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EXHIBIT 4.7
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PAWNMART, INC.
12% Subordinated Notes due 2004
INDENTURE
Dated as of _________________, 1999
TRUST MANAGEMENT, INC.,
a Texas trust company,
Trustee
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TABLE OF CONTENTS
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ARTICLE 1
Definitions and Incorporation by Reference........................ 1
SECTION 1.1. Definitions........................................ 1
SECTION 1.2. Other Definitions.................................. 10
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.. 11
SECTION 1.4. Rules of Construction.............................. 11
ARTICLE 2
The Securities.................................................... 11
SECTION 2.1. Form and Dating.................................... 11
SECTION 2.2. Execution and Authentication....................... 12
SECTION 2.3. Registrar and Paying Agent......................... 12
SECTION 2.4. Deposit of Moneys; Paying Agent To Hold
Money in Trust..................................... 13
SECTION 2.5. Securityholder Lists............................... 13
SECTION 2.6. Transfer and Exchange.............................. 13
SECTION 2.7. Certificated Securities............................ 14
SECTION 2.8. Replacement Securities............................. 14
SECTION 2.9. Outstanding Securities............................. 14
SECTION 2.10. Temporary Securities............................... 15
SECTION 2.11. Cancellation....................................... 15
SECTION 2.12. Defaulted Interest................................. 15
SECTION 2.13. Record Date........................................ 16
SECTION 2.14. CUSIP Numbers...................................... 16
ARTICLE 3
Redemption........................................................ 16
SECTION 3.1. Notices to Trustee................................. 16
SECTION 3.2. Selection of Securities To Be Redeemed............. 17
SECTION 3.3. Notice of Redemption............................... 17
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SECTION 3.4. Effect of Notice of Redemption...................... 18
SECTION 3.5. Deposit of Redemption Price......................... 18
SECTION 3.6. Securities Redeemed in Part......................... 18
ARTICLE 4
Covenants.......................................................... 18
SECTION 4.1. Payment of Securities............................... 18
SECTION 4.2. SEC Reports......................................... 19
SECTION 4.3. Limitation on Restricted Payments................... 19
SECTION 4.4. Limitation on Sales of Assets....................... 21
SECTION 4.5. Limitation on Transactions with Affiliates.......... 25
SECTION 4.6. Compliance Certificate.............................. 25
SECTION 4.7. Further Instruments and Acts........................ 25
SECTION 4.8. Maintenance of Properties; Insurance................ 26
SECTION 4.9. Corporate Existence................................. 26
SECTION 4.10. Taxes............................................... 26
SECTION 4.11. Conflicting Agreements.............................. 26
ARTICLE 5
Successor Company.................................................. 26
ARTICLE 6
Defaults and Remedies.............................................. 27
SECTION 6.1. Events of Default................................... 27
SECTION 6.2. Acceleration........................................ 29
SECTION 6.3. Other Remedies...................................... 29
SECTION 6.4. Waiver of Past Defaults............................. 29
SECTION 6.5. Control by Majority................................. 30
SECTION 6.6. Limitation on Suits................................. 30
SECTION 6.7. Rights of Holders To Receive Payment................ 30
SECTION 6.8. Collection Suit by Trustee.......................... 30
SECTION 6.9. Trustee May File Proofs of Claim.................... 31
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SECTION 6.10. Priorities.......................................... 31
SECTION 6.11. Undertaking for Costs............................... 31
SECTION 6.12. Waiver of Stay or Extension Laws.................... 31
ARTICLE 7
Trustee............................................................ 32
SECTION 7.1. Duties of Trustee................................... 32
SECTION 7.2. Rights of Trustee................................... 33
SECTION 7.3. Individual Rights of Trustee........................ 34
SECTION 7.4. Trustee's Disclaimer................................ 34
SECTION 7.5. Notice of Defaults.................................. 34
SECTION 7.6. Reports by Trustee to Holders....................... 34
SECTION 7.7. Compensation and Indemnity.......................... 34
SECTION 7.8. Replacement of Trustee.............................. 35
SECTION 7.9. Successor Trustee by Merger......................... 36
SECTION 7.10. Eligibility; Disqualification....................... 36
SECTION 7.11. Preferential Collection of Claims
Against Company..................................... 36
ARTICLE 8
Discharge of Indenture; Defeasance................................. 37
SECTION 8.1. Discharge of Liability on Securities; Defeasance.... 37
SECTION 8.2. Conditions to Defeasance............................ 37
SECTION 8.3. Application of Trust Money.......................... 39
SECTION 8.4. Repayment to Company................................ 39
SECTION 8.5. Indemnity for Government Obligations................ 39
SECTION 8.6. Reinstatement....................................... 39
ARTICLE 9
Subordination...................................................... 39
SECTION 9.1. Securities Subordinated to Senior Indebtedness...... 39
SECTION 9.2. No Payment on Securities in Certain Circumstances... 40
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SECTION 9.3. Securities Subordinated to Prior Payment
of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company...................... 41
SECTION 9.4. Securityholders To Be Subrogated to Rights
of Holders of Senior Indebtedness............................. 42
SECTION 9.5. Obligations of the Company Unconditional...................... 42
SECTION 9.6. Trustee and Paying Agent Entitled To Assume
Payments Not Prohibited in Absence of Notice.................. 43
SECTION 9.7. Application by Trustee of Monies
Deposited With It............................................. 43
SECTION 9.8. Subordination Rights Not Impaired by Acts or Omissions
of Company or Holders of Senior Indebtedness.................. 43
SECTION 9.9. Securityholders Authorize Trustee To
Effectuate Subordination of Securities........................ 44
SECTION 9.10. Right of Trustee and Paying Agent To
Hold Senior Indebtedness...................................... 44
SECTION 9.11. Article 9 Not To Prevent Events of Default.................... 44
SECTION 9.12. No Fiduciary Duty Created to Holders
of Senior Indebtedness........................................ 44
ARTICLE 10
Amendments and Waivers....................................................... 45
SECTION 10.1. Without Consent of Holders.................................... 45
SECTION 10.2. With Consent of Holders....................................... 45
SECTION 10.3. Compliance with Trust Indenture Act........................... 46
SECTION 10.4. Revocation and Effect of Consents and Waivers................. 46
SECTION 10.5. Notation on or Exchange of Securities......................... 47
SECTION 10.6. Trustee To Sign Amendments.................................... 47
SECTION 10.7. Payment for Consent........................................... 47
ARTICLE 11
Miscellaneous................................................................ 47
SECTION 11.1. Trust Indenture Act Controls.................................. 47
SECTION 11.2. Notices....................................................... 47
SECTION 11.3. Communication by Holders with Other Holders................... 48
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SECTION 11.4. Certificate and Opinion as to Conditions Precedent............ 48
SECTION 11.5. Statements Required in Certificate or Opinion................. 49
SECTION 11.6. Rules by Trustee, Paying Agent and Registrar.................. 49
SECTION 11.7. Legal Holidays................................................ 49
SECTION 11.8. Governing Law................................................. 49
SECTION 11.9. No Recourse Against Others.................................... 50
SECTION 11.10. Successors.................................................... 50
SECTION 11.11. Multiple Originals............................................ 50
SECTION 11.12. Table of Contents; Headings................................... 50
SECTION 11.13. Severability.................................................. 50
Exhibit A - Form of Security
Schedule I - Indebtedness To Be Outstanding Immediately After the Issue Date
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PAWNMART, INC.
Reconciliation and tie between Trust Indenture Act of 1939 ("TIA") and Indenture
dated as of __________________, 1999.*
TIA Indenture
Section Section
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310(a)(1) ......................................... 8.10
(a)(2) ......................................... 8.10
(a)(3) ......................................... N.A.
(a)(4) ......................................... N.A.
(a)(5) ......................................... 8.10
(b) ......................................... 8.8, 8.10
(c) ......................................... N.A.
311(a) ......................................... 8.11
(b) ......................................... 8.11
(c) ......................................... N.A.
312(a) ......................................... 2.5
(b) ......................................... 11.3
(c) ......................................... 11.3
313(a) ......................................... 8.6
(b)(1) ......................................... N.A.
(b)(2) ......................................... 8.6
(c) ......................................... 11.2
(d) ......................................... 8.6
314(a) ......................................... 4.2, 11.2
(b) ......................................... 4.21
(c)(1) ......................................... 11.4
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TIA Indenture
Section Section
--------- ---------
(c)(2) ......................................... 11.4
(c)(3) ......................................... N.A.
(d) ......................................... N.A.
(e) ......................................... 11.5
315(a) ......................................... 8.1
(b) ......................................... 8.5; 11.2
(c) ......................................... 8.1
(d) ......................................... 8.1
(e) ......................................... 7.11
316(a) ......................................... 2.7
(last
sentence)
(a)(1)(A) ......................................... 7.5
(a)(1)(B) ......................................... 7.4
(a)(2) ......................................... N.A.
(b) ......................................... 7.7
(c) ......................................... 7.7
317(a)(1) ......................................... 7.8
(a)(2) ......................................... 7.9
(b) ......................................... 2.4
318(a) ......................................... 11.1
N.A. means Not Applicable.
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* This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture. This reconciliation and tie shall only apply
subsequent to qualification of this Indenture under the TIA.
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INDENTURE dated as of _______________________, 1999, between PAWNMART,
INC., a Delaware corporation (the "Company"), and TRUST MANAGEMENT, INC., a
Texas trust company (the "Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's 12% Subordinated
Notes Due 2004 (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct 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.
"Asset Disposition" means any direct or indirect sale, lease, transfer,
conveyance or other disposition (or series of related sales, leases, transfers,
conveyances or dispositions) of property or other assets (each referred to for
the purposes of this definition as a "disposition") by the Company (including
any disposition by means of a merger, consolidation or similar transaction),
other than (i) a disposition of the Company's accounts receivable, lease
receivables or inventory (other than the disposition of inventory pursuant to a
Sale/Leaseback Transaction) at Fair Market Value in the Ordinary Course of
Business, (ii) a disposition of property or assets, whether in a single
transaction or a series of related transactions which constitute a single plan
of disposition, that have an aggregate Fair Market Value not in excess of
$1,000,000, (iii) an operating lease entered into in the ordinary course of
business with respect to property, plant or equipment that in the judgment of
the Board of Directors constitutes excess capacity or (iv) a "like-kind
exchange" of an asset in exchange for an asset of a third party, so long as, in
the judgment of the Company's Board of Directors, the asset received by the
Company in such exchange (x) has a Fair Market Value at least equal to the fair
market value of the asset transferred by the Company and (y) is usable in a
Permitted Line of Business to at least the same extent as the asset transferred
by the Company. An Asset Disposition shall include the requisition of title to,
seizure of or forfeiture of any property or assets, or any actual or
constructive total loss or an agreed or compromised total loss of any property
or assets. The term "Asset Disposition" when used with respect to the Company
shall not include any disposition pursuant to Article 5 which constitutes a
disposition of all or substantially all the assets of the Company.
