EXHIBIT 10.35
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POLYPHASE CORPORATION
TO
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY,
TRUSTEE
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INDENTURE
DATED AS OF DECEMBER 1, 1995
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$1,500,000
12% SENIOR CONVERTIBLE DEBENTURES DUE DECEMBER 1, 1997
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TABLE OF CONTENTS
Page
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ARTICLE ONE - DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........... 1
SECTION 101. Definitions......................................... 1
SECTION 102. Compliance Certificates and Opinions................ 12
SECTION 103. Form of Documents Delivered to Trustee.............. 13
SECTION 104. Notices, etc., to Trustee and Company............... 13
SECTION 105. Notice to Holders; Waiver........................... 14
SECTION 106. Conflict with Trust Indenture Act................... 15
SECTION 107. Effect of Headings and Table of Contents............ 15
SECTION 108. Successors and Assigns.............................. 15
SECTION 109. Separability Clause................................. 15
SECTION 110. Benefits of Indenture............................... 16
SECTION 111. Governing Law....................................... 16
SECTION 112. Legal Holidays...................................... 16
SECTION 113. No Security Interest Created........................ 16
SECTION 114. Liability Solely Corporate.......................... 16
SECTION 115. Counterparts........................................ 17
SECTION 116. Further Instruments and Acts........................ 17
ARTICLE TWO - FORMS OF BONDS..................................................... 17
SECTION 201. Forms Generally..................................... 17
SECTION 202. Form of Face of Bond................................ 18
SECTION 203. Form of Reverse of Bond............................. 20
SECTION 204. Form of Trustee's Certificate of Authentication..... 27
ARTICLE THREE - THE BONDS........................................................ 27
SECTION 301. Title and Terms..................................... 27
SECTION 302. Denominations....................................... 28
SECTION 303. Execution, Authentication, Delivery and Dating...... 28
SECTION 304. Temporary Bonds..................................... 29
SECTION 305. Registration, Transfer and Exchange................. 29
SECTION 306. Mutilated, Destroyed, Lost and Stolen Bonds......... 31
SECTION 307. Payment of Interest; Interest Rights Preserved...... 31
SECTION 308. Cancellation........................................ 32
SECTION 309. Lists of Holders.................................... 32
ARTICLE FOUR - SATISFACTION AND DISCHARGE........................................ 33
SECTION 401. Satisfaction and Discharge of Company's Obligations. 33
SECTION 402. Application of Trust Money.......................... 34
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ARTICLE FIVE - DEFAULTS AND REMEDIES............................................. 34
SECTION 501. Event of Default.................................... 34
SECTION 502. Acceleration........................................ 37
SECTION 503. Other Remedies...................................... 38
SECTION 504. Waiver of Existing Defaults......................... 38
SECTION 505. Control by Majority................................. 38
SECTION 506. Trustee May File Proofs of Claim.................... 38
SECTION 507. Trustee May Enforce Claims Without Possession of
Bonds............................................. 39
SECTION 508. Application of Money Collected...................... 39
SECTION 509. Limitation on Suits................................. 40
SECTION 510. Unconditional Right of Holders to Receive Principal,
Premium and Interest.............................. 40
SECTION 511. Restoration of Rights and Remedies.................. 41
SECTION 512. Rights and Remedies Cumulative...................... 41
SECTION 513. Delay or Omission Not Waiver........................ 41
SECTION 514. Undertaking for Costs............................... 41
ARTICLE SIX - THE TRUSTEE.. 42
SECTION 601. Certain Duties and Responsibilities................. 42
SECTION 602. Notice of Defaults.................................. 43
SECTION 604. Certain Rights of Trustee........................... 44
SECTION 605. Not Responsible for Recitals or Issuance of Bonds... 45
SECTION 606. May Hold Bonds...................................... 46
SECTION 607. Money Held in Trust................................. 46
SECTION 608. Compensation, Indemnification and Reimbursement..... 46
SECTION 609. Resignation and Removal; Appointment of Successor... 47
SECTION 610. Acceptance of Appointment by Successor.............. 48
SECTION 611. Merger, Conversion, Consolidation or Succession to
Business.......................................... 49
SECTION 612. Appointment of Authenticating Agent................. 49
SECTION 613. Preferential Collection of Claims Against Company... 50
ARTICLE SEVEN - CONCERNING THE HOLDERS........................................... 51
SECTION 701. Acts of Holders..................................... 51
SECTION 702. Proof of Ownership; Proof of Execution of Instruments
by Holders........................................ 51
SECTION 703. Persons Deemed Owners............................... 51
SECTION 704. Revocation of Consents; Future Holders Bound........ 52
ARTICLE EIGHT - CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.............
SECTION 801. Company May Consolidate, etc., Only on Certain
Terms............................................. 52
SECTION 802. Successor Corporation Substituted................... 53
ARTICLE NINE - SUPPLEMENTAL INDENTURES........................................... 53
SECTION 901. Supplemental Indentures Without Consent of Holders.. 53
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SECTION 902. Supplemental Indentures With Consent of Holders..... 54
SECTION 903. Execution of Supplemental Indentures................ 55
SECTION 904. Effect of Supplemental Indentures................... 55
SECTION 905. Conformity with Trust Indenture Act................. 55
SECTION 906. Reference in Bonds to Supplemental Indentures....... 56
SECTION 907. Copies of Supplemental Indenture.................... 56
ARTICLE TEN - AFFIRMATIVE COVENANTS.............................................. 56
SECTION 1001. Financial Statements................................ 56
SECTION 1002. Certificates; Other Information..................... 57
SECTION 1003. Preservation of Corporate Existence................. 58
SECTION 1004. Maintenance of Property............................. 58
SECTION 1005. Insurance........................................... 58
SECTION 1006. Payment of Obligations.............................. 58
SECTION 1007. Compliance with Laws................................ 59
SECTION 1008. Notices............................................. 59
SECTION 1009. Issue Taxes......................................... 60
SECTION 1010. Payment and Conversion of Bonds..................... 60
SECTION 1011. Redemption and Purchase of Bonds.................... 60
SECTION 1012. Distributions to Holders............................ 60
SECTION 1013. HSR Act Filing...................................... 61
SECTION 1014. Cash Flow Ratio..................................... 61
SECTION 1015. Money for Bonds; Payments To Be Held in Trust....... 61
SECTION 1016. Officers' Certificate as to Default................. 62
ARTICLE ELEVEN - NEGATIVE COVENANTS 63
SECTION 1101. Transactions with Affiliates........................ 63
SECTION 1102. Compliance with ERISA............................... 63
SECTION 1103. Restricted Payments................................. 64
SECTION 1104. Restrictions on Classes of Certain Indebtedness..... 64
SECTION 1105. Use of Proceeds..................................... 64
SECTION 1106. No Restrictive Agreements........................... 65
ARTICLE TWELVE - OPTIONAL REDEMPTION OF BONDS; PURCHASE ON CHANGE OF CONTROL OR
DELISTING..................................................... 65
SECTION 1201. Election to Redeem; Notice to Trustee............... 65
SECTION 1202. Notice of Redemption................................ 65
SECTION 1203. Deposit of Redemption Price......................... 66
SECTION 1204. Bonds Payable on Redemption Date.................... 66
SECTION 1205. Bonds Redeemed in Part.............................. 67
SECTION 1206. Selection of Bonds To Be Redeemed................... 67
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ARTICLE THIRTEEN - CONVERSION OF BONDS........................................... 69
SECTION 1301. Optional Conversion................................. 69
SECTION 1302. Issuance of Common Stock; Time of Conversion........ 70
SECTION 1303. Adjustment of Conversion Price...................... 71
SECTION 1304. No Fractional Shares................................ 73
SECTION 1305. Prior Notice of Certain Events...................... 74
SECTION 1306. Taxes and Charges................................... 74
SECTION 1308. Cancellation of Converted Bonds..................... 75
ARTICLE FOURTEEN - DISPOSITIONS.................................................. 75
SECTION 1401. Dispositions By Current Management.................. 75
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INDENTURE dated as of December 1, 1995, between POLYPHASE CORPORATION,
a Nevada corporation (hereinafter called the "Company"), having its principal
executive office at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and IBJ ▇▇▇▇▇▇▇▇
BANK & TRUST COMPANY (hereinafter called the "Trustee"), having its Corporate
Trust Office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 12% Senior
Convertible Debentures due December 1, 1997 (the "Bonds"), of substantially the
tenor and amount hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture.
All things necessary to make the Bonds, when executed by the Company and
authenticated and delivered hereunder and duly issued by the Company, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Bonds
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Bonds, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
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) the following Trust Indenture Act terms used in this Indenture
have the following meanings:
"indenture securities" means the Bonds;
"indenture security holder" means a Holder;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company and any other
obligor on the Bonds;
(3) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(4) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States of America at the date of such
computation ("GAAP"); and
(5) 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.
"Act" when used with respect to any Holder has the meaning specified
in SECTION 701.
"Affiliate" of any specified Person means any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such specified Person. For the purposes of this definition, "control" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Acquisition" means the acquisition by the Company of certain land in
Las Vegas, Nevada in connection with the construction of a domed stadium.
"Authenticating Agent" has the meaning specified in SECTION 612.
"Average Price" means, when used with reference to the per share price
of the Common Stock for any date, (a) the average of the high and low sale
price, regular way, or, if no such sale takes place on such date the average of
the high bid and low asked prices, regular way, in each case as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common Stock
is listed or admitted to trading or (b) if the Common Stock is not listed or
admitted to trading on any national securities exchange, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
NASDAQ/NMS or such other system then in use or (c) if on any such date the
Common Stock is not quoted by any such organization, the average of the high bid
and low asked prices as furnished by a professional market maker that is a
member of the National Association of Securities Dealers, Inc. making a market
in the Common Stock selected by the Board of Directors of the Company. If the
Common Stock is not traded in such manner that the quotations referred to above
are available for the period required hereunder, "Average Price" shall mean the
Fair Market Value per share of Common Stock as determined in good faith by the
Board of Directors of the Company based on an
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opinion of an independent investment banking firm with an established reputation
as a valuer of securities, which opinion may be based on such assumptions as
such firm shall deem necessary and appropriate.
"Bankruptcy Law" means Title 11, U.S. Code or any other federal or
state law for the relief of debtors, as any such laws may be amended from time
to time.
"Board of Directors" means either the board of directors of the
Company, or any committee of that board duly authorized to act in respect
hereof.
"Board Resolution" means a copy of a resolution duly adopted in good
faith by the Board of Directors, certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Bond Register" and "Bond Registrar" have the respective meanings
specified in SECTION 305(A).
"Bonds" has the meaning stated in the first recital of this Indenture
and more particularly means any Bonds authenticated and delivered under this
Indenture.
"Business Day" when used with respect to any Place of Payment or any
other particular location referred to in this Indenture or in the Bonds means
any day that is not a Saturday, a Sunday or a legal holiday or a day on which
banking institutions or trust companies in that Place of Payment are authorized
or obligated by law to close.
"Change of Control" has the meaning specified in Paragraph 5 of the
Bonds.
"Closing Price" means, when used with reference to the per share price
of the Common Stock for any date, (a) the last sale price, regular way, or, if
no such sale takes place on such date the average of the closing bid and asked
prices, regular way, in each case as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading or (b) if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the NASDAQ/NMS or such other system then in use, or (c) if on any
such date the Common Stock is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
that is a member of the National Association of Securities Dealers, Inc. making
a market in the Common Stock selected by the Board of Directors of the Company.
If the Common Stock is not traded in such manner that the quotations referred to
above are available for the period required hereunder, "Closing Price" shall
mean the Fair Market Value per share of Common Stock as determined in good faith
by the Board of Directors of the Company based on an opinion of an independent
investment banking firm with an established reputation as a valuer of
securities, which opinion may be based on such assumptions as such firm shall
deem necessary and appropriate.
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"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties on such date.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company and any other successor common stock of the Company into which the
Company's common stock, par value $0.01 per share, may be converted or
reclassified or that may be issued in exchange or substitution therefor.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument (i) until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall include such successor Person and (ii) for purposes of any
provision contained herein and required by the Trust Indenture Act, each other
obligor on the Bonds.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by the Chairman, a Vice
Chairman, the President or a Vice President and by the Chief Financial Officer,
the Treasurer or the Controller of the Company, and delivered to the Trustee.
"Consolidated Net Income", for any period, means the net income (or
loss) of the Company and its Subsidiaries on a consolidated basis for such
period (taken as a single accounting period) determined in conformity with GAAP,
excluding (i) to the extent otherwise included therein, any gains or losses
realized upon any sale of assets other than in the ordinary course of business
and (ii) the net income (or loss) of any Person acquired by the Company or any
Subsidiary in a transaction accounted for as a pooling of interests to the
extent such net income (or loss) is attributable to any period prior to the date
of such acquisition.
"Consolidated Operating Cash Flow", for any period, means Consolidated
Net Income plus (i) net interest expense and (ii) depreciation and amortization,
minus the aggregate amount of earnings not legally available to pay all interest
payable on the Bonds during such period.
"Consultant" has the meaning specified in SECTION 1014.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend, guaranty, letter of credit or other obligation
(the "primary obligation") of another Person (the "primary obligor"), including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase, repurchase or otherwise acquire such primary obligations or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation
(whether in the
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form of loans, advances, stock purchases, capital contributions or otherwise),
or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item, level
of income or financial condition of the primary obligor or (c) to purchase or
make payment for property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or that any agreements
relating thereto will be complied with, or (d) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the Company in good faith.
"Contractual Obligations" means as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument to which such Person is a
party or by which it or any of its property is bound.
"Conversion Price" has the meaning specified in SECTION 1301.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this instrument is
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Current Management" means ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇.
"Current Market Price" means at any date the average of the daily
Closing Prices per share of Common Stock for the 20 consecutive Trading Days
immediately preceding the day in question. For purposes of SECTION 1303, the
term "Current Market Price" shall mean, with respect to an underwritten public
offering of Common Stock for cash on a firm commitment basis, the cash price at
which such Common Stock is sold to the public pursuant to such underwritten
offering.
"Default" means any event, act or condition that is, or after notice
or passage of time, or both, would constitute, an Event of Default.
"Delisting" has the meaning specified in Paragraph 5 of the Bonds.
"Dollar" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
5
"ERISA Affiliate" means all trades or businesses (whether or not
incorporated) that are under common control with the Company or any Subsidiary
that, together with the Company or any Subsidiary, are treated as a single
employer under Section 414(b), 414(c), 414(m) or 414(o) of the Code.
"ERISA Event" means as to the Company, any Subsidiary or any ERISA
Affiliate: (a) a Reportable Event described in Section 4043 of ERISA (other than
a Reportable Event not subject to the provision for 30-day notice to the PBGC
under such regulations); or (b) the withdrawal of the Company, any Subsidiary or
any ERISA Affiliate from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; or (c) the
filing of a notice of intent to terminate a Pension Plan covered by Title IV of
ERISA in a distress termination, or the treatment of an amendment of such
Pension Plan as a termination under Section 4041 of ERISA; or (d) the
institution of proceedings to terminate such a Pension Plan by the PBGC; or (e)
the imposition of a lien under Section 412 of the Code or Section 302 of ERISA;
or (f) any other event or condition that might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any such Pension Plan or to result in
the imposition of any liability under ERISA or the Code other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"Event of Default" has the meaning specified in SECTION 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Fair Market Value" shall mean the amount that a willing buyer would
pay a willing seller in an arm's-length transaction.
"Financial Contracts" means, with respect to any Person, financial
futures, options on financial futures, forward purchase agreements, rate swap
transactions, basis swaps, forward rate transactions, swap options, bond
options, interest rate options, foreign exchange transactions, cap, floor and
collar transactions, currency and cross-currency swap transactions and options
thereon and any other similar transactions, options thereon and any combination
of any of the foregoing entered into by such Person.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" means the government of any nation, state or
other political subdivision thereof, any central bank thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Holder" means a person in whose name a Bond is registered in the Bond
Register.
