Exhibit 4.2
CAREERENGINE NETWORK, INC.
AND
_____ ,
TRUSTEE
INDENTURE
Dated as of __, 2001
$5,765,000
12% Convertible Subordinated Debentures due March 31, 2010
TABLE OF CONTENTS
Article Section Heading Page
- ------- ------- -------------------------- ----
I DEFINITIONS AND RULES
OF CONSTRUCTION
1.01 Definitions
1.02 Other Definitions
1.03 Rules of Construction
II THE SECURITIES
2.01 Form and Dating
2.02 Execution and Authentication
2.03 Registrar, Paying Agent and
Conversion Agent
2.04 Paying Agent to Hold Money in Trust
2.05 Holder Lists
2.06 Transfer and Exchange
2.07 Replacement Securities
2.08 Outstanding Securities
2.09 Treasury Securities
2.10 Temporary Securities
2.11 Cancellation
2.12 Defaulted Interest
2.13 CUSIP Numbers
III REDEMPTION
3.01 Notices to Trustee
3.02 Selection of Securities to be Redeemed
3.03 Notice of Redemption
3.04 Effect of Notice of Redemption
3.05 Deposit of Redemption Price
3.06 Securities Redeemed in Part
IV COVENANTS
4.01 Payment of Securities
4.02 SEC Reports
4.03 Compliance Certificate
4.04 Limitation on Dividends;
Stock Purchase and
Senior Debt
4.05 Certain Transactions With a
Parent and its Affiliates
TABLE OF CONTENTS
(Continued)
Article Section Heading Page
- ------- ------- -------------------------- ----
IV 4.06 Miscellaneous Covenants
4.07 Miscellaneous Representations
and Warranties of The Company
4.08 Limitation of Interest Payments
V SUCCESSORS
5.01 When Company May Merge, etc.
VI DEFAULTS AND REMEDIES
6.01 Events of Default
6.02 Acceleration
6.03 Other Remedies
6.04 Waiver of Past Defaults
6.05 Control by Majority
6.06 Limitation on Suits
6.07 Rights of Holders to Receive Payment
or Convert Securities
6.08 Collection Suit by Trustee
6.09 Trustee May File Proofs of Claim
6.10 Priorities
6.11 Undertaking for Costs
VII TRUSTEE
7.01 Duties of Trustee
7.02 Rights of Trustee
7.03 Individual Rights of Trustee
7.04 Trustee's Disclaimer
7.05 Notice of Defaults
7.06 Reports by Trustee to Holders
7.07 Compensation and Indemnity
7.08 Replacement of Trustee
7.09 Successor Trustee by Merger, etc.
7.10 Eligibility; Disqualification
VIII DISCHARGE OF INDENTURE
8.01 Termination of Company's Obligations
8.02 Application of Trust Money
8.03 Repayment to Company
TABLE OF CONTENTS
(Continued)
Article Section Heading Page
- ------- ------- -------------------------- ----
IX AMENDMENTS
9.01 Without Consent of Holders
9.02 With Consent of Holders
9.03 Revocation and Effect of Consents
9.04 Notation on or Exchange of Securities
9.05 Trustee Protected
X CONVERSION
10.01 Conversion Privilege
10.02 Conversion Procedure
10.03 Fractional Shares
10.04 Taxes on Conversion
10.05 Adjustment for Change in Capital Stock
10.06 Adjustment for Certain Issuances of Common Stock
10.07 Subscription Offerings
10.08 Other Rights to Acquire Common Stock
10.09 Current Market Price
10.10 Minimum Adjustment
10.11 When Adjustment May Be Deferred
10.12 Number of Shares
10.13 When No Adjustment Required
10.14 Notice of Adjustment
10.15 Voluntary Reduction
10.16 Notice of Certain Transactions
10.17 Reorganization of Company
10.18 Company Determination Final
10.19 Trustee's Disclaimer
XI SUBORDINATION
11.01 Agreement to Subordinate
11.02 Certain Definitions
11.03 Liquidation, Dissolution, Bankruptcy
11.04 Default on Senior Debt
11.05 Acceleration of Securities
11.06 When Distribution Must be Paid Over
11.07 Notice by Company
11.08 Subrogation
11.09 Relative Rights
TABLE OF CONTENTS
(Continued)
Article Section Heading Page
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X 11.10 Subordination May Not Be Impaired
by Company
11.11 Distribution or Notice to Representative
11.12 Rights of Trustee and Paying Agent
XII MISCELLANEOUS
12.01 Notices
12.02 Communications by Holders with
Other Holders
12.03 Certificate and Opinion as to
Conditions Precedent
12.04 Statements Required in Certificate
or Opinion
12.05 Rules by Trustee and Agents
12.06 Legal Holidays
12.07 No Recourse Against Others
12.08 Duplicate Originals
12.09 Miscellaneous
12.10 Governing Law
SIGNATURES
EXHIBIT A - FORM OF SECURITY
INDENTURE dated as of , __, 2001 between CAREERENGINE NETWORK. INC., a Delaware
corporation (the "Company"), , as trustee (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% Convertible
Subordinated Debentures due March 31, 2010 (the "Securities").
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.01. Definitions.
-----------
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Company" means the party named as such above until a successor replaces it
and thereafter means the successor.
"Default" means any event that is, or after notice or passage of time would
be, an Event of Default.
"Holder" means a person in whose name a Security is registered.
"Indenture" means this Indenture as amended from time to time.
"Officers' Certificate" means a certificate signed by two Officers. See
Sections 12.03 and 12.04.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 12.03 and 12.04.
"Principal" of a debt security means the principal of the security plus the
premium, if any, on the security.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture.
"Subsidiary" means any entity of which at least a majority of the capital
stock having ordinary voting power for the election of directors or other
governing body of such entity (other than securities having such power only by
reason of the happening of a contingency) shall be owned by the Company directly
or indirectly through one or more of such Subsidiaries.
"Trustee" means the party named as such above until a successor replaces it
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.
Section 1.02. Other Definitions.
-----------------
Term Defined in Section
----------------------- ----------------------
"Bankruptcy Law" 6.01
"Common Stock" 10.01
"Conversion Agent" 2.03
"Current Market Price" 10.09
"CUSIP" 2.13
"Custodian" 6.01
"Event of Default" 6.01
"Existing Conversion Price" 10.06
"Indebtedness" 11.02
"Legal Holiday 12.06
"Officer" 12.09
"Paying Agent" 2.03
"Registrar" 2.03
"Representative" 11.02
"Senior Debt" 11.02
"U.S. Government Obligations" 8.01
Section 1.03. Rules of Construction.
----------------------
Unless the context otherwise requires (i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned to it in
accordance with generally accepted accounting principles; (iii) "or" is not
exclusive; (iv) words in the singular include the plural, and in the plural
include the singular; and (v) provisions apply to successive events and
transactions.
ARTICLE II
THE SECURITIES
Section 2.01. Form and Dating.
---------------
The Securities shall be in the form of EXHIBIT A, which is part of this
Indenture. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Security shall be dated the date of
its authentication.
Section 2.02. Execution and Authentication.
----------------------------
(a) Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that office at
the time the Security is authenticated, the Security shall be valid
nevertheless.
(b) A Security shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture. The Trustee shall authenticate
Securities for original issue in the aggregate principal amount stated in
paragraph 4 of Exhibit A upon a written order of the Company signed by two
officers. The aggregate principal amount of Securities outstanding at any time
may not exceed that amount except as provided in Section 2.07. The Trustee may
appoint an authenticating agent acceptable to the Company to authenticate
Securities. 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 an Agent to deal with the Company or an Affiliate.
Section 2.03. Registrar, Paying Agent and Conversion Agent.
--------------------------------------------
The Company shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the "Registrar"), an office or
agency where Securities may be presented for payment (the "Paying Agent") and an
office or agency where Securities may be presented for conversion (the
"Conversion Agent"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may appoint one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents. The term "Paying Agent" includes any additional conversion
agent. The Company shall notify the Trustee of the name and address of any Agent
not a party to this Indenture. If the Company fails to maintain a Registrar,
Paying Agent or Conversion Agent, the Trustee shall act as such.
Section 2.04. Paying Agent to Hold Money in Trust.