"Authorized Denominations" shall mean denominations of $1,000, or integral
multiples thereof.
INDENTURE - PAGE 1
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"Average Life" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (i) the sum of the products of
(a) the number of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption and
(b) the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a duly adopted resolution of the Board of
Directors in full force and effect at the time of determination and certified as
such by the Secretary or an Assistant Secretary of the Company.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP; the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests (including partnership interests) in (however designated) equity of
such Person, excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the indenture securities.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" of a Person means Redeemable Stock of such Person as
to which the maturity, conversion or exchange or redemption at the option of the
Holder thereof occurs, or may occur, on or prior to the first anniversary of the
Stated Maturity of the Securities.
"Exchange Act" means the Securities Exchange Act of 1934.
"Fair Market Value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction;
INDENTURE - PAGE 2
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provided, that the foregoing shall not prohibit sales of inventory at a discount
or on terms which are typical in the industry to which such inventory relates.
Fair Market Value shall be determined, except as otherwise provided herein, (i)
if such property or asset has a Fair Market Value less than $2,500,000, by two
officers of the Company in an Officers' Certificate delivered to the Trustee or
(ii) if such property or asset has a Fair Market Value in excess of $2,500,000,
by the Board of Directors as a whole and evidenced by a Board Resolution, dated
within 30 days of the relevant transaction, of the Board of Directors delivered
to the Trustee.
"Fresh Start Accounting" means Fresh Start Accounting as described in
Statement of Position 90-7, "Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code" (Am. Inst. of Certified Public Accountants 1990), as
then in effect, or any comparable statement then in effect.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP consistently applied, except as otherwise
expressly provided in this Indenture.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any
other Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keepwell, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part); provided, however, that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Incur" means to, directly or indirectly, create, issue, assume,
Guarantee, incur (by conversion, exchange or otherwise) extend, assume, or
otherwise become liable for, contingently or otherwise; provided, however, that
any Indebtedness or Capital Stock of a Person existing at the time such Person
becomes a Subsidiary (whether by merger, consolidation, acquisition or
otherwise) will be deemed to be incurred by such Subsidiary at the time it
becomes a Subsidiary. The terms "Incurrence," "Incurred" and "Incurring" shall
each have a correlative meaning.
INDENTURE - PAGE 3
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"Indebtedness" means, with respect to any Person on any date of
determination (without duplication),
(i) the principal of and premium (if any) in respect of indebtedness of
such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments;
(iii) all Capital Lease Obligations of such Person;
(iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except any obligation to pay
any portion of such purchase price that becomes due only if the
earnings attributable to such property or services satisfy
predetermined minimum amounts subsequent to the purchase of such
property or services and the amount of such obligation cannot be
determined on the date of such purchase);
(v) all obligations of such Person in respect of letters of credit,
banker's acceptances or other similar instruments or credit
transactions (including reimbursement obligations with respect
thereto), other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i) through
(iv) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by such Person of a demand for
reimbursement following payment on any such letter of credit;
(vi) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock
(but excluding any accrued dividends);
(vii) all Indebtedness of other Persons secured by any asset of such
Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of such Indebtedness shall be the
lesser of (A) the Fair Market Value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other
Persons; and
(viii) all Indebtedness of other Persons to the extent Guaranteed by
such Person.
For purposes of this definition, the maximum fixed redemption, repayment or
repurchase price of any Disqualified Stock that does not have a fixed
redemption, repayment or repurchase price shall be calculated in accordance with
the terms of such Stock as if such Stock were redeemed, repaid or repurchased on
any date on which Indebtedness shall be required to be determined pursuant to
the Indenture; provided, however, that if such Stock is not then permitted to be
redeemed, repaid or repurchased, the redemption, repayment or repurchase price
shall be the book value of such Stock as reflected in the most recent financial
statements of such Person. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of
INDENTURE - PAGE 4
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all unconditional obligations as described above and the maximum liability, upon
the occurrence of the contingency giving rise to the obligation, of any
contingent obligations at such date.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the TIA that are deemed to be a part of and govern this
instrument, and any such supplemental indenture, respectively.
"Indenture Obligations" means the obligations of the Company (and any other
obligor hereunder or under the Securities) to pay principal of, and premium, if
any, and interest (including, without limitation, any default interest) on, the
Securities when due and payable, whether at maturity, by acceleration, call for
redemption or repurchase, in each case as required hereunder, and all other
amounts due or to become due under or in connection with this Indenture and the
Securities and the performance of all other obligations to the Trustee and the
Holders under this Indenture and the Securities, according to the terms hereof
and thereof.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of others)
such Person. In determining the amount of any Investment in respect of any
property or asset other than cash, such property or asset shall be valued at its
Fair Market Value at the time of such Investment (unless otherwise specified in
this definition).
"Issue Date" means the first date on which Securities are issued pursuant
to this Indenture.
"Legal Holiday" is a Saturday, a Sunday or any day other than a Business
Day as defined in 12 CFR Sec. 229.2(g).
"Net Cash Proceeds" from an Asset Disposition means the sum of (i) cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Indebtedness or other
obligations relating to such properties or assets or received in any other
non-cash form) therefrom and (ii) the Fair Market Value of all securities issued
to the Company in connection therewith, in each case net of (A) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all Federal, state, provincial, foreign and local taxes required to be paid
or accrued as a liability under GAAP as a consequence of such Asset Disposition,
(B) all payments made on any Indebtedness which is secured by any property or
assets subject to such Asset Disposition, or which must by its terms, or in
order to obtain a necessary consent to such Asset Disposition, or by applicable
law, be repaid out of the proceeds from such
INDENTURE - PAGE 5
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Asset Disposition and (C) the deduction of appropriate amounts to be provided by
the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or assets disposed of in such Asset Disposition and
retained by the Company after such Asset Disposition; provided, that, in the
event that any consideration for such Asset Disposition (which would otherwise
constitute Net Cash Proceeds) is required to be held in escrow pending
determination of whether a purchase price adjustment shall be made, such
consideration (or any portion thereof) shall become Net Cash Proceeds only at
such time as it is released to the Company from escrow; provided, further, that
any non-cash consideration received in connection with such Asset Disposition,
which is subsequently converted to cash, shall be deemed to be Net Cash Proceeds
at such time and shall thereafter be applied in accordance with Section 4.4. The
term "Net Cash Proceeds" from an issuance or sale of Capital Stock means the
cash proceeds of such issuance or sale, net of attorneys' fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees actually incurred in connection with such
issuance or sale and net of taxes paid or payable as a result thereof.
"Officer" means the Chairman of the Board and Chief Executive Officer, the
President and Chief Operating Officer, the Vice President and Chief
Administrative Officer, any other Vice President, the Treasurer or the Secretary
of the Company.
"Officers' Certificate" means a certificate signed by two Officers at least
one of whom shall be the principal executive officer, principal accounting
officer or principal financial officer of the Company.
"Opinion of Counsel" means a written opinion, in form acceptable to the
Trustee, from legal counsel who is acceptable to the Trustee. The counsel may be
an employee of or counsel to the Company or the Trustee.
"Ordinary Course of Business" means sales or assignments of inventory or
accounts receivable or the performance of services at Fair Market Value or the
collection of accounts receivable in the ordinary course of business and does
not include any sale, assignment or collection after the voluntary or
involuntary bankruptcy of the Company, including, without limitation, those
events of the type described in Section 6.1(8) and (9). The ordinary course of
business shall include all activities necessary to operate the Company's
Permitted Line of Business.
"Pari passu," as applied to the ranking of any Indebtedness of a Person in
relation to other Indebtedness of such Person, means that each such Indebtedness
either (i) is not subordinate in right of payment to any Indebtedness or (ii) is
subordinate in right of payment to the same Indebtedness as is the other; and is
so subordinate to the same extent, and is not subordinate in right of payment to
each other or to any Indebtedness as to which the other is not so subordinate.
"Permitted Investment" means an Investment by the Company in (i)
receivables owing to the Company, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms; provided, however, that nothing in this paragraph shall
INDENTURE - PAGE 6
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limit in any way the ability of the Company to settle, compromise or otherwise
deal with such receivables in the ordinary course of business; (ii) payroll,
travel and similar advances to cover matters that are expected at the time of
such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business; (iii) loans or advances, in
the aggregate principal amount of $750,000 outstanding from time to time, to
employees of the Company made in the ordinary course of business consistent with
past practices of the Company; (iv) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or in satisfaction of judgments; (v) joint ventures, whether in the form
of cash or through a contribution of assets (the nature of which, if other than
cash, to be determined in good faith by the Board of Directors, whose
determination shall be evidenced by a Board Resolution delivered to the Trustee)
in an amount not to exceed $1,000,000 at any one time; (vi) any other property,
asset or Person if made pursuant to any written agreement of the Company in
effect on the Issue Date; (vii) Investments made as a result of the receipt
of non-cash consideration from an Asset Disposition that was made pursuant to
and in compliance with the provisions of Section 4.4 or a disposition of assets
pursuant to and in compliance with the provisions of Article 5 hereof; and
(viii) any purchase or acquisition of all or substantially all the business
assets of Capital Stock, Indebtedness, any other evidence of beneficial
ownership or other similar instruments issued by such Person engaged in a
Permitted Line of Business.
"Permitted Line of Business" means (i) the line or lines of business in
which the Company is engaged on the Issue Date and (ii) a line or lines of
business similar or related to the line or lines of business described in the
foregoing clause (i).
