EXHIBIT 4.2
KFx INC.,
as Obligor
and
FIRST BANK NATIONAL ASSOCIATION,
doing business as
COLORADO NATIONAL BANK,
as Trustee
_________________________
INDENTURE
Dated as of July 25, 1997
-------------------------
U.S.$25,000,000
6% CONVERTIBLE DEBENTURES
DUE 2002
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION............................................ 1
Section 1.1. Definitions.................................................. 1
Section 1.2. Trust Indenture Act.......................................... 13
Section 1.3. Rules of Construction........................................ 13
Section 1.4. Rights of TCK................................................ 14
ARTICLE II FORM OF DEBENTURES................................................ 14
Section 2.1. Forms Generally.............................................. 14
Section 2.2. Forms of Debentures.......................................... 15
Section 2.3. Form of Coupon............................................... 30
Section 2.4. Form of Certificate of Authentication........................ 31
Section 2.5. Form of Conversion Notice.................................... 31
Section 2.6. Restrictive Legends.......................................... 33
ARTICLE III THE SECURITIES.................................................... 34
Section 3.1. Title and Terms.............................................. 34
Section 3.2. Denominations................................................ 34
Section 3.3. Execution, Authentication, Delivery and Dating............... 34
Section 3.4. Global Securities............................................ 35
Section 3.5. Mutilated, Destroyed, Lost and Stolen Debentures and Coupons. 40
Section 3.6. Persons Deemed Owners........................................ 42
Section 3.7. Cancellation................................................. 42
Section 3.8. Computation of Interest...................................... 43
Section 3.9. ISIN, Common Code Or Other Identifying Numbers............... 43
ARTICLE IV REDEMPTION OF SECURITIES.......................................... 43
Section 4.1. Right of Redemption.......................................... 43
Section 4.2. Applicability of Article..................................... 43
Section 4.3. Election to Redeem; Notice to Trustee........................ 43
Section 4.4. Notice of Redemption; Section of Debentures.................. 44
Section 4.5. Deposit of Redemption Price.................................. 44
Section 4.6. Debentures Payable on Redemption Date........................ 45
ARTICLE V CONVERSION OF DEBENTURES.......................................... 46
Section 5.1. Conversion Privilege......................................... 46
Section 5.2. Exercise of Conversion Privilege............................. 46
Section 5.3. Fractions of Shares.......................................... 47
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Section 5.4. Adjustment of Conversion Price............................... 47
Section 5.5. Notice of Adjustments of Conversion Price.................... 53
Section 5.6. Notice of Certain Corporate Action........................... 53
Section 5.7. Company to Reserve Common Stock.............................. 54
Section 5.8. Taxes on Conversions......................................... 54
Section 5.9. Cancellation of Converted Definitive Debentures.............. 54
Section 5.10. Provisions in Case of Reclassification, Consolidation,
Merger or Sale of Assets..................................... 55
ARTICLE VI COVENANTS......................................................... 56
Section 6.1. Payment of Principal and Interest on Debentures.............. 56
Section 6.2. Maintenance of Offices for Agencies.......................... 56
Section 6.3. Money for Payments to Be Held in Trust....................... 57
Section 6.4. Taxes, Assessments, Governmental Charges and Certain Claims.. 58
Section 6.5. Reporting Requirements....................................... 59
Section 6.6. Books and Records............................................ 59
Section 6.7. Maintenance of Insurance..................................... 59
Section 6.8. Maintenance of Corporate Existence, Properties, Etc.......... 59
Section 6.9. Type of Business............................................. 60
Section 6.10. Merger or Sale of Assets..................................... 60
Section 6.11. Investments.................................................. 60
Section 6.12. Use of Proceeds.............................................. 61
Section 6.13. Dividends, Etc............................................... 61
Section 6.14. Additional Indebtedness...................................... 61
Section 6.15. Limitation on Liens.......................................... 62
Section 6.16. Compliance with Laws, Etc.................................... 62
Section 6.17. Reports from the Company..................................... 62
Section 6.18. Registration and Listing..................................... 63
Section 6.19. Statement by Officers as to Default.......................... 63
Section 6.20. Additional Amounts........................................... 64
ARTICLE VII REMEDIES OF THE TRUSTEE AND HOLDER OF................................
DEBENTURES ON EVENT OF DEFAULT.................................... 65
Section 7.1. Events of Default Defined.................................... 65
Section 7.2. Covenant of Company to Pay to Trustee Whole Amount Due on
Debentures on Default in Payment of Interest, Principal or
Premium...................................................... 68
Section 7.3. Trustee May File Proofs of Claim............................. 69
Section 7.4. Application of Moneys Collected by Trustee................... 70
Section 7.5. Limitation on Suits.......................................... 70
Section 7.6. Unconditional Right of Holders to Receive Principal, Premium
and Interest and to Convert.................................. 71
Section 7.7. Restoration of Rights and Remedies........................... 71
Section 7.8. Rights and Remedies Cumulative............................... 71
Section 7.9. Delay or Omission Not Waiver................................. 72
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Section 7.10. Rights of Holders of Majority in Principal Amount of
Debentures to Direct Trustee and Waive Defaults.............. 72
Section 7.11. Waiver of Past Defaults...................................... 73
Section 7.12. Undertaking for Costs........................................ 73
Section 7.13. Waiver of Usury, Stay or Extension Laws...................... 73
ARTICLE VIII CONCERNING THE TRUSTEE............................................ 74
Section 8.1. Certain Duties and Responsibilities.......................... 74
Section 8.2. Notice of Defaults........................................... 75
Section 8.3. Rights of Trustee............................................ 75
Section 8.4. Trustee Not Liable for Recitals.............................. 76
Section 8.5. Trustee and Agents May Own Debentures........................ 76
Section 8.6. Trustee Entitled to Compensation, Reimbursement and
Indemnity.................................................... 77
Section 8.7. Right of Trustee to Rely on Certificate of Officers of
Company Where no Other Evidence Specifically Prescribed...... 78
Section 8.8. Moneys Received by Trustee to be Held in Trust............... 78
Section 8.9. Requirements for Eligibility of Trustee...................... 78
Section 8.10. Resignation or Removal of Trustee............................ 78
Section 8.11. Acceptance by Successor Trustee.............................. 80
Section 8.12. Successor to Trustee by Merger, Consolidation or
Succession to Business....................................... 80
Section 8.13. Authenticating Agent......................................... 80
ARTICLE IX CONCERNING THE HOLDERS OF DEBENTURES.............................. 82
Section 9.1. Evidence of Action by Holders of Debentures.................. 82
Section 9.2. Proof of Execution of Instruments and of Holding of
Debentures................................................... 83
Section 9.3. Action by Holder of Debenture Binds Future Holders........... 84
ARTICLE X MEETINGS.......................................................... 85
Section 10.1. Purposes for Which Meetings May be Called.................... 85
Section 10.2. Manner of Calling Meetings................................... 85
Section 10.3. Call of Meetings by Company or Holders of Debentures......... 85
Section 10.4. Persons Entitled to Vote at Meetings......................... 86
Section 10.5. Determination of Voting Rights, Control and Adjournment of
Meetings..................................................... 86
Section 10.6. Manner of Voting at Meetings and Record to be Kept........... 87
Section 10.7. Exercise of Rights of Trustee or Holders of Debentures May
Not be Hindered or Delayed by Call of Meeting of Holders of
Debentures................................................... 88
ARTICLE XI SUPPLEMENTAL INDENTURES........................................... 88
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Section 11.1. Purposes for Which Supplemental Indentures May be Entered
into Without Consent of Holders of Debentures............... 88
Section 11.2. Modification of Indenture with Consent of Holders of a
Majority in Principal Amount of Debentures.................. 89
Section 11.3. Effect of Supplemental Indentures........................... 90
Section 11.4. Debentures May Bear Notation of Changes..................... 91
Section 11.5. Opinion of Counsel.......................................... 91
Section 11.6. Notice of Supplemental Indentures........................... 91
Section 11.7. Consent of TCK.............................................. 91
ARTICLE XII CONSOLIDATION OR MERGER.......................................... 92
Section 12.1. When Company May Merge, Etc................................. 92
Section 12.2. Successor Corporation....................................... 93
ARTICLE XIII SATISFACTION AND DISCHARGE OF INDENTURE;
DEPOSITED MONEYS............................................ 93
Section 13.1. Satisfaction and Discharge of Indenture..................... 93
Section 13.2. Application by Trustee of Funds Deposited for Payment of
Debentures.................................................. 94
Section 13.3. Repayment of Moneys Held by Paying Agent.................... 94
Section 13.4. Moneys Deposited for Redemption of Debentures Subsequently
Converted to be Returned to Company......................... 95
Section 13.5. Payment of Deposited Money to Company After Lapse of Time... 95
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS........................................... 95
ARTICLE XV RIGHT TO REQUIRE REPURCHASE................................. 96
Section 15.1. Right to Require Repurchase................................. 96
Section 15.2. Notice; Method of Exercising Repurchase Right............... 96
Section 15.3. Deposit of Repurchase Price................................. 98
ARTICLE XVI MISCELLANEOUS PROVISIONS......................................... 98
Section 16.1. Successors and Assigns of Company Bound by Indenture........ 98
Section 16.2. Acts of Board, Committee or Officer of Successor Corporation
Valid....................................................... 99
Section 16.3. [Intentionally Omitted]..................................... 99
Section 16.4. Notices, Etc. to Trustee and Company........................ 99
Section 16.5. Notice to Holders of Debentures; Waiver..................... 99
Section 16.6. Effect of Headings and Table of Contents.................... 100
Section 16.7. Indenture and Debentures to be Construed in Accordance with
Laws of State of New York................................... 100
Section 16.8. Officers' Certificate and Opinion of Counsel to be Furnished
upon Applications or Demands by Company..................... 100
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Section 16.9. Benefits of Indenture....................................... 102
Section 16.10. Legal Holidays.............................................. 102
Section 16.11. Effect of Invalidity of Provisions.......................... 102
Section 16.12. Execution in Counterparts................................... 102
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Exhibit 4.2
INDENTURE, dated as of July 25, 1997, between KFx Inc., a Delaware
corporation (the "Company"), and First Bank National Association, doing business
as Colorado National Bank, a national banking association authorized to exercise
corporate trust power, as Trustee (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the creation of an issue of its 6% Convertible Debentures due 2002
(the "Debentures") and the coupons thereto appertaining of substantially the
same tenor and amount hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this Indenture; and
WHEREAS, all acts and things necessary have been done by the Company
to make the Debentures, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company upon payment therefor by the
purchasers thereof, the valid obligations of the Company, and to make this
Indenture a valid agreement of the Company, in accordance with their and its
terms;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In order to declare the terms and conditions upon which the Debentures
and the coupons thereto appertaining are, and are to be authenticated, issued
and delivered, and for and in consideration of the premises and the purchase of
the Debentures by the holders thereof ("Holders"), it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Debentures
as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section I.1. Definitions.
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"Additional Amounts" has the meaning specified in the form of
Definitive Debenture set forth in Section 2.2(a).
"Affiliate" means, when used with reference to any specified Person,
any other Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with, such specified Person. For the purposes
of this definition, "control" when used with respect to any Person means the
power to direct or cause the direction of the management or policies of such
Person, directly or indirectly, whether through the ownership or voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"AMEX" means the American Stock Exchange.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Debenture or beneficial interest therein the
rules and procedures of Euroclear or Cedel and of the Common Depositary, in each
case to the extent applicable to such transaction as in effect from time to
time.
"Authorized Newspaper" means, so long as the Debentures are listed on
a securities exchange and such exchange so requires, a newspaper published in
the city in which such securities exchange is located; provided that publication
in London, England shall be in the Financial Times and for so long as the
---------------
Debentures are listed on the Luxembourg Stock Exchange, "Authorized Newspaper"
shall include the Luxembourg Wort; provided, further, that if, because of
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temporary or permanent suspension of publication or general circulation of any
newspaper or for any other reason, it is impossible or, in the opinion of the
Trustee, impracticable to make reasonable publication of any notice required
herein in a newspaper published in the city in which the securities exchange is
located, then "Authorized Newspaper" shall mean any publication in an English
language newspaper of general circulation.
"Authenticating Agent" means any Person authorized pursuant to Section
8.13 to act on behalf of the Trustee to authenticate Debentures.
"Bankruptcy Code" means the Bankruptcy Code of 1978, as amended (11
U.S.C. 101 et seq.).
"Board of Directors" means either the Board of Directors of the
Company or any duly authorized committee of such Board of Directors.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to the Trustee.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions are authorized or obligated by law, executive
order or regulation to close, in Denver, Colorado and, with respect to any
payment on the Debentures or the Coupons, or conversion of Debentures, if there
is a Paying Agent or Conversion Agent in Luxembourg, in Luxembourg and, with
respect to any other place of payment or conversion, in such other place of
payment or conversion.
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"Capitalized Lease Obligations" means, with respect to any Person, any
Indebtedness of such Person represented by obligations under a lease or other
rental agreement that are required to be capitalized for financial reporting
purposes in accordance with GAAP, and the amount of such Indebtedness for
purposes hereof shall be the capitalized amount of such obligations as
determined in accordance with GAAP on a consolidated basis.
"Cedel" means Cedel Bank Societe Anonyme.
"Change of Control" has the meaning specified in the form of
Definitive Debenture set forth in Section 15.1.
"Closing Price Per Share" means, with respect to the Common Stock of
the Company, for any day, the reported last sales price regular way per share
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case (i) on the
American Stock Exchange, as reported in The Wall Street Journal (or other
similar newspaper) or, if the Common Stock is not listed or admitted to trading
on such Exchange, on the principal (as determined by the Company's Board of
Directors) national securities exchange on which the Common Stock is listed or
admitted to trading, or (ii) if not listed or admitted to trading on any
national securities exchange or quoted on the Nasdaq National Market, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to time
by the Company for that purpose. If no such prices are available, the Closing
Price Per Share shall be the fair value of a share as determined by the Board of
Directors of the Company.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations promulgated thereunder
and any successor statute thereto.
"Commission" means the Securities and Exchange Commission.
"Common Depositary" has the meaning specified in Section 3.4.
"Common Stock" or "Shares" means the Common Stock, $.001 par value, of
the Company as presently authorized by its Certificate of Incorporation or any
other stock of the Company into which such Common Stock may hereafter be changed
from time to time.
"Company" means the Person named as such in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Notice" has the meaning specified in Section 15.2(a).
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"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by an Officer and delivered to the Trustee.
"Continuing Director" means, at any date, a member of the Board of
Directors who (i) was a member of the Board of Directors for the period of 24
months prior to such date or (ii) was nominated for election or elected to the
Board of Directors with the affirmative vote of at least two-thirds of the
Continuing Directors.
"Contractual Obligation" of any Person means any provision of any
agreement, instrument, Security or undertaking to which such Person is a party
or by which it or any of the property owned by it is bound.
"Conversion Agent" means any Person authorized by the Company to
convert Debentures in accordance with Article V. Initially, the Company has
appointed Banque Internationale A Luxembourg as its Conversion Agent in
Luxembourg.
"Conversion Date" has the meaning specified in Section 5.2.
"Conversion Notice" has the meaning specified in Section 5.2.
"Conversion Price" has the meaning specified in the form of Definitive
Debenture set forth in Section 2.2(a).
"Conversion Shares" has the meaning specified in the form of
Definitive Debenture set forth in Section 2.2(a).
"Convertible Securities" has the meaning specified in Section 5.4(e).
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ 55101).
"Coupon" means any interest coupon appertaining to a Definitive
Debenture issued in the form set forth in Section 2.3.
"Debentures" has the meaning specified in the first recital of this
Indenture and more particularly means any of the Debentures authenticated and
delivered under this Indenture.
"Definitive Debenture" means any Debenture issued in the form set
forth in Section 2.2(a).
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"Default" means any event, act or condition, the occurrence of which
is, or after notice or the passage of time or both would be, an Event of
Default.
"Determination Notice" has the meaning specified in the form of
Definitive Debenture set forth in Section 2.2(a).
"Dollar," "U.S.$," "United States dollar" or the sign "$" means a
Dollar or other equivalent unit in such coin or currency of the United States as
at the time shall be legal tender for the payment of public and private debts.
"Euroclear" means ▇▇▇▇▇▇ Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear Clearance System.
"Event of Default" has the meaning specified in Section 7.1.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended from time to time, and the rules and regulations promulgated
thereunder, and any successor statute thereto.
"Exchange Date" means the date which is 40 days after the Final
Closing Date.
"Existing Control Group" means the Persons listed under the caption
"Principal Shareholders" in the Offering Memorandum.
"Final Closing Date" means the last date on which a sale of the
Debentures is closed pursuant to the Offering Memorandum.
"Floor" has the meaning specified in the form of Definitive Debenture
set forth in Section 2.2(a).
"GAAP" means generally accepted accounting principles set forth in the
opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board or such other statements by any such other
entity as may be approved by a significant segment of the accounting profession
in the United States, and which are applicable to the circumstances as of the
date of this Indenture.
"Global Debenture" means any Debenture issued in the form set forth in
Section 2.2(b).
"Guaranty" means any Contractual Obligation, contingent or otherwise,
of a Person with respect to any Indebtedness or other obligation or liability of
another Person, including without limitation, any such Indebtedness, obligation
or liability directly or indirectly
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guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable, including Contractual Obligations (contingent or otherwise) arising
through any agreement to purchase, repurchase, or otherwise acquire such
Indebtedness, obligation or liability or any security therefor, or any agreement
to provide funds for the payment or discharge thereof (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, or other financial condition, or to
make any payment other than for value received.
"Holder" means, when used with respect to a Debenture, the bearer
thereof, and when used with respect to a Coupon, the bearer thereof.
"Indebtedness" means (a) any liability of any Person (i) for borrowed
money or (ii) evidenced by a note, debenture or similar instrument (including a
purchase money obligation and a letter of credit), whether issued in connection
with the acquisition of any assets (other than inventory or similar property
acquired in the ordinary course of business) or otherwise; (b) Capitalized Lease
Obligations of any Person; (c) any Guaranty of any liability of others described
in clause (a) or (b) above, and (d) any amendment, renewal, extension or
refunding of any liability of the types referred to in clauses (a), (b) and (c)
above.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture.
"Initial Closing Date" means the first date on which a sale of
Debentures is closed pursuant to the Offering Memorandum.
"Interest Payment Date" has the meaning specified in the form of
Definitive Debenture set forth in Section 2.2(a).
"Lien" means any mortgage, pledge, security interest, security
deposit, encumbrance, lien or charge of any kind, including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any applicable
jurisdiction.
"Luxembourg Agent" means, as the context requires, Banque
Internationale A Luxembourg in its capacity as Paying Agent, Conversion Agent or
Transfer Agent for the Company in Luxembourg.
"Luxembourg Stock Exchange" means the Bourse de Luxembourg.
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"Maturity Date" has the meaning specified in the form of Definitive
Debenture set forth in Section 2.2(a).
"Offering Memorandum" means the final Offering Memorandum dated July
25, 1997 pursuant to which the Debentures were initially offered and sold.
"Officer" means any of the following officers of the Company: the
chairman of the board of directors, the president, the chief executive officer,
any vice president, the chief financial officer or the secretary.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an assistant treasurer or an assistant secretary of the
Company.
"Opinion of Counsel" means a written opinion from independent legal
counsel who is reasonably acceptable to the Trustee.
"Outstanding" means, with respect to the Debentures as of the date of
determination, all Debentures theretofore authenticated and delivered under this
Indenture, except:
(a) Debentures theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(b) Debentures, or portions thereof, for whose payment money or
Securities in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Debentures; provided that, if such Debentures are
to be redeemed (as provided in Article IV), notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made; and
(c) Debentures in exchange for or in lieu of which other
Debentures have been authenticated and delivered pursuant to this Indenture;
provided that in determining whether the Holders of the requisite principal
amount of Outstanding Debentures have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Debentures owned by the Company
or any Affiliate of the Company shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon such request, demand, authorization, direction, notice, consent
or waiver, only Debentures that the Trustee knows to be so owned shall be so
disregarded. Debentures so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so
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to act with respect to such Debentures and that the pledgee is not the Company
or an Affiliate of the Company.
"Paying Agent" means any person authorized by the Company to pay the
principal of, premium, if any, or interest on, any Debentures on behalf of the
Company, and except as otherwise specifically set forth herein, such term shall
include the Company, if it acts as its own paying agent. The Company has
initially appointed Banque Internationale A Luxembourg as its Paying Agent in
Luxembourg.