-----------------------------------
The Company shall require each Paying Agent other than the Trustee to agree in
writing that the Paying Agent will hold in trust for the benefit of Holders or
the Trustee all money
held by the Paying Agent for the payment of Principal of or interest on the
Securities, and will 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 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. Upon doing so the
Paying Agent shall have no further liability for the money.
Section 2.05. Holder Lists.
-------------
The Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of Holders. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee on or
before each interest payment date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Holders.
Section 2.06. Transfer and Exchange.
---------------------
Where Securities are presented to the Registrar or a co-registrar with a request
to register transfer or to exchange them for an equal principal amount of
Securities the Trustee shall permit the Registrar or co-registrar to register
the transfer or make the exchange if its requirements for such transaction are
met. To permit registrations of transfer and exchanges, the Trustee shall
authenticate Securities at the Registrar's request. The Company may charge a
reasonable fee for any registration of transfer or exchange but not for any
exchange pursuant to Sections 2.10, 3.06 or 10.02.
Section 2.07. Replacement Securities.
----------------------
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 Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be sufficient in the judgment of
both to protect the Company, the Trustee, any Agent or any authenticating agent
from any loss which any of them may suffer if a Security is replaced. The
Company may charge for its expenses in replacing a Security. Every replacement
Security is an additional obligation of the Company.
Section 2.08. Outstanding Securities.
----------------------
The Securities outstanding at any time are all the Securities authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section 2.08 as not outstanding. If a
Security is replaced pursuant to Section 2.07, it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. If Securities are considered paid under
Section 4.01, they cease to be outstanding and interest on them ceases to
accrue. A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
Section 2.09. Treasury Securities.
-------------------
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 or an Affiliate shall be disregarded, 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 knows are
so owned shall be so disregarded.
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 in exchange for temporary Securities.
Section 2.11. Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for cancellation.
The Registrar, Paying Agent and Conversion Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange,
payment or conversion. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, conversion or cancellation and
shall dispose of canceled Securities as the Company directs. The Company may not
issue new Securities to replace Securities that it has paid or delivered to the
Trustee for cancellation or that any Holder has converted pursuant to ARTICLE X.
Section 2.12. Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it shall pay
the defaulted interest in any lawful manner. It may pay the defaulted interest,
plus any interest payable on the defaulted interest, to the persons who are
Holders on a subsequent special record date. The Company shall fix the record
date and payment date. At least 15 days before the record date, the Company
shall mail to Holders a notice that states the record date, payment date and
amount of interest to be paid.
Section 2.13. 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 a convenience to Holders; provided, however, 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 III
REDEMPTION
Section 3.01. Notices to Trustee.
------------------
If the Company wants to redeem Securities pursuant to Paragraph 5 of the
Securities, it shall notify the Trustee of the redemption date and the principal
amount of Securities to be redeemed at least 50 days before the redemption date.
The Trustee may waive this notice.
Section 3.02. Selection of Securities to be Redeemed.
--------------------------------------
If less than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot. The Trustee shall make the
selection not more than 75 days before the redemption date from Securities
outstanding 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 it selects shall be in
amounts of $1,000 or integral multiples of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.
Section 3.03. Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a redemption date, the Company
shall mail a notice of redemption to each Holder whose Securities are to be
redeemed. The notice shall identify the Securities to be redeemed and shall
state (i) the redemption date and redemption price; (ii) the conversion price;
(iii) the name and address of the Paying Agent and Conversion Agent; (iv) that
Securities called for redemption may be converted at any time before the close
of business on the redemption date; (v) that Holders who want to convert
Securities must satisfy the requirements in Paragraph 7 of the Securities; (vi)
that Securities called for redemption must be surrendered to the Paying Agent to
collect the redemption price; and (vii) that interest on Securities called for
redemption ceases to accrue on and after the redemption date. At the Company's
request, the Trustee shall give the notice of redemption in the Company's name
and at its expense.
Section 3.04. Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Securities called for redemption become due
and payable on the redemption date at the redemption price.
Section 3.05. Deposit of Redemption Price.
---------------------------
On or before the redemption date, the Company shall deposit with the Paying
Agent money sufficient to pay the redemption price of and accrued interest on
all Securities to be redeemed on that date. The Paying Agent shall return to the
Company any money not required for that purpose because of conversion of
Securities.
Section 3.06. Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is redeemed in part, the Trustee shall
authenticate for the Holder a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
Section 3.07. Redemption By Holder's Estate.
-----------------------------
Upon the death of a Holder of a Security, the estate of such Holder may require
the Company to redeem up to a maximum of $50,000 total value of the Securities
owned by such Holder, by delivering to the Company an irrevocable election (a
"Death Redemption Election") requiring the Company to make such redemption. The
redemption price to be paid will be the principal amount of the Security, plus
interest accrued and not previously paid, to the date of redemption. If the
redemption price would be greater than $50,000 in the aggregate, the Company
only shall be required to redeem such number of Securities that, when taken
together with the amount of accrued but unpaid interest thereon, shall equal
$50,000. In the event a Security is held jointly by two or more Persons, the
Company shall not be required to redeem such Security until each joint holder of
such Security has died. Notwithstanding the foregoing sentence, if a Security is
held jointly by a husband and wife, such Security shall be subject to the
elective redemption provisions of this Section 3.07 upon the death of either
spouse. Notwithstanding any of the foregoing, this right of redemption is
limited to the initial Holder (the Holder who purchased the Security directly
from the Company). No subsequent Security holder will have this right of
redemption.
Upon receipt of a Redemption Election, the Company shall designate the
Redemption Date for such Security, which Redemption Date shall be no more than
thirty days after the Company's receipt of the Redemption Election, and shall
pay the Redemption Price to the estate of the Holder in accordance with the
provisions set forth in this ARTICLE III.
No interest shall accrue on any Security to be redeemed under this Section 3.07
for any period of time after the Redemption Date for such Security and after the
Company has tendered the Redemption Price to the Estate of the Holder or to the
Paying Agent, which ever the Company chooses in its sole discretion.
ARTICLE IV
COVENANTS
Section 4.01. Payment of Securities.
----------------------
The Company shall pay the Principal of and interest on the Securities on the
dates and in the manner provided in the Securities. Principal and interest shall
be considered paid on the date due if the Paying Agent holds on that date money
sufficient to pay all Principal and interest then due. The Company shall pay
interest on overdue Principal at the rate borne by the Securities. It shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
Section 4.02. SEC Reports.
-----------
The Company shall file with the Trustee within 15 days after it files them with
the SEC copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Section 4.03. 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 whether or not the
signers know of any Default that occurred during the fiscal year. If they do,
the Certificate shall describe the Default and its status. The Certificate need
not comply with Section 12.04. See Section 12.09.
Section 4.04. Limitation on Dividends and Stock Purchase.
------------------------------------------
(a) The Company will not declare or pay any cash dividends on, or make any
distribution to the holders of, any shares of capital stock of the Company,
other than dividends or distributions payable in such capital stock, and neither
the Company nor any Subsidiary will purchase, redeem or otherwise acquire or
retire for value any shares of capital stock of the Company or warrants or
rights to acquire such capital stock if, at the
time of such declaration, payment, distribution, purchase, redemption, other
acquisition or retirement, an Event of Default shall have occurred and be
continuing.
(b) The provisions of this Section 4.04 shall not prevent (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment complied with the provisions hereof, (ii) the
retirement of any shares of the Company's capital stock in exchange for, or out
of the proceeds of the substantially concurrent sale (other than to a
Subsidiary) of, other shares if its capital stock (other than any preferred
stock which by its terms must be redeemed by the Company prior to the maturity
date of the Securities), and neither such retirement nor the proceeds of any
such sale or exchange shall be included in any computation made under this
Section 4.04.
Section 4.05 Certain Transactions With a Parent and its Affiliates.
