1
CARTER HAWLEY HALE STORES, INC.
AND
CONTINENTAL BANK,
NATIONAL ASSOCIATION,
TRUSTEE
____________________________
INDENTURE
Dated as of December 21, 1993
____________________________
6-1/4% Convertible Senior Subordinated Notes
due 2000
2
CROSS-REFERENCE TABLE
Indenture
---------
TIA Section Section
- ----------- -------
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(1)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.08;
9.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.06;
11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.06
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02;
11.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04(a)
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04(a)
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04(b)
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.05;
11.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01(c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.11
Section 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.05
(A)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
[L120300.7]
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TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.03 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . 7
SECTION 1.04 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02 Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.03 Registrar, Paying Agent and Conversion Agent . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04 Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.05 Securityholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.06 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.07 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.08 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.09 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.13 CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.14 Procedures for Global Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 3
REDEMPTION
SECTION 3.01 Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.02 Selection of Securities to be Redeemed . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.03 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.04 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.05 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.06 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 4
CONVERSION
SECTION 4.01 Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.02 Conversion Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.03 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.04 Taxes on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.05 Company to Provide Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.06 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
[L120300.7] i
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SECTION 4.07 No Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.08 Equivalent Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.09 Adjustments for Tax Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.10 Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.11 Notice of Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.12 Effect of Reclassifications, Consolidations, Mergers or Sales on
Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.13 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 5
SUBORDINATION
SECTION 5.01 Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.02 No Payment on Securities if Senior Debt in Default . . . . . . . . . . . . . . . . . . . 28
SECTION 5.03 Distribution on Acceleration of Securities; Dissolution and
Reorganization; Subrogation of Securities . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.04 Reliance by Senior Debt on Subordination Provisions . . . . . . . . . . . . . . . . . . . 32
SECTION 5.05 Trustee's Relation to Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.06 Other Provisions Subject Hereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 6
COVENANTS
SECTION 6.01 Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.02 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.03 Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.04 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.05 Compliance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.06 Notice of Events of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.07 Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.08 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.09 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.10 Purchase of Securities at Option of the Holder Upon Change in Control . . . . . . . . . . 38
SECTION 6.11 Effect of Change in Control Purchase Notice . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.12 Deposit of Change in Control Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.13 Securities Purchased in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.14 Compliance with Securities Laws upon Purchase of Securities . . . . . . . . . . . . . . . 41
SECTION 6.15 Repayment to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.16 Limitations on Ranking of Future Indebtedness . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.17 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.18 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
[L120300.7] ii
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ARTICLE 7
SUCCESSOR CORPORATION
SECTION 7.01 When Company May Merge, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.02 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 8
DEFAULT AND REMEDIES
SECTION 8.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.02 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.03 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.04 Waiver of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.05 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 8.06 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.07 Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.08 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 8.09 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 8.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 9
TRUSTEE
SECTION 9.01 Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.02 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.03 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 9.04 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.05 Notice of Defaults or Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.06 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.07 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.08 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 9.09 Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.10 Eligibility: Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.01 Termination of Company's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.02 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.03 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 10.04 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 11
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.01 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.02 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.03 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
[L120300.7] iii
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SECTION 11.04 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.05 Notation On or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.06 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 12
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.03 Communications by Holders With Other Holders . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.04 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . 61
SECTION 12.05 Record Date for Vote or Consent of Securityholders . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.06 Rules by Trustee, Paying Agent, Registrar . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.07 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.08 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.09 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.10 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.13 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.14 Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
EXHIBIT A FORM OF SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B FORM OF INVESTOR LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C REGISTRATION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
[L120300.7] iv
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INDENTURE dated as of December 21, 1993 between CARTER HAWLEY HALE STORES,
INC., a Delaware corporation (the "Company"), and Continental Bank, National
Association, as Trustee (the "Trustee").
Both parties agree as follows for the benefit of the other and for the equal
and ratable benefit of the Holders of the Company's 6-1/4% Convertible Senior
Subordinated Notes due 2000.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Acquiring Person" means any person or group (as defined in Section 13(d)(3)
of the Exchange Act) who or which, together with all affiliates and associates
(as defined in Rule 12b-2 under the Exchange Act), becomes the beneficial owner
of shares of Common Stock having more than 50% of the total number of votes
that may be cast for the election of directors of the Company; provided,
however, that an Acquiring Person shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or
any Subsidiary of the Company or any entity holding Common Stock for or
pursuant to the terms of any such plan, (iv) Zell/Chilmark Fund, L.P., or (v)
any limited partner or Affiliate of Zell/Chilmark Fund, L.P. Notwithstanding
the foregoing, no person shall become an "Acquiring Person" as the result of an
acquisition of Common Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such person to 50% or more of the Common Stock then outstanding;
provided, however, that if a person shall become the beneficial owner of 50% or
more of the Common Stock then outstanding by reason of share purchases by the
Company and shall, after such share purchases by the Company, become the
beneficial owner of any additional shares of Common Stock, then such person
shall be deemed to be an "Acquiring Person."
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" when used with respect to any person means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate of Zell/Chilmark Fund, L.P." means (i) any person which, directly
or indirectly, is in control of, is controlled by or is under common control
with Zell/Chilmark Fund, L.P., (ii) any other person who is a director or
officer (A) of Zell/Chilmark Fund, L.P., (B) of any subsidiary of Zell/Chilmark
Fund, L.P., or (C) of any person described in clause (i) above.
[L120300.7] 2
8
For purposes of this definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the date of this Indenture.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligation" means indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with generally accepted accounting principles and the
amount of such indebtedness shall be the capitalized amount of such obligations
determined in accordance with such principles.
"Change in Control" means any event by which (i) an Acquiring Person has
become such or (ii) Continuing Directors cease to comprise a majority of the
members of the Board of Directors; provided that a Change in Control shall not
be deemed to have occurred if either (i) the last sale price of the Common
Stock for any five trading days during the ten trading days immediately
preceding the Change in Control is at least equal to 105% of the Conversion
Price in effect on such day or (ii) the consideration, in the transaction
giving rise to such Change in Control, to the holders of Common Stock consists
of cash, securities that are, or immediately upon issuance will be, listed on a
national securities exchange or quoted on the NASDAQ National Market System, or
a combination of cash and such securities, and the aggregate fair market value
of such consideration (which, in the case of such securities, shall be equal to
the average of the last sale prices of such securities during the ten
consecutive trading days commencing with the sixth trading day following
consummation of such transaction) is at least 105% of the Conversion Price in
effect on the date immediately preceding the closing date of such transaction.
"Common Stock" means the common stock, par value $.01 per share, of the
Company as it exists on the date of this Indenture or as it may be constituted
from time to time.
"Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture and thereafter means the successor.
[L120300.7] 3
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"Continuing Director" means any member of the Board of Directors, while such
person is a member of such Board of Directors, who is not an Acquiring Person,
or an affiliate or associate of an Acquiring Person or a representative of an
Acquiring Person or of any such affiliate or associate and who (a) was a member
of the Board of Directors prior to the date of this Indenture, or (b)
subsequently becomes a member of such Board of Directors and whose nomination
for election or election to such Board of Directors is recommended or approved
by resolution of a majority of the Continuing Directors or who is included as a
nominee in a proxy statement of the Company distributed when a majority of such
Board of Directors consists of Continuing Directors.
"Credit Facility" means the Credit Agreement dated October 8, 1992 among the
Company and certain commercial lending institutions and General Electric
Capital Corporation, as agent for the lenders, and all modifications,
amendments, replacements and extensions thereto.
"default" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default.
"Holder" or "Securityholder" means the person in whose name a Security is
registered on the Registrar's books.
"Indebtedness" means, with respect to any person, (i) any obligation of such
person to pay the principal of, premium of, if any, interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company, whether or not a claim for such
post-petition interest is allowed in such proceeding), penalties, reimbursement
or indemnification amounts, fees, expenses or other amounts relating to any
indebtedness, and any other liability, contingent or otherwise, of such person
(A) for borrowed money (including instances where the recourse of the lender is
to the whole of the assets of such person or to a portion thereof), (B)
evidenced by a note, debenture or similar instrument (including a purchase
money obligation) including securities, (C) for any letter of credit or
performance bond in favor of such person, or (D) for the payment of money
relating to a Capitalized Lease Obligation; (ii) any liability of others of the
kind described in the preceding clause (i), which the person has guaranteed or
which is otherwise its legal liability; (iii) any obligation secured by a Lien
to which the property or assets of such person are subject, whether or not the
obligations secured thereby shall have been assumed by or shall otherwise be
such person's legal liability; and (iv) any and all deferrals, renewals,
extensions and refunding of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (i), (ii)
or (iii).
"Indenture" means this Indenture as amended or supplemented from time to
time.
[L120300.7] 4
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"Junior Subordinated Indebtedness" means Indebtedness of the Company
(whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed or guaranteed by the Company) which, pursuant to the terms of
the instrument creating or evidencing the same, is subordinate to the Senior
Debt and Securities in right of payment or in rights upon liquidation.
"Lien" means any mortgage, pledge, security interest, adverse claim (as
defined in Section 8.302(2) of the New York Uniform Commercial Code),
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Company or any of its Subsidiaries under a lease which
is not in the nature of a conditional sale or title retention agreement).
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Treasurer, the Secretary or the
Controller of the Company.
"Officers' Certificate" means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or Assistant Secretary of the Company. See
Section 12.04.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. See Section 12.04.
"Over-Allotment Option" means the option to purchase up to an additional
$15,000,000 principal amount of Securities granted to the initial purchaser
pursuant to Section 2(b) of the Purchase Agreement dated December 15, 1993
between the Company and the initial purchaser named therein.
"person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"principal" of a debt security, including the Securities, means the
principal of the Security plus, when appropriate, the premium, if any, on the
security.
"redemption date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture, as set
forth in the form of Security annexed as Exhibit A hereto.
"redemption price," when used with respect to any Security to be redeemed,
means the price fixed for such redemption pursuant to this Indenture, as set
forth in the form of Security annexed as Exhibit A hereto.
[L120300.7] 5
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"SEC" means the Securities and Exchange Commission.
"Securities" mean the 6-1/4% Convertible Senior Subordinated Notes due 2000,
or any of them, that are issued and authenticated under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Senior Debt" means the principal of, interest on and other amounts due on
and other amounts due on (i) Indebtedness of the Company, whether outstanding
on the date of this Indenture or hereafter created, incurred, assumed or
guaranteed by the Company in compliance with Section 6.16 hereof, for money
borrowed from banks or other financial institutions, including, without
limitation, money borrowed under the Credit Facility and any refinancings or
refundings thereof; (ii) Indebtedness of the Company, whether outstanding on
the date of this Indenture or hereafter created, incurred, assumed or
guaranteed by the Company in compliance with Section 6.16 hereof, which is not
Senior Subordinated Indebtedness or Junior Subordinated Indebtedness; and (iii)
Indebtedness of the Company under interest rate swaps, caps or similar hedging
agreements and foreign exchange contracts, currency swaps or similar
agreements. Notwithstanding anything to the contrary in the foregoing, Senior
Debt shall not include: (a) Indebtedness of or amounts owed by the Company for
compensation to employees, or for goods or materials purchased in the ordinary
course of business, or for services, or (b) Indebtedness of the Company to a
Subsidiary of the Company. For purposes of this definition, Indebtedness shall
be deemed to have been incurred in compliance with Section 6.16 hereof if the
initial holder of such Indebtedness relied in good faith upon an Officers'
Certificate of the Company to the effect that the incurrence of such
Indebtedness did not violate the provisions of Section 6.16 hereof.
"Senior Subordinated Indebtedness" means Indebtedness of the Company
(whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed or guaranteed by the Company) which, pursuant to the terms of
the instrument creating or evidencing the same, is subordinate in right of
payment to the Senior Debt and senior in right of payment to the Junior
Subordinated Indebtedness.
"Subsidiary" means any corporation of which at least a majority of the
outstanding capital stock having voting power under ordinary circumstances to
elect directors of such corporation shall at the time be held, directly or
indirectly, by the Company, by the Company and one or more Subsidiaries or by
one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 and as in effect on the date of this Indenture,
except as provided in Section 11.03 hereof.
[L120300.7] 6
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"trading day" means any day on which the New York Stock Exchange is open for
trading.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means the successor.
"Trust Officer" means the Chairman of the Board, any Vice 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.
Defined in
Term Section
- ---- -------
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Change in Control Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . 6.10
"Change in Control Purchase Notice" . . . . . . . . . . . . . . . . . . . . . . . 6.10
"Change in Control Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . 6.10
"Conversion Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Conversion Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Exchange Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.02
"Global Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.15
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.07
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Payment Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02
"Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.02
"Qualified Institutional Buyer" . . . . . . . . . . . . . . . . . . . . . . . . . 2.06(b)
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Registration Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.17
"Regulation S" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.06(b)
"Rights" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06(c)
"Shelf Registration Statement" . . . . . . . . . . . . . . . . . . . . . . . . . 6.17
"U.S. Government Obligations" . . . . . . . . . . . . . . . . . . . . . . . . . . 10.01
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
[L120300.7] 7
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"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other obligor
on the Securities.