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"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations of the Federal Trade Commission
thereunder.
"Indebtedness" means as to any Person (a) all obligations of such
Person for borrowed money (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit, bankers'
acceptances and similar credit transactions, whether or not matured), (b) all
obligations evidenced by notes, bonds, debentures or similar instruments, (c)
all obligations to pay the deferred purchase price of property or services,
except trade accounts payable or other accrued liabilities to trade creditors
arising in the ordinary course of business; (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property); (e) all obligations under leases that
have been or should be, in accordance with GAAP, recorded as capital leases; (f)
all obligations of the type referred to in any of the preceding clauses (a)
through (e) of other Persons secured by any Lien (other than Liens in favor of
lessors under leases other than leases included in the preceding clause (e)) on
any property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is non-
recourse to the credit of that Person; and (g) any Contingent Obligation for any
of the foregoing.
"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.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Bonds.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge, deposit arrangement, encumbrance, lien (statutory or other)
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including, without limitation, those created
by, arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capitalized lease obligation, or any
financing lease having substantially the same economic effect as any of the
foregoing).
"Major Holder" means a Holder of at least $500,000 aggregate principal
amount of Bonds; provided that, for the purposes of this definition, all
investment companies registered under the Investment Company Act of 1940, as
amended, that are part of the same family of investment companies (as defined in
Rule 144A under the Securities Act) shall collectively be deemed to be a single
"Holder."
"Material Subsidiary," as of any date, means any Subsidiary of the
Company (i) having total assets in excess of 10% of the consolidated total
assets of the Company and its Subsidiaries, determined as of the end of the most
recently ended fiscal quarter of the Company, as adjusted to reflect any
material change in capital stock or paid in capital since that date, or (ii)
which shall have accounted for more than 10% of Consolidated Operating Cash Flow
for any of the three most recently ended fiscal years of the Company.
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"Maturity" when used with respect to any Bond means the date on which
the principal of or premium on such Bond or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption, purchase at the option of
the Holder thereof or otherwise.
"Multiemployer Plan" means a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA as to which the Company, any Subsidiary, or any
ERISA Affiliate could have any direct or indirect liability, obligation or
commitment of any nature (absolute, accrued, contingent or otherwise).
"NASDAQ/NMS" means the National Association of Securities Dealers,
Inc. Automated Quotation System/National Market System.
"Officers' Certificate" means a certificate signed by the Chairman, a
Vice Chairman, the President or a Vice President, and by the Chief Financial
Officer, the Treasurer or the Controller of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Company (including an employee of the Company) and who shall be
reasonably satisfactory to the Trustee, which is delivered to the Trustee.
"Outstanding" when used with respect to Bonds, means, as of the date
of determination, all Bonds theretofore authenticated and delivered under this
Indenture, except:
(i) Bonds theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Bonds for whose payment or redemption money 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 Bonds; provided, however, that if such Bonds are to be
redeemed, notice of such redemption has been duly given pursuant to this
Indenture; and
(iii) Bonds that have been surrendered pursuant to SECTION 306 or in
exchange for or in lieu of which other Bonds have been authenticated and
delivered pursuant to this Indenture, other than any such Bonds in respect
of which there shall have been presented to the Trustee proof satisfactory
to it that such Bonds are held by a bona fide purchaser in whose hands such
Bonds are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Bonds outstanding have performed any Act hereunder, Bonds
owned by the Company or any other obligor upon the Bonds or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such Act, only Bonds that the Trustee knows to be so owned
shall be so disregarded. Bonds 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
8
right to act with respect to such Bonds and that the pledgee is not the Company
or any other obligor upon the Bonds or any Affiliate of the Company or of such
other obligor. In determining whether the Holders of the requisite principal
amount of Outstanding Bonds have performed any Act hereunder, the principal
amount of a Bond that shall be deemed to be Outstanding for such purpose shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the Maturity
thereof pursuant to SECTION 502.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Bonds on behalf of the
Company.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means any Plan that is subject to Title IV of ERISA or the
minimum funding standards of Section 412 of the Code.
"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, association, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Place of Payment" when used with respect to the Bonds of means the place
or places where the principal of (and premium, if any) and interest on the Bonds
are payable as specified pursuant to SECTION 301.
"Plan" means at any time, an employee benefit plan as defined in Section
3(3) of ERISA as to which the Company or any Subsidiary could have any direct or
indirect liability, obligation or commitment of any nature (absolute, accrued,
contingent or otherwise), provided, that the term "Plan" shall not include any
Multiemployer Plan.
"Polyphase Entities" means the Company and its Subsidiaries.
"Predecessor Bond" of any particular Bond means every previous Bond
evidencing all or a portion of the same debt as that evidenced by such
particular Bond; and, for the purposes of this definition, any Bond
authenticated and delivered under SECTION 306 in exchange for or in lieu of a
mutilated, lost, destroyed or stolen Bond shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Bond.
"Projected Consolidated Net Income," for any period, means the net income
(or loss), as reasonably projected by the Company and its Subsidiaries for such
period (which projections shall be based upon factual assumptions reasonably
made by the Company), of the Company and its Subsidiaries on a consolidated
basis, for such period (taken as a single accounting period) determined in
conformity with GAAP, excluding (i) to the extent otherwise included therein,
any gains or losses realized upon any sale of assets other than in the ordinary
course of business and (ii) the net income (or loss) of any Person acquired by
the Company or any Subsidiary in a transaction accounted for as a pooling of
interests to the extent such net income (or loss) is attributable to any period
prior to the date of such acquisition.
9
"Projected Consolidated Operating Cash Flow," for any period, means
Projected Consolidated Net Income plus (i) net interest expense and (ii)
depreciation and amortization, minus the aggregate amount of earnings not
legally available to pay all interest on the Bonds during such period, in each
case as reasonably projected by the Company and its Subsidiaries in such period,
which projections shall be based upon factual assumptions reasonably made in
good faith by the Company.
"Projected Fixed Charges" means the sum of the following: (i) the maximum
total interest charges and expense plus (ii) all scheduled payments of principal
of (and premium, if any) of Indebtedness, in each case reasonably projected by
the Company to be paid or payable by the Company and its Subsidiaries in any
fiscal year of the Company ending on or before December 1, 1997, which
projections shall be based upon factual assumptions reasonably made in good
faith by the Company.
"Purchase Date" means the date fixed for purchase, pursuant to Paragraph 5
of the Bonds, of any Bond pursuant to this Indenture.
"Purchase Price" means, when used with respect to any Bond to be purchased
pursuant to Paragraph 4 or 5 of the Bonds, the price for purchase of such Bond
pursuant to this Indenture at the Purchase Date.
"Purchasers" means the Persons who accept and agree to the terms of the
Securities Purchase Agreement as indicated by signature on an execution page of
such Agreement, and shall include any indirect or direct transferees of Bonds
pursuant to such Agreement.
"Record Date" shall mean the fifteenth day preceding an Interest Payment
Date.
"Redemption Date" means the date fixed for redemption, pursuant to
Paragraph 2 of the Bonds, of any Bond pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Bond to be
redeemed, the price for redemption of such Bond pursuant to this Indenture at
the Redemption Date.
"Registrar" means the Bond Registrar.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, between the Company and the Purchasers.
"Requirements of Law" means, as to any Person, any foreign, federal, state
or local law, treaty, rule or regulation and any determination, judgment, order,
decree or award 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.
"Reserve Fund" has the meaning specified in SECTION 1005.
10
"Responsible Officer" when used with respect to the Trustee means any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
any Trust Officer or Assistant Trust Officer assigned by the Trustee to
administer its corporate trust matters, or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his or her
knowledge of and familiarity with the particular subject.
"Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as December 1, 1995, by and among the Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇ World Income
Fund, Inc. and Convertible Holdings, Inc.
"Special Record Date" has the meaning specified in SECTION 105.
"Stated Maturity" when used with respect to any Bond or any principal
thereof or premium thereon or installment of interest thereon means the date
specified in such Bond as the date on which such principal, premium or
installment of interest is due and payable.
"Subsidiary" means, as to any Person, (a) any corporation more than 50% of
the outstanding Voting Stock of which 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 and (b) 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 direct the policies,
management and affairs thereof. Unless otherwise qualified, all references in
this Indenture to a "Subsidiary" or "Subsidiaries" shall refer to a Subsidiary
or Subsidiaries of the Company.
"Trading Day" means any day on which the applicable national securities
exchange on or the applicable national securities market in which the Common
Stock is listed or admitted to trading is open for the transaction of business
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange or national securities market, a Business Day.
"Transfer Restricted Securities" means securities that are required to bear
the legend set forth in SECTION 201(B).
"Trigger Date" has the meaning specified in Paragraph 2 of the Bonds.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended and
in force at the date as of which this instrument was executed.
"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 or
include each Person who is then a Trustee hereunder.
11
"Vice President" includes with respect to the Company and the Trustee, any
Vice President of the Company or the Trustee, as the case may be, whether or not
designated by a number or word or words added before or after the title "Vice
President."
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take or
refrain from taking any action under any provision of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate, in form and
substance reasonably satisfactory to the Trustee, 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, in form and substance
reasonably satisfactory to the Trustee, stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, 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.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(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 each such individual, such
individual has made such examination or investigation as is necessary to
enable such individual 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, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that such certificate or opinion or representations
with respect to the matters upon which such officer's certificate or
12
opinion is based are erroneous. Any such certificate or Opinion of Counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that such certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(1) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
delivered in person or mailed, first-class postage prepaid, to or with the
Trustee addressed to its Corporate Trust Office at the address specified in
the first paragraph of this instrument, Attention: Corporate Trust &
Agencies Administration; or
(2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
in writing and mailed, first-class postage prepaid or airmail postage
prepaid if sent from outside the United States, to the Company addressed to
it at the address of its principal office specified in the first paragraph
of this instrument, to the attention of its Treasurer, or at any other
address previously furnished in writing to the Trustee and each Holder by
the Company.
Any such Act or other document shall be in the English language, except
that any published notice may be in an official language of the country of
publication.
SECTION 105. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event or any
other communication to Holders, such notice or other communication shall be
sufficiently given to Holders (unless otherwise herein expressly provided) if in
writing and delivered in person or mailed, first-class postage prepaid, to such
Holders as their names and addresses appear in the Bond Register, within the
time prescribed. Any notice provided to Holders pursuant hereto shall be
provided to the Trustee as well, in the manner set forth in SECTION 104.
In the event of suspension of regular mail service or by reason of any
other cause it shall be impracticable to give notice by mail, such notice or
other communication shall be sent by telex, telecopy or other facsimile
transmission or by overnight courier, provided that any such notice or other
communication sent to any Holder in any such manner shall be deemed to be given
only upon receipt by such Holder.
13
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.
Such waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance on such waiver. In any case where notice to Holders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Holder, shall affect the sufficiency of such notice with
respect to other Holders, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given.
The Company may, in the circumstances permitted by the Trust Indenture Act,
fix any day as the record date (the "Special Record Date") for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted to be given or taken by Holders. If not set
by the Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day prior to
such first solicitation or vote, as the case may be. With regard to any such
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action or to revoke
any such act, whether or not such Holders continue to be Holders after such
record date.
Holders may communicate pursuant to Section 312(b) of the Trust Indenture
Act with other Holders with respect to their rights under this Indenture or the
Bonds.
SECTION 106. CONFLICT WITH TRUST INDENTURE ACT.
If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with another provision required to be included in this Indenture by
operation of Sections 310 to 317, inclusive, of the Trust Indenture Act (an
"incorporated provision"), such incorporated provision shall control.
If any provision of this Indenture modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
If at such time as it becomes necessary to qualify the Indenture under the
Trust Indenture Act and any provision of this Indenture conflicts with the Trust
Indenture Act, the Company, when authorized by a Board Resolution, and the
Trustee shall enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, to amend the Indenture to provide for the Indenture
to qualify under the Trust Indenture Act, all subject to and in accordance with
the provisions of ARTICLE NINE.
14
SECTION 107. 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 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture and the Bonds by the parties
hereto shall bind their respective successors and assigns and inure to the
benefit of their permitted successors and assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In the event that any one or more of the provisions contained in this
Indenture or in the Bonds, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any jurisdiction, in any respect and
for any reason, the validity, legality and enforceability of any such provision
in every other respect, and in any other jurisdiction, and of the remaining
provisions hereof shall not be in any way impaired, it being intended that all
of the rights and privileges of the Holders shall be enforceable to the fullest
extent provided by law.
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Bonds, express or implied, shall give
to any Person, other than the parties hereto, any Bond Registrar, any Paying
Agent and their successors hereunder, and the Holders, any benefit or any legal
or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW.
This Indenture and the Bonds shall be deemed to be contracts made and to be
performed entirely in the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State without
regard to the conflicts of law rules of said State.
SECTION 112. LEGAL HOLIDAYS.
Unless otherwise specified pursuant to this Indenture or in any Bond, in
any case where any Interest Payment Date, Redemption Date, Purchase Date or
Stated Maturity of any Bond shall not be a Business Day at any Place of Payment
for the Bonds, then (notwithstanding any other provision of this Indenture or of
the Bonds) payment of principal (and premium, if any) or interest need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date, Redemption Date, Purchase Date or at
the Stated Maturity, and no interest shall accrue on the amount so payable for
the period from and after such Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity, as the case may be, to such Business Day if such
payment is made on such Business Day.
15
SECTION 113. NO SECURITY INTEREST CREATED.
Nothing in this Indenture or in the Bonds, express or implied, shall be
construed to constitute a security interest under the Uniform Commercial Code or
similar legislation, as now or hereafter enacted and in effect in any
jurisdiction where property of the Company or its Subsidiaries is or may be
located.
SECTION 114. LIABILITY SOLELY CORPORATE.
No recourse shall be had for the payment of the principal of (or premium,
if any) or the interest on any Bonds, or any part thereof, or of the
indebtedness represented thereby, or upon any obligation, covenant or agreement
of this Indenture, against any incorporator, or against any stockholder, officer
or director, as such, past, present or future, of the Company (or any
incorporator, stockholder, officer or director, as such, of any predecessor or
successor corporation), either directly or through the Company (or any such
predecessor or successor corporation), whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Indenture and all
the Bonds are solely corporate obligations, and that no personal liability
whatsoever shall attach to, or be incurred by, any such incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company (or any incorporator, stockholder, officer or director, as such, of any
such predecessor or successor corporation), either directly or indirectly
through the Company or any such predecessor or successor corporation, because of
the indebtedness hereby authorized or under or by reason of any of the
obligations, covenants, promises or agreements contained in this Indenture or in
any of the Bonds or to be implied herefrom or therefrom; and that any such
personal liability is hereby expressly waived and released as a condition of,
and as part of the consideration for, the execution of this Indenture and the
issue of the Bonds; provided, however, that nothing contained herein or in the
Bonds shall be taken to prevent recourse to and the enforcement of the
liability, if any, of any stockholder or subscriber to capital stock of the
Company upon or in respect of the shares of capital stock of the Company not
fully paid.
SECTION 115. COUNTERPARTS.
This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.
SECTION 116. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
16
ARTICLE TWO
FORMS OF BONDS
SECTION 201. FORMS GENERALLY.
(a) The Bonds and the Trustee's certificate of authentication shall be
substantially in the forms set forth in this Article, and shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements
placed thereon as are appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation of any securities exchange on which the Bonds may be
listed, or to conform to usage.
The definitive Bonds 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, all as determined by the officers executing such
Bonds, as conclusively evidenced by their execution of such Bonds.