-----------------------------------------------------
The Company may not, and it may not permit any Subsidiary to, directly or
indirectly, sell (by merger, exchange or otherwise) or lease any property to an
Affiliate, make any investment in, or render any service to an Affiliate, or
purchase (by merger, exchange or otherwise) or borrow any money from, or make
any payment for any service rendered by an Affiliate except (i) any sale or
lease of any property, or the rendering of any service to an Affiliate, or any
purchase or lease of any property, or any payment for any service rendered, or
the making of any agreement to do so, if (A) such transaction is effected in the
ordinary course of business and the Board of Directors determines in good faith
that the terms thereof are at least as favorable to the Company or its
Subsidiary as those which could be, or could reasonably be expected to be,
obtained in a similar transaction with an entity other than any of its
Affiliates or (B) the terms of such transaction are at least as favorable to the
Company or its Subsidiary as those which could be obtained in a similar
transaction with an entity other than any of its Affiliates; (ii) any borrowing
of money, or the making of any agreement to do so, if the Board of Directors
determines in good faith that the terms of such transaction are at least as
favorable to the Company or its Subsidiary as those which could be, or could
reasonably be expected to be, obtained in a similar transaction with an entity
other than any of its Affiliates; (iii) any payment by the Company or any of its
Subsidiaries to any of its officers, directors or employees or agreement to do
so, if the Board of Directors determines in good faith that the amount to be
paid, or to be agreed to be paid, for such service bears a reasonable
relationship to the value of such services to the Company or such Subsidiary; or
(iv) any sale to an Affiliate by the Company or a Subsidiary of any capital
stock or other securities or other obligations of an Affiliate at a cash sale
price not less than the original cost thereof to the Company or such an
Affiliate or Subsidiary, as the same may have been reduced from time to time by
cash dividends or interest payments thereon or payments of principal thereof
received by the Company or such Subsidiary plus interest on such investment, as
the same may have been reduced from time to time at a rate not less than the
rate borne by the Debentures; but in no event less than current fair market
value.
Section 4.06 Miscellaneous Covenants.
-----------------------
The Company covenants and agrees that from and after the date hereof and until
the date of repayment in full of the Principal and Interest it shall comply with
the following conditions:
(i) Maintenance of Existence and Conduct of Business. Except where such
actions are not material to the Company's business as a whole, the
Company shall, and shall cause each of its material subsidiaries, if
any, to (A) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and rights; and
(B) continue to conduct its business so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times.
(ii) Books and Records. The Company shall, and shall cause each of its
subsidiaries, if any, to keep adequate books and records of account
with respect to its business activities.
(iii) Insurance. The Company shall, and shall cause each of its
material subsidiaries, if any, to maintain insurance policies insuring
such risks as are customarily insured against by companies engaged in
businesses similar to those operated by the Company or such
subsidiaries, as the case may be. All such policies are to be carried
with reputable insurance carriers and shall be in such amounts as are
customarily insured against by companies with similar assets and
properties engaged in a similar business.
(iv) Compliance with Law. The Company shall, and shall cause each of
its material subsidiaries, if any, to comply in all material respects
with all federal, state and local laws and regulations applicable to it
or such subsidiaries, as the case may be, which if breached would have
a material adverse effect on the Company's or such subsidiaries', as
the case may be, business or financial condition.
Section 4.07. Miscellaneous Representations and Warranties of The Company.
-----------------------------------------------------------
The Company represents and warrants that it: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power to carry on its business as now
conducted and to own its properties and assets it now owns; (ii) is duly
qualified or licensed to do business as a foreign corporation in good standing
in the jurisdictions in which ownership of property or the conduct of its
business requires such qualification except jurisdictions in which the failure
to qualify to do business will have no material adverse effect on its business,
prospects, operations, properties, assets or condition (financial or otherwise);
(iii) has full power and authority to execute and deliver this Indenture and the
debentures, and that the execution and delivery of these agreements will not
result in the breach of or default under, with or without the giving of notice
and/or the passage of time, any other agreement, arrangement or indenture to
which it is a party or by which it may be bound, or the violation of any law,
statute, rule, decree, judgment or regulation binding upon it; and (iv) has
taken and will take all acts
required, including but not limited to authorizing the signatory hereof on its
behalf to execute this Indenture and the debentures, so that upon the execution
and delivery of thereof, they shall constitute the valid and legally binding
obligation of the Company enforceable in accordance with the terms thereof.
Section 4.08. Limitation of Interest Payments.
-------------------------------
Nothing contained in this Indenture or the debentures or in any other agreement
between The Company and Holders requires The Company to pay or Holders to accept
interest in an amount which would subject Holders to any penalty or forfeiture
under applicable law. In no event shall the total of all charges payable under
the debentures, whether of interest or of such other charges which may or might
be characterized as interest, exceed the maximum rate permitted to be charged
under the laws of the State of New York. Should any Holder receive any payment
which is or would be in excess of that permitted to be charged under such laws,
such payment shall have been and shall be deemed to have been made in error and
shall automatically be applied to reduce the Principal outstanding on the
Holder's debenture.
ARTICLE V
SUCCESSORS
Section 5.01. When Company May Merge, etc.
---------------------------
The Company shall not consolidate with or merge into, or transfer or lease all
or substantially all of its assets to, any person unless (i) the person is a
corporation; (ii) the person assumes by supplemental indenture all the
obligations of the Company under the Securities and this Indenture, except that
it need not assume the obligations of the Company as to conversion of Securities
if pursuant to Section 10.17 the Company or another person enters into a
supplemental indenture obligating it to deliver securities, cash or other assets
upon conversion of Securities; and (iii) immediately after the transaction no
Default exists. The surviving, transferee or lessee corporation shall be the
successor Company, but the predecessor Company in the case of a transfer or
lease shall not be released from the obligation to pay the Principal of and
interest on the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
------------------
An "Event of Default" occurs if (i) the Company fails to make any payment of
Principal or Interest when due and payable or declared due and payable pursuant
to the terms of the Security and such failure shall remain uncured for a period
of fifteen (15) days after notice thereof has been given by holders to the
Company; (ii) the Company fails at any time to be in material compliance with
any of the covenants set forth in sections 4.06,
4.07, 4.08 or 10.04 of the Indenture, or shall fail at any time to be in
material compliance with or neglect to perform, keep or observe any of the
provisions of the Security or the Indenture to be complied with, performed, kept
or observed by the Company and such failure shall remain uncured for a period of
thirty (30) days after notice thereof has been given by holders or the Trustee
to the Company; (iii) any representation or warranty made in the Security or the
Indenture by the Company shall be untrue or incorrect in any material respect as
of the date when made or deemed made; (iv) a case or proceeding shall have been
commenced against the Company, or any of its material subsidiaries, if any, in a
court having competent jurisdiction seeking a decree or order in respect of the
Company, or any of its subsidiaries, (A) under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable federal,
state or foreign bankruptcy or other similar law; (B) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
the Company, or any of its material subsidiaries, or any of their respective
properties; or (C) ordering the winding-up or liquidation of the affairs of the
Company, or any of its material subsidiaries, and such case or proceeding shall
remain unstayed or undismissed for a period of 90 consecutive days or such court
shall enter a decree or order granting the relief sought in such case or
proceeding; or (v) the Company, or any of its material subsidiaries, if any
shall (A) file a petition seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable federal,
state or foreign bankruptcy or other similar law; or (B) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or the taking of possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of the
Company, or any of its material subsidiaries, or any of their respective
properties.
Section 6.02. Acceleration.
------------
Upon the occurrence of an Event of Default specified in Section 6.01 (iv) and
(v) above, all Principal and interest then remaining unpaid under the Security
shall immediately become due and payable without notice. Upon the occurrence of
any other Event of Default, the holders of no less than a majority in principal
amount of the Securities may thereafter, at their option immediately by notice
to the Company, declare all Principal and interest then remaining unpaid under
the Security immediately due and payable, whereupon the same shall forthwith
mature and become due and payable, without any further notice to the Company and
without presentment, demand, protest or notice of protest, all of which are
hereby waived by the Company. Upon a declaration of acceleration, the entire
Principal and interest then remaining unpaid under the Security shall become
immediately due and payable in full plus all reasonable costs and expenses of
the collection and enforcement of the Security, including reasonable attorney's
fees and expenses, all of which shall be added to the amount due under the
Security. The rights, powers, privileges and remedies of a holder pursuant to
the terms of the Indenture and the Security are cumulative and not exclusive of
any other rights, powers, privileges and remedies which a holder may have under
the Indenture, the Security or any other instrument or agreement.