All other terms used in this Indenture that are defined in the TIA, defined
by TIA reference to another statute or defined by SEC rule and not otherwise
defined herein have the meanings assigned to them therein.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles in effect on the
date hereof, and any other reference in this Indenture to "generally accepted
accounting principles" refers to generally accepted accounting principles in
effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein", "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, section or other
subdivision.
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form and Dating.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is incorporated in and made part
of this Indenture, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture. The
Securities may have notations, legends or endorsements as may be required by
law, stock exchange rule, agreements to which the Company is subject or usage.
The Company shall approve the form of the Securities and any notation, legend
or endorsement on them. Each Security shall be dated the date of its
authentication.
[L120300.7] 8
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SECTION 2.02 Execution and Authentication.
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 Trustee authenticates the Security, the Security shall be valid
nevertheless.
A security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of $125,000,000, upon a written order or orders of
the Company signed by two Officers or by an Officer and an Assistant Treasurer
or Assistant Secretary of the Company; provided, however, that in the event
that the Company sells any Securities pursuant to the Over-Allotment Option,
then the Trustee shall authenticate Securities for original issue in an
aggregate principal amount of up to $125,000,000 plus up to $18,750,000
aggregate principal amount of Securities sold pursuant to the Over-Allotment
Option upon a written order of the Company signed by two Officers or by an
Officer and an Assistant Treasurer or Assistant Secretary of the Company. The
aggregate principal amount of Securities outstanding at any time may not exceed
the amount set forth in the preceding sentence, 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 of the Company.
The Securities shall be issuable only in registered form without coupons and
only in denominations of $1,000 and any integral multiple thereof.
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 ("Registrar"), an office
or agency where Securities may be presented for payment ("Paying Agent"), an
office or agency where Securities may be presented for conversion ("Conversion
Agent") and an office or agency where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may
[L120300.7] 9
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have one or more additional Conversion Agents. The term "Registrar" includes
any co-Registrar, the term "Paying Agent" includes any additional Paying Agent
and the term "Conversion Agent" includes any additional Conversion Agent.
Except for purposes of Article 10, the Company or any Affiliate of the Company
may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall promptly 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, Conversion Agent or
agent for service of notices and demands, or fails to give the foregoing
notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands.
SECTION 2.04 Paying Agent to Hold Money in Trust.
On or prior to each due date of the principal of or interest on any
Securities, the Company shall promptly deposit with the Paying Agent a sum
sufficient to pay such principal or interest so becoming due. Subject to
Section 5.07, the Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company (or any other obligor on the Securities)
in making any such payment. If the Company or an Affiliate of the Company acts
as Paying Agent, it shall on or before each due date of the principal of or
interest on any Securities 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 and the Trustee may at any time during the continuance of
any default, upon written request to a Paying Agent, require such Paying Agent
to forthwith pay to the Trustee all sums so held in trust by such Paying Agent.
Upon doing so, the Paying Agent (other than the Company) shall have no further
liability for the money.
SECTION 2.05 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall
promptly furnish to the Trustee on or before each semi-annual interest payment
date and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders.
[L120300.7] 10
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SECTION 2.06 Transfer and Exchange.
(a) Subject to the provisions of subsection (b) below, when a Security is
presented to the Registrar with a request to register a transfer thereof, the
Registrar shall register the transfer as requested and when Securities are
presented to the Registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the Registrar
shall make the exchange as requested; provided that every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit registration of transfer and exchanges,
the Company shall execute and the Trustee shall authenticate Securities at the
Registrar's request. Any exchange or transfer shall be without charge, except
that the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that my be imposed in relation thereto, but this
provision shall not apply to any exchange pursuant to Section 2.10, 3.06 or
11.05.
(b) The following procedures and restrictions shall apply with respect to
the registration of any transfer (but shall not apply to the initial issuance
of any Security) of any Security other than a Global Security prior to the date
that is three years after the original issue date of the Securities; provided,
however, that such procedures and restrictions shall not apply with respect to
the registration of any transfer of any Security that has been registered under
a Shelf Registration Statement that has been declared effective by the SEC and
continues to be deemed effective at the time of such transfer pursuant to the
Registration Agreement or otherwise pursuant to an effective registration
statement under the Securities Act, or any subsequent transfer of such
registered Security:
The Registrar shall register the transfer of any Security, if the requested
transferee (i) is the Company or any Subsidiary thereof, (ii) is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act)
("Qualified Institutional Buyer"), (iii) is acquiring such Security in a
transaction exempt from the registration provisions of the Securities Act
provided by Regulation S thereunder ("Regulation S"), (iv) is an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) who has delivered to the Company and the Trustee a letter in
the form of Exhibit B hereto and such other certificates and other information,
if any, as the Company or the Trustee shall have specified with respect to such
transfer, or (v) is acquiring the Security pursuant to Rule 144 under the
Securities Act and has delivered to the Company and the Trustee such other
certificates and other information, if any, as the Company or the Trustee shall
have specified with respect to such transfer.
[L120300.7] 11
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(c) Each Security shall bear the following legend on the face thereof
until the date that is three years from the original issue date of the
Securities unless otherwise agreed by the Issuer and Holder thereof, provided,
however, that such legend need not appear with respect to any Security that has
been registered under a shelf registration statement that has been declared
effective by the SEC and continues to be deemed effective at the time of any
transfer or otherwise pursuant to an effective registration statement under the
Securities Act:
THE SECURITY OR ITS PREDECESSOR EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT
AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),(2),(3) OR (7) UNDER THE
SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THE SECURITY EVIDENCED HEREBY RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO CARTER HAWLEY HALE
STORES, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144 UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO CONTINENTAL BANK,
NATIONAL ASSOCIATION, AS TRANSFER AGENT, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF
THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRANSFER AGENT) OR (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THE SECURITY EVIDENCED HEREBY IN CERTIFICATED FORM WITHIN THREE YEARS
AFTER THE ORIGINAL ISSUANCE OF SUCH SECURITY, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE OF THIS CERTIFICATE RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO CONTINENTAL BANK,
NATIONAL ASSOCIATION, AS TRANSFER AGENT. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO CONTINENTAL BANK,
NATIONAL ASSOCIATION, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR
[L120300.7] 12
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OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE
SECURITY EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES," AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION UNDER THE SECURITIES ACT.
(d) The Company shall not, and shall not permit any of its affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act) to, resell any
Securities (or any Common Stock issued or issuable upon conversion thereof)
that have been acquired by any of them; provided, however, that such affiliates
may resell any such Securities (or Common Stock) if, upon resale, such
Securities (or Common Stock) would not be "restricted securities" within the
meaning of Rule 144 under the Securities Act. The Registrar shall not register
the transfer of any Security if the transferor of such Security is the Company
or such an affiliate of the Company, except, in the case of such an affiliate,
to the Company.
The Securities and related documentation may be amended or supplemented from
time to time in accordance with Section 11.01 hereof (x) to modify the
restrictions on, the procedures for, resales and other transfers of the
Securities to reflect any change in applicable law or regulation (or the
interpretation thereof) or provide alternative procedures in compliance with
applicable law and practices relating to the resale or other transfer of
restricted securities generally and (y) to accommodate the issuance, if any, of
Securities in book-entry form and matters related thereto (although no such
amendment or supplement may require that a Security outstanding at the time
such amendment or supplement becomes effective be placed in book-entry form).
Each Holder of any Security shall be deemed, by the acceptance or such
Security, to have agreed to any such amendment or supplement.
SECTION 2.07 Replacement Securities.
If a mutilated Security is surrendered to the Trustee, or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
and neither the Company nor the Trustee has received notice that such Security
has been acquired by a bona fide purchaser, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the New York Uniform Commercial Code, as in effect on the date
of this Indenture, are met, and there shall have been delivered to the Company
and the Trustee evidence to their satisfaction of the loss, destruction or
theft of any Security if such is the case. An indemnity bond may be required
that is sufficient in the judgment of the Company and the Trustee to protect
the Company, the Trustee or any Agent from
[L120300.7] 13
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any loss which any of them may suffer if a Security is replaced. The Company
may charge for its expenses (including the fees and expenses of the Trustee) in
replacing a Security. Every replacement Security is an additional obligation
of the Company.
SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all Securities authenticated by the
Trustee, except for those cancelled 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 until the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the Company)
holds on a redemption date or maturity date money sufficient to pay the
principal of and accrued interest on Securities payable on that date, then on
and after that date such Securities 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 of the Company holds the Security.
SECTION 2.09 Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by
any Affiliate of the Company or of such other obligor shall be disregarded,
except that for purposes of determining whether the Trustee shall be protected
in relying on any such notice, direction, waiver or consent, only Securities
which the Trustee knows are so owned shall be so disregarded. Securities so
owned which have been pledged in good faith shall not be disregarded if the
pledge establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to the Securities and that the pledgee is not the Company or
any other obligor upon the Securities or any Affiliate of the Company or of
such other obligor.
SECTION 2.10 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may prepare
and, upon the order of the Company, 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
[L120300.7] 14
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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 transfer, exchange,
payment or conversion. The Trustee and no one else shall cancel all Securities
surrendered for transfer, exchange, payment, conversion or cancellation. The
Company may not issue new Securities to replace Securities it has paid or
delivered to the Trustee for cancellation or which have been converted. All
cancelled Securities shall be held by the Trustee and may be destroyed (and, if
so destroyed, certification of their destruction shall be delivered to the
Company) unless the Company shall direct in writing that the cancelled
Securities be returned to it.
SECTION 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it shall
pay the defaulted interest to the persons who are Securityholders on a
subsequent special record date, and such term as used in this Section 2.12 with
respect to the payment of any defaulted interest shall mean the fifteenth day
next preceding the special payment date fixed by the Company, whether or not
such day is a Business Day. At least 15 days before the special record date,
the Company shall mail to each Securityholder and the Trustee a notice that
states the special record date, the special payment date and the amount of
defaulted 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 that any such notice may
state that no representation is made as to the correctness of such number
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.
SECTION 2.14 Procedures for Global Securities.
(a) Upon issuance, the Securities may be represented by one or more fully
registered notes in global form ("Global Securities") as well as Securities in
definitive form registered in the name of individual purchasers or their
nominees.
[L120300.7] 15
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If the Securities are to be represented by one or more Global Securities,
the Company shall execute and the Trustee shall, in accordance with Section
2.02, authenticate and deliver, such Global Security or Securities which (i)
shall represent, and shall be denominated in an amount equal to the aggregate
principal amount of, the aggregate principal amount of the outstanding
Securities to be represented by such Global Security or Securities, (ii) shall
be registered in the name of Cede & Co., as nominee of The Depository Trust
Company, as depositary (such depositary and any successor depositary shall be
referred to herein as the "Depositary"), (iii) shall be delivered by the
Trustee to the Depositary or pursuant to the Depositary's instructions and (iv)
if required by the Depositary, shall bear a legend substantially to the
following effect:
Unless this certificate is presented by an authorized representative of the
Depositary to the Company or its agent for registration or transfer,
exchange or payment, and any certificate issued is registered in the name of
the nominee of the Depositary or in such other name as is requested by an
authorized representative of the Depositary (and any payment is made to the
nominee of the Depositary or to such other entity as is requested by an
authorized representative of the Depositary), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, the nominee of the Depositary, has an
interest herein.
(b) A Global Security may be transferred, in whole but not in part, only
to a nominee of the Depositary for such Global Security, or to the Depositary,
or to the successor Depositary selected or approved by the Company, or to a
nominee of such successor Depositary.
(c) (i) If at any time the Depositary for a Global Security notifies the
Company that it is unwilling or unable to continue as Depositary for such
Global Security or if at anytime the Depositary for such Global Security shall
no longer be eligible or in good standing under the Exchange Act, or other
applicable statute or regulation, the Company shall appoint a successor
Depositary with respect to such Global Security. If a successor Depositary for
such Global Security is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the
Company will execute an authentication order or orders signed by two Officers
or by an Officer and an Assistant Treasurer or Assistant Secretary of the
Company, and the Trustee, upon receipt of such order or orders, will
authenticate and deliver individual Securities in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security.
(ii) The Company may at any time and in its sole discretion determine that
the Securities or portion thereof issued or issuable in the form of one or more
Global Securities
[L120300.7] 16
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shall no longer be represented by such Global Security or Securities. In such
event the Company will execute an authentication order or orders for the
authentication and delivery of individual Securities in exchange in whole or in
part for such Global Security, and the Trustee, upon receipt of such order or
orders, will authenticate and deliver individual Securities in definitive form
in an aggregate principal amount equal to the principal amount of such Global
Security or Securities representing such Securities or portion thereof in
exchange for such Global Securities.
(iii) In any exchange provided for in any of clauses (i) or (ii) above, the
Company will execute and the Trustee will authenticate and deliver individual
Securities in definitive registered form in authorized denominations. Upon the
exchange of the entire principal amount of a Global Security for individual
Securities, such Global Security shall be cancelled by the Trustee. Except as
provided in the preceding paragraph, Securities issued in exchange for a Global
Security pursuant to this Section shall be registered in such names and in such
authorized denominations as the Depositary for such Global Security shall
instruct the Trustee or the Registrar. The Trustee or the Registrar shall
deliver such Securities to the persons in whose names such Securities are so
registered.