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Redeemable Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or otherwise (including, without limitation,
upon the happening of any event) (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is convertible into or
exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at
the option of the Holder thereof, in whole or in part.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," "refinancing" and "refinanced"
shall have a correlative meaning) any Indebtedness, including Indebtedness that
refinances Refinancing Indebtedness; provided, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
INDENTURE - PAGE 7
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to or less than the sum of (A) the aggregate principal amount (or if issued with
original issue discount, the aggregate accreted value) then outstanding of the
Indebtedness being refinanced and (B) any premiums, fees and other expenses paid
by the Company, as the case may be, in connection with such refinancing;
provided, further, that the covenants relating to the Refinancing Indebtedness
are no more restrictive in the aggregate than those of the Indebtedness being
refinanced and, if the Indebtedness being refinanced is subordinated to the
Securities, the Refinancing Indebtedness is at least as subordinated to the
Securities as the Indebtedness being refinanced.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" means the principal of, interest (including, without
limitation, interest at the contract rate relating to such Senior Indebtedness
accruing after any proceeding or event referred to in clauses (8) and (9) of
Section 6.1) on. For purposes of Section 4.4, the amount of consideration
received by the Company for the assumption of Senior Indebtedness by any
purchaser of the Company's property, assets or shares shall be equal to the face
value of such Senior Indebtedness.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, excluding any provision providing for the
repurchase of such security at the option of the Holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred.
"Temporary Cash Investments" means any of the following: (i) investments in U.S.
Government Obligations maturing within 90 days of the date of acquisition
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 90 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America or any State thereof having capital, surplus and
undivided profits aggregating in excess of $5,000,000 and whose long-term debt
is rated "A" or higher according to ▇▇▇▇▇'▇ Investors Service, Inc. (or such
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)), (iii)
repurchase obligations with a term of not more than 7 days for underlying
securities of the types described in clause (i) entered into with a bank meeting
the qualifications described in clause (ii) and (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Company) organized and in existence
under the laws of the United States of America with a rating at the time as of
which any investment therein is made of "P-1" (or higher) according to ▇▇▇▇▇'▇
Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's
Corporation.
INDENTURE - PAGE 8
17
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"TIA" means, to the extent required by any such amendment, the Trust Indenture
Act of 1939, as so amended.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and, thereafter,
means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
from time to time in, unless the context otherwise specifies.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
INDENTURE - PAGE 9
18
SECTION 1.2. OTHER DEFINITIONS.
Defined in
Term Section
---- ----------
"Affiliate Transaction"......................................... 4.5
"Application Date".............................................. 4.4(a)
"Asset Disposition Purchase Amount"............................. 4.4(a)
"Asset Disposition Purchase Date"............................... 4.4(a)
"Asset Disposition Purchase Notice"............................. 4.4(d)
"Asset Disposition Purchase Offer".............................. 4.4(a)
"Asset Disposition Purchase Price".............................. 4.4(a)
"Asset Disposition Trigger"..................................... 4.4(b)
"Bankruptcy Law"................................................ 6.1
"covenant defeasance option".................................... 8.1(b)
"Custodian"..................................................... 6.1
"Defaulted Interest"............................................ 2.10
"Event of Default".............................................. 6.1
"legal defeasance option"....................................... 8.1(b)
"Notice of Default"............................................. 6.1
"Paying Agent".................................................. 2.3
"Payment"....................................................... 9.2
"Registrar"..................................................... 2.3
"Restricted Payment"............................................ 4.3
"Surviving Entity".............................................. Article 5
INDENTURE - PAGE 10
19
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular; and
(6) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP.
ARTICLE 2
THE SECURITIES
SECTION 2.1. FORM AND DATING. The Securities and the Trustee's certificate
of authentication shall be substantially in the form of Exhibit A, which is
hereby incorporated in
INDENTURE - PAGE 11
20
and expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). The Company shall
furnish any such legend not contained in Exhibit A to the Trustee in writing.
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in Exhibit A are part of the terms of this Indenture.
SECTION 2.2. EXECUTION AND AUTHENTICATION. Two Officers shall sign the
Securities for the Company by manual or facsimile signature. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the Securities and may
be in facsimile form.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities from time to time for original
issue in the aggregate offering amount of $10,000,000, upon a Company Order;
provided, however, the Trustee shall not be required to do so authenticate more
often than once a week.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar (as defined below), Paying Agent (as defined below)
or agent for service of notices and demands.
SECTION 2.3. REGISTRAR AND PAYING AGENT. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.7. The
Company may act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
INDENTURE - PAGE 12
21
SECTION 2.4. DEPOSIT OF MONEYS; PAYING AGENT TO HOLD MONEY IN TRUST. Prior
to 11:00 a.m. Dallas, Texas time on the Business Day before each due date of the
principal and interest on any Security, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal and interest when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
acts as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by the Paying Agent. Upon complying with this Section, the
Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.5. SECURITYHOLDER LISTS. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Securityholders. If the Trustee is not the 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 Securityholders.
SECTION 2.6. TRANSFER AND EXCHANGE. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer. When a Security is presented to the Registrar or a
co-registrar with a request to register a transfer, the Registrar shall register
the transfer as requested if the requirements of Section 8-401(1) of the Uniform
Commercial Code are met. When Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. No service charge shall
be made for any registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges in connection with any transfer or exchange pursuant
to this Section.
Prior to the due presentation for registration of transfer of any Security,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
The Company shall not be required to (i) issue, register the transfer of or
exchange Securities during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of Securities and ending
at the close of business on the day of such mailing, or (ii) register, in whole
or in part, except the unredeemed portion of any Security being redeemed in
part.
INDENTURE - PAGE 13
22
All Securities issued upon any transfer or exchange pursuant to the terms
of this Indenture will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.
SECTION 2.7. CERTIFICATED SECURITIES. The Company will issue certificated
Securities. In connection with the execution and delivery of such certificated
Securities, the Company shall execute and the Trustee shall, upon receipt of a
written order of the Company signed by two officers, authenticate and deliver
one or more certificated Securities in an equal aggregate principal amount.
Notwithstanding anything contained herein to the contrary, each of the
Notes issued hereunder, with the consent of the Company and Trustee, may be
issued in book entry form as an uncertificated security in accordance with the
provisions of Article 8 of the Uniform Commercial Code as adopted in the state
of organization of the Company.
SECTION 2.8. REPLACEMENT SECURITIES. If a mutilated Security is surrendered
to the Registrar or if the Holder of a Security claims that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of Section
8-405 of the Uniform Commercial Code are met and the Holder satisfies any other
reasonable requirements of the Trustee or the Company. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.9. OUTSTANDING SECURITIES. Securities outstanding at any time are
all Securities authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation and those described in this Section as
not outstanding. A Security does not cease to be outstanding because the Company
or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.8, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or a maturity date money sufficient to pay all
principal of, and premium, if any, and interest payable on, that date with
respect to the Securities (or portions thereof) to be maturing, as the case may
be, then on and after that date such Securities (or portions thereof) cease to
be outstanding and interest on them ceases to accrue.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company thereof or by any other Affiliate controlled by the Company shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee actually knows
are so owned shall be so disregarded.
INDENTURE - PAGE 14
23
In determining whether the Holders of the required principal amount of
Securities have (i) directed the time, method or place of conducting any
proceeding for any remedy available to the Trustee hereunder, or exercising any
trust or power conferred upon the Trustee; (ii) consented to the waiver of any
past Event of Default (as set forth in Section 6.1 of this Indenture) and its
consequences; or (iii) consented to the postponement of any interest payment,
Securities owned by Affiliates of the Company shall be disregarded and
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee actually knows
are so owned shall be so disregarded. The Company shall notify the Trustee in
writing when it or any of its Affiliates purchases or otherwise acquires
Securities, of the aggregate principal amount of such Securities so purchased or
otherwise acquired.
SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are ready
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.11. CANCELLATION. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and, upon request, deliver such canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST. Any interest on any Security which is
payable, but is not punctually paid or duly provided for, on the dates and in
the manner provided in the Securities and this Indenture (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant record date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a special
INDENTURE - PAGE 15
24
record date for the payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such special record date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the special record date therefor to be given to each
Holder, not less than 10 days prior to such special record date. Notice of
the proposed payment of such Defaulted Interest and the special record date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Securities are registered at the close of
business on such special record date.
(ii) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, if any at all, and upon such notice as may be required by such
exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.13. RECORD DATE. The Company may set a record date for purposes
of determining the identity of Securityholders entitled to vote or to consent to
any action by vote or consent authorized or permitted by Sections 6.4 and 6.5.
Unless this Indenture provides otherwise, such record date shall be the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of Securityholders furnished to the Trustee pursuant to Section 2.5
prior to such solicitation.
SECTION 2.14. CUSIP NUMBERS. The Company in issuing the Securities may use
CUSIP numbers (if then generally in use), and, if so, the Trustee shall use
CUSIP numbers in notices of redemption as of convenience to Holders; provided,
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
ARTICLE 3
REDEMPTION
SECTION 3.1. NOTICES TO TRUSTEE. If the Company elects to redeem Securities
pursuant to paragraph 5 of the Securities, it shall notify the Trustee in
writing of the redemption date, the
INDENTURE - PAGE 16
25
principal amount of Securities to be redeemed and the paragraph of the
Securities pursuant to which the redemption will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 45 days (or such lesser time as is acceptable to the Trustee)
but not more than 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein. If fewer than all the
Securities are to be redeemed, the record date relating to such redemption shall
be selected by the Company and given to the Trustee, which record date shall be
not less than 15 days after the date of notice to the Trustee.
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or, at the discretion of the Trustee, by a method
that complies with applicable legal and securities exchange requirements, if
any, and that the Trustee considers fair and appropriate and in accordance with
methods generally used at the time of selection by fiduciaries in similar
circumstances. The Trustee shall make the selection from outstanding Securities
not previously called for redemption. The Trustee may select for redemption
portions of the principal of Securities that have denominations larger than
$1,000. Securities and portions of them the Trustee selects shall be in
Authorized Denominations. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.3. NOTICE OF REDEMPTION. At least 15 days but not more than 60
days before a date for redemption of Securities, the Company shall mail, or
cause to be mailed, a notice of redemption by first-class mail to each Holder of
Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed, the
identification and principal amounts of the particular Securities to be
redeemed;
INDENTURE - PAGE 17
26
(6) that, unless the Company defaults in making such redemption payment,
interest on Securities (or portions thereof) called for redemption ceases
to accrue on and after the redemption date;
(7) the paragraph of the Securities pursuant to which the Securities called
for redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Securities.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense. In such event, the Company
shall provide the Trustee with the information required by this Section.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date). Failure to give notice or any defect
in the notice to any Holder shall not affect the validity of the notice to any
other Holder.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE. Prior to 11:00 a.m. Dallas, Texas
time on the redemption date, the Company shall deposit with the Paying Agent
(or, if the Company is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date) on all Securities to be redeemed on
that date other than Securities or portions of Securities called for redemption
which have been delivered by the Company to the Trustee for cancellation.