Section 6.03. 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 Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
-----------------------
The Holders of at least a majority in Principal amount of the Securities by
notice to the Trustee may waive an existing Default and its consequences except
a Default in the payment of the Principal of or interest in any Security or a
Default under ARTICLE X.
Section 6.05. Control by Majority.
-------------------
The Holders of at least a majority in principal amount of the Securities may
direct the time, method and place of conducting any proceeding for and remedy
available to the Trustee or exercising any trust or power conferred on it.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture, is unduly prejudicial to the rights of another Holder or
would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
--------------------
(a) A Holder may pursue a remedy with respect to this Indenture or the
Securities only if (i) the Holder gives to the Trustee written notice of a
continuing Event of Default; (ii) the Holders of at least a majority in
Principal amount of the Securities make a written request to the Trustee to
pursue the remedy; (iii) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense; (iv) the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and (v) during such 60-day period the
Holders of at least a majority in principal amount of the Securities do not give
the Trustee a direction inconsistent with the request.
(b) A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Section 6.07. Rights of Holders to Receive Payment or Convert Securities.
-----------------------------------------------------------
(a) Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of Principal of and interest on his Security, on or
after the respective due dates expressed in the Security, or to bring suit for
the enforcement of any such payment on or after such respective due dates, shall
not be impaired or affected without the consent of the Holder.
(b) Notwithstanding any other provision of this Indenture, the right of any
Holder to bring suit for the enforcement of his right to convert his Security
shall not be impaired or affected without the consent of the Holder.
Section 6.08. Collection Suit by Trustee.
---------------------------
If an Event of Default specified in clause 6.01 (a) (i) above 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.
Section 6.09. 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
Holders allowed in any judicial proceedings relative to the Company, its
creditors or its property.
Section 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this ARTICLE VI, it shall pay out
the money in the following order: first to the Trustee for amounts due under
Section 7.07; second to holders of Senior Debt to the extent required by ARTICLE
XI; third to Holders 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 fourth to the Company. The Trustee may fix a record date and
payment date for any payment to Holders.
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 the Trustee,
a condition for the institution of such suit shall be the giving by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorney's 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 or a suit by Holders of more than 10% in principal
amount of the Securities.
ARTICLE VII
TRUSTEE
Section 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise its rights and powers and use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of an Event of Default (i) the Trustee need
perform only those duties that are specifically set forth in this Indenture and
no others; and (ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; provided, however,
that the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except that (i)
this paragraph does not limit the effect of Paragraph (b) of this Section 7.01;
(ii) 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 (iii) the Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05.
(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 7.01.
(e) 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.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required by
law.
(g) 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 7.01.
Section 7.02. Rights of Trustee.
------------------
(a) The Trustee may rely 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.
(b) Before the Trustee acts or refrains from acting, it may require an Officers'
Certificate or an Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Certificate or
Opinion.
(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.
Section 7.03. 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 an Affiliate
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
Section 7.04. Trustee's Disclaimer.
--------------------
The Trustee 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 in the Securities other than its authentication.
Section 7.05. Notice of Defaults.
-------------------
If an Event of Default as defined in Section 6.01 occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders a notice of the
Default within 90 days after it occurs. Except in the case of a Default in
payment 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 Holders.
Section 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after the reporting date stated in Section 12.09, the Trustee
shall mail to Holders a brief report dated as of such reporting date that
contains the type of information required by Section 313 (a) of the Trust
Indenture Act of 1939. A copy of each report at the time of its mailing to
Holders shall be filed with each stock exchange 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 7.07. Compensation and Indemnity.
--------------------------
(a) The Company shall pay to the Trustee from time to time reasonable
compensation 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 request for all reasonable out-of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
out-of-pocket expenses of the Trustee's agents and counsel.
(b) The Company shall indemnify the Trustee against any loss or liability
incurred by it. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity and the Company shall defend the claim. The Trustee
may have separate counsel but the fees and expenses of such counsel shall be
borne by the Trustee unless the Company shall not have promptly employed counsel
to assume the defense of the claim, in which event such fees and expenses shall
be borne by the Company. The Company shall have the right, in its sole
discretion, to satisfy or settle any claim for which indemnification has been
sought and is available hereunder as long as such satisfaction or settlement is
at no cost to the Trustee. The Company need not pay for any settlement made
without its consent or reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.
(c) To secure the Company's payment obligations in this Section 7.07, 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 or renders
services after an Event of Default specified in clauses 6.01 (a) (iv) or (v)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
-----------------------
(a) A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08. The Trustee may resign 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 the Company.
The Company may remove the Trustee if (i) the Trustee fails to comply with
Section 7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a
receiver or public officer takes charge of the Trustee or its property; or (iv)
the Trustee becomes incapable of acting.
(b) If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a
majority in principal amount of the Securities may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
(c) If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least l0% in
principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(d) If the Trustee fails to comply with Section 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Thereupon, the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Holders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided for in Paragraph 7.07 (c).
Section 7.09. Successor Trustee by Merger, etc.
----------------------------------
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
------------------------------
This Indenture shall always have a Trustee who shall at all times be a
corporation organized and doing business under the laws of the United States or
of any State or Territory or of the District of Columbia which is (i) authorized
under such laws to exercise corporate trust powers, and (ii) subject to
supervision or examination by Federal, State, Territorial, or District of
Columbia authority. The Trustee shall always have a combined capital and surplus
as stated in Section 12.09. This Indenture shall never have a Trustee that
directly or indirectly controls or is directly or indirectly controlled by or is
under direct or indirect common control with the Company.
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.
-------------------------------------
(a) The Company may terminate all of its obligations under this Indenture if (i)
the Securities mature within one year or all of them are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
giving the notice of redemption; and (ii) the Company irrevocably deposits in
trust with the Trustee money or U.S. Government Obligations sufficient to pay
principal and interest on the Securities to maturity or redemption, as the case
may be. The Company may make the deposit only during the one year period and
only if ARTICLE XI permits it. However, the Company's obligations in Sections
2.03, 2.04, 2.05, 2.06, 2.07, 4.01, 7.07, 7.08 and 8.03, and in
ARTICLE X, shall survive until the Securities are no longer outstanding.
Thereafter the Company's obligations in Section 7.07 and 8.03 shall survive.
(b) After a deposit the Trustee upon request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in Paragraph (a) above.
(c) In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government Obligations shall be payable as
to principal or interest on or before such payment date in such amounts as will
provide the necessary money. U.S. Government Obligations shall not be callable
at the issuer's option.
(d) "U.S. Government Obligations" means direct obligations of the United States
of America for the payment of which the full faith and credit of the United
States of America is pledged.
Section 8.02. Application of Trust Money.
---------------------------
The Trustee shall hold in trust money or U.S. Government Obligations deposited
with it pursuant to Section 8.01 above. 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 and interest on the
Securities. Money and securities so held in trust are not subject to ARTICLE XI.
Section 8.03. Repayment to Company.
---------------------
The Trustee and the Paying Agent shall promptly pay to the Company upon request
any excess money or securities held by them at any time. The Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years. After
payment to the Company, Holders entitled to the money must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person.
ARTICLE IX
AMENDMENTS
Section 9.01. Without Consent of Holders.
--------------------------
The Company and the Trustee may amend this Indenture or the Securities without
the consent of any Holder to (i) cure any ambiguity, defect or inconsistency;
(ii) comply with Sections 5.01 and 10.17; or (iii) make any change that does not
adversely affect the right of any Holder.
Section 9.02. With Consent of Holders.
-----------------------
(a) The Company and the Trustee may amend this Indenture or the Securities with
the written consent of the Holders of at least 662/3% in principal amount of the
Securities. However, without the consent of each Holder affected, an amendment
under this Section 9.02 may not: (i) reduce the amount of Securities whose
Holders must consent to an amendment; (ii) reduce the rate of or change the time
for payment of interest on any Security; (iii) reduce the Principal of or change
the fixed maturity of any Security; (iv) make any Security payable in money
other than that stated in the Security; (v) make any change in Sections 6.04 or
6.07 or the second sentence of this Section 9.02; (vi) make any change that
adversely affects the right to convert any Security; or (vii) make any change in
ARTICLE XI that adversely affects the rights of any Holder.