(d) Notwithstanding any other provisions of this Indenture, so long as a
Global Security remains outstanding, unless the transferee shall otherwise
request in writing to the Registrar, no definitive Security shall be issued or
authenticated in connection with the transfer of any definitive Security
pursuant to the exemption from registration provided by Rule 144A under the
Securities Act. Instead, upon acceptance for transfer of any definitive
Security, the Registrar shall cancel such definitive Security and shall, in
lieu of issuing a new definitive Security in exchange for the definitive
Security surrendered for registration of transfer, endorse on the schedule
affixed to such Global Security (or on a continuation of such schedule affixed
to such Global Security and made a part thereof), an appropriate notation
evidencing the date and an increase in the principal amount of such Global
Security in an amount equal to the principal amount of such definitive
Security. The Registrar shall notify the Depositary promptly of any increase
in the principal amount of any Global Security.
Notwithstanding any other provisions of this Indenture, resales or other
transfers of Securities represented by a Global Security made in compliance
with Rule 144A under the Securities Act or made on or subsequent to the date
that is three years after the original issue date of such Securities will be
conducted according to the rules and procedures of the Depositary applicable to
U.S. corporate debt obligations and without notice to, or action by, the
Registrar. Upon written notice (upon which notice to the Registrar may rely)
from a participant in the Depositary's system having an interest in the
Securities represented by a Global Security that such participant (or a
[L120300.7] 17
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beneficial owner who holds an interest in the Securities through such
participant) intends to resell or transfer such Securities otherwise than
pursuant to Rule 144A under the Securities Act prior to three years after the
original issue date of such Securities, and upon satisfaction by the transferor
and, if applicable, the transferee, of the conditions necessary for the
registration of transfer of a Security set out in Section 2.06(b), the
Registrar shall and is authorized by the holder of such Global Security, by its
acceptance thereof, to endorse on the schedule affixed to such Global Security
(or on a continuation of such schedule affixed to such Global Security and made
a part thereof) an appropriate notation evidencing the date and the reduction
in the principal amount of such Global Security equal to the principal amount
of the portion of the Global Security being transferred and shall authenticate
and deliver a definitive Security registered in the name of the transferee or
its nominee in an equal aggregate principal amount. The Registrar shall notify
the Depositary promptly of any decrease in the principal amount of the Global
Security.
ARTICLE 3
REDEMPTION
SECTION 3.01 Notice to Trustee.
If the Company wants to redeem Securities pursuant to paragraph 5 of the
Securities, it shall notify the Trustee at least 45 days prior to the
redemption date as fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee) of the redemption date and the principal amount of
Securities to be redeemed.
SECTION 3.02 Selection of Securities to be Redeemed.
If less than all of the Securities are to be redeemed, the Trustee shall,
not more than 60 days prior to the redemption date, select the Securities to be
redeemed pro rata or by lot, as the Trustee in its discretion shall determine.
The Trustee shall make the selection from the Securities outstanding and not
previously called for redemption. Securities in denominations of $1,000 may
only be redeemed in whole. The Trustee may select for redemption portions
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $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 15 days but not more than 60 days before a redemption date, the
Company shall mail a notice of redemption by first class mail to each Holder of
Securities to be redeemed.
[L120300.7] 18
24
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the then current conversion price;
(4) the name and address of the Paying Agent and the Conversion Agent;
(5) that Securities called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(6) that the right to convert Securities called for redemption shall
terminate at the close of business on the tenth Business Day immediately
preceding the redemption date;
(7) that Holders who wish to convert Securities must satisfy the
requirements in paragraph 8 of the Securities;
(8) that, unless the Company defaults in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after the
redemption date and the only remaining right of the Holder is to receive
payment of the redemption price upon surrender to the Paying Agent of the
Securities;
(9) if any Security is being redeemed in part, the portion of the principal
amount of such Security to be redeemed and that, after the redemption date,
upon surrender of such Security, a new Security or Securities in principal
amount equal to the unredeemed portion thereof will be issued; and
(10) the CUSIP number, if any, of the Securities to be redeemed.
At the Company's request, the Trustee shall give the notice of redemption in
the Company's name and at the Company 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, subject to the provisions of Section
4.01, and at the redemption price. Upon surrender to the Paying Agent, such
Securities shall be paid at the redemption price, plus accrued and unpaid
interest to the redemption date.
SECTION 3.05 Deposit of Redemption Price.
On or prior to the redemption date, the Company shall promptly deposit with
the Paying Agent (or if the Company is its
[L120300.7] 19
25
own Paying Agent, shall segregate and hold in trust) money sufficient to pay
the redemption price of and accrued and unpaid interest on all Securities to be
redeemed on that date, other than Securities or portions thereof called for
redemption on that date which have been delivered by the Company to the Trustee
for cancellation. The Paying Agent shall return to the Company any money not
required for that purpose because of the conversion of Securities or otherwise.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company shall
issue and the Trustee shall authenticate for the Holder a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
CONVERSION
SECTION 4.01 Conversion Privilege.
A Holder of a Security may convert it into Common Stock of the Company at
any time prior to maturity at the conversion price then in effect, except that,
with respect to any Security called for redemption, such conversion right shall
terminate at the close of business on the tenth Business Day immediately
preceding the redemption date (unless the Company shall default in making the
redemption payment when it becomes due, in which case the conversion right
shall terminate on the date such default is cured). The number of shares of
Common Stock issuable upon conversion of a Security is 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 8 of the Securities and
is subject to adjustment as provided in this Article 4.
A Holder may convert a portion of a Security equal to $1,000 or any integral
multiple thereof. Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of it.
SECTION 4.02 Conversion Procedure.
To convert a Security, a Holder must satisfy the requirements in paragraph 8
of the Securities. The date on which the Holder satisfies all of those
requirements is the conversion date. As soon as practicable after the
conversion date, the Company shall deliver to the Holder through the Conversion
Agent a certificate for the number of whole shares of Common Stock issuable
upon the conversion and a check for any fractional share. The person in whose
name the certificate is registered shall become the stockholder of record on
the conversion date
[L120300.7] 20
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and, as of such date, such person's rights as a Securityholder shall cease.
No payment or adjustment will be made for accrued and unpaid interest on a
converted Security or for dividends or distributions on shares of Common Stock
issued upon conversion of a Security, but if any Holder surrenders a Security
for conversion after the close of business on the record date for the payment
of an installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the Holder of such
Security on such record date. In such event, such Security, when surrendered
for conversion, must be accompanied by payment of an amount equal to the
interest payable on such interest payment date on the portion so converted. If
such payment does not accompany such Security, the Security shall not be
converted. If the Company defaults in the payment of interest payable on the
interest payment date, the Trustee shall repay such funds to the Holder.
If a Holder converts more than one Security at the same time, the number of
whole shares issuable upon the conversion shall be based on the total principal
amount of 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.
SECTION 4.03 Fractional Shares.
The Company will not issue fractional shares of Common Stock upon conversion
of Securities. In lieu thereof, the Company will pay an amount in cash based
upon the current market price of the Common Stock on the trading day prior to
the date of conversion.
SECTION 4.04 Taxes on Conversion.
The issuance of certificates for shares of Common Stock upon the conversion
of any Security shall be made without charge to the converting Securityholder
for such certificates or any tax in respect of the issuance of such
certificates, and such certificates shall be issued in the respective names of,
or in such names as may be directed by, the Holder or Holders of the Security
converted; provided, however, that in the event that certificates for shares of
Common Stock are to be issued in a name other than the name of the Holder of
the Security converted, such Security, when surrendered for conversion, shall
be accompanied by an instrument of transfer, in form satisfactory to the
Company, duly executed by the registered Holder thereof or his duly authorized
attorney; and provided further, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and
[L120300.7] 21
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delivery of any such certificates in a name other than that of the holder of
the Security converted, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or is not applicable.
SECTION 4.05 Company to Provide Stock.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, solely for
the purpose of issuance upon conversion of Securities as herein provided, a
sufficient number of shares of Common Stock to permit the conversion of all
outstanding Securities.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
non-assessable when so issued.
SECTION 4.06 Adjustment of Conversion Price.
The conversion price (herein called the "Conversion Price") shall be subject
to adjustment from time to time as follows:
(a) In case the Company shall (1) pay a dividend in shares of Common Stock
to holders of Common Stock, (2) make a distribution in shares of Common Stock
to holders of Common Stock, (3) subdivide its outstanding shares of Common
Stock into a greater number of shares of Common Stock or (4) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, the Conversion Price in effect immediately prior to such action shall be
adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of Common Stock
which he would have owned immediately following such action had such Securities
been converted immediately prior thereto. Any adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to substantially
all holders of Common Stock entitling them (for a period commencing no earlier
than the record date for the determination of holders of Common Stock entitled
to receive such rights or warrants and expiring not more than 45 days after
such record date) to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price per share less than the
current market price (as determined pursuant to subsection (d) below) of the
Common Stock on such record date, the Conversion Price shall be adjusted so
that the same shall
[L120300.7] 22
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equal the price determined by multiplying the 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 offered shares of Common Stock (or the aggregate conversion price of the
convertible securities so 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 offered (or into which the convertible securities so offered are
convertible). Such adjustments shall become effective immediately after such
record date.
(c) In case the Company shall distribute to all holders of Common Stock
shares of any class of stock other than Common Stock, evidences of indebtedness
or other assets (other than cash dividends out of current or retained
earnings), or shall distribute to substantially all holders of Common Stock
rights or warrants to subscribe for securities (other than those referred to in
subsection (b) above), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such distribution
by a fraction of which the numerator shall be the current market price
(determined as provided in subsection (d) below) of the Common Stock on the
record date mentioned below less the then fair market value (as determined by
the Board of Directors of the Company, whose determination shall be conclusive
evidence of such fair market value) of the portion of the assets so distributed
or of such subscription rights or warrants applicable to one share of Common
Stock, and of which the denominator shall be such current market price of the
Common Stock. Such adjustment shall become effective immediately after the
record date for the determination of the holders of Common Stock entitled to
receive such distribution. Notwithstanding the foregoing, in the event that
the Company shall distribute rights or warrants (other than those referred to
in subsection (b) above) ("Rights") pro rata to holders of Common Stock, the
Company may, in lieu of making any adjustment pursuant to this Section 4.06,
make proper provision so that each holder of a Security who converts such
Security (or any portion thereof) after the record date for such distribution
and prior to the expiration or redemption of the Rights shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock
issuable upon such conversion (the "Conversion Shares"), a number of Rights to
be determined as follows: (i) if such conversion occurs on or prior to the
date for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "Distribution Date"), the same number of Rights to
which a holder of a number of shares of Common Stock equal to the number of
Conversion Shares is entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the Rights; and (ii) if such
conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of
[L120300.7] 23
29
Common Stock into which the principal amount of the Security so converted was
convertible immediately prior to the Distribution Date would have been entitled
on the Distribution Date in accordance with the terms and provisions of and
applicable to the Rights.
(d) 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 thirty consecutive
trading days commencing forty-five trading days before the day in question.
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 date, the average of
the reported closing bid and asked prices regular way, in either case on the
New York Stock Exchange, or if the Common Stock is not listed or admitted to
trading on such Exchange, or the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, the closing sale price
of the Common Stock, or in case no reported sale takes place, the average of
the closing bid and asked prices, on NASDAQ or any comparable system, or if the
Common Stock is not quoted on NASDAQ or any comparable system, the closing sale
price or, in case no reported sale takes place, the average of the closing bid
and asked prices, as furnished by any two members of the National Association
of Securities Dealers, Inc. selected from time to time by the Company for that
purpose.
(e) In any case in which this Section 4.06 shall require that an
adjustment be made immediately following a record date, the Company may elect
to defer (but only until five Business Days following the filing by the Company
with the Trustee of the certificate described in Section 4.10 below) issuing to
the holder of any Security converted after such record date the shares of
Common Stock and other capital stock of the Company issuable upon such
conversion over and above the shares of Common Stock and other capital stock of
the Company issuable upon such conversion only on the basis of the Conversion
Price prior to adjustment; and, in lieu of the shares the issuance of which is
so deferred, the Company shall issue or cause its transfer agents to issue due
bills or other appropriate evidence of the right to receive such shares.
SECTION 4.07 No Adjustment.
No adjustment in the Conversion Price shall be required until cumulative
adjustments amount to 1% or more of the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this Section 4.07
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 4 shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be. No adjustment of the Conversion Price shall be made for cash dividends.
[L120300.7] 24
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SECTION 4.08 Equivalent Adjustments.
In the event that, as a result of an adjustment made pursuant to Section
4.06 above, the holder of any Security thereafter surrendered for conversion
shall become entitled to receive any shares of capital stock of the Company
other than shares of its Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any Securities shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to Common Stock contained in this
Article 4.