SECTION 3.6. SECURITIES REDEEMED IN PART. Upon surrender of a Security that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.1. PAYMENT OF SECURITIES. The Company shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent (other than the Company acting as paying agent) holds in accordance with
this Indenture money sufficient to pay all principal and interest then due.
INDENTURE - PAGE 18
27
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.2. SEC REPORTS. The Company shall file the annual report and
other documents, reports and information required by Section 13 or 15(d) of the
Exchange Act with the SEC and, upon such filing, the Company shall promptly (but
no later than 15 days after filing) furnish such reports, documents and
information to the Trustee. The Company shall use its best efforts to remain
subject to the periodic reporting requirements of Section 13 of the Exchange
Act. In the event the Company is no longer subject to the periodic reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC and furnish to the Trustee and to the Securityholders the annual
reports and other documents, reports and information as if it were subject to
such reporting requirements; provided, however, that the Company shall not be so
obligated to file such reports, documents and information with the SEC if the
SEC does not permit or accept such filings, in which event such reports,
documents and information shall be provided to the Trustee and the Holders at
the times the Company would have been required to provide such reports,
documents and information had it continued to have been subject to such
reporting requirements. The Company also shall comply with the other provisions
of TIA Section 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.3. LIMITATION ON RESTRICTED PAYMENTS. (a) The Company shall not,
directly or indirectly, (i) declare or pay any dividend on, or make any
distribution on or in respect of, its Capital Stock (including any payment in
connection with any merger or consolidation involving the Company), except
dividends or distributions payable solely in its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase such
Capital Stock and except dividends or distributions payable solely to the
Company , (ii) purchase, redeem, retire or otherwise acquire for value any
Capital Stock of the Company held by Persons other than the Company in excess of
$3,000,000 or (iii) make any Investment (other than a Permitted Investment) in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment being herein referred to
as a "Restricted Payment"), if at the time of and after giving effect to the
proposed Restricted Payment:
(1) a Default or Event of Default shall have occurred and be continuing (or
would result therefrom); or
(2) the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Board of Directors, whose determination
shall be evidenced by a Board Resolution furnished to the Trustee) declared
or made since the Issue Date, would exceed, without duplication, the sum
of:
INDENTURE - PAGE 19
28
(A) the aggregate Net Cash Proceeds received by the Company from the
issue or sale of its Capital Stock, including Capital Stock of the Company
issued upon conversion of convertible debt or the exercise of options,
warrants or rights to purchase Capital Stock of the Company, but excluding
Disqualified Stock, subsequent to the Issue Date (other than an issuance or
sale to (i) an employee stock ownership plan or other trust established by
the Company or (ii) management employees); and
(B) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange subsequent to the
Issue Date of any Indebtedness of the Company convertible or exchangeable
for Capital Stock (other than Disqualified Stock) of the Company (less the
amount of any cash or other property distributed by the Company upon such
conversion or exchange).
(b) The provisions of Section 4.3(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock of the Company made in
exchange for, or out of the proceeds of a substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
an employee stock ownership plan or other trust established by the Company)
or out of proceeds of an equity contribution made substantially
concurrently with such purchase or redemption; provided, however, that (A)
such purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Net Cash Proceeds from such sale
shall be excluded from the calculation of amounts under Section
4.3(a)(2)(A);
(ii) any payment in cash in lieu of the issuance of fractional shares of
Capital Stock to any Holder of Capital Stock warrants of the Company
outstanding on the Issue Date pursuant to the exchange of such warrants for
other Capital Stock of the Company upon the exercise of such warrants
pursuant to the terms thereof; provided, however, that such payment shall
be excluded in the calculation of the amount of Restricted Payments;
(iii) dividends paid within 60 days after the date of declaration thereof
if at such date of declaration such dividend would have complied with
Section 4.3(a); provided, however, that at the time of payment of such
dividend, no other Default shall have occurred and be continuing (or result
therefrom); provided, further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments from and
after the date of declaration of such dividend; or
(iv) so long as no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof, the redemption or
repurchase of Capital Stock of the Company, options in respect thereof or
related rights pursuant to and in accordance with the repurchase provisions
of any employee stock option or any stock purchase or other
INDENTURE - PAGE 20
29
agreement between the Company and any of its management employees;
provided, however, that such redemptions or repurchases pursuant to this
Section 4.3(b)(iv) from and after the Issue Date shall not in the aggregate
exceed $3,000,000, plus the amount of any net cash proceeds to the Company
from sales of Capital Stock of the Company to management employees
subsequent to the Issue Date.
SECTION 4.4. LIMITATION ON SALES OF ASSETS. (a) The Company shall not make
any Asset Disposition unless (i) the Company receives consideration at the time
of such Asset Disposition at least equal to the Fair Market Value of the shares,
property and assets subject to such Asset Disposition, (ii) at least 75% of such
consideration consists of cash, Temporary Cash Investments or the assumption of
Senior Indebtedness of the Company and the release of the Company from all
liability under such Senior Indebtedness, (iii) in connection with any Asset
Disposition with an aggregate consideration greater than $2,000,000, the Company
delivers an Officers' Certificate to the Trustee certifying that such Asset
Disposition complies with clauses (i) and (ii) and that such Asset Disposition
was approved by a majority of the Board of Directors including a majority of the
disinterested members of the Board of Directors, as evidenced by a Board
Resolution delivered to the Trustee and (iv) 100% of the Net Cash Proceeds of
such Asset Disposition are applied as follows: (A) within 365 days of receipt
thereof (the last day of such period, the "Application Date"), the Company may
apply all or a portion of such Net Cash Proceeds to reinvestment (whether by
acquisition of an existing business or expansion, including, without limitation,
capital expenditures) in one or more Permitted Lines of Business, or any
combination thereof, and (B) to the extent any or all of such Net Cash Proceeds
are not applied as set forth above in clause (A), the Company shall apply all
remaining Net Cash Proceeds of such Asset Disposition (the "Asset Disposition
Purchase Amount") to an offer to purchase (an "Asset Disposition Purchase
Offer") Securities, on the first Business Day occurring 60 Business Days after
the Application Date (the "Asset Disposition Purchase Date") for cash at a
purchase price (such price, the "Asset Disposition Purchase Price") equal to
100% of the principal amount of the Securities so purchased plus accrued and
unpaid interest thereon to the Asset Disposition Purchase Date, in accordance
with the procedures set forth in Section 4.4(c). Any such Net Cash Proceeds
which remain after the acquisition by the Company of Securities tendered (and
not withdrawn) by Securityholders pursuant to such Asset Disposition Purchase
Offer in accordance with the procedures (including proration in the event of
oversubscription) set forth in Section 4.4(c) shall cease to be Net Cash
Proceeds.
(b) Notwithstanding the foregoing, the Company shall not be required to
make an Asset Disposition Purchase Offer until such time as the aggregate amount
of Net Cash Proceeds from Asset Dispositions required to be so applied to the
purchase of Securities pursuant to Section 4.4(a) exceeds $2,000,000 (the "Asset
Disposition Trigger"), and then the total amount of such Net Cash Proceeds shall
be required to be applied to an Asset Disposition Offer.
(c) Within 30 Business Days of the occurrence of an Asset Disposition
Trigger, (i) the Company shall notify the Trustee in writing of the Asset
Disposition Trigger and shall make the Asset Disposition Purchase Offer to
purchase Securities in an aggregate principal amount equal to the Asset
Disposition Purchase Amount at the Asset Disposition Purchase Price on or
INDENTURE - PAGE 21
30
before the Asset Disposition Purchase Date, (ii) the Company shall mail a copy
of the Asset Disposition Purchase Offer to each Securityholder and (iii) the
Company shall cause a notice of the Asset Disposition Purchase Offer to be sent
to the Dow ▇▇▇▇▇ News Service or similar business news service in the United
States of America. The Asset Disposition Purchase Offer shall remain open from
the time such offer is made until the Asset Disposition Purchase Date. The
Company shall purchase all Securities properly tendered pursuant to the Asset
Disposition Purchase Offer and not withdrawn in accordance with the procedures
set forth in the Asset Disposition Purchase Notice (as defined below). The
Trustee shall be under no obligation to ascertain, and the Trustee shall not be
deemed to have knowledge of, the occurrence of an Asset Disposition Trigger or
to give notice with respect thereto other than as provided above upon receipt of
notice of the occurrence of an Asset Disposition Trigger and an Asset
Disposition Purchase Offer from the Company. The Trustee may conclusively
assume, in the absence of receipt of notice of the occurrence of an Asset
Disposition Trigger and an Asset Disposition Purchase Offer from the Company,
that no Asset Disposition Trigger has occurred. The Asset Disposition Purchase
Offer shall include a form of Asset Disposition Purchase Notice to be completed
by the Securityholder and shall state or provide:
(1) the nature of the Asset Dispositions resulting in the Asset Disposition
Trigger, the date or dates such Asset Dispositions occurred and the amount
of the Asset Disposition Purchase Amount;
(2) that the Asset Disposition Purchase Offer is being made pursuant to
this Section 4.4(c) and that Securities in an aggregate principal amount
equal to the Asset Disposition Purchase Amount, selected in accordance with
this Indenture (if more than such amount shall be tendered) on a pro rata
basis (with such adjustments as may be deemed appropriate by the Company so
that only Securities in Authorized Denominations shall be purchased) from
among all the Securities properly tendered pursuant to the Asset
Disposition Purchase Offer, will be accepted for payment;
(3) the date by which the Asset Disposition Purchase Notice pursuant to
this Section 4.4(c) must be given;
(4) the Asset Disposition Purchase Date;
(5) the Asset Disposition Purchase Price;
(6) the name and address of the Paying Agent;
(7) that Securities must be surrendered to the Paying Agent at the office
of the Paying Agent to collect payment;
(8) information concerning the business of the Company which the Company in
good faith believes will enable such Holders to make an informed decision
(which at a minimum shall include (i) the most recently filed Annual Report
on Form 10-K (including audited
INDENTURE - PAGE 22
31
consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on
Form 8-K of the Company filed subsequent to such Quarterly Report, other
than Current Reports describing Asset Dispositions otherwise described in
the offering materials (or corresponding successor reports) and (ii) a
description of material developments in the Company's business subsequent
to the date of the latest of such Reports.