(b) An amendment under this Section 9.02 may not make any change that adversely
affects the rights under ARTICLE XI of any holder of an issue of Senior Debt
unless the holders of the issue pursuant to its terms consent to the change.
(c) Without the consent of any Holders, the Company and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation of the obligations of the
Company under the Indenture, to provide for uncertificated Debentures in
addition to or in place of certificated Debentures (provided that the
uncertificated Debentures are issued in registered form for purposes of Section
163(f) of the Internal Revenue Code of 1986, or in a manner such that the
uncertificated Debentures are described in Section 163(f)(2)(B) of the Code), to
add guarantees with respect to the Debentures, to secure the Debentures, to add
to the covenants of the Company for the benefit of the Holders or to surrender
any right or power conferred upon the Company, to make any change that does not
adversely affect the rights of any Holder.
(d) The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
(e) After an amendment under the Indenture becomes effective, the Company shall
mail to Holders a notice briefly describing such amendment. However, the failure
to give such notice to all Holders, or any defect therein, will not impair or
affect the validity of the amendment.
Section 9.03. Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent to it by a Holder of a
Security is a continuing consent by the Holder and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the consenting
Holder's Security, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to his
Security or portion of a Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
Section 9.04. Notation on or Exchange of Securities.
-------------------------------------
The Trustee may place an appropriate notation about an amendment or waiver on
any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Section 9.05. Trustee Protected.
------------------
The Trustee need not sign any supplemental indenture that adversely affects its
rights.
ARTICLE X
CONVERSION
Section 10.01. Conversion Privilege.
---------------------
A Holder may convert his Security into Common Stock of the Company at any time
during the period stated in Paragraph 7 of the Securities. "Common Stock" means
Common Stock of the Company as it exists on the date this Indenture is
originally signed. The number of shares of Common Stock issuable upon conversion
of a Security shall be determined by dividing the principal amount converted by
the conversion price in effect on the conversion date. The initial conversion
price is stated in Paragraph 7 of the Securities. The conversion price is
subject to adjustment. A Holder may convert a portion of a Security if the
portion is $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that apply to conversion of all of a Security also apply to conversion of a
portion of it.
Section 10.02. Conversion Procedure.
--------------------
To convert a Security a Holder must satisfy the requirements in Paragraph 7 of
the Securities. The date on which the Holder satisfies all those requirements is
the conversion date. As soon as practical, the Company shall deliver through the
Conversion Agent a certificate for the number of full shares of Common Stock
issuable upon the conversion adjusted to account for any fractional share as
provided in Section 10.03 below. The person in whose name the certificate is
registered shall be treated as a stockholder of record on and after the
conversion date. No payment or adjustment will be made for accrued interest on a
converted Security. If a Holder converts more than one Security at the same
time, the number of full shares issuable upon the conversion shall be based on
the total principal amount of the Securities converted. Upon surrender of a
Security that is converted in part, the Trustee shall authenticate for the
Holder a new Security equal in Principal amount to the unconverted portion of
the Security surrendered. If the last day on which a Security may be converted
is a Legal Holiday in a place where a Conversion Agent is located, the Security
may be surrendered to that Conversion Agent on the next succeeding day that is
not a Legal Holiday. The Company shall reserve out of its authorized but
unissued Common Stock or its Common Stock held in treasury enough shares of
Common Stock to permit the conversion of the Securities. All shares of
Common Stock that may be issued upon conversion of the Securities shall be fully
paid and non-assessable. The Company will endeavor to comply with all securities
laws regulating the offer and delivery of shares of Common Stock upon conversion
of Securities and will endeavor to list such shares on each national securities
exchange on which the Common Stock is then listed.
Section 10.03. Fractional Shares.
-----------------
The Company will not issue a fractional share of Common Stock upon conversion of
a Security. Instead the Company will round any fractional share to the nearest
share so that if the fraction is less than 0.5 no share shall be issued and if
the fraction is 0.5 or higher the Company shall issue one full share.
Section 10.04. Taxes on Conversion.
-------------------
If a Holder converts his Security, the Company shall pay any documentary, stamp
or similar issue or transfer tax due on the issue of shares of Common Stock upon
the conversion. However, the Holder shall pay any such tax that is due because
the shares are issued in a name other than his.
Section 10.05. Adjustment for Change in Capital Stock.
--------------------------------------
Except as provided in Section 10.17 if the Company shall (i) declare a dividend
on its outstanding Common Stock in shares of its capital stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common Stock into a
smaller number of shares, or (iv) issue any shares of its capital stock by
reclassification of its Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then in each such case the conversion privilege and the conversion
price in effect immediately prior to such action shall be adjusted so that the
Holder of a Security thereafter converted may receive the number and kind of
shares which he would have owned immediately following such action if he had
converted the Security immediately prior to such action. Such adjustment shall
be made successively whenever such event shall occur. The adjustment shall
become effective immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case of a
subdivision, combination or reclassification. If after an adjustment a Holder
upon conversion of his Security may receive shares of two or more classes of
capital stock of the Company, the Company's Board of Directors shall determine,
in good faith, the allocation of the adjusted conversion price between the
classes of capital stock. After such allocation, the conversion privilege and
conversion price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
ARTICLE X.
Section 10.06. Subscription Offerings.
----------------------
In case the Company shall issue rights, options, or warrants to all holders of
Common Stock entitling them to subscribe for or purchase Common Stock (or
securities convertible into or exchangeable for Common Stock) at a price per
share (or having a conversion price
per share, in the case of a security convertible into or exchangeable for Common
Stock) less than the Current Market Price per share of Common Stock on the
record date for the determination of stockholders entitled to receive such
rights, then in each such case the conversion price shall be adjusted by
multiplying conversion price in effect immediately prior to such record date by
a fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so to
be offered (or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible or
exchangeable securities so to be offered are initially convertible or
exchangeable). Such adjustment shall become effective at the close of business
on such record date; provided, however, that, to the extent the shares of Common
Stock (or securities convertible into or exchangeable for shares of Common
Stock) are not delivered, the conversion price shall be readjusted after the
expiration of such rights, options, or warrants (but only as to those Securities
which are not converted after such expiration), to the conversion price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) actually issued. In case any subscription price may be
paid in a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Company's Board of Directors. Shares of Common Stock owned by or held for the
account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.
Section 10.07. Other Rights to Acquire Common Stock.
------------------------------------
In case the Company shall distribute to all holders of Common Stock (including
any such distribution made to the stockholders of the Company in connection with
a consolidation or merger in which the Company is the continuing corporation)
evidences of its indebtedness or assets (other than cash dividends or
distributions and dividends payable in shares of Common Stock), or options or
warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock (excluding those referred to in
Section 10.06 above), then in each such case the conversion price shall be
adjusted by multiplying the conversion price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, of which the numerator shall be the Current Market
Price per share of Common Stock on such record date, less the fair market value
(as determined in good faith by the Company's Board of Directors) of the portion
of the evidences of indebtedness or assets so to be distributed, or of such
subscription rights, options, or warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, applicable to one share, and of which the denominator shall be such
Current Market Price per share of Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the date
of such distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
Section 10.08. Current Market Price.
--------------------
For the purpose of any computation under Sections 10.06 and 10.07 above, the
"Current Market Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices for the 30 consecutive trading days
commencing 45 trading days before such date. The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the closing bid price regular way, in either case
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, the highest reported bid price
as furnished by the National Association of Securities Dealers, Inc. through
NASDAQ or similar organization if NASDAQ is no longer reporting such
information, or by the Pink Sheets LLC or similar organization if the Common
Stock is not then quoted on an inter-dealer quotation system. If on any such
date the Common Stock is not quoted by any such organization, the fair value of
the Common Stock on such date, as determined by the Company's Board of
Directors, shall be used.
Section 10.09 Action to Permit Valid Issuance of Common Stock.
-----------------------------------------------
Before taking any action which would cause an adjustment reducing the conversion
price below the then par value, if any, of the shares of Common Stock issuable
upon conversion of the Debentures, the Company will take all corporate action
which may, in the opinion of its counsel, be necessary in order that the Company
may validly and legally issue shares of such Common Stock at such adjusted
conversion price.
Section 10.10. Minimum Adjustment.