SECTION 4.09 Adjustments for Tax Purposes.
The Company may make such reductions in the Conversion Price, in addition to
those required by paragraphs (a), (b) and (c) of Section 4.06 above, as it
considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights shall not be taxable to the
recipients thereof.
SECTION 4.10 Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Company shall promptly mail
to Securityholders a notice of the adjustment and file with the Trustee an
Officers' Certificate briefly stating the facts requiring the adjustment and
the manner of computing it. The certificate shall be conclusive evidence of
the correctness of such adjustment.
SECTION 4.11 Notice of Certain Transactions.
In the event that:
(1) the Company takes any action which would require an adjustment in the
Conversion Price.
(2) the Company consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation and stockholders of the
Company must approve the transaction, or
(3) there is a dissolution or liquidation of the Company,
a Holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, securities or assets which a holder
of shares of Common Stock on that date may receive. Therefore, the Company
shall mail to Securityholders and the Trustee a notice stating the proposed
record or effective date, as the case may be. The Company shall mail the
notice at least 10 days before such date; however, failure to mail such notice
or any defect therein shall
[L120300.7] 25
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not affect the validity of any transaction referred to in clause (1), (2) or
(3) of this Section 4.11.
SECTION 4.12 Effect of Reclassifications, Consolidations, Mergers or Sales
on Conversion Privilege.
If any of the following shall occur, namely: (i) any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of
Securities (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which the Company is a party
other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a
change in name, or par value, or from par value to no par value, or from no par
value to par value or as a result of a subdivision or combination) in,
outstanding shares of Common Stock or (iii) any sale or conveyance of all or
substantially all of the property or business of the Company as an entirety,
then the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition precedent to such reclassification, change,
consolidation, merger, sale or conveyance, execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article 4. The foregoing, however, shall not in any way
affect the right a holder of a Security may otherwise have, pursuant to clause
(ii) of the last sentence of subsection (c) of Section 4.06, to receive Rights
upon conversion of a Security. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of Common Stock includes
shares of stock or other securities and property of a corporation other than
the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 4.12 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
[L120300.7] 26
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In the event the Company shall execute a supplemental indenture pursuant to
this Section 4.12, the Company shall promptly file with the Trustee an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or securities or property (including cash) receivable by
Holders of the Securities upon the conversion of their Securities after any
such reclassification, change, consolidation, merger, sale or conveyance and
any adjustment to be made with respect thereto.
SECTION 4.13 Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this Article 4
should be made, how it should be made or what such adjustment should be, but
may accept as conclusive evidence of the correctness of any such adjustment,
and shall be protected in relying upon, the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
Section 4.10. The Trustee makes no representation as to the validity or value
of any securities or assets issued upon conversion of Securities, and the
Trustee shall not be responsible for the Company's failure to comply with any
provisions of this Article 4.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 4.12.
ARTICLE 5
SUBORDINATION
SECTION 5.01 Agreement to Subordinate.
The Company, for itself and its successors, and each Holder, by his
acceptance of Securities, agree that the payment of the principal of or
interest on or any other amounts due on the Securities is subordinated in right
of payment, to the extent and in the manner stated in this Article 5, to the
prior payment in full of all Senior Debt. Each Holder by his acceptance of the
Securities authorizes and directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effectuate, as between the holders of
Senior Debt and such Holder, the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for such purpose. If the Trustee
does not file a proper claim or proof of debt in the form required in any
voluntary or involuntary dissolution, winding up, liquidation, reorganization,
arrangement or similar proceedings relating to the Company prior to 30 days
before the expiration of time to file such claim or claims, then any holder or
holders of Senior Debt or their representative or representatives are hereby
[L120300.7] 27
33
authorized to and have the right to file an appropriate claim for and on behalf
of the Holders.
The Securities shall be senior in right of payment and in rights upon
liquidation to all Junior Subordinated Indebtedness.
SECTION 5.02 No Payment on Securities if Senior Debt in Default.
Anything in this Indenture to the contrary notwithstanding, no payment on
account of principal of or redemption of, interest on or other amounts due on
the Securities, and no redemption, purchase, or other acquisition of the
Securities, shall be made by or on behalf of the Company (i) unless full
payment of amounts then due for principal and interest and of all other amounts
then due on all Senior Debt has been made or duly provided for pursuant to the
terms of the instrument governing such Senior Debt, (ii) if, at the time of
such payment, redemption, purchase or other acquisition, or immediately after
giving effect thereto, there shall exist under any Senior Debt, or any
agreement pursuant to which any Senior Debt is issued, any default, which
default shall not have been cured or waived and which default shall have
resulted in the full amount of such Senior Debt being declared due and payable
or (iii) if, at the time of such payment, redemption, purchase or other
acquisition, the Trustee shall have received written notice from the holder or
holders of any Senior Debt or their representative or representatives (a
"Payment Blockage Notice") that there exists under such Senior Debt, or any
agreement pursuant to which such Senior Debt is issued, any default, which
default shall not have been cured or waived, permitting the holders there to
declare the full amount of such Senior Debt due and payable, but only for the
period (the "Payment Blockage Period") commencing on the date of receipt of the
Payment Blockage Notice and ending (unless earlier terminated by notice given
to the Trustee by the holders of such Senior Debt) on the earlier of (a) the
date on which such event of default shall have been cured or waived or (b) 180
days from the receipt of the Payment Blockage Notice. Upon termination of
Payment Blockage Period, payments on account of principal of or interest on the
Securities (other than amounts due and payable by reason of the acceleration of
the maturity of the Securities) and redemptions, purchases or other
acquisitions may be made by or on behalf of the Company. Notwithstanding
anything herein to the contrary, (A) only one Payment Blockage Notice may be
given during any period of 360 consecutive days with respect to the same event
of default and any other events of default on the same issue of Senior Debt
existing and known to the person giving such notice at the time of such notice
and (B) no new Payment Blockage Period may be commenced by the holder or
holders of the same issue of Senior Debt or their representative or
representatives during any period of 360 consecutive days unless all events of
default which were the object of the immediately preceding Payment Blockage
Notice, and any other event of default on the same issue of
[L120300.7] 28
34
Senior Debt existing and known to the person giving such notice at the time of
such notice, have been cured or waived.
In the event that, notwithstanding the provisions of this Section 5.02,
payments are made by or on behalf of the Company in contravention of the
provisions of this Section 5.02, such payments shall be held by the Trustee,
any Paying Agent or the Holders, as applicable, in trust for the benefit of,
and shall be paid over to and delivered to, the holders of Senior Debt or their
representative or the trustee under the indenture or other agreement (if any),
pursuant to which any instruments evidencing any Senior Debt may have been
issued, as their respective interests may appear, for application to the
payment of all Senior Debt remaining unpaid to the extent necessary to pay all
Senior Debt in full in accordance with the terms of such Senior Debt, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Debt.
The Company shall give prompt written notice to the Trustee and any Paying
Agent of event of default under any Senior Debt or under any agreement pursuant
to which any Senior Debt may have been issued.
SECTION 5.03 Distribution on Acceleration of Securities; Dissolution and
Reorganization; Subrogation of Securities.
(a) Upon (i) any acceleration of the principal amount due on the
Securities because of an Event of Default or (ii) any distribution of assets of
the Company upon any dissolution, winding up, liquidation or reorganization of
the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or any other dissolution,
winding up, liquidation or reorganization of the Company):
(1) the holders of all Senior Debt shall first be entitled to receive
payment in full of the principal thereof, the interest thereon and any other
amounts due thereon before the Holders are entitled to receive payment on
account of the principal of or interest on or any other amounts due on the
Securities;
(2) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than securities of
the Company as reorganized or readjusted or securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this
Article with respect to the Securities, to the payment in full without
diminution or modification by such plan of all Senior Debt), to which the
Holders or the Trustee would be entitled except for the provisions of this
Article, shall be paid by the liquidating trustee or agent or other person
making such a payment or distribution, directly to the holders of
[L120300.7] 29
35
Senior Debt (or their representative(s) or trustee(s) acting on their behalf),
ratably according to the aggregate amounts remaining unpaid on account of the
principal of or interest on and other amounts due on the Senior Debt held or
represented by each, to the extent necessary to make payment in full of all
Senior Debt remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities (other than securities of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in this
Article with respect to the Securities, to the payment in full without
diminution or modification by such plan of Senior Debt), shall be received by
the Trustee or the Holders before all Senior Debt is paid in full, such payment
or distribution shall be held in trust for the benefit of, and be paid over to
upon request by a holder of the Senior Debt, the holders of the Senior Debt
remaining unpaid (or their representatives) or trustee(s) acting on their
behalf, ratably as aforesaid, for application to the payment of such Senior
Debt until all such Senior Debt shall have been paid in full, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Debt.
Subject to the payment in full of all Senior Debt, the Holders shall be
subrogated to the rights of the holders of Senior Debt to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Debt until the principal of and interest on the Securities shall be paid
in full and, for purposes of such subrogation, no such payments or
distributions to the holders of Senior Debt of cash, property or securities
which otherwise would have been payable or distributable to Holders shall, as
between the Company, its creditors other than the holders of Senior Debt, and
the Holders, be deemed to be a payment by the Company to or on account of the
Senior Debt, it being understood that the provisions of this Article are and
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of Senior Debt, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as between the Company and its
creditors other than the holders of Senior Debt, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders the principal of and
interest on the Securities as and when the same shall become due and payable in
accordance with the terms of the Securities or is intended to or shall affect
the relative rights of the Holders and creditors of the Company other than
holders of Senior Debt or, as between the Company and the Trustee, the
obligations of the Company to the Trustee, nor shall anything herein or therein
[L120300.7] 30
36
prevent the Trustee or the Holders from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article of the holders of Senior Debt in respect of
cash, property and securities of the Company received upon the exercise of any
such remedy. Upon distribution of assets of the Company referred to in this
Article, the Trustee, subject to the provisions of Section 9.01 hereof, and the
Holders shall be entitled to rely upon a certificate of the liquidating trustee
or agent or other person making any distribution to the Trustee or to the
Holders for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt. Nothing contained in this Article or elsewhere in this
Indenture, or in any of the Securities, shall prevent the application by the
Trustee of any moneys which were deposited with it hereunder, prior to its
receipt of written notice of facts which would prohibit such application, for
the purpose of the payment of or on account of the principal of or interest on,
the Securities unless, prior to the date on which such application is made by
the Trustee, the Trustee shall be charged with notice under Section 5.03(c)
hereof of the facts which would prohibit the making of such application.
(b) The provisions of this Article shall not be applicable to any cash,
properties or securities received by the Trustee or by any Holder when received
as a holder of Senior Debt and nothing in Section 9.11 hereof or elsewhere in
this Indenture shall deprive the Trustee or such Holder of any of its rights as
such holder.
(c) The Company shall give prompt written notice to the Trustee of any
fact known to the Company which would prohibit the making of any payment of
money to or by the Trustee in respect of the Securities pursuant to the
provisions of this Article. The Trustee, subject to the provisions of Section
9.01 hereof, shall be entitled to assume that no such fact exists unless the
Company or any holder of Senior Debt or any trustee therefor has given such
notice to the Trustee. Notwithstanding the provisions of this Article or any
other provisions of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any fact which would prohibit the making of any
payment of monies to or by the Trustee in respect of the Securities pursuant to
the provisions in this Article, unless, and until three Business Days after,
the Trustee shall have received written notice thereof from the Company or any
holder or holders of Senior Debt or from any trustee therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 9.01 hereof, shall be entitled in all respects conclusively to
assume that no such facts exist; provided that if on a date not less than two
Business Days immediately preceding the date upon which by the terms hereof any
[L120300.7] 31
37
such monies may become payable for any purpose (including, without limitation,
the principal of or interest on any Security, and any amounts immediately due
and payable upon the execution of any instrument acknowledging satisfaction and
discharge of this Indenture, as provided in Article 10 hereof), the Trustee
shall not have received with respect to such monies the notice provided for in
this Section 5.03(c), than anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received
by it on or after such prior date.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a person representing himself to be a holder of Senior Debt (or a
trustee on behalf of such holder) to establish that such notice has been given
by a holder of Senior Debt (or a trustee on behalf of any such holder or
holders). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any person as a holder of
Senior Debt to participate in any payment or distribution pursuant to this
Article, the Trustee may request such person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Debt held by
such person, the extent to which such person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
person under this Article, and, if such evidence is not furnished, the Trustee
may defer any payment to such person pending judicial determination as to the
right of such person to receive such payment; nor shall the Trustee be charged
with knowledge of the curing or waiving of any default of the character
specified in Section 5.02 hereof or that any event or any condition preventing
any payment in respect of the Securities shall have ceased to exist, unless and
until the Trustee shall have received an Officers' Certificate to such effect.
(d) The provisions of this Section 5.03 applicable to the Trustee shall
also apply to any Paying Agent for the Company.
SECTION 5.04 Reliance by Senior Debt on Subordination Provisions.