(b) The following legend shall appear at the top of the face of the
form of Bond set forth in SECTION 202 until such time as the Trustee receives an
opinion of Counsel that the same is no longer required under the Securities
Purchase Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS."
At such time that the Trustee receives an opinion of counsel that a
Bond is no longer a Transfer Restricted Security, the provision set forth in
SECTION 203 requiring the Holder to (a) disclose its compliance with an
exemption from registration under the Securities Act provided by Rule 144 or
Rule 144A or (b) provide documents to evidence compliance with the conditions of
certain transfers, shall be removed from the form of such Bond.
17
SECTION 202. FORM OF FACE OF BOND.
POLYPHASE CORPORATION
12% SENIOR CONVERTIBLE DEBENTURES
DUE DECEMBER 1, 1997
NO. _____________ $________________
Polyphase Corporation, a corporation duly organized and existing under the
laws of the State of Nevada (herein called the "Company", which term includes
any successor Person under the Indenture hereinafter referred to) for value
received, hereby promises to pay to ________________, or registered assigns, the
principal sum of _________________________ Dollars on December 1, 1997, and to
pay interest thereon from December 1, 1995 or from the most recent Interest
Payment Date to which interest has been paid, semi-annually on December 1 and
June 1 in each year, commencing June 1, 1996, at the rate of 12% per annum,
until the principal hereof is paid. In the event that, (i) the Company shall
have received a written request to effect a registration of securities under the
Securities Act pursuant to Section 2.1 of the Registration Rights Agreement and,
for any reason whatsoever, (ii) either (A) the Company shall not have filed with
the Commission a registration statement with respect to such registration in
accordance with Section 2.1 and the other applicable provisions of the
Registration Rights Agreement or (B) such registration statement shall have been
so filed but shall not have been declared effective by the Commission, in either
case on or before the 90th day following the receipt by the Company of such
written request, the interest rate in respect of the Bonds shall, on such date,
increase to 12 1/4% per annum, and shall further increase on the last day of
each consecutive fiscal quarter of the Company thereafter by an additional
1/4%; provided, however, that the interest rate shall revert to 12% per annum
when such registration statement has been filed as aforesaid and declared
effective by the Commission. The interest so payable, and punctually paid, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Bond (or one or more Predecessor Bonds) is registered
at the close of business on the Record Date immediately preceding such Interest
Payment Date. The Company shall pay interest on overdue principal (and premium,
if any) at the interest rate then in effect plus 1% per annum, and it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful. Interest on this Bond shall be computed on the basis of a 360-day year
of twelve 30-day months.
The principal of (and premium, if any) and interest on this Bond shall be
payable at the Corporate Trust Office of the Trustee and at the office or agency
of the Company at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the City of Dallas, the State of Texas,
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose; provided, however, that at the option of the Company
payment of interest may be made at the Corporate Trust Office of the Trustee, by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Bond Register or by wire transfer of immediately available funds
to an account previously designated to the Company by such Person at least three
Business Days prior to the Interest Payment Date.
18
Reference is hereby made to the further provisions of this Bond set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Bond 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 instrument to be duly
executed under its seal.
Dated:
POLYPHASE CORPORATION
By:
----------------------------------
Title:
--------------------------------
TRUSTEE'S CERTIFICATE OF Attest:
AUTHENTICATION
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST --------------------------------------
COMPANY, as Trustee, certifies Secretary
that this is one of the Bonds
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
SECTION 203. FORM OF REVERSE OF BOND.
1. The Indenture. This Bond is one of a duly authorized issue of Bonds of
the Company designated as its 12% Senior Convertible Debentures due December 1,
1997 (herein called the "Bonds"), limited in aggregate principal amount to
$1,500,000, issued and to be issued under an Indenture, dated as of December 1,
1997 (herein called the "Indenture"), between the Company and IBJ ▇▇▇▇▇▇▇▇ Bank
& Trust Company, as Trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), 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 Bonds and of the terms upon
which the Bonds are, and are to be, authenticated and delivered. The terms of
the Bonds include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 as amended and in
effect on the date of the Indenture. All terms used in this Bond that are
defined in the Indenture shall have the meanings assigned to them in the
Indenture.
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Initially, IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, as Trustee, will act as
Paying Agent, Registrar and Conversion Agent. The Company may change any Paying
Agent, Registrar, Conversion Agent or co-registrar without notice. The Company
may act in any such capacity.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture which has in it the text of the Bond. Requests
may be made to: Polyphase Corporation, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: Corporate Secretary.
2. Optional Redemption. Subject to the conditions set forth below, the
Company may, at its option, redeem the Bonds, in whole at any time or in part
from time to time, at the following redemption prices (expressed as a percentage
of principal amount), payable in cash, in each case together with accrued
interest to the Redemption Date:
Redemption Period Percentage
----------------- ----------
Within 12 months of 105%
the date hereof
Thereafter 104%
Notwithstanding the preceding provisions of this Paragraph 2, the Company
shall not have the right to redeem any Bonds pursuant to this Paragraph 2 unless
(a) the Average Price per share of Common Stock for each of any 40 Trading Days
occurring in a period of 60 consecutive Trading Days shall have exceeded 250% of
the Conversion Price in effect on such day and (b) the Company shall have given
to each Holder, in accordance with SECTION 105 of the Indenture, within 10 days
following the last day of such 60-day period (the "Trigger Date"), written
notice of such event, in which case the Company shall have the right to redeem
the Bonds as hereinabove described at any time during the period commencing on
the 51st day after the Trigger Date and ending on November 30, 1997.
3. Notice of Redemption. Notice of redemption pursuant to Paragraph 2
hereof will be given at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Bonds to be redeemed at its registered
address. If money sufficient to pay the Redemption Price of and accrued
interest on all Bonds (or portions thereof) to be redeemed on the Redemption
Date is deposited with the Paying Agent on or before the Redemption Date, on and
after the Redemption Date, interest will cease to accrue on such Bonds or
portions thereof.
4. Use of Proceeds Put Provision. In the event that the Company uses any
of the proceeds of the issuance of the Bonds other than to fund the purchase
price for the Acquisition, the Company shall immediately provide the Holders
with written notice of such other use. In such event, the Holders have the
right for a period of 90 days from the date such notice is received, at its
option, to require the Company to purchsae all or any portion of such Holder's
Bonds at a price equal to the Purchase Price plus accrued but unpaid interest
through the date such Bonds are purchased by the Company.
5. Put Provision. In the event of a Change of Control or a Delisting
(each as hereinafter defined), each Holder shall have the right, at its option,
to require the Company to
20
purchase all or any portion of such Holder's Bonds at a price equal to the
greater of (a) the Current Market Price per share of Common Stock (determined
with reference to the date described in the following clause (i) or (ii), as
applicable) multiplied by the number of shares of Common Stock into which the
aggregate principal amount of such Bonds is convertible at the Conversion Price
in effect on (i) in the event of a merger or consolidation described in clause
(d)(i) or (d)(ii) of the definition of Change of Control set forth below, the
earlier of (A) the date of execution of the definitive merger or consolidation
agreement in respect of such merger or consolidation and (B) the date any of the
principal terms of such merger or consolidation are publicly announced or (ii)
in the event of any other Change of Control, the date such Change of Control
occurs, and (b) the Redemption Price in effect on the date of such event, plus
accrued and unpaid interest to the Purchase Date, as provided in, and subject to
the terms of, the Indenture.
A "Change of Control" shall be deemed to have occurred if and at the time
that:
(a) any Person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act), other than Current Management (which for purposes of this
clause (a) shall include any Person to whom Current Management may transfer
Common Stock pursuant to SECTION 1401 of the Indenture) or their Affiliates, is
or becomes the beneficial owner, directly or indirectly, of outstanding shares
of stock of the Company entitling such Person or Persons to exercise 50% or more
of the total voting power of all classes of stock of the Company entitled to
vote in the election of directors (the term "beneficial owner" shall be
determined in accordance with Rules 13d-3 and 13d-5 promulgated by the
Commission under the Exchange Act);
(b)(i) Current Management (including their Affiliates, other than the
Company, and any Person to whom Current Management may transfer Common Stock
pursuant to SECTION 1401 of the Indenture) cease to be the beneficial owner,
directly or indirectly, in the aggregate, of shares of Common Stock having a
fair market value (based on the most recent Closing Price per share of the
Common Stock) of at least $12,500,000; (ii) any member of Current Management
ceases to be a director or executive officer (within the meaning of Rule 3b-7
promulgated by the Commission under the Exchange Act) of the Company; or (iii)
any member of Current Management ceases to devote a substantial part of his time
to the Company's business;
(c) the Company conveys, transfers or leases all or substantially all
of its assets to any other Person; or
(d) the Company consolidates or merges with or into any other Person
and (i) the Company is not the surviving corporation, (ii) the Company's
earnings per share of Common Stock determined on a pro forma basis, giving
effect to such merger or consolidation, for its fiscal year most recently ended
and any subsequent interim period with respect to which financial statements are
required to be delivered pursuant to SECTION 1201 of the Indenture, shall be
less than the Company's historical earnings per share for either such period,
which determination shall be made by the Board of Directors, as evidenced by a
Board Resolution, within five (5) days following the consummation of such
consolidation or merger, or (iii) at any time prior to the last day of the 36th
full calendar month following such consolidation or merger,
21
persons who have continuously served as officers or directors of the Company for
a period of at least 24 months immediately prior to the effective date of such
consolidation or merger cease to constitute a majority of the board of directors
of the Person formed by such consolidation or into or with which the Company is
merged.
A "Delisting" shall be deemed to have occurred if and at such time as the
Common Stock is neither (a) listed on the New York Stock Exchange or the
American Stock Exchange nor (b) admitted for trading and traded through the
NASDAQ/NMS.
Notice of each Change of Control and each Delisting shall be given to each
Holder no later than ten (10) days following the occurrence of such event.
6. Optional Conversion. Any Holder shall have the right, at its option,
at any time prior to the close of business on December 1, 1997, to convert,
subject to the terms and provisions of the Indenture, the principal amount of
any Bond (or any portion of the principal amount thereof that is $1,000 or an
integral multiple of $1,000) into such number of fully paid and non-assessable
shares of Common Stock as is equal to (i) the principal amount of the Bond
divided by (ii) $5.00, subject to adjustment as provided in the Indenture (such
price, as so adjusted, is referred to herein as the "Conversion Price"), except
that (a) with respect to any Bond, or any portion thereof, which shall be called
for redemption pursuant to Paragraph 2 of the Bonds, such right shall terminate
at the close of business on the Redemption Date for such Bond, or such portion,
unless in any such case the Company shall default in payment of the Redemption
Price due upon such redemption and (b) with respect to any Bond, or any portion
thereof, delivered by a Holder for purchase by the Company pursuant to Paragraph
4 of the Bonds, such right shall terminate at the close of business on the
Purchase Date for such Bond, or such portion, unless in any such case the
Company shall default in payment of the Purchase Price therefor. Such
conversion right shall be exercised by the surrender of the Bond or Bonds, the
principal amount of which is so to be converted, to the Trustee at its Corporate
Trust Office any time during usual business hours, accompanied by written notice
that the Holder elects to convert such Bond or Bonds or any portion thereof and
specifying the name or names (with addresses) in which a certificate or
certificates for shares of Common Stock are to be issued and (if so required by
the Company) by a written instrument or instruments of transfer in form
reasonably satisfactory to the Trustee duly executed by the Holder or its duly
authorized legal representative and transfer tax stamps or funds therefor, if
required pursuant to the Indenture.
Upon conversion of any Bond or portion thereof, the Holder thereof shall be
entitled to receive payment of all accrued and unpaid interest on such Bond or
portion thereof through the date of conversion. The Company will deliver a
check in the amount of such accrued and unpaid interest plus any amount in lieu
of any fractional share.
7. Defaults and Remedies. If an Event of Default shall occur and be
continuing, the principal of (and premium, if any) and accrued interest on the
Bonds may be declared due and payable immediately in the manner and with the
effect provided in the Indenture.
8. Amendments and Waivers. The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights
and obligations of the Company and the rights of the Holders of the Bonds under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal
22
amount of the Bonds at the time Outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Bonds at the time Outstanding, on behalf of the Holders
of all the Bonds, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Bond.
9. Obligations Unconditional. No reference herein to the Indenture and no
provision of this Bond or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of
(and premium, if any) and interest on this Bond at the times, place and rate,
and in the coin or currency, herein prescribed.
10. Denominations, Transfers, Exchange. The Bonds are issuable only in
registered form in denominations of $1,000 and any integral multiple thereof. A
Holder may transfer or exchange Bonds in accordance with the Indenture. The
Bond Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes permitted by the
Indenture.
11. Persons Deemed Owners. Prior to due presentment of this Bond for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Bond is registered as the
owner hereof for all purposes, whether or not this Bond be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
12. Governing Law. The Indenture and this Bond shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflicts of law rules of such State.
13. No Recourse Against Others. No recourse shall be had for the payment
of the principal of (or premium, if any) or the interest on any Bonds, or any
part thereof, or of the indebtedness represented thereby, or upon any
obligation, covenant or agreement of the Indenture, against any incorporator, or
against any stockholder, officer or director, as such, past, present or future,
of the Company. By accepting a Bond, each Holder waives and releases all such
liability. The waiver and release are part of the consideration for the issue
of the Bonds.
14. Authentication. This Bond shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs the
certificate of authentication on the other side of this Bond.
15. Abbreviations. Customary abbreviations may be used in the name of
Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants
by the entireties), JT TEN (=joint tenants with rights of survivorship and not
as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
ASSIGNMENT
23
I or we assign and transfer this Bond to:
(Insert assignee's social security or tax I.D. number)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Agent to transfer this Bond on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
---------
[_] (a) this Bond is being transferred in compliance with the exemption from
registration under the Securities Act provided by Rule 144 or Rule
144A thereunder.
or
[_] (b) this Bond is being transferred other than in accordance with (a)
above and documents are being furnished that comply with the
conditions of transfer set forth in this Bond and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Bond in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Section 305 of the Indenture shall have been satisfied.
Date: Your Signature:
------------------------- -------------------------
----------------------------------------
(Sign exactly as your name appears on the
other side of this Bond)
Signature Guarantee: ----------------------------------------
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(Signature must be guaranteed by a member firm of a national securities exchange
or of the National Association of Securities Dealers, Inc. or by a commercial
bank or trust company)
OPTION OF HOLDER TO ELECT PURCHASE/CONVERSION
If you want to elect to have all or any part of this Bond purchased by
the Company pursuant to Paragraph 4 or 5 herein or converted into Common Stock
pursuant to Section 1301 of the Indenture, check the appropriate box:
[_] Purchase/Paragraph 4 or 5 [_] Convert/Section 1301
If you want to have only part of the Bond purchased or converted by
the Company pursuant to the above Sections, state the amount you elect to have
purchased/converted:
$___________________
If you want the stock certificate made out in another person's name,
complete the following:
(Insert other person's social security or tax I.D. number)
________________________________________
________________________________________
________________________________________
________________________________________
(Print or type other person's name, address and zip code)
Date: Your Signature:
--------------------------- ------------------------
-----------------------------------------
(Sign exactly as your name appears on the
other side of this Bond)
Signature Guarantee: -----------------------------------------
(Signature must be guaranteed by a member firm of a national securities exchange
or of the National Association of Securities Dealers, Inc. or by a commercial
bank or trust company)
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SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The form of the Trustee's certificate of authentication to be borne by the
Bonds shall be substantially as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds issued under the within mentioned Indenture.
