The Company shall execute and the
Trustee shall, in accordance with Section 2.2, authenticate and deliver the
Global Notes, if any, that (i) shall be registered in the name of the Depository
or the nominee of the Depository and (ii) shall be delivered by the Trustee to
the Depository or pursuant to the Depository's instructions or held by the
Trustee as custodian for the Depository.
Participants shall have no rights either under this Indenture
with respect to any Global Note held on their behalf by the Depository or by the
Note Custodian as custodian for the Depository or under such Global Note, and
the Depository may be treated by the Company, the Trustee and any Agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any Agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Participants, the
operation of customary practices of such Depository governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Definitive Notes. Notes issued in certificated form shall
be substantially in the form of Exhibit A attached hereto (but without including
the text referred to in footnotes 1 and 2 thereto).
SECTION 2.2. EXECUTION AND AUTENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture. The form of Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to $21,400,000 aggregate
principal amount of the Notes. Such written order shall specify the exact
aggregate principal amount of Notes to be authenticated. The aggregate principal
amount of Notes outstanding at any time may not exceed such amount except as
provided in Section 2.7 hereof.
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The Trustees may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the State of New York
where Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company shall enter into an appropriate agency agreement with any Agent not a
party to this Indenture, and such agreement shall incorporate the TIA's
provisions of this Indenture that relate to such Agent. The Company or any
Significant Subsidiary may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes, and will notify the Trustee of
any default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trust, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further liability for the
money. If the Company or a Significant Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the
9
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA Section
312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture and the procedures of
the Depository therefor. Beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note.
(b) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request to register the
transfer of the Definitive Notes or to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as required only
if the Definitive Notes are presented or surrendered for registration of
transfer or exchange, are endorsed and contain a signature guarantee or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney and contains a
signature guarantee.
(c) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note. Any Person having a beneficial interest in a Global Note may
upon request, subject to the Applicable Procedures, exchange such beneficial
interest for a Definitive Note, upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for the
Depository, from the Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Note.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(e) Authentication of Definitive Notes in Absence of
Depository. If at any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as Depository
for the Global Notes and a successor Depository for the Global Notes is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of
Definitive Notes under this Indenture, then the Company shall execute,
and the Trustee shall, upon receipt of an authentication order in
accordance with Section 2.2 hereof, authenticate and deliver,
Definitive Notes in an
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aggregate principal amount equal to the principal amount of the Global
Notes in exchange for such Global Notes.
(f) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or
cancelled, the principal amount of Notes represented by such Global Note shall
be reduced accordingly and an endorsement shall be made on such Global Note, by
the Trustee or the Note Custodian, at the direction of the Trustee to reflect
such reduction.
(g) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, subject to this Section 2.6 the Company shall execute and
the Trustee shall authenticate Definitive Notes and Global Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company or the
Trustee may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.7, 4.8 and 9.5
hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Definitive Notes and Global Notes issued
upon any registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture
as the Definitive Notes or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or
to exchange Notes during a period beginning at the opening of business
15 days before the day of any selection of Notes for redemption under
Section 3.2 hereof and ending at the close of business on the day of
selection;
(B) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part;
(C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest
payment date; or
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(D) to register the transfer of a Note other
than in amounts of $3,000 or multiple integrals thereof.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes, and neither the Trustee, any
Agent nor the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes in accordance with the provisions of Section 2.2
hereof.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the trustee or the Company or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgement of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company or the Trustee may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is lost, destroyed or stolen and is then replaced pursuant to
Section 2.7 hereof, it ceases to be outstanding unless the Trustee receives
proof satisfactory to it that the replaced Note is held by a bona fide
purchaser.
If the entire principal of and premium and interest on any Note is
considered paid under Section 4.1 hereof, it ceases to be outstanding and
interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
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SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, a Subsidiary of the Company or an Affiliate, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes that the Company, a Subsidiary of the
Company or an Affiliate offers to purchase or acquires pursuant to an offer,
exchange offer, tender offer or otherwise shall not be deemed to be owned by the
Company, a Subsidiary of the Company or an Affiliate until legal title to such
Notes passes to the Company, such Subsidiary or such Affiliate as the case may
be.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes. Until such exchange, Holders of temporary Notes shall be entitled to all
of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the trustee for Cancellation.
SECTION 2.12. 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 4.1 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 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 payment date and the amount of such
interest to be paid.
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ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the trustee, at
least 45 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
trustee shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate; PROVIDED that no Notes of $1,000 or less shall
be redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, by the
Trustee from the outstanding Notes not previously called for redemption within
10 business days after receipt of the Officers' certificate pursuant to Section
3.1 hereof.