Each Holder of any Security by his acceptance thereof acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration for each holder of any Senior Debt, whether
such Senior Debt was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such
Senior Debt, and such holder of Senior Debt shall be deemed conclusively to
have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Debt. Notice of any default in the
payment of any Senior Debt, except as expressly stated in this Article, and
notice of acceptance of the provisions hereof
[L120300.7] 32
38
are hereby expressly waived. Except as otherwise expressly provided herein, no
waiver, forbearance or release by any holder of Senior Debt under such Senior
Debt or under this Article shall constitute a release of any of the obligations
or liabilities of the Trustee or Holders of the Securities provided in this
Article. Except as otherwise expressly provided herein, no right of any
present or future holder of Senior Debt to enforce the subordination provisions
hereof shall at any time or in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or any such holder or by any
noncompliance by the Company with the terms, provisions or covenants of this
Indenture, regardless of any knowledge thereof which such holder may have
otherwise been charged with.
SECTION 5.05 Trustee's Relation to Senior Debt.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article in respect of any Senior Debt at any time held by it,
to the same extent as any holder of Senior Debt, and nothing in Section 9.11
hereof or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform or to observe only such of its covenants and obligation, as are
specifically set forth in this Article, and no implied covenants or obligations
with respect to the holders of Senior Debt shall be read into this Indenture
against the Trustee. The Trustee shall not owe any fiduciary duty to the
holders of Senior Debt but shall have only such obligations to such holders as
are expressly set forth in this Article.
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding up or liquidation or
reorganization under any applicable bankruptcy law of the Company (whether in
bankruptcy, insolvency or receivership proceedings or otherwise), the timely
filing of a claim for the unpaid balance of such Holder's Securities in the
form required in such proceedings and the causing of such claim to be approved.
If the Trustee does not file a claim or proof of debt in the form required in
such proceedings prior to 10 days before the expiration of the time to file
such claims or proofs, then the holders of Senior Debt, jointly, or their
representative shall have the right to demand, sue for, collect, receive and
receipt for the payments and distributions in respect of the Securities which
are required to be paid or delivered to the holders of Senior Debt as provided
in this Article and to file and prove all claims therefore and to take all such
other action in the name of the Holders or otherwise, as such holders of Senior
Debt or representative thereof may determine to be necessary or
[L120300.7] 33
39
appropriate for the enforcement of the provisions of this Article.
SECTION 5.06 Other Provisions Subject Hereto.
Expect as expressly stated in this Article, notwithstanding anything
contained in this Indenture to the contrary, all the provisions of this
Indenture and the Securities are subject to the provisions of this Article.
However, nothing in this Article shall apply to or adversely affect the claims
of, or payment, to, the Trustee pursuant to Section 9.07. Notwithstanding the
foregoing, the failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article 5 shall not be
construed as preventing the occurrence of an Event of Default under Section
8.01.
ARTICLE 6
COVENANTS
SECTION 6.01 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 and this Indenture. An
installment of principal or interest shall be considered paid on the date it is
due if the Paying Agent (other than the Company or an Affiliate of the Company)
holds by 12:00 noon New York City time on that date money designated for and
sufficient to pay the installment. The Company shall pay interest on overdue
principal at the rate borne by the Securities per annum; it shall pay interest
on overdue installments of interest at the same rate to the extent lawful.
SECTION 6.02 SEC Reports.
The Company shall file all reports and other information and documents which
it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and within 15
days after it files them with the SEC, the Company shall file copies of all
such reports, information and other documents with the Trustee. The Company
will cause any quarterly and annual reports which it mails to its stockholders
to be mailed to the Holders of the Securities.
If the Company is not subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company will prepare, for the first three
quarters of each fiscal year, quarterly financial statements substantially
equivalent to the financial statements required to be included in a report on
Form 10-Q under the Exchange Act. The Company will also prepare, on an annual
basis, complete audited consolidated financial statements including, but not
limited to, a balance sheet, a
[L120300.7] 34
40
statement of income and retained earnings, a statement of changes in financial
position and all appropriate notes. All such financial statements will be
prepared in accordance with generally accepted accounting principles
consistently applied, except for changes with which the Company's independent
accountants concur, and except that quarterly statements may be subject to
year-end adjustments. The Company will cause a copy of such financial
statements to be filed with the Trustee and mailed to the Holders of the
Securities within 50 days after the close of each of the first three quarters
of each fiscal year and within 95 days after the close of each fiscal year.
The Company will also comply with the other provisions of TIA Section 314(a).
Holders of Securities and prospective purchasers designated by such Holders
will have the right to obtain from the Company upon request by such Holders or
prospective purchasers, during any period in which the Company is not subject
to Section 13 or 15(d) of the Exchange Act, the information required by
paragraph d(4)(i) of Rule 144A under the Securities Act.
SECTION 6.03 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim,
and will actively resist any and all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
SECTION 6.04 Liquidation.
The Board of Directors or the stockholders of the Company may not adopt a
plan of liquidation which plan provides for, contemplates or the effectuation
of which is preceded by (a) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company otherwise than
substantially as an entirety (Article 7 of this Indenture being the Article
which governs any such sale, lease, conveyance or other disposition
substantially as an entirety), and (b) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and of
the remaining assets of the Company to the holders of the capital stock of the
Company, unless the Company shall in connection with the adoption of such plan
make provision for, or agree that prior to making any liquidating distributions
it will make provision for, the satisfaction of the Company's obligations
hereunder and under the
[L120300.7] 35
41
Securities as to the payment of the principal and interest. The Company shall
be deemed to make provision for such payments only if (1) the Company
irrevocably deposits in trust with the Trustee money or U.S. Government
Obligations maturing as to principal and interest in such amounts and at such
times as are sufficient, without consideration of any reinvestment of such
interest, to pay the principal of and interest on the Securities then
outstanding to maturity and to pay all other sums payable by it hereunder, or
(2) there is an express assumption of the due and punctual payment of the
Company's obligations hereunder and under the Securities and the performance
and observance of all covenants and conditions to be performed by the Company
hereunder, by the execution and delivery of a supplemental indenture in form
satisfactory to the Trustee by a person who acquires, or will acquire
(otherwise than pursuant to a lease) a portion of the assets of the Company,
and which person will have assets (immediately after the acquisition) and
aggregate earnings (for such person's four full fiscal quarters immediately
preceding such acquisition) equal to not less than the assets of the Company
(immediately preceding such acquisition) and the aggregate earnings of the
Company (for its four full fiscal quarters immediately preceding the
acquisition), respectively, and which is a corporation organized under the laws
of the United States, any State thereof or the District of Columbia; provided,
however, that Company shall not make any liquidating distribution until after
the Company shall have certified to the Trustee with an Officers' Certificate
at least five days prior to the making of any liquidating distribution that it
has complied with the provisions of this Section 6.04. Notwithstanding the
foregoing, the provisions of this Section 6.04 shall be subject to Article 5
hereof.
SECTION 6.05 Compliance Certificates.
The Company shall deliver to the Trustee concurrently with the delivery of
annual reports as provided in Section 6.02 herein, an Officers' Certificate as
to the signers' knowledge of the Company's compliance with all conditions and
covenants on its part contained in this Indenture and stating whether or not
the signers know of any Event of Default. If they do know of such an Event of
Default, the Certificate shall describe the Event of Default and the efforts to
remedy the same. For the purposes of this Section 6.05, compliance shall be
determined without regard to any requirement of notice provided pursuant to the
terms of this Indenture. The Certificate need not comply with Section 12.04
hereof. One of the signers of the Officers' Certificate shall be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company.
[L120300.7] 36
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SECTION 6.06 Notice of Events of Defaults.
In the event that indebtedness of the Company in an aggregate amount in
excess of $10,000,000 is declared due and payable before its maturity because
of the occurrence of any default under such indebtedness, the Company will
promptly give written notice to the Trustee of such declaration.
SECTION 6.07 Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company, directly or by reason
of its ownership of any Subsidiary or upon the income, profits or property of
the Company; and (2) all material lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a lien upon the property of the
Company; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which adequate provision has been made.
SECTION 6.08 Corporate Existence.
Subject to Section 6.04 and Article 7, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any right if the Board of
Directors shall determine that the preservation is no longer desirable in the
conduct of the Company's business and that the loss thereof is not, and will
not be, adverse in any material respect to the Holders.
SECTION 6.09 Maintenance of Properties.
Subject to Section 6.04, the Company will cause all material properties
owned, leased or licensed in the conduct of its business or the business of its
Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof
and thereto, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times while any Securities are outstanding; provided, however,
that nothing in this Section 6.09 shall prevent the Company from discontinuing
the maintenance of any such properties if, in the judgment of the Board of
Directors, such discontinuance is desirable in the conduct of the Company's
business or the business of its Subsidiaries and is not, and will not be,
adverse in any material respect to the Holders.
[L120300.7] 37
43
SECTION 6.10 Purchase of Securities at Option of the Holder Upon Change in
Control.
(a) If at any time that Securities remain outstanding there shall have
occurred a Change in Control, Securities shall be purchased by the Company at
the option of the Holder thereof, at a purchase price (the "Change in Control
Purchase Price") equal to the principal amount thereof plus accrued interest to
the Change in Control Purchase Date (as hereinafter defined), as of the date
that is the later of (i) 20 Business Days after the date of mailing of the
Change in Control Purchase Notice and (ii) 40 Business Days after the
occurrence of the Change in Control (the "Change in Control Purchase Date"),
subject to satisfaction by or on behalf of the Holder of the requirements set
forth in Section 6.10(c).
(b) Within 20 Business Days after the occurrence of a Change in Control,
the Company shall mail a written notice of Change in Control by first-class
mail to the Trustee and to each Holder (and to beneficial owners as required by
applicable law) and shall cause a copy of such notice to be published in a
daily newspaper of national circulation (which shall be The Wall Street Journal
unless it is not then so circulated). The Trustee may conclusively assume in
the absence of written notice to the contrary from the Company that no Change
in Control has occurred. The notice shall include the form of a Change of
Control Purchase Notice (as defined below) to be completed by the Holder and
shall state:
(1) the date of such Change in Control and, briefly, the events causing
such Change in Control;
(2) the date by which the Change in Control Purchase Notice pursuant to
this Section 6.10 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) briefly, the conversion rights of the Securities;
(6) the name and address of the Paying Agent and the Conversion Agent;
(7) the Conversion Price and any adjustments thereto;
(8) that Securities as to which a Change in Control Purchase Notice has
been given may be converted into Common Stock only to the extent
that the Change in Control Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to exercise rights under
this Section 6.10;
[L120300.7] 38
44
(10) the procedures for withdrawing a Change in Control Purchase Notice,
including a form of notice of withdrawal; and
(11) that the Holder must satisfy the requirements set forth in the
Securities in order to convert the Securities.
(c) A Holder may exercise its rights specified in Section 6.10(a) upon
delivery of a written notice of the exercise of such rights (a "Change in
Control Purchase Notice") to the Paying Agent at any time prior to the close of
business on the Change in Control Purchase Date, stating;
(1) the certificate number of each Security that the Holder will deliver
to be purchased;
(2) the portion of the principal amount of each Security that the Holder
will deliver to be purchased, which portion must be $1,000 or an
integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the terms and
conditions specified in this Indenture.
The delivery of such Security to the Paying Agent prior to, on or after the
Change in Control Purchase Date (together with all necessary endorsements) at
the office of the Paying Agent shall be a condition to the receipt by the
Holder of the Change in Control Purchase Price therefor; provided, however,
that such Change in Control Purchase Price shall be so paid pursuant to this
Section 6.10 only if the Security so delivered to the Paying Agent shall
conform in all respects to the description thereof set forth in the related
Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this Section
6.10, a portion of a Security if the principal amount of such portion is $1,000
or an integral multiple of $1,000. Provisions of this Indenture that apply to
the purchase of all of a Security pursuant to Section 6.10 through 6.15 also
apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Change in Control Purchase Notice contemplated by this
Section 6.10(c) shall have the right to withdraw such Change in Control
Purchase Notice in whole or in a portion thereof that is $1,000 or in an
integral multiple thereof at any time prior to the close of business on the
Change in Control Purchase Date by delivery of a written notice of withdrawal
to the Paying Agent in accordance with Section 6.11.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.
[L120300.7] 39
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SECTION 6.11 Effect of Change in Control Purchase Notice.
Upon receipt by the Paying Agent of the Change in Control Purchase Notice
specified in Section 6.10(c), the Holder of the Security in respect of which
such Change in Control Purchase Notice was given shall (unless such Change in
Control Purchase Notice is withdrawn as specified below) thereafter be entitled
to receive solely the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to such Holder
promptly following the later of (i) the Change in Control Purchase Date with
respect to such Security (provided the conditions in Section 6.10(c) have been
satisfied) and (ii) the time of delivery of such Security to the Paying Agent
by the Holder thereof in the manner required by Section 6.10(c). Securities in
respect of which a Change in Control Purchase Notice has been given by the
Holder thereof may not be converted into shares of Common Stock on or after the
date of the delivery of such Change in Control Purchase Notice unless such
Change in Control Purchase Notice has first been validly withdrawn.