(9) that the Asset Disposition Purchase Price for any Security as to which
an Asset Disposition Purchase Notice has been duly given and not withdrawn
(subject to proration if Securities with an aggregate principal amount
greater than the Asset Disposition Purchase Amount are so tendered) will be
paid promptly upon the later to occur of the third Business Day following
the Asset Disposition Purchase Date and the time of surrender of such
Security as described in clause (7);
(10) the procedures the Holder must follow to accept the Asset Disposition
Purchase Offer; and
(11) the procedures for withdrawing an Asset Disposition Purchase Notice.
(d) A Holder may accept an Asset Disposition Purchase Offer by delivering
to the Paying Agent at the office of the Paying Agent a written notice (an
"Asset Disposition Purchase Notice") at any time prior to the close of business
in the location of the office of the Paying Agent on the Asset Sale Purchase
Date, stating:
(1) that such Holder elects to have a Security purchased pursuant to the
Asset Disposition Purchase Offer;
(2) the principal amount of the Security that the Holder elects to have
purchased by the Company, which amount must be in an Authorized
Denomination, and the certificate numbers of the Securities to be delivered
by such securityholder for purchase by the Company; and
(3) that such Security shall be purchased on the Asset Disposition Purchase
Date pursuant to the terms and conditions specified in this Indenture.
The delivery of such Security (together with all necessary endorsements, as
determined by the Company) to the Paying Agent at the office of the Paying Agent
prior to, on or after the Asset Disposition Purchase Date shall be a condition
to the receipt by the Holder of the Asset Disposition Purchase Price therefor;
provided, that such Asset Disposition Purchase Price shall be so paid pursuant
to this Section 4.4(d) only if the Security so delivered to the Paying Agent
shall conform in all respects to the description thereof set forth in the
related Asset Disposition Purchase Notice. If at the expiration of the Asset
Disposition Purchase Offer the aggregate principal amount of Securities
surrendered by Holders exceeds the Asset Disposition Purchase Amount, the
Company or the Trustee shall select the Securities to be purchased on a pro rata
basis (with such
INDENTURE - PAGE 23
32
adjustments as may be deemed appropriate by the Company so that only Securities
in Authorized Denominations shall be purchased). Holders whose Securities are
purchased only in part will be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
The Company shall purchase from the Holder thereof, pursuant to an Asset
Disposition Purchase Offer made in accordance with this Section 4.4, a portion
of a Security if the principal amount of such portion is an Authorized
Denomination. Provisions of this Indenture that apply to the purchase of all of
a Security also apply to the purchase of a portion of such Security.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Asset Disposition Purchase Notice or written notice of withdrawal thereof.
Upon receipt by the Paying Agent of the Asset Disposition Purchase Notice,
the Holder of the Security in respect of which such Asset Disposition Purchase
Notice was given shall (unless such Asset Disposition Purchase Notice is
withdrawn as specified in the following paragraph) thereafter be entitled to
receive solely the Asset Disposition Purchase Price with respect to such
Security (subject to proration if Securities with an aggregate principal amount
greater than the Asset Disposition Purchase Amount are properly tendered). Such
Asset Disposition Purchase Price shall be paid to such Securityholder by the
Paying Agent promptly upon the later of (a) the third Business Day following the
Asset Disposition Purchase Date (provided the conditions in this Section 4.4(d)
have been satisfied) and (b) the first Business Day following the time of
delivery of the Security to the Paying Agent at the office of the Paying Agent
by the Holder thereof in the manner required by this Section 4.4(d).
An Asset Disposition Purchase Notice may be withdrawn before or after
delivery by the Holder to the Paying Agent at the office of the Paying Agent of
the Security to which such Asset Disposition Purchase Notice relates, by means
of a written notice of withdrawal delivered by the Holder to the Paying Agent at
the office of the Paying Agent to which the related Asset Disposition Purchase
Notice was delivered at any time prior to the close of business on the Asset
Disposition Purchase Date specifying, as applicable:
(1) the certificate number of the Security in respect of which such notice
of withdrawal is being submitted;
(2) the principal amount of the Security (which shall be an Authorized
Denomination) with respect to which such notice of withdrawal is being
submitted; and
(3) the principal amount, if any, of such Security (which shall be an
Authorized Denomination) that remains subject to the original Asset
Disposition Purchase Notice and that has been or will be delivered for
purchase by the Company.
No later than the date upon which written notice of an Asset Disposition
Purchase Offer is delivered to the Trustee, the Company shall cause to be
irrevocably deposited with the
INDENTURE - PAGE 24
33
Paying Agent, subject to the provisions of Section 2.4, in cash or Temporary
Cash Investments an amount sufficient to pay the aggregate Asset Disposition
Purchase Price, to be held for payment in accordance with the provisions of this
Section.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.5. LIMITATION ON TRANSACTIONS WITH AFFILIATES. (a) The Company
shall not, directly or indirectly, conduct any business, enter into or permit to
exist any transaction (including, without limitation, the sale, conveyance,
disposition, purchase, exchange or lease of any property, the lending the
borrowing or advancing of any money or the rendering of any services) with, or
for the benefit of, any Affiliate of the Company (an "Affiliate Transaction")
unless (i) the terms of such Affiliate Transaction are set forth in writing,
(ii) such Affiliate Transaction is in the best interest of the Company, (iii)
such Affiliate Transaction is on terms as favorable to the Company as those that
could be obtained at the time of such Affiliate Transaction for a similar
transaction in arm's length dealings with a Person who is not such an Affiliate
and (iv) with respect to each Affiliate Transaction involving aggregate payments
or value in excess of $750,000, the Company delivers to the Trustee an Officers'
Certificate certifying that such Affiliate Transaction was approved by a
majority of the Board of Directors, including a majority of the disinterested
members of the Board of Directors, as evidenced by a Board Resolution, and that
such Affiliate Transaction complies with clauses (ii) and (iii), such Board
Resolution to be dated within 30 days of such Affiliate Transaction.
(b) The provisions of Section 4.5(a) shall not prohibit (i) any Restricted
Payment permitted to be paid pursuant to Section 4.3, (ii) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors, (iii) loans or advances
permitted under this Indenture to employees in the ordinary course of business
in accordance with past practices of the Company, (iv) the payment of reasonable
fees to directors of the Company who are not employees of the Company or (v)
reasonable and customary indemnification arrangements between the Company and
their respective directors and officers pursuant to which the Company agrees to
indemnify such directors and officers against losses and expenses incurred by
such directors and officers in connection with their service to the Company (to
the extent that such indemnification arrangements are permitted under applicable
law).
SECTION 4.6. COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).
INDENTURE - PAGE 25
34
SECTION 4.7. 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
purpose of this Indenture.
SECTION 4.8. MAINTENANCE OF PROPERTIES; INSURANCE. The Company shall, at
all times:
(a) maintain all property and assets necessary in its business in good
working order and condition (ordinary wear and tear excepted), in
compliance with applicable regulations, laws or restrictions and supplied
with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all
as in the judgment of the Company may be necessary so its business may be
properly and advantageously conducted at all times; and
(b) maintain with recognized national or international insurance companies,
or through self-insurance programs, insurance on such of its property and
assets, and against such liabilities in at least such amounts, against at
least such risks and with such deductibles or self-insured retentions as in
each case are customarily insured against in the same general area by
companies engaged in the same or a similar business and consistent with the
past practices of the Company, and furnish to the Trustee an Officers'
Certificate specifying the nature of the insurance carried and adequacy
thereof at such times as it shall deliver to the Trustee an Officers'
Certificate pursuant to Section 4.6.
SECTION 4.9. CORPORATE EXISTENCE. Subject to Article 5, the Company shall
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, in accordance with the respective
organizational documents of the Company and the rights (charter and statutory),
registrations, licenses and franchises of the Company.
SECTION 4.10. TAXES. The Company shall pay, prior to delinquency, all
taxes, assessments and governmental levies, except as the same are being
contested in good faith and by appropriate proceedings or where the failure to
pay would not have a material adverse effect on the Company.
SECTION 4.11. CONFLICTING AGREEMENTS. The Company shall not enter into any
agreement or instrument that by its terms expressly prohibits the Company from
making any payments on the Securities required by the terms hereof and thereof.
INDENTURE - PAGE 26
35
ARTICLE 5
SUCCESSOR COMPANY
The Company shall not enter into any transaction or series of transactions
to consolidate, amalgamate or merge with or into any other Person or sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially all
its property and assets to any Person unless (i) if the Company is a party to
such transaction and is not the surviving entity (the "Surviving Entity"), the
Person formed by such consolidation or amalgamation or into which the Company is
merged or that acquires, by sale, conveyance, assignment, transfer, lease or
other disposition, all or substantially all the properties and assets of the
Company as an entirety, shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District or
Columbia and shall expressly assume by a supplemental indenture executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company pursuant to the Securities and the Indenture; (ii)
immediately before and after giving effect to such transaction or series of
transactions on a pro forma basis (and treating any Indebtedness which becomes
an obligation of the Company or the Surviving Entity as a result of such
transaction or series of transactions as having been incurred by the Company or
such Surviving Entity at the time of such transaction or series of transactions)
no Default or Event of Default shall have occurred and be continuing; and (iii)
the Company shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating (A) that such consolidation, amalgamation,
merger or transfer and such supplemental indenture (if any) and written
instrument (if any) comply with this Indenture and (B) that upon execution and
delivery of such supplemental indenture or written instrument the Company or
such Surviving Entity shall be bound by the terms of this Indenture as thereby
amended and this Indenture as thereby amended shall be enforceable against the
Company or such Successor Entity in accordance with its terms.