The Trustee shall promptly notify the company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 30 days but not more 60 days before a redemption date, a
public notice of the redemption shall be made and the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address with copies to the
Trustee.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in a principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
14
(e) the Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest or Notes called for redemption cease to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that in
all cases, the text of such notice of redemption shall be prepared or approved
by the Company and the Trustee shall have not responsibility whatsoever with
regard to such notice being accurate or correct.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Paying Agent
shall promptly return to the Company any money deposited with the Paying Agent
by the Company in excess of the amounts necessary to pay the redemption price of
and accrued interest on all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption at, interest shall cease to accrue on the Notes or
the portions of the Notes called for redemption. If a Note is redeemed on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest shall be paid to the Person in whose
name such Notes was registered at the close of business on such record date. If
any Note called for redemption shall not be so paid upon surrendered for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid or such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.1 hereof.
SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the Expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
15
SECTION 3.7. OPTIONAL REDEMPTION.
(a) The Company shall have the option to redeem the Notes pursuant to this
Section 3.7 on or after August 15, 2000. The Company shall have the option to
redeem the Notes, in whole or from time to time in part, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 15 of the years
indicated below:
Year Percentage
---- ----------
2000.................................... 104.4%
2001.................................... 102.9%
2002.................................... 101.5%
2003 and thereafter..................... 100.0%
Notwithstanding the foregoing, on or after August 15, 1999 and
until August 15, 2000, the Company may, at its option, redeem the Notes at
105.9% of the principal amount plus accrued and unpaid interest thereof if the
Common Stock bid price has averaged not less than 1.5 times the Conversion Price
during 20 consecutive Trading Days.
(b) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8. NO MANDATORY REDEMPTION.
Except as provided in Section 4.8, the Company shall not be required to
make mandatory redemption or sinking fund payments with respect to the Notes.
ARTICLE 4
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of and premium
and interest on the Notes on the date and in the manner provided in the Notes.
Principal, premium and interest shall be considered paid on the date due if the
Paying agent, if other than the Company or a Subsidiary thereof, holds as of
5:00 p.m. New York City time on the Business Day immediately prior to the due
date money deposited by the Company in immediately available funds and designed
for and sufficient to pay all principal, premium and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the interest rate on the Notes to the extent lawful; 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 period)
at the same rate to the extent lawful.
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SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency in the state of New York
(which may be an office of the Trustee or an affiliate of the Trustee, Registrar
or co-registrar) where Notes may be surrendered for registration of transfer or
for exchange and where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Note may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
company of its obligation to maintain an office or agency for such purposes. The
Company shall give prompt written notice tot he trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Officer of the
trustee as one such office or agency of the Company in accordance with Section
2.3
SECTION 4.3. REPORTS.
Whether or not the Company is required to do so by the rules and
regulations of the SEC, the Company will file with the SEC (unless the SEC will
not accept such a filing) and within 15 days of filing, or attempting to file,
the same with the SEC, furnish to the holders of the Notes and the Trustee (a)
all quarterly and annual financial and other information with respect to the
Company that would be required to be contained in a filing with the SEC on Forms
10-0 and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants, and (b) all current report
that would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports. The Company shall at all times comply with TIA
Section 314(a).
SECTION 4.4. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Significant Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificates, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of
17
Defaults of which he or she may have knowledge and what act the Company is
taking or proposes to take wit respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirect to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, as soon as possible upon any Officer
becoming aware of any Default or Event of Default, an Officer's Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.5. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
excerpt such as are contested in good faith and by appropriate proceedings or
whether the failure to effect such payment is not adverse in any material
respects to the Holders of the Notes.
SECTION 4.6. 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
to take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.7. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, and the corporate, partnership or other existence of each of its
Significant Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Significant Subsidiary, provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Significant Subsidiaries, if the
Board of Directors shall determine that the
18
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Significant Subsidiaries, takes as a whole.
SECTION 4.8. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Within 10 days of the occurrence of a Change of Control,
the Company shall give notice to the Holders and the Trustee that a Change of
Control has occurred (the "Change of Control Notice"). Subject to subparagraph
(c) below, upon the occurrence of a Change of Control, as the option of the
Holders of a majority in principal amount of Notes exercised by the giving of
notice to the Company within 20 days of receipt of the Change of Control Notice,
the company shall make an offer (a "Change of Control Offer") to repurchase all
or any part (equal to $1,000 or any integral multiple thereof) of each Holders'
Notes at an offer price in cash and/or shares of Common Stock (as valued below)
equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase (the "Change of Control
Payment"). The Company shall deliver to the trustee copies of all notices
received from the Holders in response to the Change of Control Notice. The
Change of Control Payments shall be made at the option of the Company either in
(a) cash, (b) fully registered shares of common Stock valued at 95% of the
average closing price of the Common Stock during the 20 Trading Days prior to
such change of Control Payment if the Board of Directors of the Company
determines that the payment of the Change of Control Payment in fully registered
shares of Common Stock will not adversely affect the voting rights, preferences,
privileges or relative, participating, optional or other specified rights of the
holders of the Common Stock or (c) a combination of cash and shares of Common
Stock (as valued above). Within 10 days following the receipt by the Company
from the Holders of a sufficient number of the notices described in the second
sentence of this Section 4.8(a), the company shall mail a notice to each Holder
and the Trustee stating: (i) that the Change of Control Offer is being made
pursuant to this Section 4.8 and that all Notes validly tendered and not
withdrawn will be accepted for payment; (ii) the purchase price and the purchase
date, which shall be no earlier than 30 days but no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"); (iii) that
any Note not tendered will continue to accrue interest; (iv) that, unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (v) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, properly endorsed for transfer together with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed and such customary documents as the Company may reasonably
request, to the Paying agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of Control
Payment Date; (vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
▇▇▇▇▇▇ is withdrawing his election to have the Note purchased; and (vii) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and
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regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Notes as a result of a Change of Control. In
the event of any discrepancy between this Indenture and such rules and
regulations, the requirements of Rule 14e-1 under the Exchange Act, any
successor provisions thereto, and the securities law and regulations thereunder
shall control.