"Permitted Liens" means with respect to the Company or any Subsidiary:
(a) deposits and pledges in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other social
security legislation and regulations;
(b) deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety, appeal and performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(c) Liens for taxes not yet delinquent or the validity or amount of
which are being diligently contested in good faith by appropriate proceedings
and as to which the Company or such Subsidiary has established appropriate
reserves on its books in conformity with GAAP, and in case a proceeding to
foreclose any such Lien has been commenced, such foreclosure proceeding has been
stayed or bonded pending the final resolution of the proceedings commenced by
the Company or such Subsidiary;
(d) carrier's, warehousemen's, mechanic's, materialmen's, repairmen's
or other like Liens arising in the ordinary course of business not overdue or
the validity or amount of which are being diligently contested in good faith by
appropriate proceedings and as to which the Company or such Subsidiary has
established appropriate reserves on its books in conformity with GAAP, and in
case a proceeding to foreclose any such Lien has been commenced, such
foreclosure proceeding has been stayed or bonded pending the final resolution of
the proceedings commenced by the Company or such Subsidiary;
(e) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired or constructed by the Company or such
Subsidiary; provided that (i) such security interests secure Project Finance
Indebtedness, (ii) such security interests are incurred, and the Project Finance
Indebtedness secured thereby is created, no later than 90 days after such
acquisition or construction, (iii) the Project Finance Indebtedness secured
thereby does not exceed 100% of the purchase price of such real property,
improvements or equipment at the time of such acquisition or construction, (iv)
such security interests do not apply to any other property or assets of the
Company or such Subsidiary, or (v) at the time of creating or otherwise
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incurring such security interest, and after giving effect thereto, the Company
is in compliance with all of its other covenants under this Indenture;
(f) Liens on assets of the Company or any of its Subsidiaries
existing on the date hereof; provided such Liens shall secure only the
obligation which they secure on the date hereof, and such Liens may be extended
or renewed;
(g) security interests in royalties, licensing, management,
consulting and other fees, revenues and payments receivable by, or to become
payable to, the Company and/or any of its Subsidiaries under or pursuant to
contracts, agreements or arrangements arising out of, related to or connected
with a Strategic Alliance, securing Project Finance Indebtedness related to such
Strategic Alliance; and
(h) security interests in process or feedstock contracts entered into
in connection with a Strategic Alliance by the Company or one of its
Subsidiaries securing Project Finance Indebtedness related to such Strategic
Alliance.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Placement Agents" means BlueStone Capital Partners, L.P. and
▇▇▇▇▇▇▇▇▇ International Limited.
"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 3.7 in
exchange for or in lieu of a mutilated, lost, destroyed or stolen Debenture
shall be deemed to evidence the same debt as the mutilated, lost, destroyed or
stolen Debenture.
"Project Finance Indebtedness" means Capitalized Lease Obligations and
Indebtedness used to finance the acquisition, installation and/or construction
of capital assets of the Company and/or a Subsidiary and/or a Strategic
Alliance.
"Redemption Date", when used with respect to any Debenture to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Debenture to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regulation S" means Regulation S under the Securities Act and any
successor regulation thereto.
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"Repurchase Date" has the meaning specified in Section 15.1.
"Repurchase Price" has the meaning specified in Section 15.2.
"Requirement of Law" for any Person means the articles or certificate
of incorporation and by-laws or other organizational or governing documents of
such Person and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" means, with respect to the Trustee, the chairman
or vice-chairman of the board of directors or trustees, the chairman of the
executive committee, the chairman of the trust committee, the president, any
vice-president, the secretary, the treasurer, any trust officer, the cashier,
any second or assistant vice-president, any assistant trust officer, any
assistant secretary, any assistant treasurer, any assistant cashier, or any
other officer or assistant officer of the Trustee customarily performing such
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.
"Reset Conversion Date" has the meaning specified in the form of
Definitive Debenture set forth in Section 2.2(a).
"Securities Act" means the United States Securities Act of 1933, as
amended, and any successor statute.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act.
"Stock Price Factor" has the meaning specified in the form of
Definitive Debenture set forth in Section 2.2(a).
"Strategic Alliance" means a joint venture or other agreement or
arrangement between or among the Company and/or one or more of its Subsidiaries
and one or more third parties seeking to advance and commercialize business
opportunities arising out of technologies owned or licensed by the Company or
any of its Subsidiaries, including research and development, sublicensing,
marketing and consulting in relation to such technologies and construction and
operation of facilities utilizing such technologies.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which 51% or more of the combined voting power of the outstanding Voting Stock
is owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and one
or more other Subsidiaries thereof, directly or indirectly, has at least a
majority ownership and power to
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direct the policies, management and affairs thereof. Unless otherwise specified,
"Subsidiary" means a Subsidiary of the Company.
"Taxes" means any current or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatever nature,
including, without limitation income, gross receipts, excise, property, sales,
transfer, license, payroll, withholding, social security, and franchise taxes,
now or hereafter imposed or levied by the United States of America or any state,
local or foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest, penalties,
additions to tax and other similar liabilities with respect thereto.
"Tax Law Change" means (a) any change in, or amendment to, the laws
(including any regulations or rulings promulgated thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, or any change in, or amendment to, the application or
official interpretation of such laws, regulations or rulings, or (b) any written
assertion by the United States Internal Revenue Service that the Debentures are
not properly characterized as debt.
"TCK" means Thermo Ecotek Corporation, a majority-owned subsidiary of
Thermo Electron Corporation.
"Transfer Agent" has the meaning specified in Section 2.2(a). The
Company has initially appointed Banque Internationale A Luxembourg as its
Transfer Agent in Luxembourg.
"Trading Days" means (i) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
exchange is open for business or (ii) if the Common Stock is quoted on the
Nasdaq National Market or any similar system of automated dissemination of
quotations of securities prices, days on which trades may be made on such system
or (ii) if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market or similar system,
days on which the Common Stock is traded regular way in the over-the-counter
market and for which a closing bid and closing asked price for the Common Stock
are available.
"Trust Indenture Act" means the United States Trust Indenture Act of
1939 including any successor act thereto, as it may be amended from time to
time, and includes the rules and regulations of the Commission thereunder.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
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"United States" means the United States of America (including the
States thereof and the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction.
"United States Alien" means any Person who, as to the United States,
is a foreign corporation, a nonresident alien individual, a non-resident alien
fiduciary of a foreign estate or trust, or a foreign partnership, one or more of
the members of which is, as to the United States, a foreign corporation, a non-
resident alien individual, or a non-resident alien fiduciary of a foreign estate
or trust.
"United States Person" means (1) any natural person resident in the
United States, (2) any partnership or corporation organized or incorporated
under the laws of the United States, (3) any estate of which any executor or
administrator is a United States Person, (4) any trust of which any trustee is a
United States Person, (5) any agency or branch of a foreign entity located in
the United States, (6) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary organized,
incorporated or (if an individual) resident in the United States and (7) any
partnership or corporation if (i) organized or incorporated under the laws of
any foreign jurisdiction and (ii) formed by a United States Person principally
for the purpose of investing in securities not registered under the Securities
Act, unless it is organized or incorporated, and owned, by accredited investors
(as defined in Rule 501(a) of the Securities Act) who are not natural persons,
estates or trusts.
"Vice President," when used with respect to the Company, means any
Vice President, whether designated by a number or word or words added before or
after the title "Vice President."
"Voting Stock" means the securities of any class or classes of the
Company the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the corporate directors of such corporation or
Persons performing similar functions.
"Warrant A" means the currently outstanding warrant issued by the
Company to TCK to purchase 7,750,000 shares of Common Stock (subject to
adjustment), exercisable in whole or in part during the period commencing
January 1, 2000 and expiring July 1, 2001, at an exercise price of $3.65 per
share, subject to adjustment, and any warrant or warrants issued in substitution
or exchange therefor.
"Warrant B" has the meaning specified in Section 6.10(e).
"Western Europe" means Austria, Belgium, Denmark, France, Germany,
Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom.
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Section I.2. Trust Indenture Act.
-------------------
This Indenture has not been registered under, and is not subject to
any of the protections of, the Trust Indenture Act.
Section I.3. Rules of Construction.
---------------------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the
meaning assigned to them in accordance with GAAP;
(3) all other terms used herein which are defined in the Trust
Indenture Act, or which are incorporated by reference in such Act or are defined
in the Securities Act, have the meanings assigned to them therein;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Indenture;
(5) "or" is not exclusive;
(6) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(7) provisions of this Indenture and of the Debentures apply to
successive events and transactions.
Section I.4. Rights of TCK. For all purposes of this Indenture,
-------------
nothing in this Indenture shall be deemed to restrict or prohibit the exercise
by TCK of its rights under the Stock Purchase Agreement, Warrant A and Warrant B
and the KFx Fuel Partners L.P. Agreement.
ARTICLE II
FORM OF DEBENTURES
Section II.1. Forms Generally.
---------------
The Debentures and the Coupons shall be in substantially the forms set
forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are
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required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange, the Code,
or as may, consistently herewith, be determined by the officers of the Company
executing such Debentures and Coupons, as evidenced by their execution thereof.
The Trustee's certificates of authentication shall be in substantially the form
set forth in Section 2.4 and Conversion Notices shall be in substantially the
form set forth in Section 2.5.
A Global Debenture may be printed, lithographed, typewritten,
mimeographed or otherwise produced, as determined by the officers of the Company
executing such Global Debenture, as evidenced by their execution thereof.
The Definitive Debentures and Coupons shall be printed, lithographed
or engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Debentures may be listed, all as determined by
the officers executing the Definitive Debentures and Coupons, as evidenced by
their execution thereof. The format and spacing of the text of a Definitive
Debenture or Coupon may be varied to facilitate such production.
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Section II.2. Forms of Debentures.
-------------------
(a) Form of Definitive Debenture
[FORM OF FACE]
KFx Inc.
6% CONVERTIBLE DEBENTURE DUE 2002
No. __________ U.S. $10,000
Debenture ISIN XS0078387601
Common Code 7838760
KFx Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender of this Debenture, an amount
equal to 112% of the principal sum of Ten Thousand United States Dollars on the
date in the year 2002 which is five Business Days prior to the fifth anniversary
of the Initial Closing Date (the "Maturity Date") and to pay interest on such
principal sum, from the Initial Closing Date, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly provided
for, semi-annually in arrears on January 31 and July 31 in each year (an
"Interest Payment Date"), commencing January 31, 1998, at the rate of 6% per
annum, until the principal hereof and premium, if any, is due, and at the rate
of 8% per annum on any overdue principal and, to the extent permitted by law, on
any overdue interest. Such payments shall be made, subject to any laws or
regulations applicable thereto and to the right of the Company (limited as
provided in the Indenture) to terminate the appointment of any such Paying
Agent, at the option of the Holder, at the principal office of Banque
Internationale A Luxembourg, Luxembourg, or at such other offices or agencies
outside the United States (as defined below) as the Company may designate, at
the option of the Holder, by a United States Dollar check drawn on a bank in the
City of New York or by transfer of United States Dollars to an account
maintained by the Holder with a bank located outside the United States, provided
that such Holder shall have furnished wire transfer instructions in writing to
the Paying Agent by no later than five days prior to the relevant payment date.
Interest on this Debenture due on or before the Maturity Date shall be payable
only upon presentation and surrender at such an office or agency of the Coupons
hereto attached as they severally mature. No payment of principal of, premium,
if any, or interest on, including Additional Amounts (as defined below) with
respect to, this Debenture shall be made at the Corporate Trust Office of the
Trustee under the Indenture referred to on the reverse hereof or at any other
office or agency of the Company in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States; provided, however, that payment of principal of,
premium, if any, or interest on this Debenture and payment of any
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such Additional Amounts may be made at an office of the Paying Agent in the
United States, if (but only if) payment of the full amount of such principal,
premium, if any, interest or Additional Amounts, as the case may be, at all
offices outside the United States maintained for such purpose by the Company in
accordance with the Indenture is illegal or effectively precluded by exchange
controls or other similar restrictions on the full payment or receipt of such
amounts in United States Dollars, as determined by the Company.
Subject to the terms of the Indenture, the Company will pay to the
Holder of this Debenture or any Coupon, who is not a "United States Person" such
additional amounts ("Additional Amounts") as may be necessary in order that
every net payment of the principal of, premium, if any, and interest on this
Debenture (including payment on redemption or repurchase), after deduction or
withholding for or on account of any present or future tax assessment or
governmental charge imposed upon or as a result of such payment by the United
States or any political subdivision or taxing authority thereof or therein, will
not be less than the amount provided for in this Debenture or in such Coupon to
be then due and payable; provided, however, that the foregoing obligation to pay
Additional Amounts will not apply to:
(a) any tax, assessment or other governmental charge which would not
have been so imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor,
beneficiary, member, shareholder of or possessor of a power over such
Holder, if such Holder is an estate, a trust, a partnership or a
corporation) and the United States or any political subdivision or taxing
authority thereof or therein, including, without limitation, such Holder
(or such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident of the United States or treated
as a resident thereof, or being or having been engaged in trade or business
or present therein, or having a permanent establishment therein, or (ii)
such Holder's present or former status as a personal holding company, a
foreign personal holding company with respect to the United States, a
controlled foreign corporation or a passive foreign investment company for
United States tax purposes or a corporation which accumulates earnings to
avoid United States federal income tax;
(b) any tax, assessment or other governmental charge which would not
have been so imposed but for the presentation by the Holder of this
Debenture or any Coupon for payment on a date more than 15 days after the
date on which such payment became due and payable or the date on which
payment thereof is duly provided for, whichever occurs later;
(c) any estate, inheritance, gift, sales, transfer, personal property
or similar tax, assessment or governmental charge;
(d) any tax, assessment or other governmental charge which would not
have been imposed but for the failure to comply with any certification,
identification or other reporting requirements concerning the nationality,
residence, identity or connection with
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the United States of the Holder or beneficial owner of this Debenture or
any Coupon appertaining hereto, if compliance is required by statute or by
regulation of the United States Treasury Department as a precondition to
exemption from such tax, assessment or other governmental charge;
(e) any tax, assessment or other governmental charge which is payable
otherwise than by deduction or withholding from payments of principal of or
interest on this Debenture;
(f) any tax, assessment or other governmental charge imposed as a
result of a Person's past or present actual or constructive ownership,
including by virtue of the right to convert Debentures, of 10% or more of
the total combined voting power of all classes of stock of the Company
entitled to vote;
(g) any tax, assessment or other governmental charge required to be
withheld by any Paying Agent from any payment of the principal of or
interest on this Debenture, if such payment can be made without such
withholding by any other Paying Agent in Western Europe;
(h) any tax, assessment or other governmental charge imposed on a
Holder that is not the sole beneficial owner of this Debenture or that is a
partnership or a fiduciary, but only to the extent that any beneficial
owner or member of the partnership or beneficiary or settlor with respect
to the fiduciary would not have been entitled to the payment of Additional
Amounts had the beneficial owner or member directly received its beneficial
or distributive share of payments on this Debenture; or
(i) any combination of items (a), (b), (c), (d), (e), (f), (g) and
(h).
Notwithstanding the foregoing, if and so long as a certification,
identification or other information reporting requirement referred to in the
fourth paragraph of the reverse hereof would be fully satisfied by payment of a
backup withholding tax or similar charge, the Company may elect, by so stating
in the Determination Notice (as defined on the reverse hereof), to have the
provisions of this paragraph apply in lieu of the provisions of such paragraph.
In such event, the Company will pay, as Additional Amounts, such amounts as may
be necessary so that every net payment made, following the effective date of
such requirements, outside the United States by the Company or any Paying Agent
of principal due in respect of this Debenture, or interest represented by any
Coupon, to the beneficial owner of which is not a United States Person (but
without any requirement that the nationality, residence or identity of such
beneficial owner be disclosed to the Company, any Paying Agent or any
governmental authority), after deduction or withholding for or on account of
such backup withholding tax or similar charge, other than a backup withholding
tax or similar charge which is (a) the result of a certification, identification
or information reporting requirement described in the first parenthetical clause
of such paragraph, (b) imposed as a result of the fact that the Company or any
Paying Agent has actual knowledge
-17-
that the beneficial owner of this Debenture or such Coupon is within the
category of Persons described in clause (a) of the immediately preceding
paragraph, or (c) imposed as a result of presentation of this Debenture or such
Coupon for payment more than 15 days after the date on which such payment
becomes due and payable or on which payment thereof is duly provided for,
whichever occurs later, will not be less than the amount provided for in this
Debenture or such Coupon to be then due and payable.
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein. Whenever in this
Debenture there is a reference, in any context, to the payment of the principal,
if any, of, premium, if any, or interest on, or in respect of, any Debenture or
any Coupon, such reference shall be deemed to include the payment of Additional
Amounts payable pursuant to the first and second preceding paragraphs to the
extent that, in such context, Additional Amounts are, were or would be payable
in respect of this Debenture pursuant to such paragraphs, and express reference
to the payment of Additional Amounts (if applicable) in any provisions of this
Debenture shall not be construed as excluding Additional Amounts in those
provisions of this Debenture where such express reference is not made.
Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth on the face hereof.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or its Authenticating Agent by the
manual signature of one of its authorized signatories, neither this Debenture,
nor any Coupon appertaining hereto, shall be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed under its corporate seal and Coupons bearing the facsimile signature of
one of its Officers to be annexed hereto.
Dated as of _________, ____
[Corporate Seal] KFx Inc.
By: _______________________
Title:
Attest:
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_______________________
Title:
-19-
[FORM OF REVERSE]
KFx Inc.
6% CONVERTIBLE DEBENTURES DUE 2002
This Debenture is one of a duly authorized issue of debentures of the
Company designated as its "6% Convertible Debentures due 2002" (the
"Debentures"), limited in aggregate principal amount to U.S.$25,000,000 issued
and to be issued under an Indenture, dated as of July 25, 1997 (the
"Indenture"), between the Company and First Bank National Association, doing
business as Colorado National Bank, as Trustee (the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Debentures and any
Coupons appertaining thereto and of the terms upon which the Debentures are, and
are to be, authenticated and delivered.
No sinking fund is provided for the Debentures. The Debentures are
subject to redemption, at the option of the Company, as a whole or in part from
time to time, at any time after the second anniversary of the Initial Closing
Date, at a Redemption Price equal to 130% of the principal amount plus accrued
interest to the Redemption Date, and Debentures held by United States Aliens are
also redeemable as a whole, but not in part, under the circumstances described
in the next two succeeding paragraphs, at a Redemption Price equal to 100% of
the principal amount plus interest accrued to the Redemption Date; provided,
however, that interest installments on Debentures maturing on an Interest
Payment Date on or prior to such Redemption Date will be payable only upon
presentation and surrender of Coupons for such interest at an office or agency
outside the United States (except as herein provided otherwise).
If as a result of a Tax Law Change, the Company has or will become
obligated to pay to the Holder of any Debenture or Coupon Additional Amounts, as
described in the second paragraph of the face of this Debenture, and such
obligation cannot be avoided by the Company taking reasonable measures available
to it, then the Company may, at its option, redeem the Debentures as a whole,
but not in part, at a Redemption Price equal to 100% of the principal amount
plus interest accrued to the Redemption Date, but without reduction for any
applicable United States withholding taxes; provided, however, that (i) no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Company would be obligated to pay any such Additional Amounts
were a payment in respect of the Debentures then due and (ii) at the time such
notice of redemption is given, such obligation to pay such Additional Amounts
remains in effect. Prior to the publication of any notice of redemption pursuant
to this paragraph, the Company shall deliver to the Trustee (a) an Officers'
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred and (b) an Opinion of Counsel
selected by the Company to the effect that the Company has or will become
obligated to pay such Additional Amounts as a result of such Tax Law
Change. The Company's
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right to redeem the Debentures shall continue as long as the Company is
obligated to pay such Additional Amounts, notwithstanding that the Company shall
have made payments of Additional Amounts specified in such second paragraph.
In addition, if the Company determines, based upon an Opinion of
Counsel selected by the Company, that as a result of a Tax Law Change, any
payment made outside the United States by the Company or any of its Paying
Agents of the full amount of principal, premium, if any, or interest due with
respect to any Definitive Debenture or Coupon would be subject to any
certification, identification or other information reporting requirement of any
kind, the effect of which requirement is the disclosure by the Company, any
Paying Agent or any governmental authority of the nationality, residence or
identity of a beneficial owner of such Definitive Debenture or Coupon who is a
United States Alien (other than such a requirement (a) which would not be
applicable to a payment made by the Company or any one of its Paying Agents (i)
directly to the beneficial owner or (ii) to any custodian, nominee or other
agent of the beneficial owner, (b) which can be satisfied by the custodian,
nominee or other agent certifying that such beneficial owner is not a United
States Person, provided, that, in each case referred to in clauses (a)(ii) and
(b), payment by such custodian, nominee or agent to such beneficial owner is not
otherwise subject to any such requirement, with respect to the beneficial owner
of such Definitive Debenture), the Company, at its election, will either (x)
redeem the Definitive Debentures, as a whole but not in part, upon not less than
30 nor more than 60 days' notice prior to the Redemption Date, at a Redemption
Price equal to 100% of the principal amount plus interest accrued to the
Redemption Date, or (y) if and so long as the conditions of the fourth paragraph
on the face hereof are satisfied, pay the Additional Amounts specified in such
paragraph.