------------------
No adjustment in the conversion price shall be required if such adjustment is
less than 1% of the then existing conversion price; provided, however, that any
adjustments which by reason of this Section 10.10 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this ARTICLE X shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be. Anything to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the conversion price, in addition to those required by this Section 10.10 as
it in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock hereafter made by the Company to its stockholders shall not be taxable.
Section 10.11. When Adjustment May Be Deferred.
-------------------------------
In any case in which this ARTICLE X shall require that an adjustment in the
conversion price be made effective as of a record date for a specified event, if
a Security shall have been converted after such record date the Company may
elect to defer until the occurrence
of such event issuing to the Holder of such Security the shares, if any,
issuable upon such conversion over and above the shares, if any, issuable upon
such conversion on the basis of the conversion price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such Holder a
due bill or other appropriate instrument evidencing the Holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
Section 10.12. Number of Shares.
----------------
Upon each adjustment of the conversion price as a result of the calculations
made in Sections 10.05 through 10.07 above, the Securities shall thereafter
evidence the right to purchase, at the adjusted conversion price, that number of
shares (calculated to the nearest thousandth) obtained by dividing (i) the
product obtained by multiplying the number of shares purchasable upon conversion
of the Securities prior to adjustment of the number of shares by the conversion
price in effect prior to adjustment of the conversion price by (ii) the
conversion price in effect after such adjustment of the conversion price.
Section 10.13 When No Adjustment Required.
---------------------------
No adjustment need be made for a transaction referred to in Sections 10.05
through 10.07 if Holders are permitted to participate in the transaction on a
basis no less favorable than any other party and at a level which would preserve
the Holders' percentage equity participation in the Common Stock upon conversion
of the Securities. No adjustment need be made for sales of Common Stock pursuant
to a Company plan for reinvestment of dividends or interest, the granting of
options and/or the exercise of options outstanding under any of the Company's
currently existing stock option plans, the exercise of currently existing
incentive stock options or incentive stock options which may be granted in the
future, or the exercise of any other of the Company's currently outstanding
options. No adjustment need be made for a change in the par value or no par
value of the Common Stock. If the Securities become convertible solely into
cash, no adjustment need be made thereafter. Interest will not accrue on the
cash.
Section 10.14. Notice of Adjustment.
---------------------
Whenever the conversion price is adjusted, the Company shall promptly mail to
Holders a notice of the adjustment. The Company shall file with the Trustee a
certificate from the Company's Chief Financial Officer briefly stating (i) the
facts requiring the adjustment, (ii) the adjusted conversion price and the
manner of computing it, and the date on which such adjustment becomes effective.
The certificate shall be evidence that the adjustment is correct, absent
manifest error.
Section 10.15. Voluntary Reduction.
--------------------
The Company from time to time may reduce the conversion price by any amount for
any period of time if the period is at least 20 days and if the reduction is
irrevocable during the period. Whenever the conversion price is reduced, the
Company shall mail to Holders a notice of the reduction. The Company shall mail
the notice at least 15 days before the date
the reduced conversion price takes effect. The notice shall state the reduced
conversion price and the period it will be in effect. A reduction of the
conversion price does not change or adjust the conversion price otherwise in
effect for purposes of Sections 10.05 through 10.07 above.
Section 10.16. Notice of Certain Transactions.
------------------------------
If (i) the Company takes any action that would require an adjustment in the
conversion price pursuant to this ARTICLE X; (ii) the Company takes any action
that would require a supplemental indenture pursuant to Section 10.17; or (iii)
there is a liquidation or dissolution of the Company, the Company shall mail to
Holders a notice stating the proposed record date for a distribution or
effective date of a reclassification, consolidation, merger, transfer, lease,
liquidation or dissolution. The Company shall mail the notice at least 15 days
before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
Section 10.17. Reorganization of Company.
-------------------------
If the Company is a party to a transaction subject to Section 5.01 or a merger
which reclassifies or changes its outstanding Common Stock, the person obligated
to deliver securities, cash or other assets upon conversion of Securities shall
enter into a supplemental indenture. If the issuer of securities deliverable
upon conversion of Securities is an affiliate of the surviving, transferee or
lessee corporation, that issuer shall join in the supplemental indenture. The
supplemental indenture shall provide that the Holder of a Security may convert
it into the kind and amount of securities, cash or other assets which he would
have owned immediately after the consolidation, merger, transfer or lease if he
had converted the Security immediately before the effective date of the
transaction. The supplemental indenture shall provide for adjustments that shall
be as nearly equivalent as may be practical to the adjustments provided for in
this ARTICLE X. The successor company shall mail to Holders a notice briefly
describing the supplemental indenture. If this Section 10.17 applies, Section
10.05 above does not apply.
Section 10.18. Company Determination Final.
-----------------------------
Any determination that the Company or the Board of Directors must make pursuant
to this ARTICLE X shall be conclusive, absent manifest error.
Section 10.19. Trustee's Disclaimer.
--------------------
The Trustee has no duty to determine when an adjustment under this ARTICLE X
should be made, how it should be made or what it should be. The Trustee has no
duty to determine whether any provisions of a supplemental indenture under
Section 10.17 are correct. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities. The Trustee shall not be responsible for the Company's failure to
comply with this ARTICLE X. Each Conversion Agent other than the Company shall
have the same protection under this Section 10.19 as the Trustee.
ARTICLE XI
SUBORDINATION
Section 11.01. Agreement to Subordinate.
-------------------------
The Company agrees, and each Holder by accepting a Security agrees, that the
indebtedness evidenced by the Securities is subordinated in right of payment, to
the extent and in the manner provided in this ARTICLE XI, to the prior payment
in full of all Senior Debt, and that the subordination is for the benefit of the
holders of Senior Debt.
Section 11.02. Certain Definitions.
--------------------
(a) "Indebtedness" means any indebtedness, contingent or otherwise, in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of the borrower or only to a portion thereof), or evidenced
by bonds, notes, debentures or similar instruments or letters of credit, or
representing the balance deferred and unpaid of the purchase price of any
property or interest therein, except any such balance that constitutes a trade
payable, if and to the extent such indebtedness would appear as a liability upon
a balance sheet of the borrower prepared on a consolidated basis in accordance
with generally accepted accounting principles.
(b) "Representative" means the indenture trustee or other trustee,
agent or representative for an issue of Senior Debt.
(c) "Senior Debt" means the principal of and premium, if any, and
interest (including post-petition interest, if any) on, and any other payment
due pursuant to the terms of instruments creating or evidencing Indebtedness of
the Company outstanding on the date of this Indenture or Indebtedness thereafter
created, incurred, assumed or guaranteed by the Company and all renewals,
extensions and refundings thereof, which is payable to banks or other
traditional long-term institutional lenders such as insurance companies and
pension funds, unless in the instrument creating or evidencing such
Indebtedness, it is provided that such Indebtedness is not senior in right of
payment to the Securities. Notwithstanding the foregoing, Senior Debt with
respect to the Company or any Subsidiary shall not include (i) any Indebtedness
of the Company to any subsidiary for money borrowed or advanced from such
Subsidiary and (ii) any Indebtedness representing the redemption price of any
preferred stock.
(d) A distribution as referred to in this ARTICLE XI may consist of
cash, securities or other property.
Section 11.03. Liquidation, Dissolution, Bankruptcy.
------------------------------------
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property (i)
holders of Senior Debt shall be entitled to receive payment in full in cash of
the principal of and interest to the date of
payment on the Senior Debt before Holders shall be entitled to receive any
payment of principal of or interest on Securities; and (ii) until the Senior
Debt is paid in full in cash, any distribution to which Holders would be
entitled but for this ARTICLE XI shall be made to holders of Senior Debt as
their interest may appear, except that Holders may receive securities that are
subordinated to Senior Debt to at least the same extent as the Securities.
Section 11.04. Default on Senior Debt.
----------------------
The Company may not pay principal or interest on the Securities and may not
acquire any Securities for cash or property other than capital stock of the
Company if (i) a default on Senior Debt occurs and is continuing that permits
holders of Senior Debt to accelerate its maturity, and (ii) the default is the
subject of judicial proceedings or the Company receives a notice of the default
from a person who may give it pursuant to Section 11.12. The Company may resume
payments on the Securities and may require them when (A) the default is cured or
waived, or (B) 180 days pass after the notice is given if the default is not the
subject of judicial proceedings, if this ARTICLE XI otherwise permits the
payment or acquisition at that time.