(b) On or before the Business Day immediately prior to the
Change of Control Payment Date, the Company shall, to the extent lawful, (i)
accept for payment all Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount,
whether in cash or Common Stock, equal to the Change of Control Payment in
respect of all Notes or portions thereof so tendered and (iii) delivered or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers' certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to each holder of Notes so tendered the Change of Control Payment for such
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided, that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) Notwithstanding the foregoing, prior to complying with the
provisions of this Section 4.8, but in any event within 60 days following a
Change of Control, the Company shall repay all outstanding Senior Debt or obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase the Notes required by this Section 4.8.
ARTICLE 5
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia, (b) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease conveyance other disposition shall have been
made assumes all the obligations of the Company under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, (c) immediately after such transaction no Default or Event of
Default exists, and (d) the Company or such other Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel stating that such
20
consolidation, merger, sale, assignment, transfer, lease, conveyance or disposal
complies with this Indenture and that all conditions precedent in this Indenture
have been satisfied.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merger or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise very right
and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein. When a successor
corporation assumes all of the obligations of the Company hereunder and under
the Notes and agrees to be bound hereby and thereby, the predecessor Company
shall be relived form such obligations.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest
on the Notes and such default continues for a period of 30 days:
(b) the Company defaults in payment when due of principal of
or premium on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of
Section 4.8 hereof;
(d) the Company fails to observe or perform any other
covenant, representation, warranty or other agreement in this Indenture or the
Notes for 60 days after notice to the Company by the Trustee or the Holders of
at least 25% in principal amount of the Notes then outstanding of such failure;
(e) the Company pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
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(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property; or
(iv) makes a general assignment for the benefit of
its creditors.
(f) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company in an
involuntary case;
(ii) appoints a custodian of the Company for all or
substantially all of the property of the Company, or
(iii) orders the liquidation of the Company; and the
order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.2. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by a notice in writing
to the Company (and to the Trustee if such written notice is given by the
Holders). Upon any such declaration, the Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (3) or (f) of Section 6.1 hereof occurs, all outstanding Notes shall be
due and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, premium or interest that has become due solely because of the
acceleration) have been cured or waived.
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, premium and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or
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Event of Default in the payment of the principal of, premium or interest on the
Notes (including in connection with an offer to purchase) (provided, however,
that the Holders of a majority in aggregate principal amount of the then
outstanding Notes with written notice to the Trustee may rescind an acceleration
and its consequences, including any related payment default that resulted from
such acceleration) in accordance with Section 6.2 hereof. Upon any such waiver,
such Default shall cease to exist and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any rights
of the Trustee or the Holders consequent thereon.
SECTION 6.5. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.6. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium and interest on the
Note, on or after the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring
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suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and interest remaining unpaid on the Notes and interest on
overdue principal and, to the extent lawful, interest, and such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized 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 (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceedings is hereby authorized by each Holder to make such payments
to the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, and prior to
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all reasonable compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
Trustee's costs and expenses of collection;
24
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and interest ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal,
premium and interest respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and power vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
25
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof or with an
Officers' Certificate or Opinion of Counsel received by it pursuant to
Section 7.2(b).