The Company will make such determination and election and notify the
Trustee and the Paying Agent thereof in writing as soon as practicable, and the
Paying Agent will promptly give notice of such determination in the manner
provided in the following paragraph (the "Determination Notice"), in each case
stating the effective date of such certification, identification or information
reporting requirement, whether the Company will redeem the Debentures or will
pay the Additional Amounts specified in the third paragraph on the face hereof
and (if applicable) the last date by which the redemption of the Debenture must
take place. If the Company elects to redeem the Debentures, such redemption
shall take place on a date, not later than one year after the publication of the
Determination Notice, as the Company elects by notice in writing to the Trustee
and the Paying Agent at least 45 days before the Redemption Date, unless shorter
notice is acceptable to the Trustee. Notwithstanding the foregoing, the Company
will not so redeem the Debentures if the Company, based upon an Opinion of
Counsel selected by the Company subsequently determines, not less than 30 days
prior to the Redemption Date, that subsequent payments would not be subject to
any such requirement, in which case the Company will notify the Trustee in
writing, and the Paying Agent will promptly give notice to the Holders of the
Debentures of that determination and any earlier redemption notice will
thereupon be revoked and of no further effect. If the Company elects as provided
in clause (y) of the immediately preceding paragraph to pay Additional Amounts,
the Company may, as long as
-21-
the Company is obligated to pay such Additional Amounts, subsequently redeem the
Debentures, at any time, as a whole but not in part, upon not less than 30 nor
more than 60 days' notice prior to the Redemption Date, at a Redemption Price
equal to 100% of the principal amount plus interest accrued to the Redemption
Date, but without reduction for applicable United States withholding taxes with
respect to which the Company is obligated to pay Additional Amounts.
Notice of redemption will be given by publication in Authorized
Newspapers in the City of London, England, and, so long as the Debentures are
listed on the Luxembourg Stock Exchange and the rules of such stock exchange
shall so require, in Luxembourg, or, if not practicable in either London,
England, or Luxembourg, elsewhere in any country in Western Europe. Notice to
the Holders will be given at least once not more than 60 nor less than 30 days
prior to the Redemption Date as provided in the Indenture.
If proper notice of redemption shall have been given, and if the
Company shall have deposited with the Trustee or with any Paying Agent (other
than the Company), for the benefit of the Holders of any of the Debentures
called for redemption in whole or in part, funds (to be immediately available
for payment) sufficient to redeem the Debentures to be redeemed on the date
fixed for redemption, at the applicable Redemption Price, together with accrued
and unpaid interest to the date fixed for redemption, then all obligations of
the Company in respect of such Debentures shall cease and be discharged (except
the obligation to issue Conversion Shares (as defined below) upon conversion of
Debentures on or prior to the applicable Redemption Date in accordance with the
terms of this Indenture and the Debentures), and the Holders of such Debentures
shall thereafter be restricted exclusively to such funds for any and all claims
of whatever nature on their part under the Indenture, or in respect of such
Debentures (except with respect to any rights of conversion as above stated).
The Debentures may be converted by Holders thereof, from time to time,
in the minimum principal amount of $10,000 and integral multiples thereof,
commencing 91 days after the Initial Closing Date and on or before the close of
business on the Maturity Date (unless previously redeemed or repurchased), on
written notice to the Company, at the Conversion Price described below (except
that, in respect of any Debenture or Debentures, or portion thereof, called for
redemption before such date or if a Holder thereof has exercised its right to
require the Company to repurchase its Debenture or portion thereof pursuant to
the Indenture, such right shall terminate at the close of business on the
applicable Redemption Date or the Repurchase Date, as the case may be, unless
the Company shall default in making payment due upon redemption or repurchase)
thereof, subject to the terms and provisions of the Indenture, into (a) a whole
number of duly authorized, validly issued, fully paid and non-assessable shares
of Common Stock (the "Conversion Shares") determined by dividing (i) the
aggregate principal amount of the Debentures to be converted by (ii) the
Conversion Price, and (b) an amount of money equal to the value of the
fractional share remainder, if any, resulting from the calculation described in
clause (a) above, to be paid in U.S. dollars based on the Conversion Price per
share.
-22-
"Conversion Price" means, prior to the Reset Conversion Date, $3.75
per share and on and after the Reset Conversion Date, the product of multiplying
(x) the applicable Stock Price Factor, by (y) 90%, provided, however, in no
event will the Conversion Price be less than U.S.$3.65 (the "Floor"), other than
as a result of the operation of the anti-dilution provisions of the Indenture,
regardless of the actual Stock Price Factor; and provided, further, that,
notwithstanding the foregoing, if the exercise price of Warrant A is reduced,
the Floor will be reduced on a dollar-for-dollar basis.
"Stock Price Factor" means the average daily Closing Price Per Share
for the 15 Trading Days immediately preceding the Reset Conversion Date. The
Reset Conversion Date is November 1, 1999.
Debentures may be surrendered for conversion, subject to any
applicable laws and regulations, at the office of the Conversion Agent outside
the United States. Debentures surrendered for conversion must be accompanied by
a duly executed Conversion Notice and all Coupons that mature after the
Conversion Date. Fractional Shares will not be issued upon conversion; in lieu
thereof, the remainder resulting from the conversion calculation shall be paid
in cash in U.S. dollars, based on the Conversion Price per share of Common
Stock. Upon the conversion of a Debenture, the Company will pay the converting
Holder cash (in U.S. dollars) equal to any accrued and unpaid interest on the
Debentures at the time of conversion. Subject to the operation of the adjustment
provisions described below and specified in the Indenture, no payment or
adjustment shall be made for dividends, if any, on shares of Common Stock issued
upon conversion (unless the record date therefor is subsequent to the date of
conversion). In the case of Debentures called for redemption, conversion rights
will expire on the close of business on the Redemption Date.
The Conversion Price shall be subject to adjustment upon the
occurrence of certain enumerated events, including (a) the subdivision or
combination of shares, the payment of a share dividend or distribution or any
reclassification or capital reorganization of the Common Stock; or (b) the
consolidation or merger of the Company with or into any other corporation, or
sale or transfer of all or substantially all of the assets of the Company, (c)
the distribution to holders of shares of Common Stock of evidence of
Indebtedness or assets (other than regularly scheduled cash dividends); and (d)
the sale of shares of Common Stock (or Convertible Securities) at a price per
share less than the then current Conversion Price, subject to certain
exceptions. No adjustment of the Conversion Price is required to be made until
the cumulative adjustments otherwise required to be made amount to 1% of the
Conversion Price as last adjusted.
The Indenture contains covenants restricting the ability of the
Company, subject to certain exceptions and qualifications, to incur additional
indebtedness, pay dividends or make distributions in respect of its capital
stock or purchase its capital stock; create Liens; enter into transactions with
affiliates; or consolidate, merge or sell all or substantially all of its
assets.
-23-
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture,
by either the Trustee or the Holders of at least a 51% in aggregate principal
amount of the Outstanding Debentures.
The Holders of a majority in aggregate principal amount of Outstanding
Debentures, subject to the provisions of the Indenture relating to the duties
and rights of the Trustee, will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
the exercising of any trust or power conferred on the Trustee. However, the
Trustee will have the right to decline to follow any such direction, if the
Trustee determines that the action requested may not be lawfully taken, would
subject the Trustee to liability, or would be unduly prejudicial to the other
Holders. As a prerequisite to taking any such action, the Trustee may require
the Holders requesting the same to provide it with reasonable security or
indemnity against the cost, expenses and liabilities which may be incurred in
connection with such action. The Holders of at least 25% in aggregate principal
amount of Outstanding Debentures may call a meeting of Holders if the Trustee
fails to do so within 10 days after receiving a request that it call such a
meeting.
Title to the Debentures and to the Coupons appertaining thereto will
pass by delivery. The Company, any Paying Agent or Conversion Agent and the
Trustee may (to the fullest extent permitted by applicable laws) deem and treat
the Holder of any Debenture and the Holder of any Coupon as the absolute owner
thereof for all purposes (whether or not the Debenture or a Coupon shall be
overdue and, to the extent permitted by applicable law, notwithstanding any
notice of ownership or writing on the Debenture or Coupon or any notice of
previous loss or theft of the Debenture or Coupon).
With the consent of the Holders (or persons entitled to vote, or to
give consents respecting the same) of not less than a majority in aggregate
principal amount of the Outstanding Debentures, the Company, when authorized by
a Board Resolution, and the Trustee may, from time to time and at any time,
enter into a supplemental indenture for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or of modifying in any manner the rights and
obligations of the Holders of the Debentures, Coupons and of the Company;
provided that, without the consent of the Holders of all Outstanding Debentures,
no such supplemental indenture shall, among other things, (a) extend the fixed
maturity of any Debenture, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any premium
payable at maturity or upon redemption thereof, or (b) modify any of the
provisions of this Indenture with respect to conversion of the Debentures in a
manner adverse to the Holders thereof, or reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture.
-24-
The Company may not enter into any amendment of this Indenture without
the prior written consent of TCK, as long as (i) TCK owns at least 1,000,000
Shares, and (ii) either of Warrant A or Warrant B remains in effect.
Except for liabilities arising under the Securities Act, no recourse
shall be had for the payment of the principal of, premium, if any, or interest
on any Debenture, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or in any supplemental indenture, or in any
Debenture or Coupon or because of the creation of any indebtedness represented
hereby shall be had against any incorporator, stockholder, officer, trustee,
director, past, present or future, as such of the Company or of any predecessor
or successor corporation, whether by virtue of any constitution, statute or rule
of law or equity, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of the Indenture and the issue of the Debentures and Coupons.
In the event of a Change of Control, each Holder shall have the right,
during the 45-day period following receipt of notice of such occurrence, to
require the Company to repurchase all or a portion of such Holder's Debentures
at a cash purchase price equal to the principal amount plus accrued interest to
the Repurchase Date.
A "Change of Control" shall be deemed to have occurred at the time
when a person or "group" [as defined in Section 13(d)(3) of the Exchange Act, as
in effect on the date hereof] (other than the Existing Control Group) shall have
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of more than 50% of the aggregate Voting Stock of the Company, unless such
acquisition shall have been approved by a two-thirds (66 2/3%) majority of the
Continuing Directors of the Company.
The Indenture, each Debenture and each Coupon appertaining thereto
shall be deemed to be a contract made under the laws of the State of New York,
United States of America, and for all purposes shall be governed by and
construed in accordance with the internal substantive laws of such State,
without giving effect to the choice of law rules of such State.
No reference herein to the Indenture and no provisions of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, premium,
if any, and interest on this Debenture at the time and place and at the rate and
in the manner herein prescribed.
All terms used in this Debenture which are defined in the Indenture
have the meanings assigned to them in the Indenture.
-25-
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section XV of the Indenture, the undersigned hereby
elects to have this Debenture (or if less than the full principal amount hereof,
the principal amount set forth below) repurchased by the Company.
2. The undersigned hereby directs the Trustee or Paying Agent to pay to
bearer an amount in cash equal to 100% of the principal amount hereof plus
interest accrued to the Repurchase Date.
Dated: __________ ____________________
Signature
_________________
Signature Guaranteed
Principal amount to be repurchased:*$__________
Remaining principal amount following such repurchase:
_________
* Repurchasable in the minimum principal amount of $10,000 and integral
multiples thereof.
-26-
(b) Form of Global Debenture
KFx INC.
6% CONVERTIBLE DEBENTURES
DUE 2002
ISIN No. XS0078387601
Common Code 7838760
KFx Inc., a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer upon presentation and surrender of this Global Debenture the
principal sum of Seventeen Million United States dollars (U.S.$17,000,000)
(which principal amount may from time to time be increased by adjustment made in
the records of the Trustee or the Authenticating Agent in accordance with the
Indenture, but in no event shall the principal amount as so increased exceed
U.S.$25,000,000 in the aggregate at any time) on the date in the year 2002 which
is five Business Days prior to the Initial Closing Date (the "Maturity Date")
and to pay interest on such principal sum from the Initial Closing Date, or from
the most recent Interest Payment Date (as defined below) to which interest has
been paid or duly provided for, semi-annually in arrears on January 31 and July
31 in each year (an "Interest Payment Date"), commencing January 31, 1998, at
the rate of 6% per annum until the principal hereof and premium, if any, is due,
and at the rate of 8% per annum on any overdue principal and, to the extent
permitted by law, on any overdue interest; provided, however, that interest on
this Global Debenture shall be payable only after the issuance of the Definitive
Debentures for which this Global Debenture is exchangeable and, in the case of a
Definitive Debenture, only upon presentation and surrender (at any office or
agency outside the United States, except as otherwise provided in the Indenture
referred to below) of the interest Coupons attached thereto as they severally
mature.
Each Holder of this Global Debenture, by acceptance hereof, agrees
that transfers of beneficial interests may be effected only through a book entry
system maintained by such Holder (or its agent), and that ownership of a
beneficial interest in this Global Debenture shall be required to be reflected
in a book entry.
This Global Debenture is a duly authorized issue of debentures of the
Company designated as specified in the title hereof, issued and to be issued
under the Indenture, dated as of July 25, 1997 (the "Indenture"), between the
Company and First Bank National Association, doing business as Colorado National
Bank, as Trustee. This Global Debenture is a temporary security and is
exchangeable in whole, but not in part, without charge upon request of the
Holder hereof, for Definitive Debentures, with Coupons attached, of authorized
denominations, (a) not earlier than 40 days following the Final Closing Date and
(b) as promptly as practicable following presentation of certification, in one
of the forms set forth in the Indenture for such purpose, that the beneficial
owners of this Global Debenture, are not United States Persons.
-27-
Definitive Debentures to be delivered in exchange for this Global Debenture
shall be delivered only outside the United States.
Until exchanged in full for Definitive Debentures, this Global
Debenture shall in all respects be entitled to the same benefits under, and
subject to the same terms and conditions of the Indenture as Debentures
authenticated and delivered thereunder, except that neither the Holder hereof
nor the beneficial owners of this Global Debenture shall be entitled to receive
payment of interest or other payments hereon or to convert this Global Debenture
into Common Stock of the Company or any other security, cash or other property.
The Indenture and this Global Debenture shall be deemed to be a
contract made under the laws of the State of New York, United States of America,
and for all purposes shall be governed by and construed in accordance with the
internal substantive law of such State, without giving effect to the choice of
law rules of such State.
All terms used in this Global Debenture which are defined in the
Indenture have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Paying Agent or an Authenticating Agent by the manual signature of one of
its authorized signatories, this Global Debenture shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Global Debenture to be
duly executed under its corporate seal.
Dated as of _______________ 1997
KFx Inc.
[Corporate Seal]
By:___________
Title:
Attest:
__________
Title:
-28-
Section II.3. Form of Coupon.
--------------
[FORM OF FACE]
No. __________
ISIN No. XS0078387601
Common Code 7838760
KFx Inc. U.S.$_________
Due _________, ____
6% CONVERTIBLE DEBENTURE
DUE 2002
Unless the Debenture to which this Coupon appertains shall have been
redeemed, repurchased or converted prior to the date set forth hereon, KFx Inc.
(the "Company") shall, subject to and in accordance with the terms and
conditions of such Debenture and the Indenture referred to therein, pay to the
bearer on the date set forth hereon, upon surrender hereof, the amount shown
hereon at the paying agencies set out on the reverse hereof or at such other
places outside the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas subject
to its jurisdiction as the Company may determine from time to time.
-29-
[REVERSE OF Coupon]
LUXEMBOURG PAYING AGENT, CONVERSION AGENT
AND TRANSFER AGENT:
Banque Internationale A Luxembourg
69, route ▇'▇▇▇▇
▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Section II.4. Form of Certificate of Authentication.
-------------------------------------
The Trustee's certificates of authentication shall be in substantially
the following form:*
This is one of the Debentures referred to in the within-mentioned
Indenture.
First Bank National Association,
doing business as
Colorado National Bank, as Trustee
By: [Name of Authenticating Agent],
as Authenticating Agent]
By:_________
Authorized Signatory
* For the Global Debenture and Definitive Debentures.
Section II.5. Form of Conversion Notice.
-------------------------
CONVERSION NOTICE
The undersigned Holder of this Debenture hereby irrevocably exercises
the option to convert $_____ principal amount of this Debenture into shares of
Common Stock in accordance with the terms of the Indenture referred to in this
Debenture and directs that such shares be registered in the name of and
delivered, together with a check in payment for any fractional share, to the
undersigned unless a different name has been indicated below. The address for
payment of any such check must be outside the United States. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto.
-30-
Dated: _________________ ________________________
Signature
-31-
If shares are to be registered HOLDER
in the name of and delivered
to a Person other than the
Holder, please print such Please print name and
Person's name and address: address of Holder:
______________ ______________
Name Name
______________ ______________
Address Address
______________ ______________
______________ ______________
Social Security or other Social Security or other
Taxpayer Identification Taxpayer Identification
Number, if any Number, if any
Name and address (outside the
United States) to where any
check referred to in the first
paragraph of this Conversion
Notice should be mailed:
______________
Name
______________
Address
______________
Social Security or other
Taxpayer Identification
Number, if any
-32-
Section II.6. Restrictive Legends.
-------------------
Each Definitive Debenture and Global Debenture shall bear the
following legend on the face thereof:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
PURSUANT TO REGULATION S, AN EXEMPTION FROM REGISTRATION PURSUANT TO
THE PROVISIONS UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE SECURITIES EVIDENCED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF
ANY STATE. THESE SECURITIES MAY NOT BE TRANSFERRED, OFFERED OR SOLD
PRIOR TO THE END OF THE FORTY (40)-DAY PERIOD (THE "RESTRICTED
PERIOD") COMMENCING ON THE LATER OF (i) THE DATE THE SECURITIES ARE
FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN
REGULATION S) OR (ii) THE DATE OF THE FINAL CLOSING OF THE OFFERING OF
THE DEBENTURES BY THE COMPANY, UNLESS SUCH TRANSFER, OFFER OR SALE (i)
IS MADE IN AN "OFFSHORE TRANSACTION" AND NOT TO A "U.S. PERSON" (OTHER
THAN A "DISTRIBUTOR") (AS SUCH TERMS ARE DEFINED IN REGULATION S) OR
(ii) IS MADE PURSUANT TO REGISTRATION OR AN APPLICABLE EXEMPTION UNDER
THE SECURITIES ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
CANNOT BE SOLD EXCEPT PURSUANT TO THE TERMS AND CONDITIONS OF THE
DEBENTURE SUBSCRIPTION AGREEMENT BETWEEN THE COMPANY AND THE INITIAL
HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE, A COPY OF
WHICH IS ON FILE AT THE OFFICES OF THE COMPANY."
"BY REQUESTING THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AFTER THE RESTRICTED PERIOD, THE HOLDER OF THIS
CERTIFICATE REPRESENTS THAT IF SUCH TRANSFER IS MADE TO A U.S. PERSON,
THAT AT THE TIME OF SUCH TRANSFER THE HOLDER IS NOT AN "AFFILIATE" OF
THE COMPANY (AS SUCH TERM IS DEFINED IN THE SECURITIES ACT) OR AN
"UNDERWRITER" OR "DEALER" (AS SUCH TERMS ARE DEFINED IN THE ACT), HAS
NOT ENGAGED IN ANY SHORT SALES OR SIMILAR HEDGE TRANSACTIONS WITH
RESPECT TO THE COMPANY'S SHARES OF COMMON STOCK DURING THE RESTRICTED
PERIOD, IS NOT A "DISTRIBUTOR" AND SUCH TRANSFER IS NOT BEING MADE AS
PART OF A PLAN OR SCHEME TO EVADE THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT."
-33-
"ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(j) and 1287(a) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED."
ARTICLE III
THE SECURITIES
Section III.1. Title and Terms.
---------------
The Debentures shall be known and designated as the "6%
Convertible Debentures due 2002" of the Company. The aggregate principal amount
of Debentures which may be authenticated and delivered under this Indenture is
limited to U.S.$25,000,000, except for Debentures authenticated and delivered in
exchange for, or in lieu of, other Debentures pursuant to Sections 3.3, 3.4, 3.5
or 9.5. The Debentures and the Trustee's certificate of authentication will be
substantially in the form set forth in Article II hereof.
Section III.2. Denominations.
-------------
The Definitive Debentures shall be issuable in bearer form, with
interest Coupons attached, in denominations of U.S.$10,000.
Section III.3. Execution, Authentication, Delivery and Dating.
------
The Debentures shall be executed on behalf of the Company by one of
its Officers under a facsimile of its corporate seal reproduced thereon,
attested by its Secretary or one of its Assistant Secretaries. Any such
signature may be manual or facsimile and may be imprinted or otherwise
reproduced on the Debentures.
Debentures bearing the manual or facsimile signature of individuals
who were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debentures executed by the Company to
the Trustee or to its order for authentication or to the Paying Agent, together
with a Company Order for the authentication and delivery of such Debentures, and
the Trustee or an Authenticating Agent, in accordance with such Company Order,
shall authenticate and deliver such Debentures as in this Indenture provided and
not otherwise. In connection with any Company Order for
-34-
authentication, a compliance certificate and Opinion of Counsel pursuant to
Section 16.8 shall not be required.
Each Definitive Debenture and the Global Debenture shall be dated as
of the date of issuance thereof.
No Debenture (or Coupon attached thereto) shall ever be entitled to
any benefit under this Indenture or be valid or obligatory for any purpose
unless there appears on such Debenture a certificate of authentication
substantially in the form provided for in Section 2.4 executed by the Trustee or
an Authenticating Agent by manual signature of an authorized signatory, and such
certificate upon any Debenture shall be conclusive evidence, and the only
evidence, that such Debenture has been duly authenticated and delivered
hereunder. Except as permitted by Section 3.4 or 3.5, neither the Trustee nor an
Authenticating Agent shall authenticate and deliver any Definitive Debenture
unless all Coupons appurtenant thereto for interest then matured have been
detached and cancelled.