Section 11.05. Acceleration of Securities.
--------------------------
If payment of the Securities is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration. The
Company may pay the Securities when 120 days pass after the acceleration occurs
if this ARTICLE XI permits the payment at that time.
Section 11.06. When Distribution Must be Paid over.
-----------------------------------
If a distribution is made to Holders that because of this ARTICLE XI should not
have been made to them, the Holders who receive the distribution shall hold it
in trust for holders of Senior Debt and pay it over to them as their interests
may appear.
Section 11.07. Notice by Company.
-----------------
The Company shall promptly notify the Trustee and the Paying Agent of any facts
known to the Company that would cause a payment of principal or interest on the
Securities to violate this ARTICLE XI.
Section 11.08. Subrogation.
-----------
After all Senior Debt is paid in full and until the Securities are paid in full,
Holders shall be subrogated to the rights of holders of Senior Debt to receive
distributions applicable to Senior Debt. A distribution made under this ARTICLE
XI to holders of Senior Debt which otherwise would have been made to the Holders
is not, as between the Company and Holders, a payment by the Company on Senior
Debt.
Section 11.09. Relative Rights.
---------------
This ARTICLE XI defines the relative rights of the Holders and holders of Senior
Debt. Nothing in this Indenture shall (i) impair, as between the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay principal and interest on the Securities in accordance with their terms;
(ii) affect the relative rights of the Holders and creditors of the Company
other than holders of Senior Debt; or (iii) prevent the Trustee or any Holder
from exercising its available remedies upon a Default, subject to the rights of
holders of Senior Debt to receive distributions otherwise payable to the
HoIders. If the Company fails because of this ARTICLE XI to pay principal or
interest on a Security on the due date, the failure is still a Default.
Section 11.10. Subordination May Not be Impaired by Company.
--------------------------------------------
No rights of any holder of Senior Debt to enforce the subordination of the
indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
Section 11.11. Distribution or Notice to Representative.
------------------------------------------
Whenever a distribution is to be made or a notice given to holders of Senior
Debt, the distribution may be made and the notice given to their Representative.
Section 11.12. Rights of Trustee and Paying Agent.
----------------------------------
The Trustee or Paying agent may continue to make payments on the Securities
until it receives notice satisfactory to it that payments may not be made under
this ARTICLE XI. The Company, an Agent, a Representative or a holder of Senior
Debt may give the notice. If an issue of Senior Debt has a Representative, only
the Representative may give the Notice. The Trustee in its individual or any
other capacity may hold Senior Debt with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Notices.
-------
Any notice or communication by the Company or the Trustee to the other is duly
given if in writing and delivered in person or mailed by first-class mail to the
other's address stated in Section 12.9. 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 to a Holder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above within the time prescribed,
it is duly given, whether or not the addressee receives it. If the Company mails
a notice or
communication to the Holders, it shall mail a copy to the Trustee and each Agent
at the same time.
Section 12.02. Communications by Holders with Other Holders.
--------------------------------------------
The Trustee, within five business days after receipt of a written application by
any three or more Holders stating that they desire to communicate with other
Holders with respect to their rights under the Indenture or Securities, and
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, and by reasonable proof that each such applicant
has owned his Securities for a period of at least six months preceding the date
of such application, shall inform such applicants as to the approximate number
of Holders and the approximate cost of mailing to such Holders the form of proxy
or other communication, if any, specified in such application. The Trustee
shall, upon the written request of such applicants, mail to all Holders copies
of the form of proxy or other communication which is specified in such request,
with reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment of the reasonable expenses of such mailing, unless within
five days after such tender, the Trustee shall determine, in good faith, that
such mailing would be contrary to the best interests of the Holders or would be
in violation of applicable law.
Section 12.03. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee (i) an Officers'
Certificate 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 (ii) an Opinion of Counsel stating that in
the opinion of such counsel, all such conditions precedent have been complied
with.
Section 12.04. Statements Required in Certificate or Opinion.
---------------------------------------------
Each Certificate or Opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include (i) a statement that the
person making such Certificate or Opinion has read such covenant or condition;
(ii) 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; (iii) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (iv) a statement as to whether or not, in
the opinion of such person, such condition or covenant has been complied with.
Section 12.05. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar, Paying Agent or Conversion Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.06. Legal Holidays.
---------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 12.07. No Recourse Against Others.
--------------------------
All liability described in the Securities of any director, officer, employee or
stockholder, as such, of the Company is waived and released.
Section 12.08. Duplicate Originals.
-------------------
The parties may sign any number of copies of this Indenture. One signed copy is
enough to prove this Indenture.
Section 12.09. Miscellaneous.
-------------
(a) "Officer" means the President, any Vice-President, the Treasurer or
the Secretary of the Company.
(b) The Trustee shall initially serve as authenticating agent. The
Company initially appoints the Trustee as Paying Agent, Registrar and Conversion
Agent.
(c) The first certificate pursuant to Section 4.03 shall be for the
fiscal year ending on December 31, 2001.
(d) The reporting date for Section 7.06 is November 15 of each year.
The first reporting date is April 15, 2001.
(e) The Trustee, and any successor Trustee, shall always have a
combined capital and surplus of at least $10,000,000 as set forth in its most
recent published annual report of condition.
(f) The Company's address is:
CareerEngine Network, Inc.
Two World Trade center
Suite 2112
New York, New York 10048-0203
The Trustee's address is:
Section 12.10. Governing Law.
--------------
This Indenture and the Securities will be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to
applicable principles of conflicts of law to the extent that the application of
the law of another jurisdiction would be required thereby.
SIGNATURES
Dated: CAREERENGINE NETWORK, INC.
---------------------
By
----------------------------------------
George W. Benoit, President
Attest:
Anthony S. Conigliaro, Secretary [SEAL]
Dated:
---------------------
By
----------------------------------------
Attest:
EXHIBIT A
No: ___ $
-----------------
CAREERENGINE NETWORK, INC., a Delaware corporation, promises to pay to
____________________________________________ or registered assigns, the
principal of _______________________________________ Dollars on March 31, 2010.
12% Convertible Subordinated Debenture due March 31, 2010
Interest Payment Dates: January 1, April 1, July 1 and October 1
Record Dates: December 15, March 15, June 15 and September 15
Dated: __, 2001
Authenticated
[TRUSTEE] CAREERENGINE
--------------------------- NETWORK, INC.
By By
--------------------------- ----------------------------
Authorized Officer Authorized Officer
[SEAL]
CAREERENGINE NETWORK, INC.
12% Convertible Subordinated Debenture Due March 31, 2010
1. Interest. CareerEngine Network, Inc. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this debenture (the
"Security" or the "Debenture") at the rate per annum shown above. The Company
will pay interest quarterly, in arrears, on January 1, April 1, July 1 and
October 1 of each year commencing July 1, 2001. Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the day of delivery of the Debentures. Interest
will be computed on the basis of a 360-day year of twelve 30 day months.
2. Method of Payment. The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities (the
"Holders") at the close of business on the 15th day of the month next preceding
the interest payment date even though Securities are canceled after the record
date and on or before the interest payment date, except in connection with a
redemption. 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 that at the time of payment is legal tender for the payment of
public and private debts. However, the Company may pay Principal and interest by
its check payable in such money. It may mail an interest check to a Holder's
registered address.
3. Paying Agent, Registrar, Conversion Agent. Initially, ___ (the "Trustee"),
will act as Paying Agent, Registrar and Conversion Agent. The Company may change
any Paying Agent, Registrar, Conversion Agent or co-registrar without notice.
The Company may act as Paying Agent, Registrar, Conversion Agent or
co-registrar.
4. Indenture. The Company issued the Securities under an Indenture dated as of
__, 2001 (the "Indenture") between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture. The Securities are subject to
all such terms, and Holders are referred to the Indenture for a statement of
such terms. The Securities are unsecured general obligations of the Company
limited to $ 5,765,000 in aggregate principal amount.