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
26
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request of
direction.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any Provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statements in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
The Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) provided that the Trustee is the Paying Agent, a
Default or Event of Default arising under Section 6.1(a) or (b), or (ii) any
Default or Event of Default of which the Trustee shall have received written
notice in accordance with the terms of this Indenture, and such notice shall not
be deemed to include receipt of information obtained in any information,
documents and reports furnished, filed or delivered to the Trustee under
Section 4.3
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SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each July 15 beginning with the July 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2) to the extent applicable. The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee, in writing when the Notes are
listed on any stock exchange.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee and its directors, officers,
agents and employees against any and all losses, liabilities or expenses
incurred by it or such director, officer, agent or employee arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.7) and defending itself or such director,
officer, agent or employee against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the exercise or
performance of any of its or their powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its or their
negligence, bad faith or willful misconduct. The Trustee shall notify the
Company promptly of any claim for which it or such director, officer, agent or
employee may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee and
such officer, director, agent or employee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
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
28
held in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a custodian or public officer takes charge of the Trustee
or its property;
(d) the Trustee becomes incapable of acting; or
(e) prior to the issuance of any Notes hereunder, the Board of
Directors determines to remove the Trustee; provided, that the Company shall
have paid all amounts owed to the Trustee pursuant to Section 7.7.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
29
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has (or is part of a bank holding company that has) a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, exercise its
rights under either Section 8.2 or 8.3 hereof with respect to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
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SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have discharged
its obligations with respect to all outstanding Notes on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Company shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Notes
(which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.5 hereof and the other Sections of this Indenture referred to in (a)
and (b) below) and to have satisfied all its other obligations under such Notes
and this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.4 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium and
interest on such Notes when such payments are due, (b) the Company's obligations
with respect to such Notes under Sections 2.3, 2.4, 2.7, 2.10 and 4.2 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.2 notwithstanding the prior exercise of its option under
Section 8.3 hereof.
SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Article 4 (other than those in
Sections 4.1, 4.2, 4.6 and 4.7) and Section 5.1 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with the covenant, but shall continue to be deemed "outstanding" for
all other purposes hereunder (it being understood that such Notes shall not be
deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in the covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to the covenant or by
reason of any reference in the covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.1 hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, subject to the satisfaction of the conditions
set forth in Section 6.4 hereof, Sections 6.1(c) through 6.1(f) hereof shall not
constitute an Event of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and premium and interest
on the outstanding Notes on the stated maturity thereof or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income gain or loss for federal income tax
purposes as a result of such Legal Defeasance 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 Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance 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 Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness, all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article 8
concurrently with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company is a
party or by which the Company is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel (which may be based on such solvency certificates or solvency
opinions as counsel deems necessary or appropriate) to the effect that the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeasing, hindering, delaying or defrauding creditors of the
Company or others; and
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(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law. The Company shall not be required to execute a separate trust agreement
to implement the trust described in this paragraph.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary withstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease, provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
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SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on 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 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency, provided
that such action shall not adversely affect the interests of the Holders in any
material respect;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes.
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Notes;
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; or
(f) at any time prior to the issuance of any Notes hereunder,
to make any changes determined appropriate by the Board of Directors.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental indenture authorized or permitted by the terms of this
Indenture and make any further appropriate agreements and stipulations that may
be therein contained but the Trustee shall not be obligated to enter into such
amended or
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supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, the Company and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of a majority in principal amount
of the Notes then outstanding (including, without limitation, consents obtained
in connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default or compliance with any provision of this Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or 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
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter any of the provisions with respect to the redemption of the
Notes (except as provided in Section 4.8 hereof);
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) make any Note payable in money other than that stated in
the Notes;
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(e) make any changes to Sections 6.4 or 6.7; or
(f) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Note is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding
36
on the date hereof or hereafter created, incurred, assumed or guaranteed), and
that the subordination is for the benefit of the holders of Senior Debt.
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(a) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before Holders shall be entitled to receive any
payment with respect to the Notes; and
(b) until all Obligations with respect to Senior Debt are paid
in full, any distribution to which Holders would be entitled but for this
Article 10 shall be made to holders of Senior Debt (except that Holders may
receive securities, including capital stock, that are subordinated at least to
the same extent as the Notes to Senior Debt and any securities issued in
exchange for Senior Debt).
SECTION 10.3. DEFAULT ON SENIOR DEBT.
(a) The Company may not make any payment or distribution to
the Trustee or any Holder in respect of Obligations with respect to the Notes
and may not acquire from the Trustee or any Holder any Notes for cash or
property (other than securities, including capital stock, that are subordinated
at least to the same extent as the Notes to Senior Debt and any securities
issued in exchange for Senior Debt) until all principal and other Obligations
with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or
other Obligations with respect to any Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Senior Debt; or
(ii) a default, other than a payment default, on
Senior Debt occurs and is continuing that then permits holders of the
Senior Debt to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from the Company.
If the Trustee receives any such payment Blockage Notice, no subsequent
Payment Blockage Notice shall be effective for purposes of this Section
unless and until (i) at least 179 days shall have elapsed since the
date of receipt by the Trustee of the immediately prior Payment
Blockage Notice or (ii) the default shall have been cured. No
nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice (it being
understood that any subsequent action, or any breach of any covenant
during the period commencing after the date of receipt by the Trustee
of such Payment Blockage Notice, that, in either case, would give rise
to such a default pursuant to any provision under which a default
previously existed or was continuing shall constitute a new default for
this purpose).