In case the Company, pursuant to Article XII, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article XII, any of the Debentures authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Debentures executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Debentures surrendered for such
exchange and of like principal amount; and the Trustee or an Authenticating
Agent, upon request of the successor Person, shall authenticate and deliver
Debentures as specified in such request for the purpose of such exchange.
Section III.4. Global Securities.
-----------------
(a) The Debentures shall be issued initially in the form of one
Global Debenture, which Global Debenture shall be deposited on behalf of the
subscribers for the Debentures represented thereby with Chase Manhattan Bank
Ltd. Global Trust Services, as common depositary (the "Common Depositary"), for
credit to their respective accounts (or to such other accounts as they may
direct) at Euroclear and Cedel. The principal amount of the Global Debenture may
be increased from time to time after the Initial Closing Date by means of
appropriate adjustments made on the records of the Trustee or the Authenticating
Agent, whereupon the Trustee or the Authenticating Agent, in accordance with the
Applicable Procedures, will instruct the Common Depositary or its authorized
representative to make a
-35-
corresponding adjustment to its records, but in no event shall the principal
amount as so increased exceed U.S.$25,000,000 in the aggregate at any time.
On or before the Exchange Date, the Company shall deliver to the
Luxembourg Agent, at its principal office located at 69, rout ▇'▇▇▇▇ ▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, or its designated agent, Definitive Debentures executed by the
Company. On or after the Exchange Date, the Global Debenture shall be
surrendered by the Common Depositary to the Trustee or its agent, as the
Company's agent for such purpose, to be exchanged, for Definitive Debentures,
without charge to Holders, and the Trustee or the Paying Agent or another Paying
Agent outside the United States shall authenticate and deliver (at an office or
agency outside the United States), in exchange for the Global Debenture, an
equal aggregate principal amount of Definitive Debentures, as shall be specified
by the beneficial owners thereof; provided, however, that upon such presentation
by the Common Depositary, the Global Debenture is accompanied by a certificate
dated the Exchange Date or a subsequent date and signed by Euroclear as to the
portion of the Global Debenture held for its account then to be exchanged and a
certificate dated the Exchange Date or a subsequent date and signed by Cedel as
to the portion of the Global Debenture held for its account then to be
exchanged, each to the effect hereinafter provided. The Company hereby appoints
the principal office of the Luxembourg Agent in Luxembourg, or its designated
agent, as its agent outside the United States where Definitive Debentures may be
delivered in exchange for the Global Debenture or portions thereof. Each
beneficial owner of any portion of the Global Debenture shall be entitled to
take delivery of Definitive Debentures only at such office. Notwithstanding any
other provision hereof or of the Debentures, no Debenture initially represented
by the Global Debenture will be mailed to or otherwise delivered in connection
with its original issuance to any location within the United States. The Trustee
agrees that it will cause the Paying Agent to retain each certificate provided
by Euroclear or Cedel for a period of four calendar years following the year in
which the certificate is received and not to destroy or otherwise dispose of any
such certificate without first offering to deliver it to the Company.
The certificates to be provided by Euroclear and Cedel shall be
substantially to the following effect or with such changes therein as shall be
approved by the Company and the Placement Agents and be satisfactory to the
Trustee:
-36-
"CERTIFICATE
KFx Inc.
6% CONVERTIBLE DEBENTURES
DUE 2002
This is to certify that, based on certificates we have received from
our member organizations substantially in the form set out in Section 3.4 of the
Indenture relating to the above-captioned Debentures, as of the date hereof,
U.S.$________ principal amount of the above-captioned Debentures acquired from
KFx Inc. (the "Company") is owned by persons that are not United States Persons
(as defined below).
As used in this Certificate, "United States Person" means (1) any
natural person resident in the United States, (2) any partnership or corporation
organized or incorporated under the laws of the United States, (3) any estate of
which any executor or administrator is a United States Person, (4) any trust of
which any trustee is a United States Person, (5) any agency or branch of a
foreign entity located in the United States, (6) any non-discretionary account
or similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an individual) resident in the United
States and (7) any partnership or corporation if (i) organized or incorporated
under the laws of any foreign jurisdiction and (ii) formed by a United States
Person principally for the purpose of investing in Debentures not registered
under the Securities Act, unless it is organized or incorporated, and owned, by
accredited investors (as defined in Rule 501(a) of the Securities Act) who are
not natural persons, estates or trusts; and "United States" means the United
States of America (including the States thereof and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
We further certify that (i) we are not making available herewith for
exchange any portion of the Global Debenture not included in such certificates
and (ii) as of the date hereof, we have not received any notification from any
of our member organizations to the effect that the statements made by such
member organizations with respect to any portion of the part submitted herewith
for exchange are no longer true and cannot be relied upon as of the date hereof.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings. We
agree to retain each statement provided by a member organization for a period of
four calendar years following the year in which the statement is received.
Dated: _______, 19__*
-37-
*To be dated no earlier
than the Exchange Date
[▇▇▇▇▇▇ GUARANTY TRUST
COMPANY OF NEW YORK, BRUSSELS
OFFICE, AS OPERATOR OF THE
EUROCLEAR CLEARANCE SYSTEM]
[CEDEL BANK SOCIETE ANONYME]
By:_________________
Each certificate received by Euroclear and Cedel from Persons
appearing in their records as Persons entitled to a portion of the Global
Debenture shall be substantially to the effect set forth in Section 3.4(b).
Until exchanged in full, the Global Debenture shall in all respects be
entitled to the same benefits under, and subject to the same terms and
conditions of, this Indenture as Definitive Debentures authenticated and
delivered hereunder, except that none of Euroclear, Cedel or the beneficial
owners of the Global Debenture shall be entitled to receive payment of interest
or other payments thereon or to convert the Global Debenture or any portion
thereof, into Conversion Shares or any other security, cash or other property.
(b) Whenever any provision of this Indenture or the form of Global
Debenture contemplates that certification be given by a beneficial owner of a
portion of the Global Debenture, such certification shall be provided
substantially in the form of the following certificate, with only such changes
as shall be approved by the Company:
"CERTIFICATE
KFx Inc.
6% CONVERTIBLE SUBORDINATED DEBENTURES
DUE 2002
This is to certify that as of the date hereof and except as provided
in the fourth paragraph hereof, the above-captioned Debentures held by you for
our account are owned by a person that is not a United States Person (as defined
below).
As used in this Certificate, "United States Person" means (1) any
natural person resident in the United States, (2) any partnership or corporation
organized or incorporated under the laws of the United States, (3) any estate of
which any executor or administrator is a United
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States Person, (4) any trust of which any trustee is a United States Person, (5)
any agency or branch of a foreign entity located in the United States, (6) any
non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States and (7) any partnership or corporation
if (i) organized or incorporated under the laws of any foreign jurisdiction and
(ii) formed by a United States Person principally for the purpose of investing
in Debentures not registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a) of
the Securities Act) who are not natural persons, estates or trusts; and "United
States" means the United States of America (including the States thereof and the
District of Columbia), its territories, its possessions and other areas subject
to its jurisdiction.
We undertake to advise you by telecopy, on or before the date on which
you intend to submit your certification relating to the above-captioned
Debentures then appearing in your books as being held for our account, if the
above statement as to beneficial ownership is not correct on such date as to all
such Debentures.
This certificate excepts and does not relate to U.S. $________
principal amount of the above-captioned Debentures appearing on your books as
being held for our account as to which we are not yet able to certify and as to
which we understand that exchange and delivery of Definitive Debentures cannot
be made until we are able so to certify.
We understand that this certificate is required in connection with
certain securities laws of the United States. If administrative or legal
proceedings are commenced or threatened
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in connection with which this certificate is or would be relevant, we
irrevocably authorize you to produce this certificate or a copy hereof to any
interested party in such proceedings.
Dated:__________, 19___*
*To be dated on or after
the 15th day before the
Exchange Date
[Name of Account Holder]
___________________________
(Authorized Signatory)
Name:
Title:
(c) Members of, or participants in, Euroclear and Cedel shall have no
rights under this Indenture with respect to any Global Debenture held on their
behalf by the Common Depositary, or under the Global Debenture, and the Common
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of the foregoing. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee, from giving effect to any written
certification, proxy or other authorization furnished by the Common Depositary
or shall impair, as between the Common Depositary and members of, or
participants in, Euroclear and Cedel, the operation of customary practices
governing the exercise of the rights of a Holder of a Debenture.
(d) Transfers of the Global Debenture shall be limited to transfers
of such Global Debenture in whole, but not in part, to the Common Depositary,
its successors or their respective nominees. Interests of beneficial owners in
the Global Debenture may be transferred in accordance with the Applicable
Procedures of the Common Depositary and the provisions of this Section 3.4.
Section III.5. Mutilated, Destroyed, Lost and Stolen Debentures and
--------------
Coupons.
-------
If any mutilated Debenture or a Debenture with a mutilated Coupon
appertaining to it is surrendered to the Trustee or a Transfer Agent outside the
United States, the Company shall execute, the Trustee or an Authenticating Agent
shall authenticate and the Trustee or Transfer Agent shall deliver in exchange
therefor, a new Debenture of like tenor and principal amount and bearing a
number not contemporaneously outstanding, with Coupons corresponding to the
Coupons, if any, appertaining to the surrendered Debenture; provided, however,
that any Definitive Debenture or any Coupon shall be delivered only outside the
United States and, so
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long as the Debentures are listed on the Luxembourg Stock Exchange and the rules
of such Exchange so require, such delivery shall occur at the Transfer Agent in
Luxembourg; and provided, further, that all Definitive Debentures shall be
delivered and received in person.
If the following are delivered to the Company and the Trustee or a
Transfer Agent outside the United States:
(1) evidence to their satisfaction of the destruction, loss or theft
of any Debenture or Coupon, and
(2) such security or indemnity as may be satisfactory to the Company
and the Trustee and such Transfer Agent to save each of them and any agent
of either of them harmless,
then, in the absence of actual notice to the Company, the Trustee or the
Transfer Agent that such Debenture or Coupon has been acquired by a bona fide
purchaser, the Company shall execute, the Trustee or an Authenticating Agent
shall authenticate and the Trustee or Transfer Agent shall deliver, in lieu of
any such destroyed, lost or stolen Debenture or in exchange for the Debenture to
which such Coupon appertains (together with all appurtenant Coupons not
destroyed, lost or stolen), a new Debenture of like tenor and principal amount
and bearing a number not contemporaneously outstanding, with Coupons
corresponding to the Coupons, if any, appertaining to the Debenture to which
such destroyed, lost or stolen Debenture or appertaining to the Debenture to
which such destroyed, lost or stolen Coupon appertains; provided, however, that
any Definitive Debenture or any Coupon shall be delivered only outside the
United States and, so long as the Debentures are listed on the Luxembourg Stock
Exchange and the rules of the Luxembourg Stock Exchange so require, such
delivery shall occur at the Transfer Agent in Luxembourg; and provided, further,
that all Definitive Debentures shall be delivered and received in person.
In case any such mutilated, destroyed, lost or stolen Debenture or
Coupon has become or is about to become due and payable, the Company in its
discretion, but subject to any conversion rights, may, instead of issuing a new
Debenture, pay such Debenture or Coupon, upon satisfaction of the conditions set
forth in the preceding paragraph; provided, however, that except as otherwise
provided in the form of Definitive Debentures set forth in Section 2.2(a), the
principal of and interest on Definitive Debentures shall be payable only at an
office or agency outside the United States and, in the case of interest, only
upon presentation and surrender of the Coupons appertaining thereto.
Upon the issuance of any new Debenture under this Section 3.5, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee, the Paying Agent and
the Transfer Agent) connected therewith.
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Every new Debenture with its Coupons, if any, issued pursuant to this
Section 3.5 in lieu of any destroyed, lost or stolen Debenture or in exchange
for a Debenture to which a destroyed, lost or stolen Coupon appertains, shall
constitute an original additional Contractual Obligation of the Company, whether
or not the destroyed, lost or stolen Debenture and its Coupons, if any, or the
destroyed, lost or stolen Coupon shall be at any time enforceable by anyone, and
such new Debenture and Coupons, if any, shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Debentures and
Coupons duly issued hereunder.
The provisions of this Section 3.5 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures or
Coupons.
Section III.6. Persons Deemed Owners.
---------------------
The Company, the Trustee, the Paying Agent and any agent of the
Company or the Trustee may treat the Person who is the bearer of any Debenture
or Coupon as the owner of such Debenture or Coupon for the purpose of receiving
payment of principal of, premium, if any, and interest on such Debenture and for
all other purposes whatsoever, whether or not such Debenture be overdue, and
none of the Company, the Trustee, the Paying Agent or any agent of the Company
or the Trustee shall be affected by notice to the contrary.
Section III.7. Cancellation.
------------
All Debentures surrendered for payment, redemption, repurchase,
exchange or conversion shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee. All Definitive Debentures and Coupons so
surrendered shall be immediately cancelled by such Person upon receipt prior to
being forwarded to the Trustee. No Debentures shall be authenticated in lieu of
or in exchange for any Debentures cancelled as provided in this Section 3.7,
except as expressly permitted by this Indenture. The cancelled Global Debenture
and certificates referred to in Section 3.4 shall be delivered to the Company.
All cancelled Debentures, Coupons and certificates in connection therewith held
by the Trustee shall be delivered to the Company.
Section III.8. Computation of Interest.
-----------------------
Interest on the Debentures shall be computed on the basis of a 360-day
year of twelve 30-day months.
Section III.9. ISIN, Common Code Or Other Identifying Numbers.
-------
The Company in issuing the Debentures may use "ISIN," "Common Code" or
other identifying numbers (if then generally in use), and the Trustee shall use
ISIN, CUSIP or
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other identifying numbers in notices of redemption and other notices provided
for the benefit of the Holders of Debentures, as a convenience to Holders;
provided that any such notice shall state that no representation is made as to
the correctness of such numbers either as printed on the Debentures or as
contained in any notice of redemption or other notice.
ARTICLE IV
REDEMPTION OF SECURITIES
Section IV.1. Right of Redemption.
-------------------
The Debentures may be redeemed in accordance with the provisions of
the form of Definitive Debenture set forth in Section 2.2.
Section IV.2. Applicability of Article.
------------------------
Redemption of Debentures at the election of the Company, as permitted
by any provision of the Debentures or this Indenture, shall be made in
accordance with such provision and this Article IV.
Section IV.3. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Debentures shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of any of the Debentures, the Company shall at least 30 days (or at
least 45 days in case of a redemption pursuant to the fourth paragraph of the
reverse of the form of Definitive Debentures set forth in Section 2.2(a)) prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date and of the principal amount of Debentures to be redeemed. If the Debentures
are to be redeemed pursuant to an election of the Company which is subject to a
condition specified in the form of Definitive Debenture set forth in Section
2.2(a), the Company shall furnish the Trustee with an Officers' Certificate
stating that the Company is entitled to effect such redemption and setting forth
a statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred.
Section IV.4. Notice of Redemption; Section of Debentures.
----------
Notice of redemption shall be given to the Holders of Debentures to be
redeemed at least 30 days, nor more than 60 days, prior to the Redemption Date,
and (except, in the case of a redemption pursuant to the fourth paragraph of the
forms of the reverse of the Definitive Debenture set forth in Section 2.2(a), to
the extent otherwise expressly provided in such form) such notice shall be
irrevocable.
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All notices of redemption shall state: (a) the Redemption Date; (b)
the Redemption Price; (c) that, on the Redemption Date, the Redemption Price,
and accrued interest, if any, will become due and payable upon each such
Debenture to be redeemed (but only with respect to Debentures with all unmatured
Coupons attached), and that interest thereon shall cease to accrue on and after
such date; (d) the Conversion Price, the date on which the right to convert the
Debentures to be redeemed will terminate and the places where such Debentures,
together with all unmatured Coupons and any matured Coupons in default
appertaining thereto, may be surrendered for conversion; and (e) the place or
places where such Debentures, together with all Coupons appertaining thereto, if
any, maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price and accrued interest, if any; and (f) the serial and ISIN
(if any) numbers of the Debentures to be redeemed and in case of a partial
redemption, the principal amounts of the particular Debentures to be redeemed.
Notice of redemption of Debentures to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name of and at the expense of the Company.
If less than all of the Debentures are to be redeemed, the Company, in
its sole discretion, shall select the particular Debentures or parts thereof so
to be redeemed according to such method as the Company deems fair and
appropriate.
Section IV.5. Deposit of Redemption Price.
---------------------------
One Business Day prior to any Redemption Date, the Company shall
deposit with the Trustee or with the Paying Agent (or, if the Company is acting
as its own Paying Agent, segregate and hold in trust as provided in Section 6.3)
an amount of money (which shall be in immediately available funds on such
Redemption Date) sufficient to pay the Redemption Price of, and (except if the
Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Debentures which are to be redeemed on that date, other than any Debentures
called for redemption on that date which have been converted prior to the date
of such deposit.
If any Debenture called for redemption is converted, any money
deposited with the Trustee or with a Paying Agent or so segregated and held in
trust for the redemption of such Security shall be paid to the Company or, if
then held by the Company, shall be discharged from such trust, upon delivery to
the Trustee of such converted Debentures for cancellation.
Section IV.6. Debentures Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Debentures so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Debentures shall cease to bear interest
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and the Coupons shall, except to the extent provided below, be void. Upon
surrender of any Debenture for redemption in accordance with such notice,
together with all Coupons, if any, appertaining thereto maturing after the
Redemption Date, such Debenture shall be paid by the Company at the Redemption
Price, together with accrued and unpaid interest to the Redemption Date;
provided, however, that installments of interest on Definitive Debentures on or
prior to the Redemption Date shall be payable only upon presentation and
surrender of Coupons for such interest (at an office or agency outside the
United States, except as otherwise provided in the form of Definitive Debenture
set forth in Section 2.2(a)).
If any Debenture called for redemption shall not be paid upon
surrender thereof for redemption, the principal amount of such Debenture shall,
until paid, bear interest from the Redemption Date at a rate of 8% per annum and
each Debenture shall remain convertible into Common Stock until the principal of
such Debenture or portion thereof, as the case may be, shall have been paid or
duly provided for.
If any Definitive Debenture surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Debenture may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons or the surrender of such missing
Coupons may be waived by the Company and the Trustee or the Paying Agent or its
agent, if there be furnished to them such security or indemnity as they may
require to save each of them and any Paying Agent harmless. If thereafter the
Holder of such Debenture shall surrender to any Paying Agent any such missing
Coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that interest represented by Coupons shall be payable only
upon presentation and surrender of those Coupons at an office or agency located
outside of the United States (except as otherwise provided in the form of
Definitive Debenture set forth in Section 2.2(a)).
ARTICLE V
CONVERSION OF DEBENTURES
Section V.1. Conversion Privilege.
--------------------
Subject to and in compliance with the provisions of the form of
Definitive Debenture set forth in Section 2.2(a) and this Article V, at the
option of the Holder thereof, any Definitive Debenture may be converted into
Conversion Shares at the Conversion Price at the time in effect.
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Section V.2. Exercise of Conversion Privilege.
--------------------------------
(a) In order to exercise the conversion privilege, the Holder of any
Definitive Debenture to be converted shall surrender such Debenture, together
with all Coupons that mature after the Conversion Date, at any office or agency
of the Company maintained for that purpose pursuant to Section 6.2, accompanied
by a duly signed conversion notice substantially in the form set forth in
Section 2.5 ("Conversion Notice") stating that the Holder elects to convert such
Debenture or, if less than the entire principal amount thereof is to be
converted, subject to Section 5.2(c), the portion thereof to be converted. If
the Debenture surrendered for conversion shall not be accompanied by all such
Coupons, the surrender of any or all of such missing Coupons may be waived by
the Company by Company Order, if there shall be furnished to the Company and the
Trustee such security or indemnity as they may require to save each of them and
any Paying Agent harmless. Matured Coupons not in default (including Coupons
maturing on the Conversion Date) will be payable against surrender thereof, and
matured Coupons previously surrendered and in default will continue to be
payable, notwithstanding exercise of the conversion privilege by the Holder of
such Debenture. Accrued and unpaid interest on the Debentures surrendered for
conversion through the Conversion Date will be paid in cash as of the Conversion
Date. Except as provided in this paragraph, no cash payment or adjustment shall
be made upon any conversion, in respect of any Debenture (or, subject to Section
5.2(c), part thereof, as the case may be) surrendered for conversion, or on
account of any dividends on the Common Stock issued upon conversion. The
Company's delivery to the Holder of the fixed number of shares of Common Stock
(or a cash adjustment, as provided in this Indenture) into which a Debenture is
convertible will be deemed to satisfy the Company's obligation to pay the
principal amount of the Debenture.
(b) Debentures shall be deemed to have been converted immediately
prior to the close of business on the date of surrender of such Debentures for
conversion in accordance with the foregoing provisions ("Conversion Date") and
at such time the rights of the Holders of such Debentures as Holders shall
cease, and the Person or Persons entitled to receive the Conversion Shares shall
be treated for all purposes as the record holder or holders of such Conversion
Shares at such time. As promptly as practicable on or after the Conversion Date,
the Company shall issue and deliver to the Trustee, for delivery to the Holder,
a certificate or certificates for the number of full Conversion Shares, together
with payment in lieu of any fraction of a share, as provided in this Section
5.2.