A Change in Control Purchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Paying Agent at any time
prior to the close of business on the Change in Control Purchase Date to which
it relates, specifying:
(1) the certificate number of each Security in respect of which such
notice of withdrawal is being submitted.
(2) the principal amount of the Security or portion thereof with respect
to which such notice of withdrawal is being submitted, and
(3) the principal amount, if any, of such Security that remains subject to
the original Change in Control Purchase Notice and that has been or
will be delivered for purchase by the Company.
There shall be no purchase of any Securities pursuant to Section 6.10 if
there has occurred (prior to, on or after, as the case may be, the giving, by
the Holders of such Securities, of the required Change in Control Purchase
Notice) and is continuing an Event of Default (other than a default in the
payment of the Change in Control Purchase Price with respect to such
Securities).
SECTION 6.12 Deposit of Change in Control Purchase Price.
On or before the Business Day following a Change in Control Purchase Date,
the Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company is acting as the Paying Agent, shall segregate and hold in trust as
provided in
[L120300.7] 40
46
Section 2.04) an amount of money sufficient to pay the aggregate Change in
Control Purchase Price of all the Securities or portions thereof that are to be
purchased as of such Change in Control Purchase Date.
If on the Business Day following the Change in Control Purchase Date the
Paying Agent holds, in accordance with the terms hereof, money sufficient to
pay the Change in Control Purchase Price of any Security for which a Change in
Control Purchase Notice has been tendered and not withdrawn, then, on and after
the Change in Control Purchase Date, such Security will cease to be outstanding
and interest on such Security will cease to accrue and will be deemed paid,
whether or not such Security is delivered to the Paying Agent, and all other
rights of the Holder in respect thereof shall terminate (other than the right
to receive the Change in Control Purchase Price upon delivery of such
Security).
SECTION 6.13 Securities Purchased in Part.
Any Security that is to be purchased only in part shall be surrendered at
the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities, of such
authorized denomination or denominations as may be requested by such Holder, in
aggregate principal amount equal to, and in exchange for, the portion of the
principal amount of the Security so surrendered that is not purchased.
SECTION 6.14 Compliance with Securities Laws upon Purchase of Securities.
In connection with any offer to purchase or purchase of Securities under
Section 6.10 hereof (provided that such offer or purchase constitutes an
"issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) at the time of such offer or
purchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under
the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise comply
with all Federal and state securities laws so as to permit the rights of the
Holders and obligations of the Company under Sections 6.10 through 6.13, to be
exercised in the time and in the manner specified therein.
SECTION 6.15 Repayment to the Company.
Subject to the provisions of Section 5.07, to the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 6.12 exceeds the
aggregate Change in Control
[L120300.7] 41
47
Purchase Price of the Securities or portions thereof to be purchased, then
promptly after the Business Day following the Change in Control Purchase Date
the Trustee or the Paying Agent, as the case may be, shall return any such
excess to the Company.
SECTION 6.16 Limitations on Ranking of Future Indebtedness.
The Company will not, directly or indirectly, incur, create, assume or
guarantee any Indebtedness which is subordinate or junior in right of payment
to any Senior Indebtedness and which is not expressly made by the terms of the
instrument creating such Indebtedness pari passu with, or subordinate and
junior in right of payment to, the Notes.
SECTION 6.17 Registration Rights.
(a) Simultaneously with the execution and delivery of this Indenture, the
Company shall enter into a Registration Agreement substantially in the form of
Exhibit C hereto (the "Registration Agreement"), and shall deliver to the
Trustee an Opinion of Counsel stating that the Registration Agreement has been
duly authorized, executed and delivered by the parties thereto.
(b) If the Company fails to comply with Section 2(a)(i) of the
Registration Agreement with respect to the filing of a Shelf Registration
Statement (as defined in the Registration Agreement), then, at such time, in
lieu of any other remedy that may be available to the Holders hereunder,
pursuant to applicable law or otherwise, the interest rate on the Securities
shall increase by 25 basis points. Such increase will remain in effect until
the date on which the Shelf Registration Statement is filed, on which date the
interest rate on the Securities shall revert to the interest rate originally
borne by the Securities plus any increase in such interest rate pursuant to the
following sentence. If the Company fails to comply with Section 2.1(a)(ii) of
the Registration Agreement with respect to the effectiveness of such Shelf
Registration Statement, then, at such time and on each date that is the
successive 30th day subsequent to such time, in lieu of any other remedy that
may be available to the Holders hereunder, pursuant to applicable law or
otherwise, the per annum interest rate on the Securities (which interest rate
shall be the original interest rate on the Securities plus any increase or
increases in such interest rate pursuant to the preceding sentence and this
sentence) shall increase by an additional 25 basis points; provided, however,
that the interest rate shall not increase by more than 50 basis points pursuant
to this sentence. Such increase or increases will remain in effect until the
date on which such Shelf Registration Statement is declared effective, on which
date the interest rate on the Securities shall revert to the interest rate
originally borne by the Securities; provided, however, that if a Shelf
Registration Statement has been declared effective with respect to resales of
the Securities and Converted Notes (as defined in the
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Registration Agreement) as set forth in Section 2.1 of the Registration
Agreement and the Company fails at any time for any reason to comply with
Section 2.1(a)(iii) of the Registration Agreement with respect to such Shelf
Registration Statement, then at such time and on each date thereafter that is
the successive 30th day subsequent to such time and until the earliest of (i)
the date that the Shelf Registration Agreement is again deemed effective
pursuant to Section 2.3 of the Registration Agreement, (ii) the date that is
the third anniversary subsequent to the date of original issuance of the
Securities and (iii) the date as of which all the Securities and the Converted
Notes have been sold pursuant to such Shelf Registration Statement, the per
annum interest rate on the Securities shall increase by an additional 25 basis
points; provided, further, that the interest rate shall not increase by more
than 50 basis points pursuant to the foregoing proviso. The sole and exclusive
remedy of the holders of the Securities for any failure of the Company to
perform any of its obligations under Section 2 of the Registration Agreement is
as set forth in this Section 6.17 of the Indenture.
SECTION 6.18 Maintenance of Office or Agency.
The Company will maintain an office or agency where Securities may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Securities and this indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in location, of
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be
made or served at the address of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the office of the Trustee as such
office of the Company.
ARTICLE 7
SUCCESSOR CORPORATION
SECTION 7.01 When Company May Merge, etc.
The Company shall not consolidate with or merge with or into, or transfer
all or substantially all of its assets to, any person unless:
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49
(a) either the Company shall be the resulting or surviving entity or such
person is a corporation organized and existing under the laws of the United
States, a State thereof or the District of Columbia, such person expressly
assumes by supplemental indenture executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture (in which case all such obligations of the
Company shall terminate); and
(b) immediately before and immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Company as a result of such transaction as having been incurred by the
Company at the time of such transaction, no default or Event of Default shall
have occurred and be continuing.
The Company shall deliver to the Trustee prior to the proposed transaction
an Officers' Certificate and an Opinion of Counsel, each of which shall comply
with Section 12.04 and shall state that such consolidation, merger or transfer
and such supplemental indenture comply with this Article 7 and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
SECTION 7.02 Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of all or substantially
all of the assets of the Company in accordance with Section 7.01, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture and the
Securities with the same effect as if such successor corporation had been named
as the Company herein and in the Securities.
ARTICLE 8
DEFAULT AND REMEDIES
SECTION 8.01 Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any Security when
the same becomes due and payable and the default continues for a period of 30
days;
(2) the Company defaults in the payment of the principal of any Security
when the same becomes due and payable at maturity, upon redemption or
otherwise;
(3) the Company fails to comply with any of its other agreements contained
in the Securities or this Indenture and
[L120300.7] 44
50
the default continues for the period and after the notice specified below;
(4) there shall be a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed or under any mortgage, indenture
or other instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company or
under any guarantee of payment by the Company of indebtedness for money
borrowed, whether such indebtedness or guarantee now exists or shall
hereafter be created, which default relates to (A) the obligation to pay the
principal of or interest on any such indebtedness or guarantee, taking into
account any applicable grace period, or (B) an obligation other than the
obligation to pay the principal of or interest on any such indebtedness,
which default results in the accelaration of the maturity of such
indebtedness; provided, however, that no default under this Section 8.01(4)
shall exist if all such defaults do not relate to such indebtedness or such
guarantees with an aggregate principal amount in excess of $10,000,000;
(5) the Company pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order
for relief against it in an involuntary case or proceeding under any
Bankruptcy Law, (C) consents to or acquiesces in the institution of
bankruptcy or insolvency proceedings against it, (D) applies for, consents to
or acquiesces in the appointment of or taking possession by a Custodian of
the Company for any material part of its property, (E) makes a general
assignment for the benefit of its creditors or (F) takes any corporate action
in furtherance of or to facilitate, conditionally or otherwise, any of the
foregoing;
(6) (i) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company in an involuntary case or
proceeding under any Bankruptcy Law which shall (A) approve as properly filed
a petition seeking reorganization, arrangement, adjustment or composition in
respect of the Company, (B) appoint a Custodian of the Company for any
material part of its property or (C) order the winding-up or liquidation of
its affairs, and such judgment, decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or (ii) any bankruptcy or
insolvency petition or application is filed, or any bankruptcy or insolvency
proceeding is commenced against the Company and such petition, application or
proceeding is not dismissed within 90 days; or (iii) any warrant of
attachment is issued against any material portion of the property of the
Company which is not released within 90 days of service; or
[L120300.7] 45
51
(7) one or more judgments or decrees shall be entered against the Company
involving, individually or in the aggregate, a liability of ten million
dollars ($10,000,000) or more and a sufficient number of such judgments or
decrees shall not have been vacated, discharged, satisfied or stayed pending
appeal within 30 days from the entry thereof so as to bring the aggregate
liability in respect thereof below the ten million dollar ($10,000,000)
threshold.
The term "Bankruptcy Law" means Title II, U.S. Code or any similar Federal
or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under
any Bankruptcy Law.
A default under clause (3) is not an Event of Default until the Trustee
notifies the Company or the Holders of at least 25% in principal amount of the
Securities then outstanding of the default, and the Company does not cure the
default within 60 days after receipt of such notice. The notice given pursuant
to this Section 8.01 must specify the default, demand that it be remedied and
state that the notice is a "Notice of Default". When a default under clause
(3) above is cured within such 60 day period, it ceases.
Subject to the provisions of Sections 9.01 and 9.02, the Trustee shall not
be charged with knowledge of any Event of Default unless written notice thereof
shall have been given to a Trust Officer at the principal corporate trust
office of the Trustee by the Company, the Paying Agent, any Holder or an agent
of any Holder.
SECTION 8.02 Acceleration.
If an Event of Default (other than an Event of Default specified in Section
8.01(5) or (6)) occurs and is continuing, the Trustee may, by notice to the
Company, or the Holders of at least 25% in principal amount of the Securities
then outstanding may, by notice to the Company and the Trustee, and the Trustee
shall, upon the request for such Holders, declare all unpaid principal of and
accrued interest to the date of acceleration on the Securities then outstanding
(if not then due and payable) to be due and payable and upon any such
declaration, the same shall become and be immediately due and payable. If an
Event of Default specified in Section 8.01(5) or (6) occurs, all unpaid
principal and accrued interest on the Securities then outstanding shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Securityholder. The Holders of a
majority in principal amount of the Securities then outstanding by notice to
the Trustee may rescind an acceleration and its consequences if (i) all
existing Events of Default, other than the non-payment of the principal of the
Securities which has become due solely by such declaration of acceleration,
have been cured or waived; (ii) to the extent the payment of such interest is
lawful, interest on
[L120300.7] 46
52
overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid; (iii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction; and (iv) all payments due to the Trustee and any
predecessor Trustee under Section 9.07 have been made. Anything herein
contained to the contrary notwithstanding, in the event of any acceleration
pursuant to this Section 8.02, the Company shall not be obligated to pay any
premium which it would have had to pay if it had then elected to redeem the
Securities pursuant to paragraph 5 of the Securities, except in the case of any
Event of Default occurring by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium which it would have had to pay if it had then elected to
redeem the Securities pursuant to paragraph 5 of the Securities, in which case
an equivalent premium shall also become and be immediately due and payable to
the extent permitted by law.
SECTION 8.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy by proceeding at law or in equity to collect the payment of
the principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the
Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 8.04 Waiver of Defaults and Events of Default.
Subject to Sections 8.07 and 11.02, the Holders of a majority in principal
amount of the Securities then outstanding by notice to the Trustee may waive an
existing default or Event of Default and its consequences, except a default in
the payment of the principal of or interest on any Security as specified in
clauses (1) and (2) of Section 8.01. When a default or Event of Default is
waived, it is cured and ceases.
SECTION 8.05 Control by Majority.
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines
[L120300.7] 47
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may be unduly prejudicial to the rights of another Securityholder, or that may
involve the Trustee in personal liability; provided that the Trustee may take
any other action deemed proper by the Trustee which is not inconsistent with
such direction.