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(b) the Company may and shall resume payments on and
distributions in respect of the Notes and may acquire them upon the earlier of:
(i) in the case of a default referred to in Section 10.3(a)(i) hereof, the date
upon which the default is cured or waived, or (ii) in the case of a default
referred to in Section 10.3(a)(ii) hereof, the earlier of (1) the date on which
such default is cured or waived or (2) 179 days after the applicable Payment
Blockage Notice is received by the Company if the maturity of such Senior Debt
has not been accelerated (or, if such Senior Debt has been accelerated, such
Senior Debt has been paid in full) and if this Article 10 otherwise permits the
payment, distribution or acquisition at the time of such payment or acquisition.
SECTION 10.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.
(a) In the event that the Trustee or any holder receives any
payment of any Obligations with respect to the Notes at a time when the Trustee
or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.3 hereof, such payment shall be held by the Trustee or
such Holder in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their representative (the "Representative") under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with the terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
(b) With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the company or any other person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.
SECTION 10.6. NOTICE BY COMPANY.
The company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt as provided in this Article 10. The Trustee or any Paying Agent shall not
be deemed to have knowledge of any facts or circumstances causing any payment of
any Obligations with respect to the Notes to violate this Article 10 unless it
shall have received written notice thereof in accordance with the terms of this
Indenture, and such notice shall not be
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deemed to include receipt of information obtained in any information, documents
and reports furnished, filed or delivered to the Trustee under Section 4.3.
SECTION 10.7. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article 10 to holders of Senior
Debt that otherwise would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on the Notes.
SECTION 10.8. RELATIVE RIGHTS.
(a) This Article 10 defines the relative rights of Holders and
holders of Senior Debt. Nothing in this Indenture shall: (i) impair, as between
the Company and Holders, the obligation of the Company, which is absolute and
unconditional, to pay principal of and interest on the Notes in accordance with
their terms; (ii) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior Debt; (iii)
prevent the Trustee or any Holder from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and owners of
Senior Debt to receive distributions and payments otherwise payable to Holders.
(b) If the Company fails because of this Article 10 to pay
principal of, premium, if any, or interest on a Note on the due date, the
failure is still a Default or Event of Default.
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the company or any
holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company may give
the notice. Nothing in this Article 10 shall impair the claims of, or payments
to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does into file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.9 hereof at least 30 days before the expiration of the time to file such
claim, the Holders are hereby authorized to file an appropriate claim.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified at
any time after the issuance of any Notes hereunder without the written consent
of the holders of all Senior Debt (in accordance with the provisions thereof).
ARTICLE 11
CONVERSION OF NOTES
SECTION 11.1. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this Indenture,
the Holder of any Note shall have the right, at the option of such Holder, at
any time (except that, with respect to any Note or portion of a Note that shall
be called for redemption or delivered for repurchase, such right shall terminate
immediately prior to close of business on the date fixed for redemption of such
Note or portion of such Note unless the Company shall default in payment due
upon redemption thereof) to convert the principal amount of any such Note, or
any portion thereof, into that number of fully paid and nonassessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
aggregate principal amount of the Notes or portion thereof surrendered for
conversion by the Conversion price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
11.2 hereof. Immediately following such conversion, the rights of the Holders of
converted Notes shall cease and the Persons entitled to receive the Common Stock
upon the conversion of Notes shall be treated for all purposes as having become
the owners of such Common Stock.
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SECTION 11.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.
In order to exercise the conversion privilege with respect to any Note
in definitive form, a Holder must (a) surrender such Note to be converted, duly
endorsed and in a form satisfactory to the Company, at an office or agency
maintained by the Company pursuant to Section 4.2 hereof, accompanied by the
funds, if any, required by the last paragraph of this Section 11.2, (b) notify
the Company at such office that he elects to convert such Note or a portion
thereof, specifying the principal amount he wishes to convert, (c) state in
writing the name or names (with address) in which he wishes the certificate or
certificates for shares of Common Stock to be issued and (d) pay any transfer
taxes, if required pursuant to Section 11.7 hereof. The date on which the Holder
satisfies all those requirements is the "Conversion Date." Each such Note
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the name of the Holder of such Note as it appears on the Note
register, be accompanied by instruments of transfer in form satisfactory to the
Company duly executed by the Holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Global Note, the beneficial Holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program and follow the other procedures set forth in such program.
As promptly as practicable after the Conversion Date, 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 holder (as if such transfer
were a transfer of the note or Notes (or portion thereof) so converted), the
Company shall issue and shall deliver to such Holder at the office or agency
maintained by the Company for such purpose pursuant to Section 4.2 hereof, a
certificate or certificates for the number of full shares issuable upon the
conversion of such Note or portion thereof in accordance with the provisions of
this Article 11 and a payment in cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided in
Section 11.3 hereof. In case any Note shall be surrendered for partial
conversion, and subject to Section 2.3 hereof, the Company shall execute and the
Trustee shall authenticate and make available for delivery to the holder of the
Note so surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
Each conversion shall be deemed to have been effected as to any note
(or portion thereof) on the Conversion Date, 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 such date the Holder of record
of the shares represented thereby; provided that any such surrender on any date
when the stock transfer books of the Company shall be closed shall constitute
the Person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price in effect
on the date upon which such Note shall have been surrendered.