(c) In the case of any Debenture which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Debenture or
Debentures of authorized denomination in an aggregate principal amount equal to
the unconverted portion of the principal amount of such Debenture. A Debenture
may be converted in part, but only if it is of a denomination of U.S.$10,000 and
the principal amount of such Debenture both to be converted and to remain
Outstanding after such conversion is to be equal to U.S.$10,000 or any integral
multiple of U.S.$10,000 in excess thereof.
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Section V.3. Fractions of Shares.
-------------------
No fractional Conversion Shares of Common Stock shall be issued upon
conversion of any Debenture. Instead of any fractional Conversion Share which
would otherwise be issuable upon conversion of any Debenture, the Company shall
calculate and pay a cash adjustment in respect of such fraction (calculated to
the nearest 1/100th of a share) in an amount equal to the same fraction of the
Conversion Price per share of Common Stock at the close of business on the
Conversion Date. Such cash payments shall be made to an address outside of the
United States. If more than one Debenture shall be surrendered for conversion
at one time by the same Holder, the number of full shares which shall be
issuable upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Debentures so surrendered for conversion.
Section V.4. Adjustment of Conversion Price.
------------------------------
(a) In case the Company shall pay or make a dividend or other
distribution to all holders of any class of its capital stock in shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day next following the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction, of which the numerator 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 shall be the sum of the numerator
and the total number of shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of business on
the day next following the date fixed for such determination. For the purposes
of this Section 5.4(a), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
(b) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness or assets
(including stock or other securities of the Company or any other issuer, but
excluding any dividend or distribution paid exclusively in cash, any dividend or
distribution referred to in Section 5.4(a)), the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this Section 5.4 by a fraction, of
which the numerator shall be the current market price per share (determined as
provided in Section 5.4(e)) of the Common Stock on the date of such
effectiveness less the then fair market value (each reference to "fair market
value" in this Section 5.4 shall mean fair market value as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Trustee), of the portion of the
evidences of indebtedness or assets so distributed applicable to one share of
Common Stock, and the denominator shall be such current market
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price per share of the Common Stock. Such reduction shall become effective
immediately prior to the opening of business on the day next following the date
fixed for the payment of such distribution.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
in case outstanding shares of Common Stock shall 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 proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(d) If the Company shall issue or sell any shares of Common Stock for
a consideration per share less than the Conversion Price in effect immediately
prior to the time of such issue or sale or for no consideration (excluding any
event set forth in Section 5.4 (a) or (b)), then, forthwith upon such issue or
sale, the Conversion Price shall be reduced to the consideration per share
received by the Company for the shares of Common Stock issued or sold; provided,
however, that the Conversion Price shall not be reduced by reason of the
exercise of any options or warrants to purchase Common Stock which (a) are
outstanding on the date hereof, (b) are acquired pursuant to the exercise of
options which are granted in the future pursuant to a stock option plan which
has been or may be adopted by the Company, or (c) are acquired pursuant to the
exercise of options or warrants granted pursuant to consulting agreements with
the Company or one of its Subsidiaries, provided that such options or warrants
may not represent the right to acquire more than one million shares of Common
Stock in the aggregate and shall have an exercise price equal to not less than
100% of the fair market value of a share of Common Stock on the date of grant.
In no event shall the Exercise Price be adjusted so that the Exercise Price per
share is less than the par value per share of the Common Stock.
For purposes of this Section 5.4(d), the following shall be
applicable:
(1) If the Company shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to purchase,
or any options for the purchase of Common Shares or any stock or securities
convertible into or exchangeable for shares of Common Stock (such convertible or
exchangeable stock or securities being herein called "Convertible Securities"),
whether or not such rights or options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share
for which shares of Common Stock are issuable upon the exercise of such rights
or options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, or plus, in the case of
such
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rights or options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of Common Shares issuable upon the exercise of
such rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or options)
shall be less than the Conversion Price in effect immediately prior to the time
of the granting of such rights or options, as the case may be, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or upon conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options shall be deemed
to be issued as of the date of the issuance of such rights or options and the
reduction set forth in Section 5.4(d) shall be effected as of such date. Except
as provided in subparagraph
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(3), no further adjustment of the Conversion Price shall be made upon the actual
issue of such shares of Common Stock or of such Convertible Securities upon
exercise of such rights or options or upon the actual issue of such shares of
Common Stock upon conversion or exchange of such Convertible Securities.
(2) If the Company shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible Securities, whether
or not the right to exchange or convert thereunder is immediately exercisable,
and the price per share for which shares of Common Stock are issuable upon such
conversion or exchange (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of all such Convertible Securities) shall be
less than the Conversion Price in effect immediately prior to the time of such
issue or sale, then the total maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible Securities shall be deemed
to be issued as of the date of the issuance of such Convertible Securities and
the reduction set forth in Section 5.4(d) shall be effected as of such date;
provided, however, that (a) except as otherwise provided in subparagraph (3), no
further adjustment of the Conversion Price shall be made upon the actual issue
of such shares of Common Stock upon conversion or exchange of such Convertible
Securities, and (b) if any such issue or sale of such Convertible Securities is
made upon exercise of any rights to subscribe for or to purchase or any option
to purchase any such Convertible Securities for which adjustments of the
Conversion Price have been or are to be made pursuant to the provisions of
subparagraph (1), no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.
(3) Upon the happening of any of the following events, namely, if the
purchase price provided for in any right or option referred to in subparagraph
(1), or the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraphs (1) or (2),
or the rate at which any Convertible Securities referred to in subparagraph (1)
or (2) are convertible into or exchangeable for shares of Common Stock, shall
change (other than under or by reason of provisions designed to protect against
dilution), the Conversion Price then in effect hereunder shall forthwith be
readjusted (increased or decreased, as the case may be) to the Conversion Price
which would have been in effect at such time had such rights, options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at the
time they had initially been granted, issued or sold. On the expiration of any
such option or right referred to in subparagraph (1), or the termination of any
such right to convert or exchange any such Convertible Securities referred to in
subparagraphs (1) or (2), the Conversion Price then in effect hereunder shall
forthwith be readjusted (increased or decreased, as the case may be) to the
Conversion Price which would have been in effect at the time of such expiration
or termination had such right, option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never been
granted, issued or sold, and the shares of Common
-50-
Stock issuable thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any such right or option referred to in
subparagraph (1), or the rate at which any Convertible Securities referred to in
subparagraphs (1) or (2) are convertible into or exchangeable for shares of
Common Stock, shall be reduced at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of the
delivery of shares of Common Stock upon the exercise of any such right or option
or upon conversion or exchange of any such Convertible Securities, the
Conversion Price then in effect hereunder shall, if not already adjusted,
forthwith be adjusted to such amount as would have been obtained had such right,
option or Convertible Securities never been issued as to such shares of Common
Stock and had adjustments been made upon the issuance of such shares of Common
Stock delivered as aforesaid, but only if as a result of such adjustment the
Conversion Price then in effect hereunder is thereby reduced.
Notwithstanding the foregoing, if an adjustment has been made to the
Conversion Price as a result of the issuance of any class of rights, options or
Convertible Securities, and a portion of such class has been exercised,
converted or exchanged, then no increase in the Conversion Price shall be made
by reason of a subsequent change in the purchase price, or conversion rate, as
the case may be, or the expiration, of any such rights, options or Convertible
Securities remaining outstanding.
(4) In case at any time shares of Common Stock or Convertible
Securities or any rights or options to purchase any such shares of Common Stock
or Convertible Securities shall be issued or sold for cash, the consideration
therefor. In case at any time any shares of Common Stock, Convertible Securities
or any rights or options to purchase any such shares of Common Stock or
Convertible Securities shall be issued or sold for consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration, as determined
reasonably and in good faith by the Board of Directors. In case at any time any
shares of Common Stock, Convertible Securities or any rights or options to
purchase any shares of Common Stock or Convertible Securities shall be issued in
connection with any merger or consolidation in which the Company is the
surviving corporation, the amount of consideration received therefor shall be
deemed to be the fair market value, of such portion of the assets and business
of the nonsurviving corporation as the Board of Directors may determine to be
attributable to such shares of Common Stock, Convertible Securities, rights or
options, as the case may be. In case at any time any rights or options to
purchase any shares of Common Stock or Convertible Securities shall be issued in
connection with the issue and sale of other securities of the Company, together
comprising one integral transaction in which no consideration is allocated to
such rights or options by the parties thereto, such rights or options shall be
deemed to have been issued without consideration; and if a specific amount of
consideration is allocated to such rights or options, such rights or options
shall be deemed to have been issued for such consideration. In the event of any
consolidation or merger of the Company in which stock or securities of another
corporation are issued in exchange for Common Stock of the Company or in the
event of any sale of all or substantially all of the assets of the Company in
exchange for stock or other securities of another corporation, the Company shall
be
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deemed to have issued a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for a consideration equal to
the fair market value on the date of such transaction of such stock or
securities of the other corporation, as determined in good faith by the Board of
Directors, and if any such calculation results in adjustment of the Conversion
Price, the determination of the number of Conversion Shares receivable upon
conversion of this Debenture immediately prior to such merger, consolidation or
sale, for purposes of Section 5.4, shall be made after giving effect to such
adjustment of the Conversion Price.
(5) In case the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in shares of Common Stock or Convertible
Securities, or (ii) to subscribe for or purchase shares of Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock or Convertible Securities deemed
to have been issued or sold as a result of the declaration of such dividend or
the making of such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
(e) For the purpose of any computation under Section 5.4(b), the
"current market price per share" of Common Stock on any date shall be calculated
by the Company and be deemed to be the average of the daily Closing Price Per
Share for each of the five consecutive Trading Days selected by the Company
commencing not more than 10 Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex date" with respect to
the issuance or distribution requiring such computation. For purposes of this
paragraph, the term "ex date", when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades in a regular
way on the applicable securities exchange or in the applicable securities market
without the right to receive such issuance or distribution.
(f) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in the Conversion Price; provided, however, that any adjustments which by
reason of this paragraph (f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
-52-
Section V.5. Notice of Adjustments of Conversion Price.
-----
Whenever the Conversion Price is adjusted as herein provided, the
Company shall compute the adjusted Conversion Price in accordance with Section
5.4 and shall prepare a certificate signed by the chief financial officer of the
Company setting forth the adjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment is based, and such certificate shall
promptly be delivered to the Trustee and the Conversion Agent, and the Company
shall cause notice thereof to be published in accordance with Section 16.5
within 10 Business Days after the effective date of such adjustment.
Section V.6. Notice of Certain Corporate Action.
----------------------------------
In the event:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than exclusively in cash; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, warrants or options to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of (1) any reclassification of the Common Stock of the Company,
(2) any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or (3) the sale or
other disposition of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; o r
(e) the Company or any Subsidiary of the Company shall commence a
tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer);
then, the Company shall cause to be mailed to the Conversion Agent and to be
published in the manner provided under Section 16.5 hereof within 10 Business
Days after the date on which notice is sent to the holders of the Company's
Common Stock, a notice stating (i) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, warrants or
options, 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,
warrants or options are to be determined, or (ii) the date on which such
reclassification, consolidation, merger, sale or other disposition, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such
-53-
reclassification, consolidation, merger, sale or other disposition, dissolution,
liquidation or winding up, or (iii) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire unless
extended, the consideration offered and the other material terms thereof (or the
material terms of any amendment thereto).
Section V.7. Company to Reserve Common Stock. The Company shall at all
-------------------------------
times reserve and keep available, free from preemptive rights, out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
conversion of Debentures, the full number of shares then issuable upon the
conversion in full of all Outstanding Debentures.
Section V.8. Taxes on Conversions.
--------------------
The Company will pay any and all taxes that may be payable in respect
of the issue or delivery of Conversion Shares pursuant hereto. The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of Conversion Shares in a name other
than that of the Holder of the Debentures to be converted, and no such issue or
delivery shall be made unless and until the Person requesting such issue has
paid to the Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
Section V.9. Cancellation of Converted Definitive Debentures.
----------
All Definitive Debentures delivered for conversion to the Conversion
Agent shall be cancelled by the Company, and shall not under any circumstances
be reissued.
Section V.10. Provisions in Case of Reclassification, Consolidation,
--------------
Merger or Sale of Assets.
------------------------
In the case of any capital reorganization or any reclassification of
the Common Stock, or in the case of the consolidation or merger of the Company
with or into any other corporation or in case of any sale or transfer of all or
substantially all of the assets of the Company as may be permitted by the
provisions hereof, each Holder of any Outstanding Debentures shall have the
right thereafter to convert the principal amount of each such Debenture into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company into
which such Debenture might have been converted immediately prior to such
reorganization, reclassification, consolidation, merger, sale or transfer; and,
in any such case, appropriate adjustment (as determined in good faith by the
Board of Directors of the Company) shall be made in the application of the
provisions of this Article V (including provisions with regard to the adjustment
of the Conversion Price) in order that the rights and interests of the holders
thereafter shall be as nearly equivalent as may be practicable to the rights and
interests provided for in this Article V.
-54-
In case of any consolidation or merger of the Company with or into any
other corporation (other than a consolidation or merger in which the Company is
the continuing corporation), or in case of any sale or transfer of all or
substantially all of the assets of the Company, the corporation formed by such
consolidation or the corporation into which the Company shall have been merged
or the corporation which shall have acquired such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture providing for
the rights of the Holders as set forth in the preceding paragraph.
Neither the Trustee, any Paying Agent nor any Conversion Agent shall
be under any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the kind or
amount of shares of stock or other securities or property or cash receivable by
Holders of Debentures upon the conversion of their Debentures after any such
consolidation, merger, conveyance, transfer, sale or lease or to any such
adjustment, but may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, an Opinion of Counsel with
respect thereto, which the Company shall cause to be furnished to the Trustee
upon request.
-55-
ARTICLE VI
COVENANTS
The Company covenants that so long as the Debentures are Outstanding:
Section VI.1. Payment of Principal and Interest on Debentures.
----------
The Company will duly and punctually pay, or cause to be paid, the
principal of, premium, if any, and interest on each of the Debentures at the
time and place and in the manner provided in the Debentures, the Coupons and
this Indenture. The interest due on the Debentures on or before the Maturity
Date, other than Additional Amounts payable as provided in Section 6.4 in
respect of principal of such a Debenture, shall be payable only upon
presentation and surrender of the Coupons for such interest installments as they
mature. The Company will deposit, or cause to be deposited, with the Trustee or
a Paying Agent, one Business Day prior to the Maturity Date of any Debenture and
one Business Day prior to the Interest Payment Date for any installment of
interest, all payments so due, which payments shall be in immediately available
funds on the Maturity Date or Interest Payment Date, as the case may be.
Section VI.2. Maintenance of Offices for Agencies.
-----------------------------------
The Company hereby appoints (a) the Corporate Trust Office of the
Trustee as its agent where Debentures and Coupons may be presented or
surrendered for payment in the circumstances described below (and not
otherwise), where Debentures may be surrendered for conversion in the
circumstances described below (and not otherwise) and where notices and demands
to or upon the Company in respect of the Debentures and Coupons and this
Indenture may be served, and (b) the principal office of the Luxembourg Agent as
its agent outside of the United States where, subject to any applicable laws or
regulations, Debentures and Coupons may be presented and surrendered for
payment, and where Debentures may be surrendered for conversion. As provided in
the form of Definitive Debentures set forth in Section 2.2(a), payment of
principal of or interest on Definitive Debentures, including any Additional
Amounts payable on Definitive Debentures pursuant to the provisions of the form
of Definitive Debenture set forth in Section 2.2(a), may be made, and Definitive
Debentures may be surrendered for conversion, at the Corporate Trust Office of
the Trustee if (but only if) payment of the full amount of such principal,
interest or Additional Amounts, or surrender of Definitive Debentures for
conversion, as the case may be, at all offices outside the United States
maintained for such purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or other similar
restrictions on the full payment or receipt of such amounts in United States
Dollars, as determined by the Company.
The Company may at any time and from time to time vary or terminate
the appointment of any such agent or appoint any additional agents for any or
all of such purposes; provided, however, that until all of the Debentures have
been delivered to the Trustee for
-56-
cancellation, or moneys sufficient to pay the principal of and interest on the
Debentures have been made available for payment and either paid or returned to
the Company pursuant to the provisions of Section 6.3, the Company will maintain
(1) in the City of Denver, Colorado, an office or agency where Definitive
Debentures and Coupons may be presented or surrendered for payment, where
Debentures may be surrendered for exchange or conversion in the circumstances
described in the last sentence of the first paragraph of this Section 6.2 (and
not otherwise), and where notices and demands to or upon the Company in respect
of the Debentures and Coupons and this Indenture may be served, and (2) subject
to any laws or regulations applicable thereto, in any city in a Western European
country, an office or agency where Debentures and Coupons may be presented and
surrendered for payment, where Debentures may be presented for exchange or
conversion; and provided, further, that so long as the Debentures are listed on
the Luxembourg Stock Exchange and the rules of such stock exchange shall so
require, the Company will maintain a Paying Agent and Conversion Agent in
Luxembourg. The Company will give prompt written notice to the Trustee, and
notice to the Holders in accordance with Section 16.5, of the appointment or
termination of any such agents and of the location and any change in the
location of any such office or agency.
If at any time the Company shall fail to maintain any such required
office or agency, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made and notices and demands may be served
on the Corporate Trust Office of the Trustee, except that Definitive Debentures
and Coupons may be presented and surrendered for payment and conversion to the
Paying Agent at its office in Luxembourg, Duchy of Luxembourg, or other Paying
Agent or Conversion Agent outside the United States, and the Company hereby
appoints the Paying Agent as its agent to receive such respective presentations,
surrenders, notices and demands.
Section VI.3. Money for Payments to Be Held in Trust.
--------------------------------------
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of, premium, if any, or interest on
any of the Debentures and Coupons, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal, premium,
if any, or interest so becoming due until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and will promptly notify the
Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Debentures, it will, on the Business Day immediately preceding each due date of
the principal of or interest on the Debentures, deposit with a Paying Agent a
sum sufficient to pay the principal, premium, if any, or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium, if any, or interest, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of such action or any
failure so to act.
-57-
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
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 Debenture and remaining unclaimed for two years after such
principal or interest has become due and payable shall be paid to the Company on
Company Request, or (if then held by the Company) shall be discharged from such
trust; and the Holder of such Debenture shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease.
Section VI.4. Taxes, Assessments, Governmental Charges and Certain
-----------
Claims.
------
The Company will pay and discharge, and shall cause each Subsidiary to
pay and discharge, before the same become in default, (a) all Taxes imposed upon
it or its income or profits or upon any of its assets or any part thereof and
(b) all lawful claims against it for labor, materials and supplies or otherwise,
which if unpaid might become a Lien on such assets or any part thereof or
otherwise, excluding any such Tax or claim, the amount, applicability or
validity of which is being timely contested in good faith by appropriate
proceedings.
Section VI.5. Reporting Requirements.
----------------------
The Company shall deliver to the Trustee:
(a) copies of information, documents and reports as described
in, and in accordance with, Section 6.18; and
(b) promptly upon the Company obtaining knowledge of (1) an
Event of Default or Default, an Officer's Certificate specifying in reasonable
detail the nature and period of existence thereof and what action the Company
proposes to take with respect thereto or (2) a material adverse change in the
financial condition or operation of the Company and its Subsidiaries, an
Officer's Certificate setting forth in reasonable detail the nature and amount
of such change and the action the Company proposes to take with respect thereto.
Section VI.6. Books and Records.
-----------------
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The Company shall, and shall cause each of its Subsidiaries to, keep
its books, records and accounts in accordance with GAAP applied on a basis
consistent with preceding years.
Section VI.7. Maintenance of Insurance.
------------------------
The Company shall maintain, and shall cause each Subsidiary to
maintain, with financially sound and responsible insurers, insurance with
respect to its properties and business against such casualties and contingencies
and in such amounts as are customary in the case of similarly situated
corporations engaged in the same or similar businesses.
Section VI.8. Maintenance of Corporate Existence, Properties, Etc.
----------------
Except to the extent otherwise permitted by this Indenture, the
Company shall, and shall cause each Subsidiary to, (i) do or cause or cause to
be done all things reasonably necessary to preserve, renew and keep in full
force and effect its corporate existence,(ii) at all times maintain, preserve
and protect all of its patents, trademarks, service marks, trade names, service
names, copyrights, licenses, permits, franchises and other rights, including
distributorship and franchise agreements, that continue to be useful in some
material respect to its business, and (iii) preserve all the remainder of its
property useful in the conduct of its business and keep the same in good repair,
working order and condition (ordinary wear and tear excepted), and from time to
time, make, or cause to be made, all needful and proper repairs, renewals,
replacements, betterments and improvements thereto so that the business carried
on in connection therewith may be properly and advantageously conducted at all
times; provided, that nothing in this Section 6.8 shall prevent the Company or
any Subsidiary from discontinuing the use, operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance or disposal
is, in the judgment of the Board of Directors or the board of directors of such
Subsidiary, or of any executive officer of the Company or such Subsidiary, as
applicable, having managerial responsibility for any such property, desirable in
the conduct of the business of the Company or such Subsidiary.
Section VI.9. Type of Business.
----------------
The Company shall, and shall cause each Subsidiary to, remain in
substantially the same businesses in which the Company and its Subsidiaries are
engaged as of the date of this Indenture or in such other types of businesses
that are reasonably related or incidental thereto.