SECTION 8.06 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this Indenture or
the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense (including counsel fees
and expenses);
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 8.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of the principal of and interest on the
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
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
SECTION 8.08 Collection Suit by Trustee.
If an Event of Default in the payment of principal or interest specified in
Section 8.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest,
[L120300.7] 48
54
in each case at the rate per annum borne by the Securities and such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 8.09 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
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Securityholders
allowed in any judicial proceedings relative to the Company (or any other
obligor on the Securities), its creditors or its property and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceeding is hereby authorized by each Securityholder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Securityholders, to pay
to the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 9.07. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or the
Trustee to authorize or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 8.10 Priorities.
If the Trustee collects any money pursuant to this Article 8, it shall pay
out the money in the following order:
First: to the Trustee for amounts due under Section 9.07;
Second: to the holders of Senior Debt to the extent required by Article 5;
Third: to Securityholders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
Fourth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 8.10.
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SECTION 8.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in the suit, having due regard to the merits
and good faith of the claims or defense made by the party litigant. This
Section 8.11 does not apply to a suit made by the Trustee, a suit by a Holder
pursuant to Section 8.06, or a suit by Holders of more than 10% in principal
amount of the Securities then outstanding.
ARTICLE 9
TRUSTEE
SECTION 9.01 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are specifically set
forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. The Trustee, however,
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:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section 9.01;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was negligent
in ascertaining the pertinent facts; and
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(3) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 8.05.
(d) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability, expense or fee.
(3) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 9.01.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 9.02 Rights of Trustee.
Subject to Section 9.01:
(a) The Trustee may rely upon (and shall be protected in acting or
refraining from acting upon) any document believed by it to be genuine and to
have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, which shall conform to
Section 12.04(b). The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such Certificate or Opinion.
(c) The Trustee may act through its 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.
(e) The Trustee may consult with counsel of its selection and the advice
or opinion of such counsel as to matters of law that shall be full and
complete authorization and protection in respect of any action taken, omitted
or suffered by it hereunder in good faith and in accordance with the advice
or opinion of such counsel.
SECTION 9.03 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
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with the Company or an affiliate of the Company with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Section 9.10 and 9.11.
SECTION 9.04 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 certificate of authentication.
SECTION 9.05 Notice of Defaults or Events of Default.
Within 30 days after the occurrence of any default or Event of Default with
respect to the Securities, the Trustee shall give to all Holders of the
Securities notice of such default or Event of Default known to the Trustee,
unless such default or Event of Default shall have been cured or waived;
provided, however, that, except in the case of a default or Event of Default in
the payment of the principal of or interest on any Security, the Trustee shall
be protected in withholding such notice if and so long as the board of
directors of the Trustee or a committee of Trust Officers in good faith
determine that the withholding of such notice is in the interest of the
Holders.
SECTION 9.06 Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, the Trustee shall, if required by TIA Section 313(a),
mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b).
A copy of each report at the time of its mailing to Securityholders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Securities are listed. The Company shall promptly notify the
Trustee whenever the Securities become listed on any stock exchange.
SECTION 9.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such compensation for
its services as the Company and the Trustee shall from time to time agree to in
writing (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust). The Company
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it, including the compensation and
the expenses and disbursements of its agent and counsel.
The Company shall indemnify the Trustee for, and hold it harmless against,
any and all loss, damage, claims, liability
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58
or expense, including taxes (other than taxes based upon, measured by or
determined by the income of the Trustee), arising out of or in connection with
the acceptance or administration of the trust or trusts hereunder, including
the costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent that such loss, damage, claim, liability or
expense is due to its own negligence or bad faith. The Trustee shall notify
the Company promptly of any Claim asserted against the Trustee for which it may
seek indemnity. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its written consent.
To secure the Company's payment obligations in this Section, the Trustee
shall have a senior claim to which the Securities are hereby made subordinate
on all money or property held or collected by the Trustee, except such money or
property held in trust to pay the principal of and interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.01(5) and (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 9.07 shall survive the termination of this
Indenture.
SECTION 9.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities then outstanding may remove the
Trustee by so notifying the Trustee and may appoint a successor Trustee with
the Company's written consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
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.
[L120300.7] 53
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If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of 10% in principal amount of the Securities then outstanding may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 9.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee, 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. A successor Trustee shall mail
notice of its succession to each Securityholder.
Notwithstanding replacement of the Trustee pursuant to this Section 9.08,
the Company's obligations under Section 9.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 9.09 Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets to, another corporation, the
resulting, surviving or transferee corporation without any further act shall be
the successor Trustee, provided such transferee corporation shall qualify and
be eligible under Section 9.10.
SECTION 9.10 Eligibility: Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements of
paragraphs (1), (2) and (5) of TIA Section 310 and has a capital and surplus
of at least $50,000,000. If at any time the Trustee shall cease to satisfy any
such requirements, it shall resign immediately in the manner and with the
effect specified in this Article Nine. The Trustee shall be subject to the
provisions of TIA Section 310(b). Nothing herein shall prevent the Trustee
from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b).
SECTION 9.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A trustee who
[L120300.7] 54
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has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated therein.
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.01 Termination of Company's Obligations.
The Company may terminate all of its obligations under the Securities and
this Indenture (except those obligations referred to in the immediately
succeeding paragraph) if all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities which have been replaced or
paid or Securities for whose payment money has theretofore been held in trust
and thereafter repaid to the Company, as provided in Section 10.03) have been
delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as are sufficient, without
consideration of any reinvestment of such interest, to pay the principal of and
interest on the Securities then outstanding to maturity and to pay all other
sums payable by it hereunder. The Company may make an irrevocable deposit
pursuant to this Section 10.01 only if at such time it is not prohibited from
doing so under the provisions of Article 5 and the Company shall have delivered
to the Trustee and any such Paying Agent an Officers' Certificate to that
effect.
The Company's obligations in paragraph 10 of the Securities and in Sections
2.03, 2.04, 2.05, 2.06, 2.07, 6.01, 9.07, 9.08 and 10.04 and in Article 4 shall
survive until the Securities are no longer outstanding. Thereafter, the
Company's obligations in such paragraph 10 and in Section 9.07 shall survive.
After such irrevocable deposit, the Trustee upon request shall acknowledge
in writing the discharge of the Company's obligations under the Securities and
this Indenture, except for those surviving obligations specified above.
"U.S. Government Obligations" means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which guarantee or obligation the full faith and credit of the
United States is pledged.
SECTION 10.02 Application of Trust Money.
[L120300.7] 55
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The Trustee or Paying Agent shall hold in trust, for the benefit of the
Holders, money or U.S. Government Obligations deposited with it pursuant to
Section 10.01, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of the
principal of and interest on the Securities. Money and U.S. Government
Obligations so held in trust shall not be subject to the subordination
provisions of Article 5.
SECTION 10.03 Repayment to Company.
Subject to Section 10.01, the Trustee and the Paying Agent shall promptly
pay to the Company upon written request any excess money or U.S. Government
Obligations 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 a right to such money has matured; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment, may at the expense of the Company cause to be published once
in newspapers of general circulation in the City of New York and the City of
Los Angeles or mail to each Holder entitled to such money notice that such
money remains unclaimed and that after a date specified therein, which shall be
at least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Company. After
payment to the Company, Securityholders entitled to money must look to the
Company for payment as general creditors unless otherwise prohibited by law.
SECTION 10.04 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 10.01 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 10.01
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with Section 10.01;
provided, however, that if the Company has made any payment of the principal of
or interest on any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive any such payment from the money or U.S. Government Obligations held
by the Trustee or Paying Agent.
[L120300.7] 56
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ARTICLE 11
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.01 Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 6.04 and 7.01;
(b) to provide for uncertificated Securities in addition to or in place of
certificated Securities;
(c) to cure any ambiguity, defect or inconsistency, or to make any other
change that does not adversely affect the rights of any Securityholder;
(d) to add to the covenants, agreements and obligations of the Company for
the benefit of the Holders of all of the Securities or to surrender any right
or power herein conferred upon the Company;
(e) to reduce the Conversion Price, provided that such reduction will not
adversely effect the interests of any holder of the Securities in any
material respect;
(f) Pursuant to the last paragraph of Section 2.06(d); or
(g) to comply with the requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
SECTION 11.02 With Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities with the written consent of the Holders of a majority in principal
amount of the Securities then outstanding. The Holders of a majority in
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities without notice to any Securityholder. Subject to Section 11.04,
without the consent of each Securityholder affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 8.04, may not:
(1) reduce the percentage in principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
[L120300.7] 57
63
(2) reduce the rate of or change the time for payment of interest on any
Security;
(3) reduce the principal of or change the fixed maturity of any Security
or alter the redemption provisions with respect thereto;
(4) alter the conversion, Change in Control or redemption provisions with
respect to any Security in a manner adverse to the holder thereof;
(5) waive a default in the payment of the principal of or interest on any
Security;
(6) make any changes in Section 8.04, 8.07 or this sentence;
(7) modify the provisions of Article 5 hereof in a manner adverse to the
holders;
(8) make any Security payable in money other than that stated in the
Security; or
(9) impair the right to institute suit for the enforcement of any payment
of principal or interest after the payment date therefor.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, supplement or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
An amendment under this Section 11.02 may not make any change that adversely
affects the rights under Article 5 of any holder of an issue of Senior Debt
unless the holders of that issue, pursuant to its terms, consent to the change.
SECTION 11.03 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as in effect at the date of such amendment or supplement.
SECTION 11.04 Revocation and Effect of Consents.
[L120300.7] 58
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Until an amendment or waiver becomes effective, a consent to it by a Holder
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, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (1)
through (9) of Section 11.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security.
SECTION 11.05 Notation On or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 11.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplement authorized pursuant to
this Article 11 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may but need not sign it. In signing or refusing to sign such
amendment or supplement, the Trustee shall be entitled to receive and, subject
to Section 9.01 shall be fully protected in relying upon, an Opinion of Counsel
stating that such amendment or supplement is authorized or permitted by this
Indenture. The Company may not sign an amendment or supplement until the Board
of Directors approves it.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317,
[L120300.7] 59
65
inclusive, of the TIA through operation of Section 318(c) thereof, such imposed
duties shall control.
SECTION 12.02 Notices.
Any notice or communication shall be given in writing and delivered in
person or mailed by certified or registered mail, return receipt requested,
addressed as follows:
if to the Company:
Carter Hawley Hale Stores, Inc.
3880 North Mission Road
Los Angeles, California 90031
Attention: Marc C. Bercoon, Esq.
General Counsel
if to the Trustee:
Continental Bank, National Association
231 S. La Salle
Chicago, Illinois 60697
Attention: Corporate Trust Department
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed by
first-class mail to him at his address shown on the register kept by the
Registrar.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication to a Securityholder is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
SECTION 12.03 Communications by Holders With Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the
[L120300.7] 60
66
Trustee, the Registrar and any other person shall have the protection of TIA
Section 312(c).
SECTION 12.04 Certificate and Opinion as to Conditions Precedent.
(a) 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 at
the request of the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent (including any covenant compliance with which
constitutes a condition precedent) have been complied with.
(b) Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture (other
than annual certificates provided pursuant to Section 6.05 hereof) shall
include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officer's
Certificate on certificates of public officials.
SECTION 12.05 Record Date for Vote or Consent of Securityholders.
[L120300.7] 61
67
The Company may set a record date for purposes of determining the identity
of Securityholders entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture, which record date shall be the
later of 10 days prior to the first solicitation of such vote or consent or the
date of the most recent list of Securityholders furnished to the Trustee
pursuant to Section 2.05 hereof prior to such solicitation. If a record date
is fixed, those persons who were Holders of Securities at such record date (or
their duly designated proxies), and only those persons, shall be entitled to
take such action by vote or consent or to revoke any vote or consent previously
given, whether or not such persons continue to be Holders after such record
date.
SECTION 12.06 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules for its
functions.
SECTION 12.07 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which state or
Federally chartered banking institutions in New York, New York or Chicago,
Illinois 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 12.08 Governing Law.
The laws of the State of New York shall govern this Indenture and the
Securities without regard to principles of conflicts of law.
SECTION 12.09 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary.
SECTION 12.10 No Recourse Against Others.
All liability described in paragraph 19 of the Securities of any director,
officer, employee or stockholder, as such, of the Company is waived and
released.
SECTION 12.11 Successors.
[L120300.7] 62
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All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 12.12 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
SECTION 12.13 Separability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.14 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
[L120300.7] 63
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the ___ of December, 1993.
CARTER HAWLEY HALE STORES, INC.
By___________________________
Title________________________
[SEAL]
Attest:______________________
Secretary
CONTINENTAL BANK,
NATIONAL ASSOCIATION,
Trustee
By___________________________
Title________________________
[SEAL]
Attest:_________________________
Title___________________________
[L120300.7] 64
70
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On ___ day of December, 1993, before me personally came ________________, to
me known, who, being by me duly sworn, did depose and say that he is
___________________ of Carter Hawley Hale Stores, Inc., one of the parties
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation; and that he signed his name thereto by like authority.