41
The Holder of record of a Note at the close of business on a record
date with respect to the payment of interest on the Notes will be entitled to
receive such interest with respect to such Notes on the corresponding interest
payment date, notwithstanding the conversion of such Notes after such record
date and prior to such interest payment date. Notes surrendered for conversion
during the period from the close of business on any record date for the payment
of interest to the opening of business of the corresponding interest payment
date must be accompanied by a payment in cash in an amount equal to the interest
payable on such interest payment date, unless such Notes have been called for
redemption on a redemption date occurring 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 immediately following the corresponding interest payment
date. The interest payment with respect to any Note called for redemption on a
date 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 immediately
following the corresponding interest payment date will be payable on such
interest payment date to the record Holder of such Note on such record date,
notwithstanding the conversion of such Note after such record date and prior to
such interest payment date. Except as provided in this Section 11.2, no payment
or adjustment will be made upon conversion of Notes for accrued and unpaid
interest or for dividends with respect to the Common Stock issued upon such
conversion of Notes as provided in this Article 11.
Upon the conversion of any interest in a Global Note, the Trustee, or
the Note Custodian at the direction of the Trustee, shall make a notation on
such Global Note as to the reduction in the principal amount represented
thereby.
SECTION 11.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
The Company shall not issue a fractional share of Common Stock upon
conversion of the Notes. Instead the Company shall pay a cash adjustment for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined as follows: Multiply the current market
price of a full share by the fraction. Round the result to the nearest cent. The
current market price of a share of Common Stock is the Closing Price of the
Common Stock on the last Trading Day prior to the Conversion Date.
SECTION 11.4. CONVERSION PRICE.
The "Conversion Price" shall be that amount as determined pursuant to
the company's Restated Certificate of Incorporation with respect to the 8 3/4%
Series B Convertible Exchangeable Preferred Stock, filed with the Secretary of
State of the State of New Jersey on August 8, 1997, as amended through the date
of the exchange of Preferred Stock for the Notes, on the date of exchange of the
Preferred Stock for the Notes, subject to adjustment as provided in this Article
11. Notice of the initial Conversion Price shall be set forth in the Officers'
Certificate delivered to the Trustee pursuant to Section 2.2 hereof and the
Company shall notify the Trustee of any adjustments in the Conversion Price as
soon as practicable after determination.
SECTION 11.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by the Company
as follows:
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(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
Conversion price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination of the
holders entitled to such dividends and distributions. For the purposes of this
Section 11.5(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 shall
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(b) In case the Company shall issue rights, options or
warrants to all holders of its Common Stock entitling them to subscribe for,
purchase or acquire shares of Common Stock at a price per share less than the
current market price per share of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion price by a fraction the numerator of which shall be the number
of shares of Common stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription purchase or acquisition would purchase at such current
market price and 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 plus the number of shares of Common Stock so offered for
subscription, purchase or acquisition, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination of the holders entitled to such rights, options or
warrants. However, upon the expiration of any right, option or warrant to
purchase Common Stock, the issuance of which resulted in an adjustment in the
Conversion price pursuant to this Section 11.5(b), if any such right, option or
warrant shall expire and shall not have been exercised, the Conversion Price
shall be recomputed immediately upon such expiration and effective immediately
upon such expiration shall be increased to the price it would have been (but
reflecting any other adjustments to the Conversion Price made pursuant to the
provisions of Section 11.5 hereof after the issuance of such rights, options or
warrants) had the adjustment of the Conversion Price made upon the issuance of
such rights, options or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights, options or warrants. No further
adjustment shall be made upon exercise of any right, option or warrant if any
adjustment shall have been made upon the issuance of such security. For the
purposes of this Section 11.5(b), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company shall not issue any rights, options or warrants in respect of shares
of Common Stock held in the treasury of the Company.
(c) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of
43
business on the day following the day upon which such subdivision becomes
effective shall be reduced, and conversely, in case the outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
increased, to equal the product of the Conversion Price in effect on such date
and a fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such subdivision or combination, as the
case may be, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such subdivision or combination, as
the case may be. Such reduction or increase, as the case may be, shall become
effective immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock (i) evidences of its indebtedness
or (ii) shares of any class of capital stock, cash or other assets (including
securities, but excluding (1) any rights, options or warrants referred to in
Section 11.5(b) hereof, (2) any dividend or distribution referred to in Section
11.5(a) hereof, and (3) cash dividends paid from the Company's retained earnings
unless the sum of (A) all such cash dividends and distributions made within the
preceding 12 months in respect of which no adjustment has been made and (B) any
cash and the fair market value of other consideration paid in respect of any
repurchases of Common Stock by the Company or any of its subsidiaries within the
preceding 12 months in respect of which no adjustment has been made, exceeds 20%
of the Company's market capitalization (being the product of the then current
market price per share of the Common Stock times the aggregate number of shares
of Common Stock then outstanding) on the record date for such distribution),
then in each case, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by multiplying
such Conversion Price by a fraction of which the numerator shall be the current
market price per share of the Common Stock on such date of determination (or, if
earlier, on the date on which the Common stock goes "ex-dividend" in respect of
such distribution) less the then fair market value as determined by the Board of
Directors, whose determination shall be conclusive and shall be described in a
statement filed with any conversion agent) of the portion of the capital stock,
cash or other assets or evidences of indebtedness to distributed (and for which
an adjustment to the Conversion Price has not previously been made pursuant to
the terms of this Section 11.5) applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the Common Stock,
such adjustment to become effective immediately after the opening of business on
the day following such date of determination of the holders entitled to such
distribution. The following transactions shall be excluded from the foregoing
clauses (A) and (B): (x) repurchases of Common Stock issued under the Company's
stock incentive programs and (y) dividends or distributions payable-in-kind in
additional shares of or warrants, rights, calls or options exercisable for or
convertible into additional shares of Junior Securities.