Section VI.10. Merger or Sale of Assets.
------------------------
The Company shall not, and shall not permit any Subsidiary to, merge,
consolidate or exchange shares with any other corporation, or sell, lease or
transfer or otherwise dispose of any of its assets to any Person, other than
sales, leases, transfers or other dispositions
-59-
of inventory in the ordinary course of business or particular items of obsolete
or unnecessary equipment in the ordinary course of business, except
(a) any Subsidiary may merge or consolidate with the Company;
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of
all or substantially all of its assets to the Company or another Subsidiary;
(c) the Company or a Subsidiary may enter into one or more
transactions constituting Strategic Alliances; and
(d) as otherwise permitted by this Indenture; and
(e) the Company may allow TCK to increase the percentage of its
ownership of Common Stock pursuant to Warrant A and another warrant ("Warrant
B") issued to TCK by the Company.
Section VI.11. Investments.
-----------
The Company shall not, and shall not permit any Subsidiary to, make or
have outstanding any loan or advance to, or own, purchase or acquire any
obligations (other than accounts receivable generated in the ordinary course of
business) or Securities of, or any interest in, or make any capital contribution
to or acquire all or substantially all of the assets of, any other Person, other
than to: (a) acquire and own obligations or Securities received in settlement of
debt created in the ordinary course of business that is owing to the Company or
such Subsidiary; (b) own, purchase or acquire (i) commercial paper, banker's
acceptances or certificates of deposit issued by any United States commercial
bank having a combined capital and surplus of at least $500 million or enter
into repurchase agreements with such banks with respect to obligations described
in this clause (b)(i), (ii) commercial paper of reputable issuers located in the
United States, which obligations have a short-term rating of A-1 or better by
Standard & Poor's Corporation or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc., (iii)
obligations of the United States government or any agency thereof, (iv)
obligations guaranteed by the United States government or any agency thereof, in
each case such obligations described in this clause (b) to be due within 270
days from the date of acquisition, and (v) shares of open end management
companies registered under the Investment Company Act of 1940, commonly known as
mutual funds or money market funds that invest solely in obligations of the
types described earlier in this clause (b), if the shares thereof are redeemable
at net asset value at any time; (c) endorse negotiable instruments for
collection or deposit in the ordinary course of business; (d) own stock of
Subsidiaries; (e) acquire all or any portion of the assets, Securities or other
ownership interests of any other Person in a transaction constituting a
Strategic Alliance; and (f) redemption of the Debentures as permitted by this
Indenture.
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Section VI.12. Use of Proceeds.
---------------
The Company shall use the proceeds from the sale of the Debentures as
specified in the Offering Memorandum pursuant to which the Debentures were
offered for sale.
Section VI.13. Dividends, Etc.
---------------
The Company will not declare or pay any dividend on its capital stock
(other than stock dividends), and the Company will not, and will not permit any
Subsidiary to, except as expressly permitted by this Indenture, purchase,
redeem, retire or acquire any capital stock, convertible securities or
subordinated debt of the Company or such Subsidiary or another Subsidiary or any
option, warrant or other right to acquire any such capital stock, convertible
securities or subordinated debt.
Section VI.14. Additional Indebtedness.
-----------------------
The Company will not, and will not permit any Subsidiary, to in any
way, directly or indirectly, create, incur, assume, guaranty, suffer to exist,
agree to purchase or repurchase, pay or provide funds in respect of, or
otherwise become, be or remain liable, contingently, directly or indirectly,
with respect to any Indebtedness, except, without duplication, (a) the
Debentures; (b) unsecured Indebtedness of the Company and its Subsidiaries on a
consolidated basis, not to exceed the difference, if any, between the $25
million and the aggregate principal amount of the Debentures at the time
Outstanding; (c) Project Finance Indebtedness; and (d) Indebtedness in an amount
sufficient to redeem all Outstanding Debentures in the event the Company elects
to effect such redemption by reason of a Tax Law Change.
Section VI.15. Limitation on Liens.
-------------------
The Company will not, and will not permit any Subsidiary to, create,
incur, assume or permit to exist any Lien on any asset of the Company or such
Subsidiary or on any income or profits of the Company or such Subsidiary, except
for Permitted Liens.
Section VI.16. Compliance with Laws, Etc.
--------------------------
The Company will comply, and will cause each of its Subsidiaries to
comply, in all material respects, with all Requirements of Law and Contractual
Obligations applicable to or binding upon any of them.
Section VI.17. Reports from the Company.
------------------------
(a) The Company will file with the Trustee within 15 days
after the date by which the Company is required to file the same with the
Commission (including any extension of time to which the Company is entitled),
copies of the annual reports and of the
-61-
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
such sections, then to file with the Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which may
be required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company will file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
Section VI.18. Registration and Listing.
------------------------
Within a reasonable time after the issuance of the Global Debenture
(not to exceed 45 days from the date of the final closing of the offering of the
Debenture pursuant to the Offering Memorandum), the Company (a) will effect all
registrations with, and obtain all approvals by, all governmental authorities
that may be necessary under applicable United States Federal or state law
(including the Securities Act, the Exchange Act and state securities and blue
sky laws) before the shares of Common Stock issuable upon conversion of the
Debentures may be lawfully issued and delivered, and thereafter publicly traded
(if permissible under the Securities Act), and qualified or listed as
contemplated by clause (b); and (b) will list the shares of Common Stock
required to be issued and delivered upon conversion of the Debentures prior to
such issuance or delivery on each national securities exchange on which
outstanding Common Stock is listed at the time of such delivery and if
outstanding Common Stock is not listed on any national securities exchange or is
not so qualified at the time of such delivery, to use its reasonable best
efforts to qualify such shares prior to such delivery for quotation through the
NASDAQ National Market System.
-62-
Section VI.19. Statement by Officers as to Default.
-----------------------------------
The Company will deliver to the Trustee within 120 days after the end
of each fiscal year, an Officers' Certificate stating (a) that in the course of
performing by the signers duties as such officers of the Company, they would
normally obtain knowledge of (i) whether or not any Default exists in the
performance and observation of any terms, provisions and conditions of this
Indenture and (ii) whether or not the Company has otherwise kept, observed,
performed and fulfilled its obligations under this Indenture in all material
respects; (b) to the knowledge of such officers, as of the date of such
Officers' Certificate, (i) whether or not any Default exists, (ii) whether or
not the Company during the preceding fiscal year kept, observed, performed and
fulfilled, in all material respects, each and every covenant and obligation of
the Company under this Indenture; and (c) whether or not there was any Default
in the performance and observance by the Company of any of the terms, provisions
or conditions of this Indenture during such preceding fiscal year. If the
officers signing the Officers' Certificate know of such a Default, whether then
existing or occurring during such preceding fiscal year, the Officers'
Certificate shall describe such Default and its status with particularity. The
Company shall also promptly notify the Trustee if the Company's fiscal year is
changed so that the end thereof is on any date other than the then current
fiscal year end date. For purposes of this Section 6.20, such compliance shall
be determined without regard to any period of grace granted by the Trustee or
requirement of notice under this Indenture. Notwithstanding the foregoing, the
Company will deliver to the Trustee, within fifteen Business Days after becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
with particularity such Default or Event of Default and further stating what
action the Company has taken or is taking or proposes to take with respect
thereto.
Section VI.20. Additional Amounts.
------------------
The Company will pay to the Holder of any Debenture or any Coupon
appertaining thereto Additional Amounts as provided in the form of Definitive
Debenture set forth in Section 2.2(a). Whenever in this Indenture there is a
reference, in any context, to the payment of the principal of, premium, if any,
or interest on, or in respect of, any Debenture or any Coupon, such reference
shall be deemed to include the payment of Additional Amounts provided for in
this Section 6.21 to the extent that, in such context, Additional Amounts are,
were or would be paying in respect thereof pursuant to the provisions of this
Section 6.21, and express reference to the payment of Additional Amounts (if
applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express reference is
not made.
At least 10 days prior to the Exchange Date, or an earlier Redemption
Date (and at least 10 days prior to each date of payment of principal, premium,
if any, or interest after the Exchange Date, or an earlier Redemption Date or
Repurchase Date, if there has been any change with respect to the matters set
forth in the Officers' Certificate referred to below), the Company
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will furnish the Trustee and any Paying Agents, with an Officers' Certificate
instructing the Trustee and such Paying Agents whether such payment of principal
of, premium, if any, or interest on the Debentures shall be made to Holders of
Debentures or Coupons who are not United States Persons without withholding for
or on account of any tax, assessment or other governmental charge described in
the second paragraph of the face of the form of Definitive Debenture set forth
in Section 2.2(a). If any such withholding shall be required, then such
Officers' Certificate shall specify by country the amount, if any, required to
be withheld on such payments to such Holders of Debentures or Coupons and the
Company will pay to the Trustee or the Paying Agent the Additional Amounts
required by this Section to be paid in the event of any such withholding. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against any loss, liability or expense arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished pursuant to this Section, except to the extent
such loss, liability or expense is attributable to the Trustee's negligence or
bad faith.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND HOLDER of DEBENTURES
ON EVENT OF DEFAULT
Section VII.1. Events of Default Defined.
-------------------------
An Event of Default Occurs if:
(a) default for 30 days in the due and punctual payment of
any installment of interest (including any Additional Amount) upon any of the
Debentures as and when the same shall become due and payable; or
(b) default in the due and punctual payment of the
principal of, and premium, if any, on, any of the Debentures as and when the
same shall become due and payable either at maturity, upon redemption, by
declaration as authorized by this Indenture, or otherwise; or
(c) failure on the part of the Company to observe or
perform any of the covenants or agreements on the part of the Company in the
Debentures or in this Indenture, not otherwise referred to in another paragraph
of this Section 7.1, after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company by the
Trustee or to the Trustee and the Company by the Holders of at least 25% in
aggregate principal amount of the then Outstanding Debentures; or
(d) a material default shall occur under (i) any bond,
debenture, note or other evidence of Indebtedness by the Company or a Subsidiary
or (ii) any mortgage, indenture, credit or loan agreement or other instrument
under which there
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may be issued or by which there may be secured or evidenced any Indebtedness by
the Company or such Subsidiary, whether such Indebtedness now exists or shall
hereafter be created, which default shall constitute a failure to pay any
portion of the principal of, premium, if any, and interest on such Indebtedness
when due and payable after the expiration of any applicable grace period with
respect thereto, or a default shall occur in the performance of any other
covenant or condition contained in any such evidence of Indebtedness or
mortgage, indenture, credit or loan agreement or other instrument if the effect
of such default is to entitle (after giving effect to any applicable notice or
applicable cure rights) the holder of such evidence of indebtedness or creditor
(or a trustee for such holders or creditors) to then cause such Indebtedness to
become due prior to its stated maturity, or if such default shall have resulted
in such indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without such
Indebtedness having been discharged; or
(e) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against the
Company and/or any Subsidiary and such judgment or judgments remain unstayed or
undischarged for a period of 60 days, provided that the aggregate of all such
judgments exceeds U.S.$1,000,000; or
(f) the Company or a Subsidiary shall (1) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of the Company or any such Subsidiary or of all
or a substantial part of the property of the Company or any such Subsidiary, (2)
admit in writing the inability of the Company or any such Subsidiary, or be
generally unable, to pay its debts as such debts become due, (3) make a general
assignment for the benefit of its creditors, (4) commence a voluntary case under
the Bankruptcy Code (as now or hereafter in effect), (5) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, (6) fail to
controvert in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against such Person in an involuntary case under the Bankruptcy
Code or other similar law, or (7) take any action for the purpose of effecting
any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application of the Company or any Subsidiary, in any court of competent
jurisdiction, seeking (1) the liquidation, reorganization, dissolution, winding-
up or composition or readjustment of debts of the Company or any such
Subsidiary, (2) the appointment of a trustee, receiver, custodian, liquidator or
the like of the Company or any such Subsidiary or of all or any substantial part
of the assets of the Company or any such Subsidiary, or (3) similar relief in
respect of the Company or any such Subsidiary, under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition and adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue in effect, for a period of 60 days from commencement of such
proceeding or case or the date of such order, judgment or decree, or any order
for relief against the Company or any such Subsidiary shall be entered in an
involuntary case or proceeding under the Bankruptcy Code; or
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(h) any material provision of any Debenture, any Coupon or
this Indenture shall at any time for any reason cease to be valid and binding in
accordance with its terms on the Company, or the validity or enforceability
thereof shall be contested by the Company, or the Company shall terminate or
repudiate (or attempt to terminate or repudiate) any Debenture, Coupon or this
Indenture; or
(i) any representation, warranty or statement made by the
Company in any certificate, report, financial statement or other document
furnished to the Trustee or any Holder of a Debenture or Coupon pursuant to this
Indenture shall be false or misleading in any material respect on the date as of
which made or deemed made;
then and in each and every such case (other than an Event of Default specified
in Section 7.1(f) and (g)), unless the principal of all the Debentures shall
have already become due and payable, either the Trustee or the holders of at
least 51% in aggregate principal amount of the Outstanding Debentures hereunder,
by notice in writing to the Company (and to the Trustee if given by the Holders
of Debentures), may declare the principal of and interest accrued on all the
Debentures then outstanding to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything in this Indenture or in such Debentures contained to the contrary
notwithstanding. If an Event of Default specified in Sections 7.1(f) or (g)
occurs, all unpaid principal, premium and interest on all the Debentures then
outstanding shall ipso facto become and shall be immediately due and payable
----------
without any declaration or other act on the part of the Trustee or any Holders
of Debentures.
This provision is subject to the condition that if, at any time after
the principal of and interest accrued on the Debentures shall have been so
declared due and payable, but before the Debentures shall have become due by
their terms and before any judgment or decree for the payment of the moneys due
shall have been obtained or entered as hereinafter provided, the Company shall
pay or shall deposit with the Trustee a sum of money sufficient to pay all
matured installments of interest upon all the Debentures then outstanding and
the principal of any and all Debentures then outstanding that shall have become
due otherwise than by declaration (with interest upon such principal and, to the
extent that payment of such interest is enforceable under applicable law, upon
overdue installments of interest, at the rate per annum expressed in all
Debentures to the date of such payment or deposit) and all amounts payable to
the Trustee under Section 8.6, and any and all defaults under the Indenture,
other than the nonpayment of principal and interest on Debentures then
outstanding that shall not have become due by their terms, shall have been
remedied or provision shall have been made therefor to the satisfaction of the
Trustee, then and in every such case the holders of a majority in aggregate
principal amount of the Outstanding Debentures, by written notice to the Company
and to the Trustee, may waive all defaults and rescind and annul such
declaration and its consequences; but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
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In case the Trustee or any Holder of a Debenture shall have proceeded
to enforce any right under this Indenture and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment or for any
other reason or shall have been determined adversely to the Trustee or such
Holder, then, and in every such case, the Company, Trustee and the Holder of
Debentures shall be restored severally and respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company, the Trustee and the Holders of Debentures shall continue as though no
such proceedings had been taken.
Section VII.2. Covenant of Company to Pay to Trustee Whole Amount Due
on Debentures on Default in Payment of Interest,
Principal or Premium.
--------------------
The Company covenants that (1) in case default shall be made in the
payment of any installment of interest on any of the Debentures, as and when the
same shall become due and payable, and such default shall have continued for a
period of 30 days, or (2) in case default shall be made in the payment of the
principal of any of the Debentures, or premium, if any, when the same shall have
become due and payable, whether upon maturity of the Debentures or upon
redemption or upon declaration as authorized by this Indenture or otherwise,
then, upon demand of the Trustee, the Company shall pay in cash to the Trustee,
for the benefit of the Holders of the Debentures and Coupons then outstanding,
the whole amount that then shall have become due and payable on all such
Debentures and Coupons for principal, premium, if any, or interest (including
any Additional Amounts), as the case may be, with interest upon any overdue
principal, and (to the extent that payment of such interest is enforceable under
applicable law) upon overdue installments of interest (including any Additional
Amounts) at the rate per annum expressed in the Debentures; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection and all amounts payable to the Trustee under Section 8.6.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Debentures and collect in the manner provided and to the extent permitted by law
out of property of the Company or other obligor upon the Debentures wherever
situated the moneys adjudged or decreed to be payable.
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Section VII.3. Trustee May File Proofs of Claim.
--------------------------------
The Trustee shall be entitled and empowered, either in its own name or
as trustee of an express trust, or as attorney-in-fact for the Holders of the
Debentures and any Coupons, or in any one or more of such capacities, to file
such proof of debt, amendment of proof of debt, claim, petition or other
document as may be necessary or advisable in order to have the claims of the
Trustee and the Holders of the Debentures and Coupons allowed in any equity
receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization
or other judicial proceedings relative to the Company or any other obligor on
the Debentures or their creditors, or affecting their property. The Trustee is
hereby irrevocably appointed (and the successive respective Holders of the
Debentures and any Coupons by taking and holding the same shall be conclusively
deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of
the respective Holders of the Debentures and any Coupons, with authority to make
and file in the respective names of the Holders of the Debentures and Coupons or
on behalf of the Holders of the Debentures and Coupons as a class, subject to
deduction from any such claims of the amounts of any claims filed by any of the
Holders of the Debentures and Coupons themselves, any proof of debt, amendment
of proof of debt, claim, petition or other document in any such proceedings and
to receive payment of any sums becoming distributable on account thereof, and to
execute any such other papers and documents and to do and perform any and all
such acts and things for and on behalf of such Holders of the Debentures and
Coupons as may be necessary or advisable in the opinion of the Trustee in order
to have the respective claims of the Trustee and of the Holders of the
Debentures and Coupons against the Company or its property allowed in any such
proceeding, and to receive payment of or on account of such claims; provided
that nothing contained in this Indenture shall be deemed to give to the Trustee
any right to accept or consent to any plan of reorganization or otherwise by
action of any character in any such proceeding to waive or change in any way any
right of any Holder of a Debenture or Coupons.
All rights of action and of asserting claims under this Indenture, or
under any of the Debentures and Coupons, may be enforced by the Trustee without
the possession of any of the Debentures and Coupons or the production thereof on
any trial or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit of
the Holders of the Debentures and Coupons, subject to the provisions of this
Indenture. In any proceedings brought by the Trustee (and also any proceedings
in which a declaratory judgment of a court may be sought as to the
interpretation or construction of any provision of this Indenture, to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Debentures and Coupons, and it shall not be necessary to make any Holders
of the Debentures and Coupons parties to any such proceedings.
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Section VII.4. Application of Moneys Collected by Trustee.
-------
Any moneys collected by the Trustee, pursuant to Section 7.2, shall be
applied in the following order, at the date or dates fixed by the Trustee, upon
presentation of the several Debentures, and the notation thereon of the payment,
if only partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 8.6;
Second: To the payments of the amounts then due for principal,
premium, if any, and interest on the Debentures and Coupons, and interest on
overdue principal and premium, if any, and (so far as may be lawful and if such
interest has been collected by the Trustee) upon overdue installments of
interest at the rate per annum expressed in the Debentures; and in case such
moneys shall be insufficient to pay in full the whole amount so due and unpaid
upon the Debentures and Coupons, then to the payment, ratably to the aggregate
of such principal, premium, if any, and accrued and unpaid interest; and
Third: To the payment of the remainder, if any, to the Company, its
successors or assigns, or to whomsoever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.
Section VII.5. Limitation on Suits.
-------------------
No Holder of any Debenture or Coupon shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
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(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under the Indenture, except in the
manner herein provided and for the equal and ratable benefit of all such
Holders.
Section VII.6. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.
--------------
Notwithstanding any other provision in this Indenture, the Holder of
any Debenture or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium, if any, on
such Debenture or payment of such Coupon on the respective maturities expressed
in such Debenture or Coupon (or, in the case of redemption or repurchase, on the
Redemption Date or Repurchase Date, as the case may be), and to convert such
Debenture in accordance with Article V, and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of such Holder.
Section VII.7. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder of a Debenture or Coupon has instituted
any proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Debentures and Coupons shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and such Holders shall continue as though no such
proceeding had been instituted.
Section VII.8. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures or Coupons in the
last paragraph of Section 3.5, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Debentures or Coupons is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section VII.9. Delay or Omission Not Waiver.
----------------------------
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No delay or omission of the Trustee or of any Holder of any Debenture
or Coupon to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or any acquiescence therein. Every right and remedy given by this
Article VII or by law to the Trustee or to the Holders of Debentures or Coupons
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or (subject to the limitations contained in this Indenture) by the
Holders of Debentures or Coupons, as the case may be.
Section VII.10. Rights of Holders of Majority in Principal Amount of
Debentures to Direct Trustee and Waive Defaults.
---------------------------
Subject to the provisions of Sections 8.1 and 8.2, the Holders of a
majority in aggregate principal amount of the Outstanding Debentures shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee; provided that (a) such direction shall be in accordance with law
and the provisions of this Indenture; (b) the Trustee shall have the right,
subject to the provisions of Section 8.1, to decline to follow any such
direction if the Trustee shall, being advised by an Opinion of Counsel,
determine that the action so directed may not be lawfully taken, or if the
Trustee in good faith shall, by a Responsible Officer, determine that the
proceeding so directed would be illegal or involve it in personal liability or
that the action so directed would be unduly prejudicial to the Holders of
Debentures not taking part in such direction; and (c) the Holders of a majority
in aggregate principal amounts of the Outstanding Debentures shall provide
adequate indemnity to the Trustee; and provided, further, that nothing in this
Indenture shall impair the right of the Trustee to take any action deemed proper
by the Trustee and that is not inconsistent with such direction by the Holders
of the Debentures.