________________________________,
as Trustee
By:
------------------------------
Authorized Signatory
ARTICLE THREE
THE BONDS
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Bonds which may be authenticated and
delivered under this Indenture is limited to $1,500,000, except for Bonds
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Bonds pursuant to ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇, ▇▇▇, ▇▇ ▇▇▇. The
Bonds shall be known and designated as the "12% Senior Convertible Debentures
due December 1, 1997" of the Company. The Stated Maturity of the Bonds shall be
as set forth in the form of Bond included in this Article, and the Bonds shall
pay interest as provided therein. The terms of the Bonds included in SECTIONS
202 and 203 are part of the terms of this Indenture.
The principal of (and premium, if any) and interest on the Bonds shall
be payable at the Corporate Trust Office of the Trustee and at the office or
agency of the Company at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the City of Dallas, the State of
Texas, maintained for such purpose and at any other office or agency maintained
by the Company for such purpose; provided, however, that at the option of the
Company payment of interest may be made at the Corporate Trust Office of the
Trustee, by check mailed to the address of the Person entitled thereto as such
address shall appear in the Bond Register or by wire transfer of immediately
available funds to an account previously designated to the Company by such
Person in writing at least three Business Days prior to the Interest Payment
Date. The Trustee shall be the initial Paying Agent hereunder. The Company
shall deposit with the Paying Agent no later than one (1) Business Day prior to
the date on which the payment of principal of (and premium, if any) and/or
interest on the Bonds is payable in immediately available Funds in the amounts
required for such payment.
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The Bonds shall be redeemable as provided in Paragraph 2 of the Bonds
and ARTICLE TWELVE.
Each Holder of Bonds shall have the right to require the Company to
purchase its Bonds as provided in Paragraph 4 of the Bonds and SECTION 1207.
The Bonds shall be convertible as provided in ARTICLE THIRTEEN.
SECTION 302. DENOMINATIONS.
The Bonds shall be issuable only in registered form and in
denominations of $1,000 and any integral multiple thereof and shall be payable
only in Dollars.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Bonds shall be executed on behalf of the Company by its Chairman
of the Board, its President, its Chief Financial Officer, one of its Vice
Presidents or its Treasurer, under its corporate seal reproduced thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers may be manual or facsimile.
Bonds bearing the manual or facsimile signatures 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 Bonds or did not hold
such offices at the date of such Bonds.
The Trustee shall authenticate and deliver Bonds from time to time for
original issue up to the aggregate principal amount of $1,500,000, upon a
Company Order specifying the amount of Bonds to be authenticated and the date on
which the Bonds are to be authenticated. The aggregate principal amount of
Bonds outstanding at any time may not exceed $1,500,000.
Each Bond shall be dated the date of its authentication.
No Bond shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Bond a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee or by an Authenticating Agent, and such executed
certificate upon any Bond shall be conclusive evidence, and the only evidence,
that such Bond has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture. Notwithstanding the foregoing, if
any Bond shall have been duly authenticated and delivered hereunder but never
issued and sold by the Company, and the Company shall deliver such Bond to the
Trustee for cancellation as provided in SECTION 308 together with a written
statement (which need not comply with SECTION 102) stating that such Bond has
never been issued and sold by the Company, for all purposes of this Indenture
such Bond shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
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SECTION 304. TEMPORARY BONDS.
(a) Pending the preparation of definitive Bonds, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Bonds that are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination for the Bonds substantially
of the tenor of the definitive Bonds in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the Company may determine to be appropriate for temporary Bonds. Every such
temporary Bond shall be executed by the Company and shall be authenticated and
delivered by the Trustee upon the same conditions and in substantially the same
manner, and with the same effect, as the definitive Bonds in lieu of which they
are issued.
If temporary Bonds are issued, the Company will cause definitive Bonds
to be prepared without unreasonable delay. After the preparation of definitive
Bonds, the temporary Bonds shall be exchangeable for definitive Bonds, of a like
Stated Maturity and with like terms and provisions, upon surrender of the
temporary Bonds at the office or agency of the Company in a Place of Payment for
the Bonds, without charge to the Holder, except as provided in SECTION 305 in
connection with a transfer. Upon surrender for cancellation of any one or more
temporary Bonds, the Company shall execute and the Trustee shall authenticate
and deliver in exchange therefor a like principal amount of definitive Bonds of
authorized denominations and of a like Stated Maturity and like terms and
provisions. Until so exchanged, the temporary Bonds shall in all respects be
entitled to the same benefits under this Indenture as definitive Bonds.
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE.
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the registers maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Bond Register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of the Bonds and of transfers and exchanges of the Bonds. The
Trustee is hereby appointed "Bond Registrar" for the purpose of registering the
Bonds and registering transfers and exchanges of the Bonds as herein provided.
Subject to subsection (c) below, upon surrender for registration of
transfer of any Bond at the office or agency of the Company maintained for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee, one or more new Bonds of like
aggregate principal amount of such denominations as are authorized for the Bonds
and of a like Stated Maturity and with like terms and conditions.
Subject to subsection (c) below, at the option of the Holder, Bonds
may be exchanged for other Bonds of like aggregate principal amount of other
authorized denominations and of a like Stated Maturity and with like terms and
conditions, upon surrender of the Bonds to be exchanged at such office or
agency. Whenever any Bonds are surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Bonds that the
Holder making the exchange is entitled to receive.
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(b) All Bonds issued upon any transfer or exchange of Bonds shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Bonds surrendered for such transfer
or exchange.
No service charge will be made for any transfer or exchange of Bonds
except as provided in SECTION 306. The Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer of Bonds, other than those expressly provided in
this Indenture to be made at the Company's own expense or without expense or
without charge to the Holders.
The Company shall not be required (i) to register, transfer or
exchange Bonds during a period beginning at the opening of business 15 days
before the day of the transmission of a notice of redemption of Bonds selected
for redemption under SECTION 1201 and ending at the close of business on the day
of such transmission, or (ii) to register, transfer or exchange any Bond so
selected for redemption in whole or in part, except the unredeemed portion of
any Bond being redeemed in part.
(c) When Bonds are presented by a Holder to the Bond Registrar with a
request to register the transfer of the Bonds, the Bond Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transactions, which shall be reasonable, are met; provided, however, that the
Bonds presented or surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Bond Registrar
duly executed by such Holder or by his attorney, duly authorized in
writing; and
(ii) in the case of a Bond that is a Transfer Restricted
Security, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 or Rule 904 under the
Securities Act or pursuant to an effective registration statement
under the Securities Act, a certification to that effect from
such Holder in form satisfactory to the Trustee; or
(B) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a certification
to that effect from such Holder in form satisfactory to the
Trustee and an Opinion of Counsel from such Holder or the
transferee reasonably acceptable to the Company and to the Bond
Registrar to the effect that such transfer is in compliance with
the Securities Act.
29
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN BONDS.
If (i) any mutilated Bond is surrendered to the Trustee at its
Corporate Trust Office, or (ii) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Bond, and, if
required by the Company or the Trustee, there is delivered to the Company and
the Trustee such security or indemnity as may be sufficient, in their judgment,
to save each of them and any Paying Agent harmless from any loss which they may
suffer if such Bond is replaced as described below, and neither the Company nor
the Trustee receives notice that such Bond has been acquired by a bona fide
purchaser, then the Company shall execute and upon Company Request the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Bond, a new Bond of like Stated Maturity
and with like terms and conditions and like principal amount, bearing a number
not contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Bond has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Bond, pay the amount due on such Bond in accordance
with its terms.
Upon the issuance of any new Bond under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in respect thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Bond issued pursuant to this Section shall constitute an
original additional contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Bond shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued hereunder.
The provisions of this Section 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 Bonds.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
(a) Interest on any Bond that is payable and is punctually paid on any
Interest Payment Date shall be paid to the Person in whose name such Bond (or
one or more Predecessor Bonds) is registered at the close of business on the
Record Date immediately preceding such Interest Payment Date notwithstanding the
cancellation of such Bond upon any transfer or exchange subsequent to such
Record Date. Payment of interest on Bonds shall be made at the offices of the
Paying Agent or Paying Agents specified pursuant to SECTION 301 or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto as such address shall appear in the Bond Register or, if provided
pursuant to SECTION 301, by wire transfer to an account designated by the Holder
pursuant to SECTION 301.
30
(b) Subject to the foregoing provisions of this Section, each Bond
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Bond shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Bond.
(c) The Company shall give notice to the Trustee of any increase or
decrease in the interest rate on the Bonds as provided in Section 2.1 of the
Registration Rights Agreement.
SECTION 308. CANCELLATION.
Each of the Bond Registrar and Paying Agent shall deliver to the
Trustee any Bonds surrendered to it for transfer, exchange, payment or
conversion. The Company may at any time deliver to the Trustee for cancellation
any Bonds previously authenticated and delivered hereunder that the Company may
have acquired in any manner whatsoever, and may deliver to the Trustee (or to
any other Person for delivery to the Trustee) for cancellation any Bonds
previously authenticated hereunder that the Company has not issued. All Bonds
delivered to the Trustee for transfer, exchange, conversion, payment or
cancellation shall be promptly canceled by the Trustee (and no one else). No
Bonds shall be issued or authenticated in lieu of or in exchange for any Bonds
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Bonds held by the Trustee shall be destroyed by the
Trustee, and the Trustee shall deliver a certificate to such effect to the
Company. The acquisition of any Bonds by the Company shall not operate as a
redemption or satisfaction of the indebtedness represented thereby unless and
until such Bonds are surrendered to the Trustee for cancellation.
SECTION 309. LISTS OF HOLDERS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Bond Registrar, the Company shall furnish to
the Trustee, in writing at least five Business Days before each Interest Payment
Date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Holders.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF COMPANY'S OBLIGATIONS.
The Company may terminate all of its obligations under this Indenture
and the Bonds (except as to any surviving rights of registration of transfer or
exchange of the Bonds herein expressly provided for and rights to receive
payments of principal (and premium, if any) and interest on the Bonds and except
as provided below) and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging such termination, when
(1) either
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(A) all Bonds theretofore authenticated and delivered (other than
Bonds that have been destroyed, lost or stolen and which have been
replaced or paid as provided in SECTION 306) have been delivered to
the Trustee for cancellation; or
(B) all Bonds not theretofore delivered to the Trustee for
cancellation,
(i) have become due and payable; or
(ii) will become due and payable in full at their Stated
Maturity within one year;
and the Company, in the case of (i) or (ii) of this subclause
(B), has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for such purpose an amount in
cash sufficient to pay and discharge the entire indebtedness on
such Bonds for principal (and premium, if any) and interest to
the date of such deposit (in the case of Bonds that have become
due and payable) or to the Stated Maturity (the Company hereby
agreeing to promptly notify each Holder of the making of such
deposit);
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) 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 such termination of the Company's obligations
under this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company under SECTIONS 301, 305, 306, 307, 309, 402, 403,
608, 1010, 1011 AND 1015 and in ARTICLE THIRTEEN shall survive until the Bonds
have been paid in full. Thereafter, the Company's obligations under SECTION 608
and the last paragraph of SECTION 1015 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
All money deposited with the Trustee pursuant to SECTION 401 shall be
held in trust and applied by it, in accordance with the provisions of the Bonds
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
32
SECTION 403. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money in accordance
with this ARTICLE FOUR by reason of any legal proceeding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, the Company's obligations under this
Indenture and the Bonds shall be revived and reinstated as though no deposit had
occurred pursuant to this ARTICLE FOUR until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with this ARTICLE FOUR;
provided, however, that if the Company has made any payment of interest (or
premium, if any) on or principal of any Bonds because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Bonds to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE FIVE
DEFAULTS AND REMEDIES
SECTION 501. EVENT OF DEFAULT.
"Event of Default" wherever used herein means any one of the following
events:
(1) the Company defaults in the payment of interest on any Bond
when the same becomes due and payable and such default continues for a
period of 10 Business Days;
(2) the Company (i) defaults in the payment of principal of (or
premium, if any, on) any Bond when the same becomes due and payable at its
Stated Maturity, upon redemption, upon purchase at the option of the Holder
thereof, upon declaration or otherwise or (ii) fails to redeem or purchase
any Bonds when required pursuant to ARTICLE TWELVE;
(3) the Company fails to comply with any of SECTIONS 801, 802,
1010, 1011, 1102, 1103, 1104, 1105 or 1106 of this Indenture;
(4) the Company fails to comply with any of its other agreements
in this Indenture or any of its agreements in the Bonds, the Securities
Purchase Agreement or the Registration Rights Agreement other than its
agreement in SECTION 1014 and the default continues for the period and
after the notice specified below;
(5) the ratio of Consolidated Operating Cash Flow for the
Company's fiscal year most recently ended to Projected Fixed Charges is
less than 1.25 to 1.0 unless (i) the Company shall have complied with the
other provisions of SECTION 1014 and shall have used its best efforts to
implement the recommendations of the Consultant referred to in such Section
and (ii) the ratio of Consolidated Operating Cash Flow for the Company's
fiscal year most recently ended to Projected Fixed Charges is not less than
1.0 to 1.0;
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(6) the ratio of Consolidated Operating Cash Flow for the
Company's fiscal year most recently ended to Projected Fixed Charges is
less than 1.0 to 1.0;
(7) any representation or warranty made by the Company herein or
in the Bonds, the Securities Purchase Agreement or the Registration Rights
Agreement or by the Company or any of its officers in writing furnished to
the Trustee or any Holder in connection with or pursuant to this Indenture,
the Bonds, the Securities Purchase Agreement or the Registration Rights
Agreement shall have been false in any material respect on the date as of
which made and shall continue to be false 30 days after the Company
receives notice thereof;
(8) the Company or any Material Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case relating to the Company or any
Material Subsidiary;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) petitions or applies to any tribunal for, or consents to,
the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Company or any Material
Subsidiary, or of any substantial part of the property of the Company or
any Material Subsidiary; or
(D) makes a general assignment for the benefit of its
creditors;
(9) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary in an involuntary case and the order or decree remains unstayed
and in effect for 30 days;
(B) appoints a trustee, receiver, custodian, liquidator or
similar official of the Company or any Material Subsidiary or for all or
any substantial part of the property of the Company or any Material
Subsidiary and the order or decree remains unstayed and in effect for 60
days; or
(C) orders the dissolution, winding up or liquidation of the
Company and the order or decree remains unstayed and in effect for 60 days;
(10) the Company or any Material Subsidiary defaults, beyond any
applicable grace period, in any payment of (i) principal of (or premium, if
any) or interest on any Indebtedness the principal amount of which
Indebtedness exceeds
34
$500,000 or (ii) any amounts payable under any Financial Contract to which
the Company or any Material Subsidiary is a party in excess of $500,000;
(11) any judgment, order or decree for the payment of money in
excess of $500,000 shall be rendered against the Company or any Subsidiary,
shall not be fully covered by insurance and the insurer shall not have
admitted liability with respect thereto, and within 30 days after entry
thereof (or such shorter period ending one day prior to the date on which
the judgment creditor could attach assets of the Company or such
Subsidiary) such judgment, order or decree is not discharged or waived or
the execution thereof stayed; and
(12) any material provision of the Indenture or of any of the
Bonds is found or held by any arbitrator or court to be invalid, illegal or
unenforceable in any jurisdiction and for any reason.
A default under clause (4) shall not be an Event of Default until
Holders of at least 25% in principal amount of the Outstanding Bonds notify the
Company of the Default and the Company does not cure the Default within 30 days
after receipt of such notice. Any such notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default." If the
Holders of at least 25% in principal amount of the Outstanding Bonds request the
Trustee to give such notice on their behalf, the Trustee shall do so.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event that with the giving of notice or the lapse of time or both would
become an Event of Default under clause (4), (7), (10) or (11), its status and
what action the Company is taking or proposes to take with respect thereto.
SECTION 502. ACCELERATION.