Upon any transaction involving the Company in which the Company is not the
Surviving Entity, such Surviving Entity shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the Company in the case of a transfer or lease shall not be
released from the obligation to pay the principal of, and premium, if any, or
interest on, the Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company fails to make any payment of interest on any Security when
the same shall become due and payable, and such failure continues for a
period of 30 days;
(2) the Company (i) fails to make the payment of the principal of or
premium, if any, on any Security when the same becomes due and payable at
its Stated Maturity, upon acceleration, redemption or declaration, or
otherwise or (ii) fails to redeem or purchase Securities when and to the
extent required pursuant to this Indenture or the Securities;
(3) the Company fails to comply with Article 5;
INDENTURE - PAGE 27
36
(4) the Company fails to comply with Section 4.2, 4.3, 4.4, 4.5 or 4.11
(other than a failure to purchase Securities when required under Section
4.4) and such failure continues for 30 days after the notice specified
below, or the Company fails to give the notice specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2), (3)
or (4) above) and such failure continues for a period of 60 days after the
notice specified below or the Company fails to give the notice specified
below;
(6) Principal of or interest on any Indebtedness of the Company for
borrowed money is not paid when due within any applicable grace period or
any Indebtedness of the Company is accelerated by the Holders thereof, in
each case, if the total amount so unpaid when due within any applicable
grace period or accelerated exceeds $3,500,000;
(7) one or more judgments or decrees aggregating in excess of $5,000,000 is
rendered against the Company and is not discharged and either: (A) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree; or (B) there is a period of 60 days following the entry
of such judgment or decree during which such judgment or decree is not
discharged, waived or the execution thereof stayed;
(8) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(9) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case;
(B) appoints a Custodian of the Company or for any substantial part of
its property; or
(C) orders the winding up or liquidation of the Company; or any similar
relief is granted under any foreign laws and the order or decree remains
unstayed and in effect for 60 days.
INDENTURE - PAGE 28
37
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by reason of the provisions of Article 9 of this Indenture or by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4) or (5) above is not an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified after receipt of such notice. Such notice must specify
the Default, demand that it be remedied and state that such notice is a "Notice
of Default".
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 which with the giving of notice and the lapse of time would become an
Event of Default under clause (4), (5), (6) or (7) above, its status and what
action the Company is taking or proposes to take with respect thereto.
SECTION 6.2. ACCELERATION. If an Event of Default (other than an Event of
Default specified in Section 6.1(8) or (9) with respect to the Company) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the Securities by notice to the Trustee (who
shall promptly notify the Company), may declare the principal of and accrued
interest on all the Securities to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.1(8) or (9) occurs, the principal of and interest
on all the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any
Securityholders. The Holders of a majority in principal amount of the Securities
by notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration. No such rescission
shall affect any subsequent Default or impair any right consequent thereto.
SECTION 6.3. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
INDENTURE - PAGE 29
38
SECTION 6.4. WAIVER OF PAST DEFAULTS. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal (other than principal due by
reason of acceleration) of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.2 cannot be amended or waived
without the consent of each Securityholder affected. When a Default or Event of
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.5. CONTROL BY MAJORITY. The Holders of a majority in principal
amount of the Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or by 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 7.1,
that the Trustee determines is unduly prejudicial to the rights of other
Securityholders 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 satisfactory to it
in its sole discretion against all losses and expenses caused by taking or not
taking such action.
SECTION 6.6. LIMITATION ON SUITS. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an Event of
Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities make
a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee security or indemnity
reasonably satisfactory to it against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do not
give the Trustee a direction inconsistent with the request during such
60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
INDENTURE - PAGE 30
39
SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default in payment
of interest or principal specified in Section 6.1(1) or (2) occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount of principal and
interest remaining unpaid (together with interest on such unpaid interest to the
extent lawful) and the amounts provided for in Section 7.7.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.7.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
INDENTURE - PAGE 31
40
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in
principal amount of the Securities.
SECTION 6.12. WAIVER OF STAY OR EXTENSION LAWS. The Company (to the extent
it may lawfully refrain from doing so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and
is continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in their exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default known to the
Trustee:
(1) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture. However, in the case
of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that: (1) this paragraph does not limit the effect of paragraph (b) of this
Section; (2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts; and (3) the Trustee shall not be liable
with respect to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 6.5.
INDENTURE - PAGE 32
41
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
SECTION 7.2. RIGHTS OF TRUSTEE. (a) The Trustee may rely and shall be
protected in acting or in refraining from acting on any document believed by it
to be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document, 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, upon
reasonable notice to the Company, to examine the books, records and premises of
the Company, personally or by agent or attorney and to consult with the officers
and representatives of the Company, including the Company's accountants and
attorneys.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete
INDENTURE - PAGE 33
42
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of the Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity reasonably
satisfactory to it against the costs, expenses and liabilities which may be
incurred by it in compliance with such request, order or direction.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or
any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for
and makes no representation as to the validity or adequacy of this Indenture or
the Securities, it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in the Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate
of authentication.
SECTION 7.5. NOTICE OF DEFAULTS. If a Default occurs and is continuing and
if it is known to a Trust Officer of the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security,
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS. If required by TIA Section
313(a), as promptly as practicable after each May 15 beginning with the May 15
following the date of this Indenture, and in any event prior to July 15 in each
year, the Trustee shall mail to each Securityholder a brief report dated as of
May 15 that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.7. COMPENSATION AND INDEMNITY. The Company shall pay to the
Trustee from time to time such compensation as shall be agreed to in writing
between the Company and the Trustee for its services. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon
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43
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, sale or otherwise in connection with this
Indenture, in addition to the compensation for its services. Such expenses shall
include the reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts and court costs. The
Company shall indemnify the Trustee, its officers, directors, employees and
agents, against any and all loss, liability damage, claim or expense (including
reasonable attorneys' fees and expenses), including taxes (other than taxes
based on the income of the Trustee) incurred by it in connection with the
acceptance or administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith.
The Trustee's right to receive payment of any amounts due under this
Section 7.7 shall not be subordinate to any other liability or indebtedness of
the Company (even though the Securities may be subordinate to such other
liability or indebtedness).
The Company's payment obligations pursuant to this Section shall survive
the discharge of this Indenture. To secure the Company's payment obligations in
this Section, the Trustee shall have a lien prior to the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Securities. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.1(8) or (9)
with respect to the Company, the expenses are intended to constitute expenses of
administration under Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
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44
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
25% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or assets to, another corporation or banking association, the
resulting, surviving or transferee corporation or banking association without
any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $1,000,000 as set forth in its most
recent published annual report of condition. No obligor upon the Securities or
Person directly controlling, controlled by or under common control with such
obligor shall serve as Trustee upon the Securities. The Trustee shall comply
with TIA Section 310(b); provided, however, that there shall be excluded from
the operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such exclusion
set forth in TIA Section 310(b)(1) are met.
INDENTURE - PAGE 36
45
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. DISCHARGE OF LIABILITY ON SECURITIES; DEFEASANCE. (a) When (i)
the Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.8) for cancellation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 of this
Indenture, and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Securities,
including interest thereon (other than Securities replaced pursuant to Section
2.8), and if in either case the Company pays all other sums payable hereunder by
the Company, then this Indenture shall, subject to Sections 8.1(c) and 8.6,
cease to be of further effect. The Trustee shall acknowledge satisfaction and
discharge of this Indenture on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company.
(b) Subject to Sections 8.1(c), 8.2 and 8.6, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.2 (to the
extent that the failure to comply with Section 4.2 shall not violate the TIA),
4.3, 4.4 and 4.5. Article 5 and the related operation of Sections 6.1(3), (4)
and (5) and the operation with respect to Sections 6.1(6), (7), (8) and (9)
("covenant defeasance option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Sections 6.1(3), (4) or
(5) or an Event of Default specified in Sections 6.1(7), (8) or (9).
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b), the Company's obligations in
Sections 2.3, 2.4, 2.5, 2.6, 2.8, 7.7, 7.8, 8.4, 8.5 and 8.6 shall survive until
the Securities have been paid in full. Thereafter, the Company's obligations in
Sections 7.7, 8.4, 8.5 and 8.6 shall survive.
SECTION 8.2. CONDITIONS TO DEFEASANCE. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
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46
(1) the Company irrevocably deposits in trust with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on
the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing their opinion that
the payments of principal and interest when due and without reinvestment on
the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Securities to
maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day period
no Default specified in Section 6.1(8) or (9) with respect to the Company
occurs which is continuing at the end of the period;
(4) no Default has occurred and is continuing on the date of such deposit
and after giving effect thereto;
(5) the deposit does not constitute a default under any other agreement
binding on the Company;
(6) the Company delivers to the Trustee an Opinion of Counsel to the effect
that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(7) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from the Internal Revenue Service a ruling or (ii) since the
date of this Indenture there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Securityholders will not
recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(9) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
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47
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
SECTION 8.3. APPLICATION OF TRUST MONEY. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities.
SECTION 8.4. REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money or securities
held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years; provided, however, that the Trustee and the Paying Agent before being
required to make any payment may, but need not, at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
Dallas or mail to each Holder entitled to such money notice that such money
remains unclaimed and that after a date specified therein, which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be paid to the Company. After payment
to the Company, Securityholders entitled to the money must look to the Company
for payment as general creditors.
SECTION 8.5. INDEMNITY FOR GOVERNMENT OBLIGATIONS. The Company shall pay
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.6. REINSTATEMENT. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article 8
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
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 8 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Article 8.
ARTICLE 9
SUBORDINATION
SECTION 9.1. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS. The Company,
for itself and its successors, and each Holder, by its acceptance of Securities,
agrees that, notwithstanding anything to the contrary in Sections 6.1 and 6.2
hereof, the payment of the principal of, interest on or any other amounts due on
the Securities is subordinated in right of payment, to the extent and
INDENTURE - PAGE 39
48
in the manner provided in this Article 9, to the prior payment in full of all
Senior Indebtedness. Each Holder by its acceptance of the Securities authorizes
and directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Indebtedness and
such Holder, the subordination provided in this Article 9.
The expressions "prior payment in full," "payment in full" and "paid in
full" and any other similar term or phrase when used in this Article 9 with
respect to Senior Indebtedness shall mean the payment in full of such Senior
Indebtedness in cash or provision for such payment in cash or otherwise in a
manner satisfactory to the holders of the Senior Indebtedness.
This Article 9 shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and they
and/or each of them may enforce such provisions to the extent and in the manner
provided herein.