Section VII.11. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Debentures may, on behalf of the Holders of all the
Debentures and Coupons, waive any past Default hereunder and its consequences,
except a Default (a) in the payment of the principal of or interest on any
Debenture, or (b) in respect of a covenant or provision hereof which under
Article XI cannot be modified or amended without the consent of the Holders of
each Outstanding Security affected.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section VII.12. Undertaking for Costs.
---------------------
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All parties to this Indenture agree, and each Holder of any Debenture
or Coupon, by his acceptance thereof, shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 7.12 shall not apply (a) to any suit
instituted by the Trustee; (b) to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Debentures; or (c) to any suit instituted by any Holder of any
Debenture or Coupon for the enforcement of the payment of the principal of or
interest on any Debenture or the payment of any Coupon on or after the
respective stated maturity or maturities expressed in such Debenture or Coupon
(or, in the case of redemption, on or after the Redemption Date) or for the
enforcement of the right to convert any Security in accordance with Article V.
Section VII.13. Waiver of Usury, Stay or Extension Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit of or advantage of, any usury, stay or extension law
wherever enacted, now or at any time hereafter in force, which 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 will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section VIII.1. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein,upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are
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specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture, but not to verify the contents thereof.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that:
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless the Trustee is determined to have
been negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders of a majority in principal amount of the Outstanding Debentures
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section VIII.2. Notice of Defaults.
------------------
Within 60 days after the occurrence of any Default hereunder as to
which the Trustee has received written notice, the Trustee shall give to all
Holders of Debentures, in the manner provided in Section 16.5, notice of such
Default, unless such Default shall have been cured or waived.
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Section VIII.3. Rights of Trustee.
-----------------
Except as otherwise provided in Section 8.1:
(a) In the absence of bad faith on the part of the Trustee, the
Trustee may rely and shall be protected in acting or refraining from acting upon
any Board Resolution, Officers' Certificate, certificate of independent public
accountants, or any other certificate, statement, instrument, opinion, report,
notice, Company Request, consent, Company Order, appraisal, bond, Debenture or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel, and an Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any Holders of Debentures or Coupons pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee reasonable
security and indemnity against the cost, expenses and liabilities which may be
incurred therein or thereby;
(d) The Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(e) Prior to being notified of the occurrence of an Event of
Default hereunder and after the cure or waiver of all Events of Default which
may have occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, or other paper or document, unless requested in writing to do so by
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Debentures; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity (and
security therefor) against such expense or liability as a condition to so
proceeding. The reasonable expense of every such investigation shall be paid by
the Company or, if paid by the Trustee, shall be repaid by the Company upon
demand; and
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys.
Section VIII.4. Trustee Not Liable for Recitals.
-------------------------------
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The recitals contained herein, in the Debentures (other than the
certificate of authentication on the Debentures), if any, and in the Coupons, if
any, shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness or completeness of the same. The Trustee
makes no representations as to the validity, sufficiency or enforceability
(except as against the Trustee) of this Indenture, of the Debentures or of the
Coupons. The Trustee shall not be accountable for the use or application by the
Company of any of the Debentures or of the proceeds of such Debentures, or for
the use or application of any moneys paid over by the Trustee in accordance with
any provision of this Indenture, or for the use or application of any moneys
received by any Paying Agent other than the Trustee.
Section VIII.5. Trustee and Agents May Own Debentures.
-------------------------------------
The Trustee, any Authenticating Agent, any Paying Agent, any
Conversion Agent or other agent of the Company or the Trustee, in its individual
or any other capacity, may buy, own, hold and sell, as owner or pledgee,
Debentures and Coupons with the same rights it would have if it were not
Trustee, Paying Agent, Conversion Agent or any other agent of the Company or the
Trustee, and no such activity shall impair any of the Trustee's rights, remedies
or defenses, or enlarge any of its duties or liabilities under this Indenture.
Section VIII.6. Trustee Entitled to Compensation, Reimbursement and
-----------------
Indemnity.
---------
The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it hereunder, and the
Company shall pay or reimburse the Trustee, upon its request, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all persons not regularly in its employ as well as any and all extraordinary
expenses, costs and fees incurred by the Trustee if an Event of Default shall
occur), except any such expense, disbursement or advance as may arise from the
Trustee's own negligence, bad faith or willful misconduct. If any property,
other than cash, shall at any time be subject to a Lien in favor of the Holders
of the Debentures or Coupons, the Trustee (if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by a supplemental
instrument subjecting such property to such Lien), shall be entitled, but shall
not be obligated, to make advances for the purpose of preserving such property
or discharging tax liens or other prior liens or encumbrances thereon.
The Company covenants to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence,
bad faith or willful misconduct on the part of the Trustee, and arising out of
or in connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim
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of liability in connection with the exercise or performance of any of its powers
or duties hereunder.
The obligations of the Company under this Section 8.6 to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture. Such
additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except money or property held in trust for the benefit of the Holders of
particular Debentures or Coupons. When the Trustee incurs expenses or renders
services after an Event of Default specified in Section 7.1(f) or (g) occurs,
the expenses and the compensation for services are intended to constitute
expenses of administration under any bankruptcy law.
Section VIII.7. Right of Trustee to Rely on Certificate of Officers of
Company Where no Other Evidence Specifically
Prescribed.
Except as otherwise provided in Section 8.1, whenever in the
administration of the trusts or the performance of this Indenture the Trustee
shall deem it necessary or desirable that a matter be proved or established
prior to taking or suffering or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by an Officers' Certificate,
and such certificate shall be full warrant of such action taken, suffered or
omitted by it under the provisions of this Indenture upon the faith thereof.
Section VIII.8. Moneys Received by Trustee to be Held in Trust.
-----
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds, except to the extent required by
law. The Trustee shall be under no liability for interest on any moneys received
by it hereunder.
Section VIII.9. Requirements for Eligibility of Trustee.
---------------------------------------
The Trustee hereunder shall at all times be a corporation organized
and doing business under the laws of the United States or any State or Territory
or of the District of Columbia authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $1,000,000,
subject to supervision or examination by Federal, State, Territorial, or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible
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in accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.10.
Section VIII.10. Resignation or Removal of Trustee.
---------------------------------
(a) The Trustee, or any successor hereafter appointed, may at
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Company. Upon receiving such notice of
resignation, the Company shall promptly seek to appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Holder of a
Debenture may, on behalf of himself and all others similarly situated, petition
any such court for the appointment of a successor trustee. Such court may
thereupon after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) If any of the following shall occur at any time:
(i) the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by a Holder, or
(ii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee, or,
subject to the provisions of Section 7.12, a Holder may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of
Outstanding Debentures may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Company, another to the Trustee so
removed and one complete set to the successor so appointed.
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(d) Any resignation or removal of the Trustee and any
appointment of a successor trustee pursuant to any of the provisions of this
Section shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.11. Notwithstanding the foregoing, the
resignation of the Trustee shall in all events become effective 60 days after
written notice of such resignation has been given by the Trustee to the Company
pursuant to this Section 8.10.
(e) The Company shall give notice of each resig-nation and each
removal of the Trustee and each appointment of a successor trustee to the
Holders of the Debentures in the manner provided in Section 16.5. Each notice
shall include the name of each successor and the address of its corporate trust
office.
Section VIII.11. Acceptance by Successor Trustee.
-------------------------------
A successor Trustee appointed as provided in Section 8.10 shall
execute, acknowledge and deliver to the Company and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee
herein. The predecessor trustee shall, nevertheless, at the written request of
the Company or the successor Trustee, upon payment of any amount due it and then
unpaid, pay over to the successor Trustee all moneys at the time held by it
hereunder and the Company and the predecessor trustee shall execute and deliver
such instruments and take such other action as may reasonably be required for
more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless, at the time of such acceptance, such successor Trustee shall be
eligible under the provisions of Section 8.9.
Section VIII.12. Successor to Trustee by Merger, Consolidation or
----------------
Succession to Business.
----------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 8.9, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section VIII.13. Authenticating Agent.
--------------------
-▇▇-
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Agent may authenticate the Global Debenture and the
Definitive Debentures, as the Trustee's
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Authenticating Agent. The Trustee may, with the consent of the Company, appoint
an additional Authenticating Agent or Agents acceptable to the Company with
respect to the Debentures to authenticate Debentures issued upon exchange or
substitution pursuant to this Indenture.
Debentures authenticated by an Authenticating Agent shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Debentures by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States of
America, any state thereof, the District of Columbia, England and Wales or
Luxembourg, authorized under such laws to act as Authenticating Agent and
subject to supervision or examination by government or other fiscal authority.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 8.13, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 8.13.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidate, or any corporation resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall
be a party, or any corporation succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 8.13, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 8.13, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section 8.13.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 8.13. If an
Authenticating Agent is appointed with respect to the Debentures pursuant to
this Section 8.13, the Debentures may have endorsed thereon, in addition to or
in lieu of the Trustee's certification of authentication, an alternative
certificate of authentication in the following form:
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"This is one of the Debentures referred to in the within-mentioned
Indenture.
First Bank National Association,
doing business as
Colorado National Bank,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By: _________________________
Authorized Signatory"
ARTICLE IX
CONCERNING THE HOLDERS OF DEBENTURES
Section IX.1. Evidence of Action by Holders of Debentures.
----------
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders of Debentures may be embodied in and evidenced by (i) one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent or proxy duly appointed in writing by such Holders or (ii) the
record of Holders of Debentures voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Debentures duly
called and held in accordance with the provisions of Article X. Except as herein
otherwise expressly provided, such action shall become effective when such
instrument or instruments or record is delivered to the Trustee and copies
thereof are delivered to the Company. The Trustee shall promptly deliver to the
Company copies of all such instruments and records delivered to the Trustee.
Proof of execution of any such instrument or of a writing appointing any such
agent or proxy, or the holding by any Person of a Debenture, shall be sufficient
for any purpose of this Indenture and (subject to Section 8.1) conclusive in
favor of the Trustee and the Company if made in the manner provided in this
Section. The record of any meeting of Holders of Debentures shall be proved in
the manner provided in Section 10.6.
Section IX.2. Proof of Execution of Instruments and of Holding of
----------
Debentures.
----------
(a) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgement of deeds, certifying that the individual signing
such instrument or writing acknowledged by him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The
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fact and date of execution of any same may also be proved in any other manner
which the Trustee or the Paying Agent deems sufficient; and the Trustee or
Paying Agent may in any instance require further proof with respect to any of
the matters referred to in this Section 9.2.
(b) The principal amount and serial number of any Definitive
Debenture held by any Person, and the date of his holding the same, may be
proved by the production of such Definitive Debenture or by a certificate
executed by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee or the Paying Agent
to be satisfactory, showing that at the date therein mentioned such Person had
on deposit with such depositary, or exhibited to it, the Definitive Debenture
therein described; or such facts may be proved by the certificate or affidavit
of the Person holding such Definitive Debenture, if such certificate or
affidavit is deemed by the Trustee or the Paying Agent to be satisfactory. The
Trustee, the Paying Agent and the Company may assume that any Definitive
Debenture continued to be held by such Person until (1) another certificate or
affidavit bearing a later date issued in respect of such Definitive Debenture is
produced, or (2) such Definitive Debenture is produced to the Trustee or the
Paying Agent by some other Person, or (3) such Definitive Debenture is no longer
Outstanding. The principal amount and serial numbers of Definitive Debentures
held by the Person so executing such instrument or writing and the date of
holding the same may also be proved in any other manner which the Paying Agent
deems sufficient; and the Paying Agent may in any instance require further proof
with respect to any of the matters referred to in this Section 9.2.(b).
(c) Upon receipt by the Trustee or the Paying Agent from any Holder
of (i) any notice of Default or breach referred to in Section 7.1(c), if such
Default has occurred and is continuing and the Trustee shall not have given such
a notice to the Company, (ii) any declaration of acceleration referred to in
Section 7.2, if an Event of Default has occurred and is continuing and the
Trustee shall not have given such a declaration to the Company, or (iii) any
direction referred to in Section 7.10, if the Trustee shall not have taken the
action specified in such direction, then a record date shall automatically and
without any action by the Company or the Trustee be set for determining the
Holders entitled to join in such notice, declaration or direction, which record
date shall automatically and without any action by the Company or the Trustee be
set for determining the Holders entitled to join in such notice, declaration or
direction, which record date shall be the close of business on the 10th day (or,
if such day is not a Business Day, the first Business Day thereafter) following
the day on which the Trustee receives such notice, declaration or direction.
Promptly after such receipt by the Trustee, and as soon as practicable
thereafter, the Trustee shall notify the Company and the Holders of any such
record date so fixed. The Holders on such record date (or their duly appointed
agents or proxies), and only such Persons, shall be entitled to join in such
notice, declaration or direction, whether or not such Holders remain Holders
after such record date; provided that, unless such notice, declaration or
direction shall have become effective by virtue of Holders of the requisite
principal amount of Debentures on such record date (or their duly appointed
agents or proxies) having joined therein on or prior to the 90th day after such
record date, such notice, declaration or direction shall automatically and
without any action by any Person be cancelled and of no further effect. Nothing
in this paragraph shall be construed to prevent a Holder (or a duly
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appointed agent or proxy thereof) from giving, before or after the expiration of
such 90-day period, a notice, declaration or direction contrary to or different
from, or, after the expiration of such period, identical to, the notice,
declaration or direction to which such record date relates, in which event a new
record date in respect thereof shall be set pursuant to this paragraph. In
addition, nothing in this paragraph shall be construed to render ineffective any
notice, declaration or direction of the type referred to in this paragraph given
at any time to the Trustee and the Company by Holders (or their duly appointed
agents or proxies) of the requisite principal amount of Outstanding Debentures
on the date such notice, declaration or direction is so given.
(d) The provisions of this Section 9.2 are subject to the provisions
of Section 10.5.
Section IX.3. Action by Holder of Debenture Binds Future Holders.
--------------
Any request, demand, authorization, direction, notice, consent,
election, waiver or other action of the Holder of any Debenture shall be
conclusive and binding upon such Holder and upon all future Holders and owners
of such Debenture, and of any Debenture issued in exchange therefor or in place
thereof, irrespective of whether or not any notation in regard thereto is made
upon such Debenture. Any action taken by the Holders of the percentage in
aggregate principal amount of the Outstanding Debentures specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the Holders of all the Debentures.
ARTICLE X
MEETINGS OF HOLDERS OF DEBENTURES
Section X.1. Purposes for Which Meetings May be Called.
------
A meeting of Holders of Debentures may be called at any time and from
time to time pursuant to the provisions of this Article X to make, give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action authorized to be taken by the Holders of the Debentures or the Holders of
any specified aggregate principal amount of the Debentures under any provision
of this Indenture or as may be authorized or permitted by law.
Section X.2. Manner of Calling Meetings.
--------------------------
(a) The Trustee may at any time call a meeting of Holders of
Debentures for any purpose specified in Section 10.1, to be held at such time
and at such place in the Borough of Manhattan, City of New York, (or in the City
of London, England) as the Trustee shall determine. Notice of every meeting of
the Holders of Debentures, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 16.5 by the Trustee, not less than 21
days nor more than 90 days prior to the date fixed for the meeting.
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(b) Any meeting of Holders of Debentures shall be valid without
notice if the Holders of all Debentures then outstanding are present in person
or by proxy, or if notice is waived before or after the meeting by the Holders
of all Debentures outstanding, and if the Company and the Trustee are either
present by duly authorized representatives or have, before or after the meeting,
waived notice.
Section X.3. Call of Meetings by Company or Holders of Debentures.
-------------
In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 25% in principal amount of the Outstanding Debentures
shall have requested the Trustee to call a meeting for the Holders of
Debentures, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have made the
first publication of the notice of such meeting within 21 days after receipt of
such request, or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Debentures in the amount
specified, as the case may be, may determine the time and the place in the
Borough of Manhattan, City of New York, or in the City of London, England, for
such meeting and may call such meeting for such purposes by giving notice
thereof as provided in this Section 10.3.
Section X.4. Persons Entitled to Vote at Meetings.
------------------------------------
To be entitled to vote at any meeting of Holders of Debentures, a
Person shall (a) be a Holder of one or more Outstanding Debentures, or (b) be a
person appointed by a written instrument as proxy for a Holder or Holders of
Outstanding Debentures by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders of Debentures shall
be the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and any representatives of the Company and its
counsel.
Section X.5. Determination of Voting Rights, Control and Adjournment
---------------
of Meetings.
-----------
(a) Notwithstanding any other provision of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Debentures, in regard of proving the holding of Debentures
and of the appointment of proxies, and in regard of the appointment and duties
of inspectors of votes, and the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit. Except as otherwise
permitted or required by any such regulations, the holding of Debentures and the
appointment of any proxy shall be proved in the manner specified in Section 9.2
or by having the signature of the Person executing the proxy witnessed or
guaranteed by any bank, banker or trust company deemed by the Trustee to be
satisfactory.
(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by
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Holders of Debentures as provided in Section 10.3, in which case the Company or
the Holders of Debentures calling the meeting, as the case may be, shall in like
manner, appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in aggregate principal amount of the Debentures represented at the meeting and
entitled to vote.
Subject to the provisions of Section 9.4 and 10.4, at any meeting each
Holder of Debentures or such Holder's proxy shall be entitled to one vote for
each U.S.$10,000 principal amount of Debentures; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Debentures challenged
as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding. The chairman of the meeting shall have no right to vote, except as
a Holder of Debentures or proxy. At any meeting of Holders of Debentures, the
presence (in person or by proxy) of Persons holding or representing Outstanding
Debentures in an aggregate principal amount sufficient to take action on the
business for the transaction of which such meeting was called shall constitute a
quorum. Any meeting of Holders of Debentures duly called pursuant to the
provisions of Sections 10.2 or 10.3 may be adjourned from time to time by the
vote of the Holders of a majority in aggregate principal amount of the
Outstanding Debentures represented at the meeting and entitled to vote, whether
or not constituting a quorum, and the meeting may be held as so adjourned
without further notice.
Section X.6. Manner of Voting at Meetings and Record to be Kept.
----------
The vote upon any resolution submitted to any meeting of Holders of
Debentures shall be by written ballots on which shall be subscribed the
signatures of the Holders of Debentures or of their representatives by proxy and
the principal amounts and serial numbers of the Debentures voted by the ballot.
The permanent chairman of the meeting shall appoint two inspectors of votes, who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, in duplicate,
of the proceedings of each meeting of the Holders of Debentures shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts, setting forth a copy of the notice of the meeting and showing that notice
was given as provided in Section 10.2. The record shall be signed and verified
by the affidavits of the permanent chairman and secretary of the meeting and one
of the duplicates shall be delivered to the Company and the other to the Trustee
to be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting. Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
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Section X.7. Exercise of Rights of Trustee or Holders of Debentures
May Not be Hindered or Delayed by Call of Meeting of
Holders of Debentures.
----------
Nothing in this Article X contained shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders of Debentures
or any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Holders of Debentures under any of the
provisions of this Indenture or of the Debentures.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section XI.1. Purposes for Which Supplemental Indentures May be
Entered into Without Consent of Holders of Debentures.
--------------------------------
The Company, when authorized by a Board Resolution, and the Trustee,
subject to the conditions and restrictions in this Indenture contained, may from
time to time and at any time enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements and obligations of
the Company herein and in the Debentures and Coupons as permitted by
this Indenture;
(b) to add to the covenants of the Company in this Indenture, to
contain such further covenants and agreements thereafter to be
observed, or to surrender any right or power herein reserved to or
conferred upon the Company;
(c) to cure any ambiguity or to correct or supplement any
defective or inconsistent provision contained in this Indenture or in
any supplemental indenture; or to make such provisions with respect to
matters or questions arising under this Indenture as may be necessary
or desirable and not inconsistent with this Indenture; provided that
such action shall not adversely effect the interests of the Holders of
Debentures;
(d) to make provisions with respect to the conversion rights of
Holders of Debentures pursuant to the requirements of Section 5.10;
and
(e) to evidence and provide for the acceptance of appointment
hereunder of a successor Trustee.
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Upon Company Request, accompanied by a Board Resolution authorizing
the execution of any such supplemental indenture, and subject to and upon
receipt by the Trustee of the documents described in Section 11.3 hereof, the
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained.
Any supplemental indenture authorized by the provisions of this
Section may be executed by the Company and the Trustee without the consent of
the Holders of any of the Debentures at the time outstanding, notwithstanding
any of the provisions of Section 11.2.
Section XI.2. Modification of Indenture with Consent of Holders of a
Majority in Principal Amount of Debentures.