(a) If an Event of Default occurs under clauses (8) or (9) of SECTION
501, then the principal of (and premium, if any) and the accrued interest on all
the Bonds shall become and be due and payable immediately without any
declaration or other act on the part of the Trustee or any Holders; and the
Company will pay to the Trustee, for the benefit of the Holders of such Bonds,
the amount then due and payable on such Bonds for principal (and premium, if
any) and interest, if any, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
(b) If an Event of Default occurs under clauses (1) or (2) of SECTION
501, the Holder of any Bonds (other than the Company or any of its Affiliates)
may at its option, by notice to the Company, declare the principal of (and
premium, if any) and accrued interest on all such Bonds to be due and payable
immediately. Upon such declaration, such principal, premium and interest shall
be due and payable immediately.
(c) If any other Event of Default occurs and is continuing, the
Trustee by notice to the Company may, and the Trustee upon the request of the
Holders of at least 25% in principal amount of the Outstanding Bonds shall, or
the Holders of at least 25% in principal
35
amount of the Outstanding Bonds by notice to the Trustee may, declare the
principal of (and premium, if any) and accrued interest on all the Bonds to be
due and payable immediately. Upon such declaration such principal (and premium,
if any) and interest shall be due and payable immediately.
(d) If the Company fails to pay any such amounts forthwith
immediately or upon such demand, the Trustee, in its own name and as trustee of
an express trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, and may prosecute such proceeding to judgment or final
decree, and may enforce the same against the Company or any other obligor upon
such Bonds, and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon such Bonds wherever situated.
(e) The Holders of a majority in principal amount of the Outstanding
Bonds may, by notice to the Trustee, rescind an acceleration pursuant to
subsection (a) or (c) of this SECTION 502 and its consequences if all existing
Events of Default have been cured or waived, except nonpayment of principal,
premium or interest that has become due solely because of the acceleration, and
if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or Event of Default or impair any
right consequent thereto.
SECTION 503. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion pursue any available remedy to collect the payment of principal
(or premium, if any) of or interest on the Bonds or to enforce the performance
of any provision of the Bonds or this Indenture, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other available remedy.
SECTION 504. WAIVER OF EXISTING DEFAULTS.
Subject to SECTIONS 510 and 902, Holders of a majority in principal
amount of the Outstanding Bonds may, by notice to the Trustee, waive an existing
Default and its consequences other than a Default in the payment of principal of
(or premium, if any) or interest on any Bond. When a Default is waived, it is
deemed cured, but no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any consequent right.
SECTION 505. CONTROL BY MAJORITY.
Holders of a majority in principal amount of Outstanding Bonds may, by
notice to the Trustee, direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or, subject to SECTION 601,
that the Trustee determines is unduly prejudicial to the rights of other Holders
or would involve the Trustee in personal liability; provided, however, that the
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification
36
reasonably satisfactory to it against all losses and expenses caused by taking
or not taking such action. Notwithstanding the preceding provisions of this
SECTION 505, if an "Event of Default" occurs under clause (1) or (2) of SECTION
501, the Holder of any Bonds that exercises its right to accelerate the maturity
of said Bonds may proceed to enforce its remedies with or without the Holders of
any other Bonds at the time and place and in the manner determined by such
Holder in its sole discretion.
SECTION 506. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceedings, or any voluntary or involuntary case under any Bankruptcy
Law, as now or hereafter constituted, relative to the Company or any other
obligor upon the Bonds, or the property of the Company or of such other obligor,
or any of their creditors, the Trustee (irrespective of whether the principal of
such Bonds shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal (or premium,
if any) or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise:
(i) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect of the Bonds
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders of such Bonds allowed
in such judicial proceeding; and
(ii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, custodian, liquidator, sequestrator or
other similar official in any such proceeding is hereby authorized by each such
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to such Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under SECTION 608.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Bonds or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 507. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF BONDS.
All rights of action and claims under this Indenture or the Bonds may
be prosecuted and enforced by the Trustee without the possession of any of the
Bonds or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name, as
trustee of an express trust, and any recovery of
37
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Bonds in respect of which such
judgment has been recovered.
SECTION 508. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order and, in case of the distribution of such money on
account of principal (and premium, if any) or interest, upon presentation of the
Bonds in respect of which money has been collected and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under SECTION
608;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Bonds, in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due
and payable on such Bonds for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section. At least 15 days before such record date, the
Trustee shall, at the expense of the Company, mail to each Holder a notice that
states the record date, the payment date and the amount to be paid.
SECTION 509. LIMITATION ON SUITS.
No Holder of any Bond 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:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Bonds;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Bonds shall have made written request to the Trustee to
institute such proceeding in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
satisfactory to it against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such proceeding; and
38
(5) 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 Bonds;
it being understood and intended that no one or more of the 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 the
Holders, or to obtain or to seek to obtain priority or preference over any other
of the Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all of the
Holders.
SECTION 510. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Bond shall have the right, which is absolute and unconditional, to receive
payment of the principal of (and premium, if any) and (subject to SECTION 307)
interest on such Bond on the respective Stated Maturity or Maturities expressed
in such Bond (or, in the case of redemption or purchase, on the Redemption Date
or Purchase Date, as the case may be) and to institute suit for the enforcement
of any such payment and interest thereon, and such right shall not be impaired
or affected without the consent of such Holder.
Notwithstanding any other provision of this Indenture, the right of
any Holder to institute suit for the enforcement of its right to convert any
Bonds shall not be affected or impaired without the consent of such Holder.
SECTION 511. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder 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 the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 512. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise expressly provided elsewhere in this Indenture, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders, or any of them, is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the fullest 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 right or remedy.
39
SECTION 513. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder 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 Indenture or by law
to the Trustee or to the Holders , or any of them, may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
or any of them, as the case may be.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Bond by
its 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 other than the Trustee 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 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder or group of
Holders holding in the aggregate more than 10% in principal amount of the
Outstanding Bonds, or to any suit instituted by any Holder of a Bond for the
enforcement of the payment of the principal of (or premium, if any) or interest
on such Bond on or after the respective Stated Maturity or Maturities expressed
in such Bond (or, in the case of redemption or purchase, on or after the
Redemption Date or the Purchase Date, as the case may be).
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties as are specifically
set forth in this Indenture, and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(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 provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether they
conform to the requirements of this Indenture.
40
(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 its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's 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 willful misconduct, provided that
(1) this subsection shall not be construed to limit the effect of
subsection (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 it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it with respect to the Bonds in good
faith in accordance with a direction received by it pursuant to SECTION
505; and
(4) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any 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 grounds for believing that repayment of such funds or indemnity,
reasonably satisfactory to it, against such risk or liability is not
reasonably assured to it.
(d) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct of or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
SECTION 601 and to the provisions of the Trust Indenture Act.
SECTION 602. NOTICE OF DEFAULTS.
Within 30 days after the occurrence and continuation of any Default
that is known to the Trustee, the Trustee shall give notice to all Holders of
such Default unless such Default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of (or premium, if any) or interest on any Bond, the Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders.
Notice given pursuant to this SECTION 602 shall be transmitted by
mail:
(1) to all Holders, as the names and addresses of the Holders appear
in the Bond Register; and
41
(2) to each Holder of a Bond whose name and address appear in the
information preserved at the time by the Trustee in accordance with either
of this Indenture or the Trust Indenture Act.
SECTION 603. REPORTS BY TRUSTEE TO HOLDERS.
If required by Section 313 (a) of the Trust Indenture Act, within 60
days after May 15 of any year, commencing the May 15 following the date of this
Indenture, the Trustee shall mail to each Holder a brief report dated as of such
May 15 that complies with Section 313(a) of the Trust Indenture Act. The
Trustee shall also comply with Section 313(b)(2) of the Trust Indenture Act.
The Trustee shall also transmit by mail all reports as required by Section
313(c) and Section 313(d) of the Trust Indenture Act.
Reports pursuant to this Section shall be transmitted by mail:
(1) to all registered Holders, as the names and addresses of such
Holders appear on the Bond Registrar's books;
(2) to such Holders as have, within the two years preceding such
transmission, filed their names and addresses with the Trustee for that purpose;
and
(3) except in the case of reports pursuant to Section 313(b) of the
Trust Indenture Act, to each Holder of Bonds whose name and address is preserved
at the time by the Trustee in accordance with either of this Indenture or the
Trust Indenture Act.
A copy of each report at the time of its mailing to Holders shall be
filed with the Commission and each national securities exchange or over-the-
counter system on which the Bonds are listed or traded. The Company shall
notify the Trustee when the Bonds are listed or traded on any national
securities exchange or over-the-counter market.
SECTION 604. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties
and the Trustee need not investigate any fact or matter stated therein;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee may require an
Officers' Certificate or an Opinion of
42
Counsel and (unless other evidence be herein specifically described) may
rely upon such Officers' Certificate or Opinion of Counsel and shall not be
liable for any action it takes or omits to take in reliance in good faith
on such Officers' Certificate or Opinion of Counsel, provided that the
Trustee shall have examined the same to the extent and as required by
SECTION 601;
(d) the Trustee may consult with counsel and the advice of such
counsel or any opinion of counsel shall be full and complete authorization
and protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it;
(h) the permissive right of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty;
(i) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture; and
(j) unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an officer of the Company.
SECTION 605. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF BONDS.
The recitals and statements contained herein and in the Bonds and in
any document in connection with the sale of the Bonds, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no
43
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Bonds. The Trustee
shall not be accountable for the use or application by the Company of the
proceeds of the Bonds or the application of any money received by any Paying
Agent other than the Trustee.
SECTION 606. MAY HOLD BONDS.
The Trustee, any Paying Agent, the Bond Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Bonds, and, subject to any incorporated provisions of the Trust
Indenture Act, may otherwise deal with the Company with the same rights it would
have if it were not the Trustee, Paying Agent, Bond Registrar or such other
agent.
SECTION 607. MONEY HELD IN TRUST.
Money held by the Trustee or any Paying Agent (other than the Company
or any of its Affiliates) in trust hereunder need not be segregated from other
funds except to the extent required by law. Neither the Trustee nor any such
Paying Agent shall be under any liability for interest on any money received by
it hereunder except as otherwise agreed in writing with the Company.
SECTION 608. COMPENSATION, INDEMNIFICATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation in
Dollars for its acceptance of this Indenture and for all services rendered
by it hereunder (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee in Dollars upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable compensation
and the expenses and disbursements of its agents and counsel); and
(3) to indemnify in Dollars the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred by it without negligence
or bad faith on its part arising out of or in connection with the
acceptance or administration of this trust or performance of its duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
The obligations of the Company under this SECTION 608 shall survive
the satisfaction and discharge of this Indenture.
44
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Bonds on all money or property held or
collected by the Trustee, except that held in trust to pay principal of (or
premium, if any) or interest on particular Bonds. Such Lien shall survive the
satisfaction and discharge of this Indenture.
SECTION 609. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under SECTION 610.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee 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 with respect
to the Bonds.
(c) The Trustee may be removed at any time and a successor Trustee
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Bonds, delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310(b) of the Trust
Indenture Act with respect to the Bonds after written request therefor by
the Company or by any Holder; or
(2) the Trustee shall cease to be eligible under Section 310(a) of the
Trust Indenture Act and shall fail to resign after written request therefor
by the Company or by any Holder or shall cease to be eligible under
subsection (h) of this Section; or
(3) 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, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to SECTION 514, any Holder may, on behalf of itself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any reason, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within 60 days after such resignation, removal or incapability, or the
occurrence of such vacancy, the successor Trustee appointed by the Company does
not take office, the Company or the Holders of a majority in principal amount of
the Outstanding Bonds may appoint a successor Trustee. If a successor
45
Trustee shall be appointed by an Act of the Holders of a majority in principal
amount of the Outstanding Bonds delivered to the Company and to the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment, become the successor Trustee and to that extent supersede
the successor Trustee appointed by the Company. If no successor Trustee shall
have been so appointed by the Company or the Holders and accepted appointment in
the manner hereinafter provided, any Holder may, subject to SECTION 514, on
behalf of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give prompt notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee in the manner
provided in SECTION 105 to each Holder. Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office.
(g) If the Trustee has or shall acquire any conflicting interest
within the meaning of the Trust Indenture Act, it shall either eliminate such
conflicting interest or resign in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture, and the Company shall
take prompt action to have a successor Trustee appointed in the manner provided
herein.
(h) There shall at all times be a Trustee hereunder, which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such,
having a combined capital and surplus of at least $50,000,000, subject to
supervision or examination by federal or state authority and having its
Corporate Trust Office in New York, New York. If such corporation publishes
reports of condition at least annually, pursuant to law or the requirements of
said 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. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Notwithstanding replacement of the Trustee pursuant to this SECTION 609, the
Company's obligations under SECTION 608 shall continue for the benefit of the
retiring Trustee.
SECTION 610. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In the case of an appointment hereunder of a successor Trustee,
each such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee under this Indenture; but, on request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee, and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder, subject nevertheless to any Lien
and claim provided for in SECTION 608.
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(b) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
SECTION 611. MERGER, CONVERSION, 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,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Bonds shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Bonds so authenticated with the same effect
as if such successor Trustee had itself authenticated such Bonds. In case any
Bonds shall not have been authenticated by such predecessor Trustee, any such
successor Trustee may authenticate and deliver such Bonds, in either its own
name or that of its predecessor Trustee, with the full force and effect which
this Indenture provides for the certificate of authentication of the Trustee.
SECTION 612. APPOINTMENT OF AUTHENTICATING AGENT.
As long as any Bonds remain Outstanding, upon a Company Request, there
shall be an authenticating agent (the "Authenticating Agent") appointed by the
Trustee to act as its agent on its behalf and subject to its direction in
connection with the authentication and delivery of the Bonds. Bonds
authenticated by such Authenticating Agent shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by such Trustee. Wherever reference is made in this Indenture to
the authentication and delivery of Bonds by the Trustee or to the Trustee's
certificate of authentication, such reference 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 such Trustee by such
Authenticating Agent except that only the Trustee may authenticate Bonds upon
original issuance and pursuant to SECTION 306 hereof. Such Authenticating Agent
shall at all times be a corporation organized and doing business under the laws
of the United States of America or of any State, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $25,000,000 and subject to supervision or examination by federal or state
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any
47
corporation succeeding to the corporate agency business of any Authenticating
Agent, shall continue to be the Authenticating Agent without the execution or
filing of any paper or any further act on the part of the Trustee or such
Authenticating Agent. Any Authenticating Agent may resign at any time, and if
it shall cease to be eligible in accordance with the provisions of this Section
shall resign immediately, by giving written notice of resignation to the
applicable Trustee and to the Company.
Upon receiving such a notice of resignation or upon such a
termination, the Trustee shall appoint a successor Authenticating Agent, and the
Company shall provide notice of such appointment to all Holders of Bonds in the
manner provided in SECTION 105. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent herein. The Trustee for
the Bonds agrees to pay to the Authenticating Agent from time to time reasonable
compensation for its services, and the Trustee shall be entitled to be
reimbursed for such payment, subject to the provisions of SECTION 608. The
Authenticating Agent for the Bonds shall have no responsibility or liability for
any action taken by it as such at the direction of the Trustee.
If an appointment is made pursuant to this Section, the Bonds may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Bonds issued under the within mentioned Indenture.
--------------------------------,
as Trustee
By
------------------------------
As Authenticating Agent
By
------------------------------
Authorized Signatory
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee becomes a creditor of the Company, the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company. A Trustee that has resigned or been
removed is subject to such provisions of the Trust Indenture Act to the extent
provided therein.
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ARTICLE SEVEN
CONCERNING THE HOLDERS
SECTION 701. ACTS OF HOLDERS.
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent or proxy duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee, and, where it is hereby expressly required, to the Company or such
instrument or instruments become effective in accordance with their terms,
whichever is later. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Whenever in this Indenture
it is provided that the Holders of a specified percentage in aggregate principal
amount of the Outstanding Bonds may take any Act, the fact that the Holders of
such specified percentage have joined therein may be evidenced by the instrument
or instruments executed by Holders in person or by agent or proxy appointed in
writing.