(e) The reclassification or change of Common Stock into
securities including securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section 11.6 shall
apply) shall be deemed to involve (i) a distribution of such securities other
than Common stock to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
holders of
44
Common Stock entitled to receive such distribution" within the meaning of
Section 11.5(d) hereof), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of Section 11.5(c) hereof).
(f) The Company from time to time may reduce the Conversion
Price if it considers such reductions to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock rights will not
be taxable to the holders of Common Stock by any amount, but in no event may the
Conversion Price be less than the par value of a share of Common Stock. Whenever
the Conversion Price is reduced, the Company shall mail to Holders of record of
Notes a notice of the reduction. The Company shall mail the notice at least 15
days before the date the reduced Conversion Price takes effect. The notice shall
state the reduced Conversion Price and the period it will be in effect. A
reduction of the Conversion Price does not change or adjust the Conversion Price
otherwise in effect for purposes of Sections 11.5(a), (b), (c), (d) and (e)
hereof.
(g) No adjustment in the Conversion Price need be made until
all cumulative adjustments amount to at least 1% in the Conversion Price, as
last adjusted; provided that any adjustments that by reason of this Section
11.5(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 11
shall be made by the Company and shall be made to the nearest cent.
(h) For the purpose of any computation under Section 11.5, the
current market price per share of Common Stock on any day shall be deemed to be
the average of the Closing Prices of the Common Stock for the 20 consecutive
Trading Days selected by the Board of Directors commencing no more than 30
Trading Days before and ending no later than the day before the day in question;
provided that, in the case of Section 11.5(d) hereof, if the period between the
date of the public announcement of the dividend or distribution and the date of
or the determination of holders of Common Stock entitled to receive such
dividend or distribution (or, if earlier, the date on which the Common Stock
goes "ex-dividend" in respect of such dividend or distribution) shall be less
than 20 Trading Days, the period shall be such lesser number of Trading Days
but, in any event not less than five Trading Days.
(i) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No adjustment in
the Conversion Price need be made under Section 11.5(a), (b) or (d) hereof if
the Company issues or distributes to each Holder of Notes the shares of Common
Stock, evidences of indebtedness, assets, rights, options or warrants referred
to in those paragraphs which each Holder would have been entitled to receive had
Notes been converted into Common Stock prior to the happening of such event or
the record date with respect thereto.
(j) Whenever the conversion price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an
45
Officers' Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the fact requiring such adjustment.
Promptly after delivery of such certificate, the company shall prepare a notice
of such adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the date on which each adjustment became effective and shall mail such
notice of such adjustment of the Conversion Price to each Holder of Notes at his
last address appearing on the Note register provided for in Section 2.5 hereof,
within 20 days after execution thereof. Failure to deliver such notice shall not
effect the legality or validity of any such adjustment.
(k) In any case in which this Section 11.5 shall require that
an adjustment as a result of any event become effective from and after a record
date, the company may elect to defer until after the occurrence of such event
(i) the issuance to the Holder of and Notes converted after such record date and
before the occurrence of such event of the additional shares of Common Stock
issuable upon such conversion over and above the shares issuable on the basis of
the Conversion Price in effect immediately prior to adjustment and (ii) a cash
payment for any remaining fractional shares of Common stock as provided in
Section 11.3 hereof; provided, however, that if such event shall not have
occurred and authorization of such event shall be rescinded by the Company, the
Conversion Price shall be recomputed immediately upon such recision to the price
that would have been in effect had such event not been authorized, provided that
such recision is permitted by and effective under applicable laws.
SECTION 11.6. EFFECTIVE OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
In the case of any consolidation of the Company or the merger of the
Company with or into any other entity or the sale or transfer of all or
substantially all the assets of the Company pursuant to which the Company's
Common Stock is converted into other securities, cash or assets, the Company or
the successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture providing that the Notes shall be
convertible into the kind and amount of securities, cash or other assets
receivable upon such consolidation merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Notes might have been converted
immediately prior to such consolidation, merger, transfer or sale assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount receivable per share by a plurality of
non-electing shares. Such supplemental indenture shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 11.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Notes within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 11.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
SECTION 11.7. TAXES ON SHARES ISSUED.