--------------------
With the consent (evidenced as provided in Section 9.1) of the Holders
(or persons entitled to vote, or to give consents respecting the same) of not
less than a majority in aggregate principal amount of Outstanding Debentures,
the Company, when authorized by a Board Resolution, and the Trustee may, from
time to time and at any time, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights and obligations of the
Holders of the Debentures and of the Company; provided that, without the consent
of the Holders of all Outstanding Debentures and Coupons affected thereby, no
such supplemental indenture shall:
(a) change the maturity of the principal of, or any installment of
interest on, any Debenture, or reduce the principal amount or the rate of
interest payable thereon, or reduce the amount of principal that would be due
and payable upon a declaration of acceleration of the maturity thereof pursuant
to Section 7.2 or a redemption thereof pursuant to Article IV, or change the
obligation of the Company to pay Additional Amounts pursuant to Article VI, or
change the coin or currency in which any Debenture or the interest thereon or
any other amount in respect thereof is payable, or impair the right to institute
suit for the enforcement of any payment in respect of any Debenture on or after
the maturity thereof (or, in the case of redemption or any repurchase, on or
after the Redemption Date or Repurchase Date, as the case may be), or adversely
affect the right to convert any Debenture as provided in Article V, or
(b) reduce the requirements for quorum or voting, or reduce the
percentage in principal amount of the Outstanding Debentures the consent of
whose Holders is required for any such supplemental indenture or the consent of
whose Holders is required for any waiver provided for in this Indenture, or
(c) modify the obligation of the Company to maintain an office or
agency in London, England, and in a city in a Western European country (or
Luxembourg in particular if so required) pursuant to Section 6.2, or
(d) modify any of the provisions of this Section or Section 7.11,
except to increase any percentage contained herein or therein or to provide that
certain other provisions of
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this Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Debenture affected thereby; or
(e) modify any of the provisions of Section 6.17.
Upon Company Request, accompanied by a Board Resolution authorizing
the execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of Holders of Debentures as aforesaid, the
Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Holder of Debentures
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section XI.3. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture by the Company and
the Trustee pursuant to the provisions of this Article, or Article XII, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith, and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the Holders
of Debentures shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section XI.4. Debentures May Bear Notation of Changes.
---------------------------------------
Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article or Article
XII, or after any action taken at a meeting of Holders of Debentures pursuant to
Article X, may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture or as to any action taken at any
such meeting; and, in such case, suitable notation may be made upon outstanding
Debentures after proper presentation and demand. If the Company or the Trustee
shall so determine, new Debentures so modified as to conform, in the opinion of
the Trustee and the Board of Directors, to any modification of this Indenture
contained in any supplemental indenture, or to any action taken at any such
meeting, may be prepared by the Company, authenticated by the Trustee and
delivered in exchange for the Debentures then outstanding, upon demand of, and
without cost to, the Holders thereof upon surrender of such Debentures.
Section XI.5. Opinion of Counsel.
------------------
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The Trustee, subject to the provisions of Section 8.1, may require and
receive an Opinion of Counsel as conclusive evidence that any supplemental
indenture executed pursuant to this Article is authorized or permitted by the
terms of this Indenture and that it is not inconsistent therewith.
Section XI.6. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 11.2, the Company
shall give notice to all Holders of Debentures of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 16.5. Any failure of the Company to give notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
Section XI.7. Consent of TCK.
--------------
The Company may not enter into any amendment of this Indenture without
the prior written consent of TCK, as long as (i) TCK owns at least 1,000,000
Shares, and (ii) either of Warrant A or Warrant B remains in effect.
ARTICLE XII
CONSOLIDATION OR MERGER
Section XII.1. When Company May Merge, Etc.
----------------------------
Notwithstanding the provisions of Section 6.10, the Company may
consolidate with, or merge with or into, another Person or transfer (by lease,
assignment, sale or otherwise) all or substantially all of its properties and
assets, in a single transaction, as an entirety or substantially as an entirety
to another Person if:
(a) either the Company shall be the continuing Person, or the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or to which the properties and assets of the Company as
an entirety or substantially as an entirety are transferred shall be a
Person organized and existing under the laws of the United States of
America or any state thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Debentures and this Indenture;
provided that a corporation at all times shall be a co-obligor together
with the continuing Person or transferee if the continuing Person or
transferee is itself not a corporation;
(b) prior to the consummation of such transaction, the Holders of a
majority in aggregate principal amount of the Outstanding Debentures shall
have consented to such transaction; provided, however, such consent shall
not be required i n
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connection with a transaction in which TCK or any Subsidiary thereof is the
surviving or acquiring entity;
(c) immediately before and immediately after giving effect to
such transaction, no Event of Default and no Default shall have occurred
and be continuing; and
(d) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or lease and such supplemental indenture
comply with this Article XII and that all conditions precedent herein
provided relating to such transaction have been complied with.
The foregoing shall not be applicable with respect to a consolidation,
merger or transfer that involves less than 25% of the assets of the Company.
Section XII.2. Successor Corporation.
---------------------
Upon any consolidation or merger, or any transfer of assets of the
Company in accordance with Section 12.1, the successor Person formed by such
consolidation or into which the Company is merged or to which such transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein. When a successor Person
assumes all of the obligations of the Company hereunder and under the
Debentures, the predecessor shall be released from such obligation.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE;
DEPOSITED MONEYS
Section XIII.1. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of conversion, exchange, or
replacement of Debentures herein expressly provided for and any right to receive
Additional Amounts as provided in the form of Definitive Debenture set forth in
Section 2.2(a) and the Company's obligations to the Trustee pursuant to Section
8.6, and the Trustee, at the expense of the Company, shall execute proper
instruments in form and substance satisfactory to the Trustee acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Debentures theretofore authenticated and delivered and
all Coupons appertaining thereto (other than (1) Debentures and Coupons
which have been destroyed, lost or stolen and which have been replaced or
paid as provided in Section 3.7, (2)
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Coupons appertaining to Debentures called for redemption or repurchased and
maturing after the relevant Redemption Date or Repurchase Date, as the case may
be, whose surrender has been waived as provided in Section 4.6, and (3)
Debentures and Coupons for whose payment money had theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section 6.3 have been
delivered to the Trustee for cancellation; or
(ii) all such Debentures and all Coupons appertaining thereto
not theretofore delivered to the Trustee or the Paying Agent or its agent for
cancellation (other than Debentures or Coupons referred to in Section 13.1(a)(1)
through (3) above):
(1) have become due and payable; or
(2) have been called for redemption pursuant to Article IV,
or provision satisfactory to the Trustee shall have been made for the giving of
notice of redemption as provided in Article IV, and the Company shall have
deposited or caused to be deposited in trust with the Trustee or a Paying Agent
(other than the Company) funds (to be immediately available for payment) in an
amount sufficient to pay at maturity or upon redemption such Debentures and
Coupons not theretofore delivered to the Trustee for cancellation, including
principal, premium, if any, and interest due or to become due to the Maturity
Date or Redemption Date, as the case may be;
(3) the Company has paid or caused to be paid all other
sums payable thereunder by the Company; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
(b) all obligations of the Company in respect of the Debentures shall
cease and be discharged, and the Holders of such Debentures shall thereafter be
restricted exclusively to such funds for any and all claims of whatsoever nature
on their part under this Indenture or with respect to such Debentures.
Notwithstanding the satisfaction and discharge of this Indenture, the
rights, remedies, immunities and defenses of the Trustee under this Indenture,
including but not limited to those contained in Section 8.1, with respect to
actions taken or omitted to be taken pursuant to this Indenture and events
occurring prior to such satisfaction and discharge, and the obligations of the
Company to the Trustee under Section 8.6, shall survive.
Section XIII.2. Application by Trustee of Funds Deposited for
-------------
Payment of Debentures.
---------------------
All moneys deposited with the Trustee pursuant to Section 13.1 shall
be held in trust and applied by it to the payment to the Holders of the
particular Debentures, for the
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payment or redemption of which such moneys have been deposited with the Trustee,
of all sums due and to become due thereon for principal, premium, if any, and
interest.
Section XIII.3. Repayment of Moneys Held by Paying Agent.
-----
In connection with the satisfaction and discharge of this Indenture
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company or the Trustee, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys.
Section XIII.4. Moneys Deposited for Redemption of Debentures
Subsequently Converted to be Returned to Company.
-------------------
All moneys deposited with the Trustee or any Paying Agent for the
payment or redemption of Debentures subsequently converted shall be returned to
the Company upon its written request. All moneys deposited with any Conversion
Agent in connection with the Debentures surrendered for conversion for the
payment of interest on such Debentures on an Interest Payment Date shall be paid
over to the Company promptly after such Interest Payment Date.
Section XIII.5. Payment of Deposited Money to Company After Lapse of
--------------
Time.
----
In case the Holder of any Debenture entitled to payment hereunder at
any time outstanding hereunder shall not, within two years after the Maturity
Date, or if such Debenture shall have been called for redemption, then within
two years after the relevant Redemption Date, claim the amount on deposit with
the Trustee or other depositary for the payment of such Debenture, the Trustee
or other depositary shall pay over to the Company the amount so deposited, upon
Company Request, and thereupon the Trustee or other depositary shall be released
from any and all further liability with respect to the payment of such
Debenture, and the Holder of such Debenture as an unsecured creditor shall be
entitled (subject to any applicable statute of limitations) to look only to the
Company for the payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Except for liabilities arising under the Securities Act, no recourse
shall be had for the payment of the principal of (and premium, if any) or the
interest on any Debenture or Coupon, or for any claim based thereon or otherwise
in respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture or in any supplemental indenture, or
in any Debenture or Coupon, or because of the creation of any indebtedness
represented hereby shall be had against any incorporator, stockholder, officer,
trustee, director, past, present or future, as such of the Company or of any
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law or equity, or
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by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Debentures.
ARTICLE XV
RIGHT TO REQUIRE REPURCHASE
Section XV.1. Right to Require Repurchase.
---------------------------
In the event of a Change of Control, then each Holder shall have
the right to require the Company to repurchase, and upon the exercise of such
right, the Company shall repurchase, all of such Holder's Debentures, or any
portion of the principal amount thereof that is an integral multiple of
U.S.$10,000 (provided that no single Debenture may be repurchased in part unless
the portion of the principal amount of such Debenture to be Outstanding after
such repurchase is equal to U.S.$10,000 or integral multiples of U.S.$10,000 in
excess thereof), on the date (the "Repurchase Date") that is 45 days after the
date of the Company Notice (as defined in Section 15.2) for cash in U.S. dollars
at a purchase price equal to 100% of the principal amount plus interest accrued
to the Repurchase Date (the "Repurchase Price"); provided, however, that
installments of interest on Debentures whose maturity is on or prior to the
Repurchase Date shall be payable only upon presentation and surrender of Coupons
for such interest (at an office or agency outside the United States, except as
otherwise provided in the form of Definitive Debenture set forth in Section
2.2(a)). Such right to require the repurchase of the Debentures shall not
continue after a discharge of the Company from its obligations with respect to
the Debentures in accordance with Article XIII, unless a Change of Control shall
have occurred prior to such discharge.
A "Change of Control" shall be deemed to have occurred at the time
when persons other than the Existing Control Group shall have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
more than 50% of the aggregate Voting Stock of the Company.
Section XV.2. Notice; Method of Exercising Repurchase Right.
-----
(a) Unless the Company shall have theretofore called for
redemption all of the Outstanding Debentures, on or before the 30th day after
the occurrence of a Change of Control, the Company or, at the request of the
Company on or before the 15th day after such occurrence, the Trustee, shall give
to all Holders of Debentures, in the manner provided in Section 16.5 notice (the
"Company Notice"), of the occurrence of the Change of Control and of the
repurchase right set forth herein arising as a result thereof. The Company shall
also deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(i) the Repurchase Date;
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(ii) the date by which the repurchase right must be exercised;
(iii) the Repurchase Price;
(iv) a description of the procedure which a Holder must follow to
exercise a repurchase right ;
(v) that on the Repurchase Date, the Repurchase Price will become
due and payable upon each such Debenture designated by the Holder to be
repurchased, and that interest on such Debenture shall cease to accrue on and
after said date;
(vi) the Conversion Price, the date on which the right to convert the
Debenture to be repurchased will terminate and the places where such Debentures,
together with all unmatured coupons and any matured Coupons in default
appertaining thereto, may be surrendered for conversion; and
(vii) the place or places where such Debentures, together with all
Coupons appertaining thereto, if any, maturing after the Repurchase Date, are to
be surrendered for payment of the Repurchase Price.
No failure of the Company to give the Company Notice or defect therein
shall limit any Holder's right to exercise a repurchase right or affect the
validity of the proceedings for the repurchase of Debentures.
(b) To exercise a repurchase right, a Holder shall deliver to any
Paying Agent on or before the 45th day after the date of the Company Notice, (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Debentures to be
repurchased and a statement that an election to exercise the repurchase right is
being made thereby, and (ii) the Debentures with respect to which the repurchase
right is being exercised, together with all Coupons, if any, appertaining
thereto maturing after the Repurchase Date; provided, however, the Debenture
shall be delivered only to the office of a Paying Agent located outside the
United States (except as otherwise provided in the form of Definitive Debenture
set forth in Section 2.2(a)). Such written notice shall be irrevocable, except
that the right of the Holder to convert the Debentures with respect to which the
repurchase right is being exercised shall continue until the close of business
on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Paying
Agent the Repurchase Price in cash, for payment to the Holder on the Repurchase
Date; provided, however, that the Repurchase Price shall be so payable only at
an office or agency outside the United States (except as otherwise provided in
the form of Definitive Debenture set forth in Section 2.2(a)).
(d) If any Debenture surrendered for repurchase shall not be
accompanied by all appurtenant Coupons maturing after the Repurchase Date, such
Debenture may be paid after
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deducting from the Repurchase Price an amount equal to the face amount of all
such missing Coupons, or the surrender of such missing Coupons may be waived by
the Company and the Trustee, if there be furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Debenture shall surrender to any
Paying Agent any such missing Coupon in respect of which a deduction shall have
been made from the Repurchase Price, such Holder shall be entitled to receive
the amount so deducted; provided, however, that interest represented by Coupons
shall be payable only upon presentation and surrender of those Coupons at an
office or agency located outside of the United States (except as otherwise
provided in the form of Definitive Security set forth in Section 2.2(a)).
(e) If any Debenture (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Debenture (or portion thereof, as the case may be) shall, until paid, bear
interest from the Repurchase Date at the rate of 8% per annum, and each
Debenture shall remain convertible into Common Stock until the principal of such
Debenture (or portion thereof, as the case may be) shall have been paid or duly
provided for.
Section XV.3. Deposit of Repurchase Price.
---------------------------
Prior to the Repurchase Date, the Company shall deposit with the
Paying Agent an amount of money sufficient to pay the Repurchase Price of the
Debentures which are to be repaid on the Repurchase Date.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
Section XVI.1. Successors and Assigns of Company Bound by Indenture.
------------
All the covenants and agreements by the Company in this Indenture
shall bind its successors and assigns, whether so expressed or not.
Section XVI.2. Acts of Board, Committee or Officer of Successor
---------
Corporation Valid.
-----------------
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful successor of the Company.
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Section XVI.3. [Intentionally Omitted]
Section XVI.4. Notices, Etc. to Trustee and Company.
------------------------------------
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders of Debentures or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with,
(a) the Trustee, by any Holder of Debentures or by the Company,
shall be sufficient for every purpose hereunder if made, given, furnished,
or filed in writing to or with the Trustee at its Corporate Trust Office,
telecopier no.: ▇▇▇-▇▇▇-▇▇▇▇, Attention: Vice President-Corporate Trust; or
(b) the Company, by the Trustee or by any Holder of the
Debentures, shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing, mailed, first-class
postage prepaid, or telecopied and confirmed by mail, first-class postage
prepaid, or delivered by hand or overnight courier, addressed to the
Company at Suite 3200, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
no.: ▇▇▇-▇▇▇-▇▇▇▇, Attention: Chief Financial Officer, or at any other
address previously furnished in writing to the Trustee by the Company.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice (other than a notice
published in Luxembourg) may be in an official language of the country of
publication.
Section XVI.5. Notice to Holders of Debentures; Waiver.
---------------------------------------
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Debentures of any event, such notice shall be
sufficiently given to Holders of Definitive Debentures or any Global Debenture
if published in an Authorized Newspaper in the City of London, England, and, so
long as the Debentures are listed on the Luxembourg Stock Exchange and the rules
of such stock exchange shall so require, in Luxembourg or, if not practicable in
either London, England or Luxembourg, elsewhere in any country in Western
Europe, on a Business Day at least twice, the first such publication to be not
earlier than the earliest date and the second such publication to be not later
than the latest date prescribed for the giving of such notice. Such notice shall
be deemed to have been given on the date of such publication or, if published in
Authorized Newspapers on different dates, on the date of the first such
publication. In case by reason of the suspension of publication of any
Authorized Newspaper or by reason of any other cause it shall be impracticable
to publish any notice as provided above, then such notification as shall be
given with the approval of the Trustee, which approval shall not be unreasonably
withheld, shall constitute sufficient notice to such Holders for every purpose
hereunder.
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Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Debentures shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section XVI.6. Effect of Headings and Table of Contents.
--------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section XVI.7. Indenture and Debentures to be Construed in Accordance
with Laws of State of New York.
----
This Indenture, each Debenture and each Coupon shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be governed by and construed in accordance with the internal substantive
laws of such State without giving effect to the choice of law rules thereof.
Section XVI.8. Officers' Certificate and Opinion of Counsel to be
Furnished upon Applications or Demands by Company.
----------------------------------
Upon any Company Request or application by the Company to the Trustee
or the Paying Agent to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee or the Paying Agent, as the case may
be, an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, and such
action or omission does not violate the terms of this Indenture or the
provisions of any applicable law, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate, an opinion
of or representations by
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counsel, unless such officer knows, or in the exercise of his reasonable care
shall know, that the certificate or opinion or representations with respect to
the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous. Any certificate, statement or Opinion of Counsel may be
based (insofar as it relates to factual matters, information with respect to
which is in the possession of the Company) upon the certificate, statement or
opinion of or representations by any officer or officers of the Company with
direct knowledge of such factual matters, unless such counsel knows or in the
exercise of reasonable care should know, that the certificate, statement or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous.
Any certificate, statement or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants, unless such officer or counsel, as the case may be, knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the accounting matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous.
Section XVI.9. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Debentures or Coupons, express or
implied, shall give to any Person, other than the parties hereto and their
successors and assigns hereunder and the holders of Debentures and Coupons, any
benefit or legal or equitable right, remedy or claim under this Indenture.
Section XVI.10. Legal Holidays.
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In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or the maturity date of any Debenture or Coupon or the last day
on which a Holder of a Debenture has a right to convert his Debenture shall not
be a Business Day at the place of payment or place of conversion, as the case
may be, then (notwithstanding any other provision of this Indenture or of the
Debentures or Coupons), payment of interest, or principal premium, if any, or
delivery for conversion of such Debenture need not be made at such place of
payment or place of conversion, as the case may be, on or by such day, but may
be made on or by the next succeeding Business Day at such place of payment or
place of conversion, as the case may be, with the same force and effect as if
made on the Interest Payment Date, Redemption Date or Repurchase Date, or the
maturity date or by such last day for conversion; provided, however, that in
case that payment is made on such succeeding Business Day, no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Redemption Date, Repurchase Date, Stated Maturity or last day for
conversion, as the case may be.
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Section XVI.11. Effect of Invalidity of Provisions.
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In case any one or more of the provisions contained in this Indenture,
in the Debentures or the Coupons shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture, of
such Debentures or of such Coupons, but this Indenture, such Debentures and such
Coupons shall be construed as if such invalid or illegal or unenforceable
provision had never been contained herein or therein.
Section XVI.12. Execution in Counterparts.
-------------------------
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but all such counterparts shall together constitute
but one and the same instrument.
Colorado National Bank, the party of the second part, hereby accepts
the trusts in this Indenture declared and provided, upon the terms and
conditions hereinabove set forth.
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IN WITNESS WHEREOF, KFx Inc., the party of the first part, has caused
this Indenture to be signed in its corporate name and acknowledged by ▇▇▇▇▇▇▇
▇▇▇▇▇▇, its Chief Financial Officer, and its corporate seal to be affixed
hereunto; and First Bank National Association, doing business as Colorado
National Bank, the party of the second part, has caused this Indenture to be
signed and acknowledged by a Vice President thereof and its corporate seal to be
affixed hereunto, all as of the day and year first above written.
[Seal]
KFx INC.
Attest:
By:________________________________
Name:
______________________ Title:
FIRST BANK NATIONAL ASSOCIATION,
doing business as
[Seal] COLORADO NATIONAL BANK
By:________________________________
Name: ▇▇▇▇ ▇▇▇▇▇
Attest: Title: Vice President *
Corporate Trust
______________________
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On July 25, 1997, before me personally came ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to me
known, who, being by me duly sworn, did depose and say that he resides at
_____________________________________, Colorado, that he is the Chief Financial
Officer of KFx Inc., one of the corporations described in and which executed the
foregoing Indenture; that he knows the seal of said corporation; that the seal
affixed to said Indenture is such corporate seal; that it was so affixed and
that he signed his name thereto by order of the board of directors of said
corporation and that he signed his name thereto by like order.
(Seal) _______________________________
Notary Public
STATE OF COLORADO )
: ss.:
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
______ 1997 by _________, Vice President-Corporate Trust of First Bank National
Association, doing business as Colorado National Bank. Witness my hand and
official seal.
_____________________________
(Title of Officer)
My commission expires _______
________________________________
Notary Public
(Seal)
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