SECTION 702. PROOF OF OWNERSHIP; PROOF OF EXECUTION OF INSTRUMENTS BY HOLDERS.
The ownership of Bonds shall be proved by the Bond Register or by a
certificate of the Bond Registrar.
Subject to the provisions of SECTION 604, proof of the execution of a
writing appointing an agent or proxy and of the execution of any instrument by a
Holder or its agent or proxy shall be sufficient and conclusive in favor of the
Trustee and the Company if made in the following manner: The fact and date of
the execution by any such person of any instrument may be proved by the
certificate of any notary public or other officer authorized to take
acknowledgement of deeds, that the person executing such instrument acknowledged
to such officer the execution thereof, or by an affidavit of a witness to such
execution sworn to before any such notary or other such officer. Where such
execution is by an officer of a corporation or association or a member of a
partnership on behalf of such corporation, association or partnership, as the
case may be, or by any other person acting in a representative capacity, such
certificate or affidavit shall also constitute sufficient proof of such person's
authority.
The Trustee may in any instance require further proof with respect to
any of the matters referred to in this Section so long as the request is a
reasonable one.
SECTION 703. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name any Bond is registered as the owner of such
Bond for the purpose of receiving payment of the principal of (and premium, if
any) and (subject to SECTION 307) interest, if any, on such Bond and for all
other purposes whatsoever, whether or not such Bond be overdue, and neither the
Company, the Trustee nor any agent of the Company or the
49
Trustee shall be affected by notice to the contrary. All payments made to any
Holder, or upon its order, shall be valid and, to the extent of the sum or sums
paid, effectual to satisfy and discharge the liability for the moneys so paid
upon such Bond.
SECTION 704. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND.
At any time prior to (but not after) any Act by the Holders of the
percentage in aggregate principal amount of the Outstanding Bonds specified in
this Indenture in connection with such Act becomes effective, as provided in
SECTION 701, any Holder of a Bond the number, letter or other distinguishing
symbol of which is shown by the evidence to be included in the Bonds the Holders
of which have consented to such Act may, by filing written notice with the
Trustee at the Corporate Trust Office and upon proof of ownership as provided in
SECTION 702, revoke such Act so far as it concerns such Bond. Except as
aforesaid, any such Act taken by the Holder of any Bond shall be conclusive and
binding upon such Holder and upon all future Holders of such Bond and of any
Bonds issued on transfer or in lieu thereof or in exchange or substitution
therefor, irrespective of whether or not any notation in regard thereto is made
upon such Bond or such other Bonds.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate or merge with or into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless:
(1) the Person formed by such consolidation or surviving such merger
(if not the Company) or the Person that acquires by conveyance or transfer,
or that leases, the properties and assets of the Company substantially as
an entirety (the "successor corporation") shall be a corporation 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, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Bonds and the
performance and observance of every covenant and other obligation of this
Indenture and the Bonds on the part of the Company to be performed or
observed;
(2) immediately after giving effect to such transaction (and treating
any Indebtedness that becomes an obligation of the successor corporation or
any Subsidiary as a result of such transaction as having been incurred by
such corporation or such Subsidiary at the time of such transaction), no
Default or Event of Default shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a
50
mortgage, pledge, lien, security interest or other encumbrance that would
not be permitted by this Indenture, the Company or such successor
corporation shall take such steps as shall be necessary effectively to
secure all Bonds equally and ratably with (or prior to) all Indebtedness
secured thereby; and
(4) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance, transfer or lease and such supplemental indenture (if
any) comply with this Indenture and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 802. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation with or merger into any other corporation or any
conveyance or transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with SECTION 801, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such conveyance, transfer or lease 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 corporation had been
named as the Company herein, and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the Bonds.
Nothing in this ARTICLE EIGHT shall be deemed to affect the rights of any
Holder under SECTION 1207.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by such successor of the covenants and other obligations
of the Company herein and in the Bonds contained, all pursuant to and in
accordance with this Indenture, including, without limitation, ARTICLE
EIGHT and SECTION 1307; or
(2) to add to the covenants or other obligations of the Company, for
the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Events of Default; or
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(4) to secure the Bonds; or
(5) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Bonds; or
(6) to cure any ambiguity; to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein; or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent with
any provision of this Indenture, provided such other provisions shall not
adversely affect the interests of the Holders of Outstanding Bonds; or
(7) to change any place or places where (A) the principal of and
premium, if any, and interest on Bonds shall be payable, (B) all Bonds may
be surrendered for registration or transfer, (C) all Bonds may be
surrendered for exchange, and (D) notices and demands to or upon the
Company in respect of all Bonds and this Indenture may be served.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Bonds, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may 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 modifying in any manner the rights of
the Holders under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Bond
affected thereby,
(1) change the Stated Maturity of the principal of, or premium, if
any, or installment of interest on, any Bond, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
redemption or purchase thereof, or otherwise, or adversely affect the right
of repayment or purchase, if any, at the option of the Holder, or impair
the right to institute suit for the enforcement of any payment on or after
the Stated Maturity thereof (or, in the case of redemption or purchase, on
or after the Redemption Date or the Purchase Date, as the case may be); or
(2) change the percentage in principal amount of the Outstanding
Bonds, the consent of whose Holders is required for any supplemental
indenture, or the consent of whose Holders is required for any waiver,
including waiver of compliance with the provisions of this Indenture or
defaults hereunder and their consequences provided for in this Indenture;
or
(3) modify any of the provisions of this Section, SECTION 504 or
SECTION 510, except to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Bond affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any
52
Holder with respect to changes in the references to "the Trustee" and
concomitant changes in this Section, or the deletion of this proviso, in
accordance with the requirements of SECTIONS 610 and 901(5); or
(4) make any Bond payable in money other than Dollars; or
(5) make any change that adversely affects the rights of any Holder.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to any incorporated provisions of the Trust Indenture Act) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which adversely affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise in a material
way.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the effectiveness of any supplemental indenture under this
Article in accordance with its terms, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Bonds theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN BONDS TO SUPPLEMENTAL INDENTURES.
Bonds authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Bonds so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Bonds.
53
SECTION 907. COPIES OF SUPPLEMENTAL INDENTURE.
Promptly after the execution by the Company and the appropriate
Trustee of any supplemental indenture pursuant to SECTION 901 or SECTION 902,
the Company shall transmit, in the manner provided in SECTION 105, to all
Holders of any of the Bonds, a copy of such supplemental indenture.
ARTICLE TEN
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees with the Trustee and (i) with
the Purchasers and any Major Holder, with respect to all of this ARTICLE TEN,
and (ii) with any other Holder, with respect to all of this ARTICLE TEN except
SECTIONS 1002(B) and 1002(D), that, so long as any Bonds remain unpaid:
SECTION 1001. FINANCIAL STATEMENTS.
The Company shall deliver to the Trustee and each Holder, all in form
and substance satisfactory to it:
(a) as soon as available, but not later than ninety (90) after
the end of each fiscal year of the Company (or until the end of the period
permitted under Rule 12b-25(b)(2)(ii) under the Exchange Act), a copy of
the audited consolidated balance sheet of the Company and its Subsidiaries
as of the end of such year and the related consolidated statements of
income, cash flows and stockholders' equity for such fiscal year, reported
on by independent public accountants of recognized national standing
selected by the Company whose report shall be without limitation as to the
scope of the audit, provided, however, that the delivery of the Company's
Annual Report on Form 10-K shall satisfy the requirements of this SECTION
1001(A);
(b) commencing with the fiscal period ending on December 31,
1995, as soon as available, but in any event not later than forty-five (45)
days after the end of each of the first three fiscal quarters of the
Company of each year (or until the end of the period permitted under Rule
12b-25(b)(2)(ii) under the Exchange Act), the unaudited consolidated
balance sheet of the Company and its Subsidiaries, and the related
consolidated statements of income and cash flow for such quarter and for
the period commencing on the first day of the fiscal year and ending on the
last day of such quarter, certified by an authorized financial officer of
the Company, provided, however, that the delivery of the Company's
Quarterly Report on Form 10-Q shall satisfy the requirements of this
SECTION 1001(B);
54
SECTION 1002. CERTIFICATES; OTHER INFORMATION.
The Company shall furnish to the Trustee, the Purchasers, any Major
Holder or any Holder, as appropriate:
(a) concurrently with each delivery of the financial statements
pursuant to SECTIONS 1001(A) and (B) above, a certificate of an officer of
the Company (i) including calculations set forth in reasonable detail
showing the Company's compliance with the financial covenants contained
herein and (ii) stating that such officer has reviewed the terms of this
Indenture, the Bonds, the Securities Purchase Agreement and the
Registration Rights Agreement and has made, or caused to be made, a review
in reasonable detail of the transactions of the Company and its
Subsidiaries during the fiscal period covered by such financial statements,
that, to the best of such officer's knowledge, the Company, during such
period, has observed or performed all of its covenants and other
agreements, and satisfied every condition, in all material respects,
contained in this Indenture to be observed, performed or satisfied by it,
and that such officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate;
(b) promptly after the same are sent or filed, copies of all such
financial statements, proxy statements, notices and reports as it shall
send to the holders of its outstanding securities (or trustees or agents
therefor) and copies of all registration statements (without exhibits) and
all reports that it files with the Commission except preliminary proxy
statements, preliminary Registration Statements on Form S-8 and Forms 3, 4
and 5;
(c) upon request by any Holder, any information required to
permit the Bonds to be eligible for resale pursuant to Rule 144A
promulgated by the Commission under the Securities Act; and
(d) such additional information or documents pertaining to the
Polyphase Entities (financial or otherwise) as the Purchasers or a Major
Holder reasonably may request; provided, however, that the Company shall
not provide the Purchasers or any Major Holder with material nonpublic
information unless the Purchasers or such Major Holder has specifically so
requested and entered into a confidentiality agreement with the Company in
connection therewith;
and shall also comply with the provisions of Section 314(a) of the Trust
Indenture Act.
SECTION 1003. PRESERVATION OF CORPORATE EXISTENCE.
Except for such actions as (i) the Board of Directors of the Company
shall determine are in the best interest of the Company or (ii) do not have a
material adverse effect on the assets, business, prospects, operations or
financial or other condition of the Polyphase Entities, taken as a whole, the
Company shall, and shall cause each of its Subsidiaries, to:
(1) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state of incorporation;
55
(2) preserve and maintain in full force and effect all material
rights, privileges, qualifications, licenses and franchises necessary in
the normal conduct of its business;
(3) qualify to do business as a foreign corporation under the
laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification; and
(4) use its reasonable efforts, in the ordinary course, to
preserve its business organization and preserve the goodwill and business
of its customers and suppliers and others having business relations with
it.
SECTION 1004. MAINTENANCE OF PROPERTY.
The Company shall, and shall cause each of its Subsidiaries to,
maintain and preserve all its property that is material to its business in
good working order and condition, ordinary wear and tear excepted.
SECTION 1005. INSURANCE.
The Company shall maintain, and shall cause each Subsidiary to maintain,
with financially sound and reputable insurance companies, insurance with respect
to its properties and business, against such losses, damages, casualties and
contingencies, of the kinds, covering the risks, and in the relative
proportionate amounts, usually carried by companies engaged in businesses
similar to that of the Company.
SECTION 1006. PAYMENT OF OBLIGATIONS.
Except to the extent that the failure to do so would have (i) a material
adverse effect on the assets, business, prospects, operations or financial or
other condition of the Polyphase Entities, taken as a whole, or (ii) an adverse
effect on the Company's ability to perform its obligations under the Securities
Purchase Agreement, the Indenture, the Bonds or the Registration Rights
Agreement, the Company shall, and shall cause its Subsidiaries to, pay and
discharge as the same shall become due and payable, all their respective
obligations and liabilities, including without limitation:
(1) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such
Subsidiary; and
(2) all lawful claims (including, without limitation, claims for
labor, services, materials and supplies) that the Company is obligated to
pay, which are due and which, if unpaid, might by law become a Lien upon
any of its properties or assets.
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SECTION 1007. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each Subsidiary to comply,
in all material respects with all Requirements of Law and with the directions of
any Governmental Authority having jurisdiction over it or its business, except
where any failure to so comply would not have a material adverse effect on the
business, operations, properties, prospects, assets or financial or other
condition of the Polyphase Entities, taken as a whole.
SECTION 1008. NOTICES.
Upon knowledge of the Chief Executive Officer, the President, the
Chief Financial Officer or the Treasurer of the Company of the events described
below, the Company shall give written notice within ten (10) days to the Trustee
and each of the Holders:
(1) of the occurrence of any Default or Event of Default
accompanied by a certificate specifying the nature of such Default or Event
of Default and the period of existence thereof;
(2) of the giving of any notice or the taking of any other action
by any Holder with respect to a claimed Default or Event of Default; and
(3) of any (i) material default or event of default under any
material Contractual Obligation of the Company or any of its Subsidiaries
or (ii) material dispute, litigation, investigation, proceeding or
suspension that may exist at any time between the Company or any of its
Subsidiaries and any Governmental Authority.
Each notice pursuant to this SECTION 1008 shall be accompanied by a statement by
the Chief Executive Officer, President or Chief Financial Officer of the Company
setting forth details of the occurrence referred to therein and stating what
action the Company proposes to take with respect thereto.
SECTION 1009. ISSUE TAXES.
The Company shall pay, or cause to be paid, all documentary and
similar taxes levied under the laws of the United States of America or any state
or local taxing authority thereof or therein in connection with the issuance of
the Bonds and the execution and delivery of the other agreements and documents
contemplated hereby and any modification of the Bonds or such other agreements
and documents and will hold the Holders and the Trustee harmless, without
limitation as to time, against any and all liabilities with respect to all such
taxes.
SECTION 1010. PAYMENT AND CONVERSION OF BONDS.
The Company shall pay the principal of (and premium, if any) and,
subject to the grace period contained in SECTION 501 hereof, interest on the
Bonds on the dates and in the manner provided therein and in this Indenture
(including in each case all such amounts payable upon redemption or purchase of
the Bonds pursuant to this Indenture and the Bonds). The Company will at all
times reserve and keep available out of its authorized Common Stock, solely
57
for the purpose of issue or delivery upon conversion of the Bonds as provided in
ARTICLE THIRTEEN, such number of shares of Common Stock as shall then be
issuable or deliverable upon the conversion of all outstanding Bonds. All
shares of Common Stock that shall be so issuable or deliverable shall have been
duly authorized and shall, when issued or delivered, be validly issued and fully
paid and non-assessable, free and clear of any Liens, and shall not have been
issued in violation of any preemptive rights. The Company shall use its best
efforts to list all such shares of Common Stock on the American Stock Exchange
as promptly as practicable following the date hereof. The Company shall issue
the Common Stock into which the Bonds are convertible upon the proper surrender
thereof in accordance with the provisions of this Indenture and the Bonds and
shall otherwise comply with the terms hereof and thereof.
SECTION 1011. REDEMPTION AND PURCHASE OF BONDS.
The Company shall redeem the Bonds and purchase the Bonds pursuant to
and in accordance with this Indenture.
SECTION 1012. DISTRIBUTIONS TO HOLDERS.
All distributions to Holders, whether upon redemption, purchase,
payment of principal (or premium, if any) or interest, or otherwise, shall be
made pro rata in accordance with the aggregate unpaid principal amount of Bonds
held by each such Holder at the time of such distribution.
SECTION 1013. HSR ACT FILING.