SECTION 9.2. NO PAYMENT ON SECURITIES IN CERTAIN CIRCUMSTANCES. (a) No
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) shall be made or agreed to be made on account of the principal of,
premium (if any) or interest on the Securities, or in respect of any redemption,
retirement, defeasance, purchase or other acquisition of any of the Securities,
and no Holder of any Security shall be entitled to receive any such payment (any
of the foregoing payments or actions being referred to in this Section 9.2 as a
"Payment"), on or after the occurrence of any default in the payment of
principal or interest then due and payable in respect of any Senior Indebtedness
(either at maturity, upon redemption, by acceleration or otherwise), unless and
until such default has been waived or cured or all amounts then due and payable
for principal of and interest on all Senior Indebtedness shall have been paid in
full or provision therefor in cash, in cash equivalents, or in accordance with
the terms of such Senior Indebtedness and the agreements, if any, under which
such Senior Indebtedness was issued or created, shall have been made.
(b) The Company may not make any Payment if a default or event of default
under any agreement governing Senior Indebtedness (other than a default or event
of default relating to payment of principal or interest, either at maturity,
upon redemption, by declaration or otherwise) has occurred and is continuing
that permits the holders of such Senior Indebtedness to accelerate its maturity
(whether or not such acceleration has occurred).
Notwithstanding the provisions of this Section 9.2(b), the Company may make
Payments on the Securities when:
(1) all defaults and events of default referred to in such notice are
cured or waived; or
INDENTURE - PAGE 40
49
(2) 179 days pass after such notice is given, with respect to such
defaults and/or events of default so long as this Article 9
(including, without limitation, Section 9.2(a)) otherwise permits a
Payment at that time.
(c) In the event that notwithstanding the provisions of this Section 9.2
the Company shall make any Payment to the Trustee or any Holder of the
Securities on account of the principal of or interest on the Securities after
receiving notice (as aforesaid) of the happening of a default or event of
default on Senior Indebtedness, then, unless and until such default or event of
default shall have been cured or waived or shall have ceased to exist, such
payment (subject to the provisions of Sections 9.6 and 9.7) shall be held by the
Trustee or such Holder, in trust for the benefit of, and subject to Sections 9.6
and 9.7, shall be paid forthwith over and delivered to, the holders of Senior
Indebtedness (pro rata as to each of such holders on the basis of the respective
amounts of Senior Indebtedness then in default held by them) for application to
the payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any default
in the payment of principal of or interest on any Senior Indebtedness or a
default which results in the acceleration of such Senior Indebtedness or under
any agreement pursuant to which Senior Indebtedness has been issued.
SECTION 9.3. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION OF COMPANY. Upon any
distribution or payment of assets or securities of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company of any
kind or character (whether voluntary or involuntary, in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full (or to have such payment duly provided for) of the
principal thereof and interest due thereon and other amounts due in connection
therewith before the Holders are entitled to receive any payment or distribution
of any assets (other than Capital Stock of the Company) on account of the
principal of or interest on the Securities;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders or the
Trustee on behalf of the Holders would be entitled except for the provisions of
this Article 9, including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Securities, shall be paid by the
liquidating trustee or agent or other person making such payment or distribution
directly to the holders of Senior Indebtedness (pro rata as to each such holder
or trustee on the basis of the respective amounts of unpaid Senior Indebtedness
held or represented by each), to the extent necessary to make payment in full of
all Senior Indebtedness remaining unpaid except that Holders of the Securities
shall be entitled to receive securities that are subordinated to Senior
Indebtedness to at least the same degree as the Securities; and
INDENTURE - PAGE 41
50
(c) in the event that notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Securities, shall be received
by the Trustee or the Holders or any Paying Agent (or, if the Company is acting
as its own Paying Agent, money for any such payment or distribution shall be
segregated or held in trust) on account of principal of or interest on the
Securities before all Senior Indebtedness is paid in full, such payment or
distribution (subject to the provisions of Sections 9.6 and 9.7) shall be
received and held in trust for and shall be paid forthwith over and delivered to
the holders of the Senior Indebtedness remaining unpaid or unprovided for (pro
rata as to each of such holders on the basis of the respective amounts of Senior
Indebtedness held by them), for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
thereof or to or for the holders of such Senior Indebtedness, except that
Holders of the Securities shall be entitled to receive securities that are
subordinated to Senior Indebtedness to at least the same extent as the
Securities.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company or any
assignment for the benefit of the Company's creditors.
SECTION 9.4. SECURITYHOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF
SENIOR INDEBTEDNESS. Subject to the payment in full of all Senior Indebtedness
pursuant to this Article 9, the Holders of Securities shall be subrogated
equally and ratably to the rights of the holders of Senior Indebtedness to
receive payments or distributions of assets of the Company applicable to the
Senior Indebtedness until all amounts owing on the Securities shall be paid in
full, and for the purpose of such subrogation no such payments or distributions
to the holders of Senior Indebtedness by or on behalf of the Company or by or on
behalf of the Holders by virtue of this Article 9 which otherwise would have
been made to the Holders shall, as among the Company, its creditors other than
holders of the Senior Indebtedness and the Holders, be deemed to be payment by
the Company to or on account of the Senior Indebtedness, it being understood
that the provisions of this Article 9 are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and the
holders of Senior Indebtedness, on the other hand.
SECTION 9.5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL. Nothing contained in
this Article 9 or elsewhere in this Indenture or in any Security is intended to
or shall impair, as among the Company, its creditors other than holders of the
Senior Indebtedness and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal amount of and
other interest (including, to the extent lawful ,any interest on overdue
installments of interest) on the Securities as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders and creditors of the Company other
than the holders of Senior Indebtedness, nor shall anything herein or therein
prevent
INDENTURE - PAGE 42
51
the Trustee or any Holders from exercising all remedies otherwise permitted by
applicable law upon Default under this Indenture, subject to the rights, if any,
under this Article 9 of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy. Upon any distribution of assets of the Company referred to in this
Article 9, the Trustee, subject to the provisions of Sections 7.1 and 7.2, and
the Holders shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation,
reorganization or similar proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 9.
SECTION 9.6. TRUSTEE AND PAYING AGENT ENTITLED TO ASSUME PAYMENTS NOT
PROHIBITED IN ABSENCE OF NOTICE. The Trustee and Paying Agent shall not at any
time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee or the Paying Agent or
the taking of any other action under this Article 9 by the Trustee unless and
until the Trustee or the Paying Agent shall have received written notice thereof
from the Company or from one or more holders of Senior Indebtedness prior to the
receipt of any such written notice, the Trustee and Paying Agent, subject to the
provisions of Sections 7.1 and 7.2, shall be entitled in all respects
conclusively to assume that no such facts exist.
SECTION 9.7. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT. Subject to
Article 8, any deposit of monies by the Company with the Trustee or any Paying
Agent (whether or not in trust) for the payment of the principal of or interest
on any Securities shall be subject to the provisions of Sections 9.1, 9.2, 9.3
and 9.4, except that, prior to the date on which by the terms of this Indenture
any such monies may become payable for any purpose (including, without
limitation, the payment of either the principal of or the other interest on any
Security), the Trustee shall not have received with respect to such monies the
notice provided for in Section 9.6, then the Trustee or the Paying Agent shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received. This Section shall be construed solely
for the benefit of the Trustee and Paying Agent and nothing herein shall be
construed to relieve any Holders from the duties imposed upon them under Section
9.3(c) with respect to monies received in violation of the provisions of this
Article 9. The foregoing shall not apply if the Company acts as its own Paying
Agent.
SECTION 9.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF OR
HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future holders of any
Senior Indebtedness to enforce subordination as provided herein shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal
INDENTURE - PAGE 43
52
freely with the Company, all without affecting the liabilities and obligations
of the parties to the Indenture or the Holders. No provision in any supplemental
indenture which modifies this Article 9 or otherwise affects the superior
position of the holders of the Senior Indebtedness shall be effective against
the holders of the Senior Indebtedness who have not consented thereto.
SECTION 9.9. SECURITYHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION
OF SECURITIES. Each Holder by its acceptance of Securities authorizes and
expressly directs the Trustee on its behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 9 and to protect the rights of the Holders pursuant to this Indenture
and appoints the Trustee its attorney-in-fact for such purpose, including, in
the event of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or any
other similar remedy or otherwise) tending towards liquidation of the business
and assets of the Company, the immediate filing of a claim for the unpaid
balance of its Securities in the form required in said proceedings and causing
said claim to be approved. If the Trustee does not file a proper claim or proof
of debt in the form required in such proceeding prior to 30 days before the
expiration of the time to file such claim or claims, then the holders of Senior
Indebtedness are hereby authorized to file an appropriate claim for and on
behalf of the Holders. In the event of any such proceeding, until the Senior
Indebtedness is paid in full in accordance with Section 9.3 (or adequate
provision made for such payment), without the consent of the holders of a
majority in aggregate principal amount outstanding of Senior Indebtedness, no
Holder shall waive, settle or compromise any such claim or claims relating to
the Securities that such Holder now or hereafter may have against the Company.
SECTION 9.10. RIGHT OF TRUSTEE AND PAYING AGENT TO HOLD SENIOR
INDEBTEDNESS. The Trustee and the Paying Agent, in their individual capacities,
shall be entitled to all of the rights set forth in this Article 9 in respect of
any Senior Indebtedness at any time held by either of them to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall be
construed to deprive the Trustee or the Paying Agent of any of its rights as
such holder.
SECTION 9.11. ARTICLE 9 NOT TO PREVENT EVENTS OF DEFAULT. The failure to
make a payment on account of principal of or other interest (including any
interest on overdue installments of interest and defaulted interest) on the
Securities by reason of any provision of this Article 9 shall not be construed
as preventing the occurrence of an Event of Default under Section 6.1. Nothing
contained in this Article 9 shall limited the right of the Trustee or the
Holders to take any action to accelerate the maturity of the Securities pursuant
to Section 6.2 or to pursue any rights or remedies hereunder or under applicable
law, subject to the rights, if any, under this Article 9 of the holders, from
time to time, of Senior Indebtedness.
SECTION 9.12. NO FIDUCIARY DUTY CREATED TO HOLDERS OF SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness by virtue of the provisions of this Article 9, and shall not
be liable to any such holders (other than for its willful misconduct or gross
negligence) if it shall pay over to deliver to the Holders or the Company or any
other person, money or assets in compliance with the terms of this Indenture.