46
If a Holder converts Notes, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. However, the Holder shall pay any such tax that is
due because the shares are issued in a name other than the Holders' name.
SECTION 11.8. RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON
STOCK.
The Company has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury enough
shares of Common Stock to permit the conversion of the Notes in full. All shares
of Common Stock that may be issued upon conversion of Notes shall be fully paid
and nonassessable. The Company shall endeavor to comply with all securities laws
regulating the offer and delivery of shares of Common stock upon conversion of
Notes and shall endeavor to list such shares on each national securities
exchange on which the Common Stock is listed.
SECTION 11.9. COMMON STOCK ISSUABLE UPON CONVERSION.
For purposes of this Article 11, "Common Stock" includes 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. However, subject to the provisions of Section 11.5(b) hereof,
shares issuable on conversion of Notes shall include only shares of the class
designated as Common Stock of the Company on the date of issuance of the
Preferred Stock pursuant to the Offering or shares of any class or classes
resulting from any reclassification thereof and which have no preferences in
respect of dividends or 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 which such class then
so issuable shall be substantially in the proportions which the total number of
shares of such class resulting from all such reclassifications to the total
number of shares of all such classes resulting from all such reclassifications.
SECTION 11.10. RESPONSIBILITY OF TRUSTEE.
The Trustee and any other conversion agent shall not at any time be
under any duty or responsibility to any Holder of Notes to make a determination
whether any facts exist that may require any adjustment of the Conversion Price,
or with respect to the nature or extent or calculation of any such adjustment
when made, or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. The Trustee
and any other conversion agent shall not be accountable with respect to the
validity or value (or the kind or amount of any shares of Common Stock, or of
any securities or property, that may at any time be issued or delivered upon the
conversion of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. Subject to the provision of Section 7.1
hereof, 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 in cash upon the
surrender of any Note for the purpose
47
of conversion or to comply with any of the duties, responsibilities or covenants
of the Company contained in this Article 11. Without limiting the generality of
the foregoing, neither the Trustee nor any conversion agent shall be under any
responsibility to determine whether a supplemental indenture under Section 11.6
hereof is required to be entered into or the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 11.6
relating either to the amount of shares receivable by Holders upon the
conversion of their Notes after any event referred to in Section 11.6 hereof or
to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.1 hereof, 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 11.11. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
In case (a) the Company makes any distribution or dividend that would
require an adjustment in the Conversion Price pursuant to Section 11.5 hereof,
(b) the Company takes any action that would require a supplemental indenture
pursuant to Section 11.6 hereof or (c) of the voluntary or involuntary
dissolution, liquidating or winding-up of the Company, the Company shall cause
to be filed with the Trustee and to be mailed to each Holder of Notes as
promptly as possible but in any event at least 15 days prior to the applicable
date hereinafter specified, a notice stating (i) the date on which a record date
is to be taken for the purpose of such dividend, distribution, rights, options
or warrants, or, if a record is not to be taken, the date as of which the
holders of Common stock of record to be entitled to such dividend, distribution,
rights, options or warrants are to be determined or (ii) the date on which such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings referenced in clauses (a) through (c) of this
Section 11.11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Subsection (c) of Section 318 of the TIA , the imposed
duties shall control. The provisions of Section 310 and 317, inclusive, of the
TIA that impose duties on any Person (including provisions automatically deemed
included in an indenture unless the indenture provides that such provisions are
excluded) are a part of and govern this Indenture, except as, and to the extent,
expressly excluded form this Indenture, as permitted by the TIA.
48
SECTION 12.2. NOTICES.
Any notice or communication shall be in writing and delivered in person
or mailed by first class mail (registered or certified, return receipt
requested), or overnight air courier guaranteeing next day delivery, addressed
as follows:
If to the Company:
KTI, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to the Trustee:
SunTrust Bank, Central Florida, National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With a copy to:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; and the next Business Day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
49
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails or otherwise gives a notice or communication to
Holder, it shall similarly mail or give a copy to the Trustee and each Agent at
the same time.
SECTION 12.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITONS PRECEDENT.
Upon any request or application by the Company to the trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied, and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set froth in
Section 12.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
50
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
SHAREHOLDERS.
No past, present or future director, officer, employee, incorporator or
shareholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuances of the Notes.
SECTION 12.8. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Significant Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind their successors. All agreements of the Trustees in this Indenture shall
bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table 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 of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
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SIGNATURES
Dated as of July ___, 1998 KTI, INC.
By: _____________________________
Name:
Title:
Dated as of July ___, 1998 SUNTRUST BANK, CENTRAL FLORIDA
NATIONAL ASSOCIATION, ___________
By: _____________________________
Name:
Title:
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