The Company shall prepare and file, and cooperate with any Holder so
that it may prepare and file, in each case within five Business Days of a
request by any such Holder, notification and report forms in compliance with the
HSR Act in connection with the conversion of any Bonds, if required by the HSR
Act, and otherwise fully comply with the requirements of the HSR Act and any
requests or requirements of the United States Federal Trade Commission or the
United States Department of Justice in connection therewith.
SECTION 1014. CASH FLOW RATIO.
The Company covenants that it will not permit the ratio of
Consolidated Operating Cash Flow for its fiscal year most recently ended
(commencing with the fiscal year ended September 30, 1995) to Projected Fixed
Charges to be less than 1.25 to 1.0. If the ratio of Consolidated Operating
Cash Flow for any such fiscal year to Projected Fixed Charges is less than 1.25
to 1.0, the Company shall, no later than December 31 of the next fiscal year
(or, in the case of the fiscal year ended September 30, 1995, within 30 days
following the date of this Indenture), hire an independent financial consultant,
who shall be acceptable to a majority of the Major Holders (the "Consultant"),
to, within 60 days, prepare a written report in which the Consultant shall
recommend to the Company the courses of action that, in the opinion of the
Consultant, may enable the Company to maintain a ratio of Consolidated Operating
Cash Flow for such and subsequent fiscal years to Projected Fixed Charges of at
least 1.25 to 1.0. The Company shall implement all recommendations set forth in
such report to the extent and as soon as possible.
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SECTION 1015. MONEY FOR BONDS; 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 (and premium, if any) or interest
on any of the Bonds, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and 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, it will, by
or on each due date of the principal of (and premium, if any) or interest on any
Bonds, deposit with any such Paying Agent a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due, such sum to be held in trust
by the Paying Agent for the benefit of the Persons entitled thereto, and (unless
any such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Bonds in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Bonds) in the making of any payment of principal of
(and premium, if any) or interest on the Bonds; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
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 (and premium, if
any) or interest on any Bond and remaining unclaimed for two years after such
principal (and premium, if any) or interest has became due and payable shall be
paid to the Company upon Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Bond shall thereafter, as
an unsecured general creditor, look to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all
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liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be transmitted to
such Holder, in the manner provided by SECTION 105, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification, any unclaimed balance of
such money then remaining will be repaid to the Company.
SECTION 1016. OFFICERS' CERTIFICATE AS TO DEFAULT.
The Company will deliver to the Trustee, within forty-five (45) days
after the end of each of the first three fiscal quarters in each fiscal year of
the Company and ninety (90) days after the end of each fiscal year of the
Company, an Officers' Certificate stating whether or not to the best knowledge
of the signers thereof (i) the Company is in default in the performance and
observation of any of the terms, provisions and conditions of this Indenture or
the Bonds or (ii) a Default has occurred, and, if the Company shall be so in
default or if a Default shall have occurred, specifying all such defaults and
Defaults and the nature thereof of which they may have knowledge and the action
that the Company has taken or proposes to take with respect thereto.
ARTICLE ELEVEN
NEGATIVE COVENANTS
The Company hereby covenants and agrees with the Trustee and (i) with
the Purchasers, with respect to all of this ARTICLE ELEVEN and (ii) with any
other Holder, with respect to all of this ARTICLE ELEVEN that, so long as any
Bonds remain unpaid:
SECTION 1101. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any transaction or otherwise deal with any Affiliate of the
Company or of any such Subsidiary (including, in any such case, without
limitation, either member of Current Management or any Affiliate of either such
member), in the ordinary course of business or otherwise, except pursuant to the
reasonable requirements of the business of the Company or such Subsidiary and on
terms no less favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of the
Company or of such Subsidiary or of such member of Current Management, except
for (i) employment agreements entered into and other employee benefits granted
with the approval of the Board of Directors of the Company; (ii) payments under
the Bonds; (iii) tax allocation agreements or management agreements among the
Polyphase Entities; (iv) guaranty agreements pursuant to which the Company
guarantees any of the obligations of the Polyphase Entities; and (v)
transactions between or among any of the Company and any Subsidiary or between
or among Subsidiaries.
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SECTION 1102. COMPLIANCE WITH ERISA.
The Company shall not directly or indirectly and will not permit any
Subsidiary or any ERISA Affiliate directly or indirectly to (i) terminate in a
distress termination any Pension Plan subject to Title IV of ERISA so as to
result in any liability to the Company or any Subsidiary, (ii) permit to exist
any ERISA Event that presents the risk of a liability of the Company or any
Subsidiary, (iii) make a complete or partial withdrawal (within the meaning of
ERISA Section 4201) from any Multiemployer Plan so as to result in any liability
to the Company or any Subsidiary or (iv) take any action that shall result in a
Plan intended to be qualified under Section 401(a) or 403(a) of the Code ceasing
to be so qualified as to which the Company or its Subsidiary has any liability,
which liability in the case of clauses (i) through (iv), individually or
together with all other such liabilities, is materially adverse to the assets,
business, prospects, operations or financial or other condition of the Polyphase
Entities taken as a whole.
SECTION 1103. RESTRICTED PAYMENTS.
(a) The Company shall not declare, pay or make a dividend or other
distribution on the Common Stock (other than a dividend or distribution with
respect to which an adjustment under SECTION 1303(A) is made), including,
without limitation, any distribution of assets, properties, cash, rights,
obligations or securities, during any 12-month period, having an aggregate Fair
Market Value equal to more than 50% of the Consolidated Net Income of the
Company for such period, unless at the time of such distribution a payment or
other distribution (a "Special Payment") is paid to each Holder in an amount
equal to the dividend or other distribution that such Holder would have received
had such Holder converted such Bond into shares of Common Stock immediately
prior to the declaration or payment of such dividend or other distribution,
whichever is earlier.
(b) Notwithstanding the provisions of subsection (a) of this Section, if
and for so long as an Event of Default shall have occurred and be continuing,
the Company shall not declare, make or pay any dividend or other distribution
(including, without limitation, any distribution of assets, properties, cash,
rights, obligations or securities) on, or redeem, purchase or otherwise acquire,
directly or indirectly, any shares of any class of its capital stock.
SECTION 1104. RESTRICTIONS ON CLASSES OF CERTAIN INDEBTEDNESS.
The Company shall not create, assume, issue or incur, for cash,
property or any other consideration or benefit or otherwise, or permit to exist
any Indebtedness that is senior in right of payment to the Bonds; provided,
however, that nothing in this SECTION 1104 shall be interpreted to prevent the
Company from assuming any Indebtedness of any Person that is not senior in right
of payment to the Bonds, in anticipation of or in connection with the
acquisition of such Person or all or substantially all of the assets of such
Person.
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SECTION 1105. USE OF PROCEEDS.
Unless the Company immediately provides written notice to Holders of
the Bonds to the contrary upon application, the proceeds of the issuance of the
Bonds will be used solely to fund a portion of the purchase price for the
Acquisition. Neither the Company nor any Subsidiary owns or has any present
intention of acquiring any "margin stock" as defined in Regulation G (12 CFR
Part 207) of the Board of Governors of the Federal Reserve System ("margin
stock"). No portion of the proceeds of the issuance of the Bonds has been or
will be used, directly or indirectly, (i) for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock, (ii) for the
purpose of maintaining, reducing, retiring or refinancing any Indebtedness of
the Company or any other Person that was originally incurred to purchase or
carry a stock that is currently a margin stock, or (iii) to extend credit for
the purpose of purchasing or carrying any margin stock, or for any other purpose
that might constitute this transaction a "purpose credit" within the meaning of
such Regulation G. Neither the Company nor any agent acting on its behalf has
taken or will take any action that might cause this Indenture or the Bonds to
violate Regulation G, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act, in each
case as in effect now or as the same may hereafter be in effect.
SECTION 1106. NO RESTRICTIVE AGREEMENTS.
The Company shall not (and shall not permit any Subsidiary) to enter
into or permit to exist any Contractual Obligations that would restrict any
Subsidiary from paying management fees, dividends or partnership distributions
(whether of income, retained earnings or capital) to, or making loans or
advances to the Company or to any Subsidiary directly controlling such
Subsidiary, unless the Consolidated Net Income for each fiscal quarter and
fiscal year of the Company for which financial statements are required to be
delivered pursuant to SECTION 1001 would exceed the sum of (i) Projected Fixed
Charges for such fiscal period plus (ii) total operating expenses of the Company
and its Subsidiaries for such fiscal period, in each case as reasonably
projected by the Company, at the time the Company or such Subsidiary enters into
such agreement and giving effect to all such restrictions, based upon factual
assumptions reasonably made by the Company in good faith.
ARTICLE TWELVE
OPTIONAL REDEMPTION OF BONDS;
PURCHASE ON CHANGE OF CONTROL OR DELISTING
SECTION 1201. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Bonds pursuant to Paragraph
2 of the Bonds shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all of the Bonds pursuant
to Paragraph 2 of the Bonds, the Company shall, at least 60 days prior the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Bonds to be redeemed. Such notice shall be accompanied
by an Officers' Certificate from the Company to the effect that such redemption
complies with the conditions
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herein. In the case of any redemption of Bonds pursuant to Paragraph 2 of the
Bonds prior to the expiration of any restriction on such redemption provided in
the terms of such Bonds or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restrictions.
SECTION 1202. NOTICE OF REDEMPTION.
Notice of redemption of Bonds pursuant to Paragraph 2 of the Bonds
shall be given by the Company, or at the Company's request, by the Trustee in
the name and at the expense of the Company, not less than thirty (30) days and
not more than sixty (60) days prior to the Redemption Date to each Holder of
Bonds to be redeemed in whole or in part pursuant to Paragraph 2 of the Bonds,
in the manner provided in SECTION 105. Any notice so given shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. Failure to give such notice, or any defect in such notice
to the Holder of any Bond, shall not affect the sufficiency of any notice of
redemption with respect to the Holder of any other Bond.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued and unpaid interest
on the Bonds to be redeemed to the Redemption Date;
(3) the then-current Conversion Price;
(4) that Bonds are being redeemed by the Company pursuant to Paragraph
2 of the Bonds, together with a brief statement of the facts permitting
such redemption;
(5) if less than all Outstanding Bonds are to be redeemed, the
identification and principal amounts to be redeemed;
(6) that on the Redemption Date the Redemption Price will become due
and payable upon each such Bond to be redeemed together with all accrued
and unpaid interest thereon to the Redemption Date, and that, unless the
Company defaults in the payment of the Redemption Price, interest thereon,
if any, shall cease to accrue on and after said date;
(7) that the right to convert Bonds called for redemption will
terminate at the close of business on the Redemption Date; and
(8) the name of the Paying Agent and the Place or Places of Payment
where such Bonds are to be surrendered for payment of the Redemption Price
and the name and address of the conversion agent for the Bonds.
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SECTION 1203. DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date for any Bonds, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust as provided in SECTION 1015)
an amount of money sufficient to pay the Redemption Price of such Bonds or any
portions thereof that are to be redeemed on that date together with all accrued
and unpaid interest thereon to such date.
SECTION 1204. BONDS PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, any Bonds to be
redeemed pursuant to Paragraph 2 of the Bonds shall, on the Redemption Date,
become due and payable at the Redemption Price and from and after such date
(unless the Company shall default in the payment of the Redemption Price) such
Bonds shall cease to bear interest. Upon surrender of any such Bond for
redemption in accordance with the notice described in SECTION 1202, such Bond
shall be paid by the Company at the Redemption Price, plus accrued interest to
the Redemption Date.
If any Bond called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) of such Bond shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Bond.
SECTION 1205. BONDS REDEEMED IN PART.
Any Bond that is to be redeemed only in part shall be, if the Company,
the Bond Registrar or the Trustee so requires, duly endorsed by, or accompanied
by a written instrument of transfer, in form satisfactory to the Company, the
Bond Registrar and the Trustee, duly executed by, the Holder thereof or its
attorney duly authorized in writing, and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Bond without
service charge, a new Bond or Bonds, of like tenor and form, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Bond so
surrendered.
If any Bond selected for partial redemption is converted in part, the
converted portion of such Bond shall be deemed (so far as may be) to be the
portion selected for redemption.
SECTION 1206. SELECTION OF BONDS TO BE REDEEMED.
If fewer than all the Bonds are to be redeemed pursuant to Paragraph 2
of the Bonds, the Trustee shall select the Bonds to be redeemed on a pro rata
basis, provided, that if pro rata redemption is not then permitted by an
applicable legal or securities exchange requirement, the Trustee shall select
the Bonds to be redeemed by lot or by any other method that complies with
applicable legal and securities exchange requirements, if any. The Trustee shall
make the selection from Outstanding Bonds not previously called for redemption.
The Trustee may select for redemption portions of the principal of Bonds that
have denominations larger than $1,000. Bonds and portions of them that the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Bonds called for redemption also
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apply to portions of Bonds called for redemption. The Trustee shall notify the
Company promptly of the Bonds or portions of Bonds to be redeemed.
SECTION 1207. CHANGE OF CONTROL; DELISTING.
(a) Put Provision. If and whenever a Change of Control or a Delisting
shall occur, each Holder shall have the right, at its option, to require the
Company to purchase all or any portion of such Holder's Bonds at a cash price
(the "Purchase Price") equal to the greater of (i) the Current Market Price per
share of Common Stock (determined with reference to the date described in the
following clause (i) or (ii), as applicable) multiplied by the number of shares
of Common Stock into which the aggregate principal amount of such Bonds is
convertible at the Conversion Price in effect on (A) in the event of a merger or
consolidation described in clause (d)(i) or (d)(ii) of the definition of Change
of Control set forth in Paragraph 4 of the Bonds, the earlier of (1) the date of
execution of the definitive merger or consolidation agreement in respect of such
merger or consolidation and (2) the date any of the principal terms of such
merger or consolidation are publicly announced or (B) in the event of any other
Change of Control, the date such Change of Control occurs, and (ii) the
Redemption Price in effect on the date of such event, together with all accrued
and unpaid interest to the Purchase Date, in accordance with this SECTION 1207.
(b) Within 10 days following each Change of Control or Delisting, the
Company shall mail a notice to each Holder, with a copy to the Trustee, stating:
(1) that a Change in Control or Delisting has occurred and that such
Holder has the right to require the Company to purchase all or any portion
of such Holder's Bonds at the Purchase Price;
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income,
earnings per share, cash flow and capitalization after giving effect to
such Change of Control) or such Delisting;
(3) the purchase date fixed by the Company in respect of such event,
which shall be no earlier than 30 days nor later than 60 days from the date
such notice is given (the "Purchase Date") and the Purchase Price;
(4) the instructions determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Bonds purchased,
including the Place or Places of Payment at which Bonds are to be
surrendered for payment of the Purchase Price; and
(5) the then-current Conversion Price.
No failure on the part of the Company to give such notice shall limit any of the
Holder's rights under this Section.
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(c) Holders electing to have a Bond purchased will be required to surrender
the Bond, with an appropriate form duly completed, to the Company at the address
specified in the notice at least ten Business Days prior to the Purchase Date.
Any Holder will be entitled to withdraw its election if the Trustee or the
Company receives not later than three Business Days prior to the Purchase Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of the Bonds delivered for purchase by such
Holder and a statement that such Holder is withdrawing its election to have such
Bonds purchased. Holders electing to have a Bond, or any portion thereof,
purchased shall retain the right to convert all Bonds, or any portion thereof,
delivered for purchase at any time prior to the close of business on the third
Business Day immediately preceding the Purchase Date.
(d) On the Purchase Date, all Bonds required to be purchased by the Company
under this Section shall become due and payable at the Purchase Price, and the
Company shall pay the Purchase Price plus accrued and unpaid interest, if any,
on such Bonds to the Holders entitled thereto and shall deliver all Bonds so
purchased to the Trustee for cancellation. The provisions of SECTION 1205 shall
also apply to the purchase by the Company of any portions of Bonds pursuant to
this Section. The Company shall deposit with the Paying Agent no later than one
(1) Business Day prior to any Purchase Date an amount equal to the Purchase
Price. Provisions of this Indenture that apply to the right of Holders to
require the Company to purchase Bonds pursuant to this Section also apply to
portions of Bonds.