INDENTURE - PAGE 44
53
ARTICLE 10
AMENDMENTS AND WAIVERS
SECTION 10.1. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may
amend this Indenture or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in place of
certificated Securities; provided, however, that the uncertificated
Securities are issued in registered form for purposes of Section 163(f) of
the Code or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of the Code;
(4) to add Guarantees with respect to the Securities or to secure the
Securities;
(5) to add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company;
(6) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA;
(7) to provide for the acceptance of appointment hereunder by a successor
Trustee; or
(8) to make any change that does not adversely affect the rights of any
Securityholder.
provided that the Company has delivered to the Trustee an Opinion of Counsel and
an Officer's Certificate stating that such amendment or supplement complies with
the provisions of this Section 10.1.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 10.2. WITH CONSENT OF HOLDERS. The Company and the Trustee may
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a majority in principal
amount of the Securities. In addition, the Holders of at least a majority in
principal amount of the Securities by written notice to the Trustee may waive
future compliance by the Company with any provision of this Indenture or the
Securities. However, without the consent of each Securityholder affected, an
amendment or waiver may not:
INDENTURE - PAGE 45
54
(1) reduce the percentage of principal amount of Securities whose Holders
must consent to an amendment or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Security;
(3) reduce the principal of or extend the Stated Maturity of any Security;
(4) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may be redeemed in accordance with
Article 3;
(5) make any Security payable in money other than that stated in the
Security;
(6) impair the right of any Securityholder to institute suit for
enforcement of any payment on or with respect to any Security; or
(7) make any change in Section 6.4 or 6.7 or the second sentence of this
Section which adversely affects the rights of any Securityholder.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such amendment
or waiver. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment or waiver under
this Section.
SECTION 10.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 10.4. REVOCATION AND EFFECT OF CONSENTS AND WAIVERS. A consent to
an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give
INDENTURE - PAGE 46
55
such consent or to revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders after such record
date. No such consent shall be valid or effective for more than 120 days after
such record date.
SECTION 10.5. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee at the written direction of
the Company shall place an appropriate notation on the Security regarding the
changed terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.
Failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment.
SECTION 10.6. TRUSTEE TO SIGN AMENDMENTS. The Trustee shall sign any
amendment authorized pursuant to this Article 10 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.1) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that (i) such
amendment is authorized or permitted by this Indenture and that all conditions
precedent to the execution, delivery and performance of such amendment have been
satisfied; and (ii) the Indenture together with such amendment complies with the
TIA.
SECTION 10.7. PAYMENT FOR CONSENT. Neither the Company nor any Affiliate of
the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. TRUST INDENTURE ACT CONTROLS. If and to the extent that any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provision (an "incorporated provision") included in
this Indenture by operation of, Sections 310 to 318, inclusive, of the TIA, such
imposed duties or incorporated provision shall control.
SECTION 11.2. NOTICES. Any notice or communication shall be in writing and
delivered in person, by telecopier or mailed by first-class mail addressed as
follows:
INDENTURE - PAGE 47
56
if to the Company:
PawnMart, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention of Chief Financial Officer
if to the Trustee:
TRUST MANAGEMENT, INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention of Corporate Trust Administration
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Securityholders
may communicate pursuant to TIA Section 312(b) with other Securityholders with
respect to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA Section
312(c).
SECTION 11.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
INDENTURE - PAGE 48
57
(2) 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 have been complied with.
SECTION 11.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such individual,
such covenant or condition has been complied with.
SECTION 11.6. RULES BY TRUSTEE, PAYING AGENT AND REGISTRAR. The Trustee may
make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 11.7. LEGAL HOLIDAYS. If a payment date is a Legal Holiday, payment
shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY. THE PARTIES HERETO SUBMIT TO THE JURISDICTION OF COURTS
LOCATED IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE.
SECTION 11.9. NO RECOURSE AGAINST OTHERS. A director, officer, employee or
stockholder, as such, of the Company or the Trustee shall not have any liability
for any obligations of the Company or the Trustee, respectively, under the
Securities or this Indenture or for any claim
INDENTURE - PAGE 49
58
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder shall waive and release all such
liability. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 11.10. SUCCESSORS. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 11.11. MULTIPLE ORIGINALS. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 11.12. TABLE OF CONTENTS; HEADINGS. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
SECTION 11.13. SEVERABILITY. In case any provision in this Indenture or in
the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
INDENTURE - PAGE 50
59
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
PAWNMART, INC.
By:
--------------------------------
Name:
Title:
TRUST MANAGEMENT, INC., as Trustee
By:
--------------------------------
Name:
Title:
INDENTURE - PAGE 51
60
EXHIBIT A
[FORM OF FACE OF SECURITY]
$
CUSIP NO.
------------
12% Subordinated Note due 2004
Note No.
----------
PAWNMART, INC., a Delaware corporation, promises to pay to ______________,
or registered assigns, the principal sum of __________________ Dollars on
December 31, 2004.
Interest Payment Dates: the fifteenth day of each month, beginning with the
second full calendar month following issuance.
Record Dates: the first day of each month.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated:
PAWNMART, INC.
[Seal]
By:
--------------------------------------
President and Chief Executive Officer
--------------------------------------
Senior Vice President and
Chief Financial Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
TRUST MANAGEMENT, INC.,
as Trustee, certifies that this is one of the Securities referred to in the
Indenture.
By:
------------------------------
Authorized Signatory
61
[FORM OF REVERSE SIDE OF SECURITY]
12% Subordinated Note Due December 31, 2004
1. INTEREST
PAWNMART, INC., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company will pay interest
monthly on the fifteenth day of each month (each an "Interest Payment Date") of
each year, commencing on the second full calendar month following issuance.
Interest on the Securities will accrue from and including the most recent date
to which interest has been paid or, if no interest has been paid, from the date
of this Security. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company shall pay interest on overdue principal at the
rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. METHOD OF PAYMENT
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on the first day of each month immediately preceding the Interest Payment Date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States of America that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money mailed to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR
Initially, TRUST MANAGEMENT, INC., a Texas trust company ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company may act as Paying
Agent, Registrar or co-registrar.
4. INDENTURE
The Company issued the Securities under an Indenture dated as of
_______________, 1999 ("Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are obligations of the Company limited to $10,000,000.00
aggregate principal amount (subject to Section 2.8 of the Indenture). The
Indenture imposes certain limitations on the Company, including, subject to
certain exceptions, the payment of dividends on, and redemption of, the Capital
Stock of the Company, the sale by the Company of assets, transactions with
Affiliates and consolidations and mergers and transfer of all or substantially
all the Company's assets.
62
5. OPTIONAL REDEMPTION
The Company may redeem the Securities in whole at any time or in part at
any time and from time to time at the redemption prices set forth below
(expressed as percentages of the principal amount thereof), plus accrued and
unpaid interest (if any) to the date of redemption (subject to the right of
Holders of record on the relevant record date to receive interest due on the
related Interest Payment Date):
If redeemed pursuant to this Paragraph 5
during the 12-month period ending March 31
of the years set forth below:
Year Percentage
---- -----------
2000 103 %
2001 102 %
2002 101 %
2003 100 %
2004 100 %
6. NOTICE OF REDEMPTION
Notice of redemption will be mailed by first class mail at least 15 days
but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in Authorized Denominations.
If money sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. SUBORDINATION
The Company's payment of the principal of and interest on the Securities is
subordinated and subject to the prior payment in full of the Company's Senior
Indebtedness as more fully set forth in the Indenture. Each Holder of Securities
by his acceptance hereof covenants and agrees that all payments of the principal
and interest on the Securities by the Company shall be subordinated in
accordance with Article 9 of the Indenture and each holder accepts and agrees to
be bound by such provisions.
8. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form without coupons in Authorized
Denominations. A Holder may transfer or exchange Securities in accordance with
the Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements or transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
register the transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion of the
Security not to be redeemed) or any Securities for a period of 15 days before a
selection of Securities to be redeemed or 15 days before an interest payment
date.
9. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of it
for all purposes.
10. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its written request unless an abandoned property law designates another Person.
After any such payment, Holders entitled to the money must look only to the
Company and not to the Trustee for payment.
63
11. DISCHARGE AND DEFEASANCE
Subject to certain conditions, the Company at any time may terminate some
of or all its obligation under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S Government Obligations for the payment of
principal and interest on the Securities to redemption or maturity, as the case
may be.
12. AMENDMENT, WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount outstanding of the Securities and (ii) any
default or noncompliance with any provision may be waived with the written
consent of the Holders of a majority in principal amount outstanding of the
Securities. Subject to certain exceptions set forth in the Indenture, without
the consent of any Securityholder, the Company and the Trustee may amend the
Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, to comply with Article 5 of the Indenture, to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to add Guarantees with respect to the Securities, to secure the Securities, to
add additional covenants or surrender rights and powers conferred on the
Company, to comply with any request of the SEC in connection with qualifying the
Indenture under the Act or to make any change that does not adversely affect the
rights of any Securityholder.
13. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest on the Securities; (ii) default in payment of principal on
the Securities at maturity, upon acceleration, redemption or otherwise, or
failure by the Company to purchase Securities when required; (iii) failure by
the Company to comply with other agreements in the Indenture or the securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$3,500,000 at the time; (v) certain events of bankruptcy or insolvency with
respect to the Company; and (vi) certain judgments or decrees for the payment of
money in excess of $5,000,000. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the Securities
may declare all the Securities to be due and payable immediately. Certain events
of bankruptcy or insolvency are Events of Default which will result in the
Securities being due and payable immediately upon the occurrence of such Events
of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
14. TRUSTEE DEALINGS WITH THE COMPANY
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by
64
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
16. AUTHENTICATION
This Security 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 Security.
17. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder 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), COST (= custodian), and U/G/M/A (= Uniform Gift to Minors
Act).
18. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. GOVERNING LAW
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to:
PawnMart, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention of Chief Financial Officer
65
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ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
-----------------------------------------------------------
Date: Your Signature:
------------------- --------------------------------
(Sign exactly as your name appears on the other side of this Security)
-----------------------------------------------------------
66
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.4 of the Indenture, check the box: [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.4 of the Indenture, state the amount:
$
------------------------------
Date: Your Signature:
------------------- --------------------------------
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:
----------------------------------------------
(Signatures must be guaranteed by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934.)
67
Schedule I to 12% Subordinated Indenture
Indebtedness To Be Outstanding
----------------------
Immediately After the Issue Date
----------------------