5. Redemption. From time to time after the date hereof, the Company may redeem
all or part of the Securities at 100% of Principal amount, plus accrued interest
to the redemption date if the closing price of the Common Stock equals or
exceeds 2.154 times the then conversion price for a period of 20 consecutive
trading days ending three trading days prior to the notice of redemption
referred to in Paragraph 6 below. The closing price for each day shall be the
last reported sales price regular way or, in case no such reported sale takes
place on such day, the closing bid price regular way, in either case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if the Common Stock is not listed or admitted to trading
on any national securities exchange, the highest reported bid price as furnished
by the National Association of Securities Dealers, Inc. through NASDAQ or
similar organization if
NASDAQ is no longer reporting such information, or by the Pink Sheets LLC or
similar organization if the Common Stock is not then quoted on an inter-dealer
quotation system.
6. Notice of Redemption. Notice of redemption will be mailed at least 30 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 whole multiples of
$1,000. On and after the redemption date interest ceases to accrue on Securities
or portions of them called for redemption.
7. Conversion.
(a) A Holder may convert all or a portion (as defined below) of the
principal amount of his Security outstanding at the time such conversion is
effected into Common Stock of the Company ("Common Stock") at any time after the
date hereof and before the close of business on the earlier of March 31, 2010 or
the date that principal and interest under this Debenture has been paid in full.
If the Security is called for redemption, the Holder may convert it at any time
before the close of business on the redemption date. The initial conversion
price is $2.00 per share, subject to adjustment in certain events. To determine
the number of shares issuable upon conversion of a Security, divide the
principal amount converted by the conversion price in effect on the conversion
date. On conversion no payment or adjustment for accrued and unpaid interest
will be made. All such interest will be forfeited. The Company will round to the
nearest share for any fractional share so that if the fraction is less than 0.5
no share shall be issued and if the fraction is 0.5 or higher the Company shall
issue one full share.
(b) To convert a Security a Holder must (i) complete and sign the
conversion notice on the back of the Security; (ii) surrender the Security to a
Conversion Agent; (iii) furnish appropriate endorsements and transfer documents,
if required by the Registrar or Conversion Agent; and (iv) if required, pay any
transfer or similar tax if the Holder requests that the Common Stock to be
registered in a name other than his upon conversion. A Holder may convert a
portion of a Security if the portion is $1,000 or a whole multiple of $1,000.
(c) The conversion price will be adjusted for dividends or
distributions on Common Stock payable in Company Stock; subdivisions,
combinations or certain reclassifications of Common Stock; certain issuances of
Common Stock at less than the then Current Market Value; or distributions of
assets or debt securities of the Company. However, no adjustment will be made if
Holders may participate in the transaction or in certain other cases.
(d) If the Company is a party to a consolidation or merger or a
transfer or lease of all or substantially all of its assets, the right to
convert a Security into Common Stock may be changed into a right to convert it
into securities, cash or other assets of the Company or another entity.
8. Subordination. The Securities are subordinated to Senior Debt, which is the
principal of and premium, if any, and interest (including post-petition
interest, if any) on,
and any other payment due pursuant to the terms of instruments creating or
evidencing Indebtedness of the Company outstanding on the date of this Indenture
or Indebtedness thereafter created, incurred, assumed or guaranteed by the
Company and all renewals, extensions and refundings thereof, which is payable to
banks or other traditional long-term institutional lenders such as insurance
companies and pension funds, unless in the instrument creating or evidencing
such Indebtedness, it is provided that such Indebtedness is not senior in right
of payment to the Securities. Notwithstanding the foregoing, Senior Debt with
respect to the Company or any Subsidiary shall not include (i) any Indebtedness
of the Company to any Subsidiary for money borrowed or advanced from such
Subsidiary and (ii) any Indebtedness representing the redemption price of any
preferred stock. "Indebtedness," as applied to any entity means any
indebtedness, contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such entity or
only to a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit, or representing the balance deferred and
unpaid of the purchase price of any property or interest therein, except any
such balance that constitutes a trade payable, if and to the extent that such
indebtedness would appear as a liability upon a balance sheet of such entity
prepared on a consolidated basis in accordance with generally accepted
accounting principles. To the extent provided in the Indenture, Senior Debt must
be paid before the Securities may be paid. The Company agrees to the
subordination and authorizes the Trustee to give it effect.
9. Denomination, Transfer and Exchange. The Securities are in registered form
without coupons in denominations of $1,000 and whole multiples of $1,000. The
transfer of Securities may be registered and Securities may be exchanged as
provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not exchange or register the transfer of any Securities for a period of 15
days before a selection of Securities to be redeemed. The Securities are not
separable from the Units of which they are a part, and may not be transferred
separately until six months from the effective date of the registration
statement in which these Securities were registered unless the Company and the
underwriter agree that the Securities can be separated and traded separately on
an earlier date.
10. Persons Deemed Owners. The registered holder of a Security may be treated as
its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the Indenture or the
Securities may be amended with the consent of the Holders of at least 66 2/3% in
principal amount of the Securities. Without the consent of any Holder, the
Indenture or the Securities may be amended to cure any ambiguity, defect or
inconsistency, to provide for assumption of Company obligations to Holders or to
make any change that does not adversely affect the rights of any Holders.
12. Defaults and Remedies. Each of the following occurrences constitutes an
Event of Default: (i) failure by the Company to pay principal or interest on the
Securities when due and such failure shall remain uncured for a period of
fifteen (15) days after notice thereof has been given to the Company by holders;
(ii) failure by the Company to comply with any
of its other material agreements in the Indenture or the Securities and such
failure shall remain uncured for a period of thirty (30) days after notice
thereof has been given by holders or the Trustee to the Company; (iii) any
representation or warranty made in the Security or the Indenture by the Company
shall be untrue or incorrect in any material respect as of the date when made or
deemed made and (iv) certain events of bankruptcy or insolvency. If an Event of
Default occurs and is continuing, the Trustee or the Holder of at least a
majority in Principal amount of the Securities may declare all of the Securities
to be due and payable immediately. Notwithstanding the foregoing, a default
under clause (i), (ii) or (ii) above is not an Event of Default until the
Trustee or the Holders of at least a majority in Principal amount of the
Securities notify the Company of the Default. Holders may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in Principal
amount of the Securities may direct the Trustee in its exercise of any trust
power. The Trustee may withhold from Holders notice of any continuing default
(except a default in the payment of Principal or interest) if it determines that
withholding notice is in their interest. The Company must furnish an annual
compliance certificate to the Trustee.
13. Trustee Dealings with the Company. The Trustee under the Indenture, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
14. No Recourse Against Others. A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based thereon, in
respect of or by reason of such obligations or their creation. Each Holder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
15. Authentication. This Security shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent appointed by the
Trustee.
16. Abbreviations. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM ("tenants in common"), TEN ENT ("tenants by the
entireties"), JT TEN ("joint tenants with right of survivorship and not as
tenants in common"), CUST ("Custodian"), and U/G/M/A ("Uniform Gifts to Minors
Act").
17. CUSIP Numbers. 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 Holders. 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.
The Company will furnish to any Holder upon written request and without charge a
copy of the Indenture, which has in it the text of this Security in larger type.
Requests may be made to: Secretary, CareerEngine Network, Inc., Two world Trade
Center, Suite 2112, New York, New York 10048-0203. In the event that there is
any difference between the terms of this Debenture and the Indenture, the terms
of the Indenture will control.
ASSIGNMENT FORM CONVERSION NOTICE
To assign this Security, fill in the To convert this Security into Common form
below: Stock of the Company, check the box: [ ]
I or we assign and transfer this To convert only part of this Security,
Security to state the amount:
(Insert assignee's Soc. Sec. or Tax
I.D. No.)
$_______________
If you want the stock certificate made out
- ------------------------------------ in another person's name, fill in the
form below:
- ------------------------------------
- ------------------------------------ (Insert assignee's soc. sec. or tax i.d.
(Print or type assignee's name, no.)
address and zip code)
and irrevocably appoint ___________
________________ agent to transfer
this Security on the books of the
Company. This agent may substitute _______________________________________
another to act for him. (Print or type assignee's name, address
and zip code)
---------------------------------------
Date: Your Signature
-------------------- ---------------------------------
(Sign your name exactly as it appears on the other side of this Security)