ARTICLE THIRTEEN
CONVERSION OF BONDS
SECTION 1301. OPTIONAL CONVERSION.
Any Holder shall have the right, at its option, at any time prior to
the close of business on December 1, 1997, to convert, subject to the terms and
provisions of this ARTICLE THIRTEEN, the principal amount of any Bond (or any
portion of the principal amount thereof that is $1,000 or an integral multiple
of $1,000) into such number of fully paid and non-assessable shares of Common
Stock (calculated as to each conversion to the nearest 1/100 of a share) as is
equal to (i) the principal amount of the Bond or such portion divided by (ii)
$5.00, subject to adjustment as provided in SECTION 1303 (such price, as so
adjusted, is referred to herein as the "Conversion Price"), except that (a) with
respect to any Bond, or any portion thereof, which shall be called for
redemption pursuant to Paragraph 2 of the Bonds, such right shall terminate at
the close of business on the Redemption Date for such Bond, or such portion,
unless in any such case the Company shall default in payment of the Redemption
Price due upon such redemption and (b) with respect to any Bond, or any portion
thereof, delivered by a Holder for purchase by the Company pursuant to Paragraph
4 of the Bonds, such right shall terminate at the close of business on the
Purchase Date for such Bond, or such portion, unless in any such case the
Company shall default in payment of the Purchase Price therefor. Such
conversion right shall be exercised by the surrender of the Bond or Bonds, the
principal amount of which is so to be converted, to the Trustee at its Corporate
Trust Office any time during usual business hours, with the Option of the Holder
to Elect Purchase/Conversion on the back of the Bond completed and signed,
accompanied (if so required by the Company) by a written instrument or
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instruments of transfer in form reasonably satisfactory to the Trustee duly
executed by the Holder or its duly authorized legal representative and transfer
tax stamps or funds therefor, if required pursuant to SECTION 1306. For
convenience, the conversion of all or a portion, as the case may be, of the
principal amount of any Bond into Common Stock is hereinafter sometimes referred
to as the conversion of such Bond. All Bonds surrendered for conversion shall
be delivered to the Trustee for cancellation and canceled by it and, subject to
the next sentence, no Bond shall be issued in lieu thereof. In the case of any
Bond that is converted in part only, upon such conversion the Trustee shall
authenticate and deliver to the Holder thereof a new Bond or Bonds of authorized
denominations equal in aggregate principal amount to the unconverted portion of
the Bond surrendered.
Upon conversion of any Bond or portion thereof, the Holder thereof shall be
entitled to receive payment of all accrued and unpaid interest on such Bond or
portion thereof through the date of conversion.
The Company shall comply with all securities laws regulating the offer and
delivery of shares of Common Stock upon conversion of Bonds and will use its
best efforts to list such shares on each national securities exchange or
national market system on which the Common Stock is listed or traded.
SECTION 1302. ISSUANCE OF COMMON STOCK; TIME OF CONVERSION.
As promptly as practicable after the surrender, as herein provided, of
any Bond or Bonds for conversion pursuant to SECTION 1301, the Company shall,
directly or through the Trustee, deliver to or upon the written order of the
Holder of the Bond or Bonds so surrendered a certificate or certificates
representing the number of fully paid and non-assessable shares of Common Stock
into which such Bond or Bonds (or portion thereof) may be or was converted in
accordance with the provisions of this ARTICLE THIRTEEN together with a check in
an amount equal to (i) any amount in lieu of a fractional share of Common Stock
determined in accordance with SECTION 1304 and (ii) the amount of all accrued
and unpaid interest on the converted Bond or Bonds through the date of
conversion. Subject to the following provisions of this paragraph and of
SECTION 1303, such conversion shall be deemed to have been made immediately
prior to the close of business on the date that such Bond or Bonds shall have
been surrendered in satisfactory form for conversion, so that the rights of the
Holder of such Bond or Bonds as a Holder shall cease with respect to such Bond
or Bonds (or the portion thereof being converted) at such appropriate time, and
the Person or Persons entitled to receive the Common Stock deliverable upon
conversion of such Bond or Bonds shall be treated for all purposes as having
become the record holder or holders of such Common Stock at such appropriate
time, and such conversion shall be at the Conversion Price in effect at such
time; provided, however, that no surrender shall be effective to constitute the
Person or Persons entitled to receive the Common Stock deliverable upon such
conversion as the record holder or holders of such Common Stock while the share
transfer books of the Company shall be closed (but not for any period in excess
of fifteen (15) days), but such surrender shall be effective to constitute the
Person or Persons entitled to receive such Common Stock as the record holder or
holders thereof for all purposes immediately prior to the close of business on
the next succeeding day on which such share transfer books are open (or
following such fifteen-day period), and such conversion shall be
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deemed to have been made at, and shall be made at the Conversion Price in effect
at, such time on such next succeeding day.
If the last day for the exercise of the conversion right shall not be
a Business Day, then such conversion right may be exercised on the next
succeeding Business Day.
SECTION 1303. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time or from time to time
(i) pay a dividend or make a distribution on the outstanding shares of
Common Stock in capital stock (which, for purposes of this SECTION 1303
shall include, without limitation, any options, warrants or other rights to
acquire capital stock) of the Company, (ii) subdivide the outstanding
shares of Common Stock into a larger number of shares, (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, (iv)
issue any shares of its capital stock in a reclassification of the Common
Stock or (v) pay a dividend or make a distribution on the outstanding
shares of Common Stock in shares of its capital stock pursuant to a
shareholder rights plan, "poison pill" or similar arrangement, then, and in
each such case, the conversion privilege and the Conversion Price in effect
immediately prior to such event shall be adjusted so that the Holder of any
Bond thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock or other securities of the Company that
such Holder would have owned or would have been entitled to receive upon or
by reason of any of the events described above, had such Bond been
converted immediately prior to the happening of such event. Such adjustment
shall be made successively whenever any event described above shall occur.
An adjustment made pursuant to this subsection (a) shall become effective
retroactively (A) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend
or distribution or (B) in the case of any such subdivision, combination or
reclassification, at the close of business on the day upon which such
corporate action becomes effective.
(b) In case the Company shall at any time or from time to time
issue or sell shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock, or any options, warrants or other
rights to acquire shares of Common Stock) to all holders of its Common
Stock at a price per share less than the Current Market Price per share of
Common Stock then in effect at the record date referred to in the
immediately following paragraph (treating the price per share of any
security convertible or exchangeable or exercisable into Common Stock as
equal to (x) the sum of the price for such security convertible,
exchangeable or exercisable into Common Stock plus any additional
consideration payable (without regard to any anti-dilution adjustments)
upon the conversion, exchange or exercise of such security into Common
Stock divided by (y) the number of shares of Common Stock initially
underlying such convertible, exchangeable or exercisable security), other
than issuances or sales of Common Stock pursuant to any employee benefit
plan, then, and in each such case, the Conversion Price then in effect
shall be adjusted by dividing the Conversion Price in
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effect on the day immediately prior to such record date, by a fraction (A)
the numerator of which shall be the sum of the number of shares of Common
Stock outstanding on such record date plus the number of additional shares
of Common Stock issued (or the maximum number into which such convertible
or exchangeable securities initially may convert or exchange or for which
such options, warrants or other rights initially may be exercised) and (B)
the denominator of which shall be the sum of the number of shares of Common
Stock outstanding on such record date plus the number of shares of Common
Stock that the aggregate consideration for the total number of such
additional shares of Common Stock so issued (or into which such convertible
or exchangeable securities may convert or exchange or for which such
options, warrants or other rights may be exercised plus the aggregate
amount of any additional consideration initially payable upon conversion,
exchange or exercise of such security) would purchase at the Current Market
Price per share of Common Stock on such record date. If the Company shall
issue or sell shares of Common Stock or rights, options, warrants or
convertible or exchangeable securities for a consideration consisting, in
whole or in part, of property other than cash, the amount of such
consideration shall be determined in good faith by the Board of Directors
whose determination shall be conclusive and evidenced by a Board
Resolution.
Such adjustment shall be made whenever such shares, securities,
options, warrants or other rights are issued, and shall become effective
retroactively immediately after the close of business on the record date
for the determination of stockholders entitled to receive such shares,
securities, options, warrants or other rights; provided, that the
determination as to whether an adjustment is required to be made pursuant
to this SECTION 1303(B) shall only be made upon the issuance of such shares
or such convertible or exchangeable securities, options, warrants or other
rights, and not upon the issuance of the security into which such
convertible or exchangeable security converts or exchanges, or the security
underlying such option, warrant or other right.
Notwithstanding the foregoing, in the event of such issuance or
sale of Common Stock at a price less than the Current Market Price, no such
adjustment under this SECTION 1303(B) need be made to the Conversion Price
unless such adjustment would require an increase or decrease of at least 1%
of the Conversion Price then in effect. Any lesser adjustment shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment that, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of at least 1% of
such Conversion Price.
(c) If the Company shall distribute to all holders of Common
Stock (i) any rights or warrants to subscribe for or purchase any security
of the Company (other than those referred to in paragraph (b) above) or
(ii) any evidence of indebtedness or other securities of the Company (other
than capital stock) or (iii) assets (other than cash) having an aggregate
fair market value (as determined by the Board of Directors as provided
below) that, together with all other such distributions for which an
adjustment pursuant to this paragraph (c) has not been made within 12
months preceding the record date fixed for determination of holders
entitled to receive such distribution, exceeds 10% of the product of the
number of shares of Common Stock outstanding on such record date multiplied
by the Current Market Price per share of the Common Stock on such record
69
date, then in each case the Conversion Price shall be adjusted so that the
Conversion Price shall thereafter equal the price determined by multiplying
the Conversion Price on the day immediately preceding such record date by a
fraction, the numerator of which shall be such Current Market Price minus
the per share Fair Market Value (as determined in a Board Resolution, which
shall be conclusive evidence of such Fair Market Value) of such rights,
warrants, evidences of indebtedness or other securities or assets, as the
case may be, so distributed to holders of the Common Stock, and the
denominator of which shall be such Current Market Price.
(d) If, at any time, as a result of any adjustment made pursuant
to paragraphs (a), (b) or (c) above, the Holder of any Bond thereafter
surrendered for conversion shall become entitled to receive any shares of
capital stock of the Company other than shares of Common Stock, the number
of such shares so receivable upon conversion of any Bond shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained in such paragraphs
(a), (b) and (c) with respect to the Common Stock.
(e) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, and shall thereafter and before the distribution to
stockholders thereof legally abandon its plan to pay or deliver such
dividend or distribution, then thereafter no adjustment in the Conversion
Price then in effect shall be required by reason of the taking of such
record.
(f) Upon any increase or decrease in the Conversion Price, then,
and in each such case, the Company promptly shall deliver to the Trustee
and each Holder at least ten (10) Business Days prior to effecting any of
the foregoing transactions an Officers' Certificate, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated and specifying the increased or
decreased Conversion Price then in effect following such adjustment.
(g) Notwithstanding any other provision of this SECTION 1303, no
adjustment to the Conversion Price shall reduce the Conversion Price below
the then par value per share of the Common Stock and any such purported
adjustment shall instead reduce the Conversion Price to such par value.
The Company hereby covenants not to take any action (i) to increase the par
value per share of the Common Stock or (ii) that would or does result in
any adjustment in the Conversion Price that, if made without giving effect
to the previous sentence, would cause the Conversion Price to be less than
the par value per share of the Common Stock.
SECTION 1304. NO FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any Bond or Bonds. If more than one
Bond shall be surrendered for conversion at one time by the same Holder,
the number of full shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate principal amount of the
Bonds so surrendered. If the conversion of any Bond or Bonds results in a
fraction, an amount equal to such fraction multiplied by the Closing Price
of the Common Stock on the Business Day
70
immediately preceding the day of conversion shall be paid to such holder in cash
by the Company.
SECTION 1305. PRIOR NOTICE OF CERTAIN EVENTS.
In case at any time or from time to time:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock;
(2) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights or warrants;
(3) there shall be any reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock),
or of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the
sale or other disposition of all or substantially all of the assets of the
Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall mail to the Trustee and each Holder of Bonds at its last
address appearing on the Bond Register, as promptly as possible but in any event
at least ten (10) days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or granting of rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined, or (y) the date on which such reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up is expected to
become effective. Such notice also shall specify the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for shares of stock or other securities or property or cash
deliverable upon such reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up.
SECTION 1306. TAXES AND CHARGES.
The issuance or delivery of certificates for Common Stock upon the
conversion of Bonds shall be made without charge to the converting Holder of
Bonds for such certificates or for any documentary, stamp, transfer or other tax
in respect of the issuance or delivery of such certificates or the securities
represented thereby, and such certificates shall be issued or delivered in the
respective names of, or in such names as may be directed by, the Holders of the
Bonds converted; provided, however, that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
Holder of the Bonds converted, and the Company shall not be required to issue or
deliver such certificate unless or until the Person or Persons requesting the
issuance or delivery thereof shall have paid to the Company the amount of such
71
tax or shall have established to the reasonable satisfaction of the Company that
such tax has been paid.
SECTION 1307. REORGANIZATION OF THE COMPANY.
If the Company is a party to a transaction subject to SECTION 801 or a
merger that reclassifies or changes its outstanding Common Stock, the successor
corporation shall enter into a supplemental indenture, in accordance with and
subject to the provisions of ARTICLE NINE, that shall provide that the Holder of
a Bond may convert it into the kind and amount of securities, cash or other
assets which such Holder would have owned immediately after the consolidation,
merger, conveyance, transfer or lease if such Holder had converted the Bond
immediately before the effective date of such transaction. The supplemental
indenture shall provide for adjustments that shall be as nearly equivalent as
may be practical to the adjustments provided for in this Article.
SECTION 1308. CANCELLATION OF CONVERTED BONDS.
All Bonds delivered for conversion shall be delivered to the Trustee to be
canceled by or at the direction of the Trustee as provided in SECTION 308.
ARTICLE FOURTEEN
DISPOSITIONS
SECTION 1401. DISPOSITIONS BY CURRENT MANAGEMENT.
Notwithstanding anything to the contrary in this Indenture, each
member of Current Management shall be free to transfer any part of their
respective shares of Common Stock to (i) the spouse of such member, (ii) any
lineal descendant of such member or (iii) any entity controlled by such member
or both such members.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
POLYPHASE CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------------
Print Name: ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Title: Executive Vice President
--------------------------------------
Attest:
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Print Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------
Title: Secretary
-----------------------
Seal
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY,
AS TRUSTEE
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Print Name: ▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Vice President
--------------------------------------
Attest:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------
Title: Assistant Secretary
-----------------------
Seal
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss:
COUNTY OF NEW YORK )
On the 1st day of December, 1995, before me personally came ▇▇▇▇▇
▇▇▇▇▇ to me known, who, being by me duly sworn, did depose and say that he is
Executive Vice President of Polyphase Corporation, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------
Notary Public
SEAL ▇▇▇▇▇ ▇▇▇▇▇
Notary Public, State of New York
No. ▇▇-▇▇▇▇▇▇▇
Qualified in New York County
Certificate Filed In Ne York County
Commission Expires August 31, 1997
74
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 1st day of December, 1995, before me personally came ▇▇▇ ▇▇▇▇▇▇
to me known, who, being by me duly sworn, did depose and say that he is a Vice
President of IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
association, and that he signed his name thereto by like authority.
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Notary Public
SEAL ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Notary Public, State of New York
No. 01KE4971667
Qualified in New York County
Certificate Filed In New York County
Commission Expires November 9, 1997
75