__________________________________
My Commission Expires:
[L120300.7] 65
71
STATE OF ILLINOIS )
) ss.
COUNTY OF __________ )
On ___ day of December, 1993, before me personally came ________________, to
me known, who, being by me duly sworn, did depose and say that he is
___________________ of Continental Bank, National Association one of the
parties described in and which executed the foregoing instrument; that he knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation; and that he signed his name thereto by like authority.
__________________________________
My Commission Expires:
[L120300.7] 66
72
Exhibit A [Front of Security]
Number
CARTER HAWLEY HALE STORES, INC.
6-1/4% Convertible Senior Subordinated Note due 2000
CARTER HAWLEY HALE STORES, INC., a Delaware corporation promises to pay
to or registered assigns the principal sum of
Dollars on December 31, 2000.
Interest Payment Dates: December 31 and June 30
Record Dates: December 15 and June 15
Additional provisions of this Note are set forth on the other side of this
Note.
CARTER HAWLEY HALE STORES, INC.
By: _______________________
By: _______________________
Certificate of Authentication:
CONTINENTAL BANK, NATIONAL ASSOCIATION, as
Trustee, certifies that this is one of the
Securities referred to in the Indenture.
By _______________________________________
Authorized Signatory
Dated:
[L120300.7] A-1
73
[BACK OF SECURITY]
CARTER HAWLEY HALE STORES, INC.
6-1/4% Convertible Senior Subordinated Note Due 2000
1. Interest and Maturity.
Carter Hawley Hale Stores, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at the rate per
annum shown above (plus any rate increase that may be required under Section
6.17 of the Indenture (as defined below)). The Company will pay interest
semi-annually on December 31 and June 30 of each year, commencing June 30,
1994. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of first
issuance of the Notes under the Indenture; provided that, if there is no
existing default in the payment of interest, and if this Note is authenticated
between a record date referred on the face hereof and the next succeeding
interest payment date, interest shall accrue from such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months; and provided, further that, if a Note is converted after the close of
business on the record date for the payment of an installment of interest and
prior to the opening of business on the next interest payment date, then, in
accordance with Section 8 hereof, the holder of the Note so converted will be
required to pay to the Company the amount of such interest at the time of
surrender of the Note for conversion. The principal of this Note will mature
and be payable on December 31, 2000, unless earlier redeemed or converted.
2. Method of Payment.
The Company will pay interest on this Note (except defaulted interest) to
the person who is the registered holder of this Note at the close of business
on the December 15 and June 15 next preceding the interest payment date. The
holder must surrender this Note to the Paying Agent to collect payment of
principal. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts.
3. Paying Agent, Registrar and Conversion Agent.
Initially, Continental Bank, National Association (the "Trustee"), will act
as Paying Agent, Registrar and Conversion Agent. The Company may change any
Paying Agent, Registrar or Conversion Agent without notice to the Noteholders.
The Company or any of its Subsidiaries may act as Paying Agent, Registrar or
Conversion Agent.
[L120300.7] A-2
74
4. Indenture Limitations.
The Company issues this Note under an Indenture dated as of December 21,
1993 (the "Indenture") between the Company and the Trustee. The terms of this
Note include those stated in the Indenture and those made part of the Indenture
by reference to the Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbb),
as amended, by the Trust Indenture Reform Act of 1990 and as in effect on the
date of the Indenture. This Note is subject to all such terms, and the holder
of this Note is referred to the Indenture and said Act for a statement of them.
The Notes are unsecured obligations of the Company limited to $125,000,000
aggregate principal amount (subject to Sections 2.02 and 2.07 of the
Indenture).
5. Optional Redemption.
The Notes may be redeemed, at the Company's option, in whole or from time to
time in part, at any time on and after December 31, 1998, at a redemption price
of 100% of the principal amount thereof together with accrued and unpaid
interest to the date fixed for redemption.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at
least 15 days but not more than 60 days before the redemption date of each
holder of Notes to be redeemed at his registered address. Notes 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 Notes or portions of them called for redemption.
7. Purchase of Notes at Option of Holder upon a Change in Control.
At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall become obligated to purchase all
or any part specified by the Holder (so long as the principal amount of such
part is $1,000 or an integral multiple thereof) of the Notes held by such
Holder on the date that is the later of (i) 20 Business Days after the date of
mailing of a Change in Control Purchase Notice and (ii) 40 Business Days after
the occurrence of a Change in Control of the Company, at the principal amount
thereof together with accrued and unpaid interest thereon to the Change in
Control Purchase Date. The Holder shall have the right to withdraw any Change
in Control Purchase Notice by delivering a written notice of withdrawal to the
Paying Agent in accordance with the terms of the Indenture.
[L120300.7] A-3
75
8. Conversion.
A Holder of a Note may convert it into shares of Common
Stock of the Company at any time after 90 days following the date of original
issuance thereof and prior to maturity, except that if the Note is called for
redemption, the conversion right will terminate at the close of business on the
tenth Business Day immediately preceding the redemption date. The initial
conversion price is $12.19 per share, subject to adjustment under certain
circumstances. The number of shares issuable upon conversion of a Note is
determined by dividing the principal amount converted by the conversion price
in effect on the conversion date. Upon conversion, no adjustment for interest
or dividends will be made. No fractional shares will be issued upon
conversion, in lieu thereof, an amount will be paid in cash based upon the
market price (as defined) of the Common Stock on the last trading day prior to
the date of conversion.
To convert a Note, a Holder must (1) complete and sign a
conversion notice substantially in the form set forth below, (2) surrender the
Note to a Conversion Agent, (3) furnish appropriate endorsements or transfer
documents if required by the Registrar or Conversion Agent and (4) pay any
transfer or similar tax, if required. If a holder surrenders a Note for
conversion after the close of business on the record date for the payment of an
installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date will be paid to the registered holder on
such record date. In such event, the Note, when surrendered for conversion,
must be accompanied by payment of an amount equal to the interest payable on
such interest payment date on the principal amount of the Note or portion
thereof then converted. A holder may convert a portion of a Note equal to
$1,000 or any integral multiple thereof.
A Note in respect of which a Holder has delivered a Change
in Control Purchase Notice exercising the option of such Holder to require the
Company to purchase such Note may be converted only if the notice of exercise
is withdrawn as provided above and in accordance with the terms of the
Indenture.
9. Subordination.
This Note is a general unsecured obligation of the Company
and is (i) subordinate in right of payment to all existing and future Senior
Debt of the Company, (ii) pari passu in right of payment to all existing and
future Senior Subordinated Indebtedness; and (iii) senior in right of payment
to all existing and future Junior Subordinated Indebtedness of the Company, as
described in the Indenture.
[L120300.7] A-4
76
10. Denominations, Transfer, Exchange.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and integral multiples of $1,000. A holder may
register the transfer of or exchange Notes in accordance with the Indenture.
The Registrar may require a holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental
charges that may be imposed by law or permitted by the Indenture.
11. Available Information.
The Holder of this Note and prospective purchasers
designated by such Holder will have the right to obtain from the Company upon
request by such Holder or prospective purchasers, during any period in which
the Company is not subject to Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the information required by paragraph d(4)(i) of Rule
144A under the Securities Act of 1933, as amended (the "Securities Act").
12. Persons Deemed Owners.
The registered holder of a Note may be treated as the owner
of it for all purposes.
13. Registration Rights.
The Company has entered into the Registration Agreement with
Salomon Brothers Inc as the representative of each Holder, substantially in the
form of Exhibit C to the Indenture, to file, after the date of issuance hereof,
a shelf registration statement under the Securities Act relating to resales of
the Notes and the Common Stock issuable upon conversion thereof. If such
registration statement is not filed or has not been declared effective by the
Securities and Exchange Commission (the "Commission") within the time periods
set forth in the Indenture, the interest rate on the Notes will be temporarily
or permanently increased in the manner set forth in the Indenture. Unless and
until the Notes are registered pursuant to a registration statement that has
been declared effective by the Commission under the Securities Act, the Notes
are subject to certain restrictions on transfer and may only be resold or
transferred to certain persons in a transaction that complies with certain
procedures established by the Company as described in the Indenture. By
purchasing this Note, the Holder hereof agrees to be bound by all of the terms
of the Registration Agreement, including the information supplying,
indemnification and other obligations contained therein.
[L120300.7] A-5
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14. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, holders entitled to money must look to
the Company for payment.
15. Amendments, Supplement and Waiver.
Subject to certain exceptions, the Indenture or the Notes
may be amended or supplemented with the consent of the holders of a majority in
principal amount of the Notes then outstanding and any past default or
noncompliance with any provision may be waived in a particular instance with
the consent of the holders of a majority in principal amount of the Notes then
outstanding. Without the consent of or notice to any Noteholder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to, among
other things, provide for uncertified Notes in addition to or in place of
certificated Notes, to cure any ambiguity, defect or inconsistency, to add to
the covenants and obligations of the Company for the benefit of the holders, to
reduce the Conversion Price provided it will not adversely effect the interests
of any holder in any material respect, or to make any other change that does
not adversely affect the right of any Noteholder.
16. Successor Corporation
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor corporation
will be released from those obligations.
17. Defaults and Remedies.
An Event of Default is: default for 30 days in payment of
interest on the Notes; default in payment of principal on the Notes; failure by
the Company for 60 days after notice to it to comply with any of its other
agreements in the Indenture or the Notes; certain events of bankruptcy or
insolvency of the Company or any of its subsidiaries; certain failures to pay
judgments or decrees entered against the Company; and certain defaults on other
indebtedness. If an Event of Default (other than as a result of certain events
of bankruptcy or insolvency), occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the Notes then outstanding may
declare all unpaid principal and the accrued interest to the date of
acceleration on the Notes then outstanding to be due and payable immediately,
all as and to the extent provided in the Indenture. If any Event of Default
occurs as a result of certain events of bankruptcy or insolvency, all unpaid
principal of and accrued interest on the Notes then outstanding shall become
due and
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78
payable immediately without any declaration or other act on the part of the
Trustee or any Noteholder, all as and to the extent provided in the Indenture.
Noteholders may not enforce the Indenture or the Notes except as provided in
the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, holders
of a majority in principal amount of the Notes then outstanding may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Noteholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company is required to file periodic reports with the Trustee
as to the absence of default.
18. Trustee Dealing with the Company.
Continental Bank, National Association, 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 an Affiliate of
the Company, and may otherwise deal with the Company or an Affiliate of the
Company, as if it were not Trustee.
19. 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 Notes or the Indenture or for any claim based on, in respect or by
reason of, such obligations or their creation. The Holder of this Note by
accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issue of this Note.
20. Discharge Prior to Maturity.
If the Company deposits with the Trustee or Paying Agent
money or U.S. Government Obligations sufficient to pay the principal of and
interest on the Notes to maturity, the Company will be discharged from the
Indenture except for certain Sections thereof.
21. Authentication.
This Note shall not be valid until the Trustee or an
authenticating agent signs the certificate of authentication on the other side
of this Note.
22. Abbreviations and Definitions.
Customary abbreviations may be used in name of a Noteholder
or an assignee, such as : TEN COM (= tenants in common, TEN ENT (= tenants by
the entireties), JT TEN (= joint
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79
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
All capitalized terms used in this Note and not specifically
defined herein are defined in the Indenture and are used herein as so defined.
23. Indenture to Control.
In the case of any conflict between the provisions of this
Note and the Indenture, the provisions of the Indenture shall control.
The Company will furnish to any Noteholder, upon written
request and without charge, a copy of the Indenture. Requests may be made to:
Carter Hawley Hale Stores, Inc., 3880 North Mission Road, Los Angeles,
California 90031, Attention: Secretary.
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80
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we)
assign and transfer this Note to
(insert assignee's Social Security or tax I.D. number)
_________________________________________________________________
_________________________________________________________________
(print or type assignee's name, address and zip code)
and irrevocably appoint _________________________________________ agent to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: ________________ Your Signature ________________________
(Sign exactly as your name appears on the other side of this Note)
*Signature
Guarantee: ______________________________________________________
*Guarantor must be a member of one of the following recognized signature
guarantee program: (1) the Securities Transfer Agents Medallion Program, (2)
the New York Stock Exchange Medallion Signature Program and (3) the Stock
Exchange Medallion Program.
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81
ELECTION TO CONVERT
To Carter Hawley Hale Stores, Inc.:
The undersigned owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion below designated,
into Common Shares of CARTER HAWLEY HALE STORES, INC. in accordance with the
terms of the Indenture referred to in this Note, and directs that the shares
issuable and deliverable upon conversion, together with any check in payment
for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the undersigned on account of
interest accompanies this Note.
Date:
Portions of Note to be
in whole ___ purchased ($1,000 or an
integral multiplier
thereof): $ _________
______________________________
Signature (for conversion only)
Please Print or Typewrite
Name and Address, Including Zip
Code, and Social Security or Other
Identifying Number
_____________________________________
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or portion of this Note purchased by
the Company pursuant to Section 6.10 of the Indenture, check the applicable
box:
Portions of Note to be
in whole ___ purchased ($1,000 or an
integral multiplier
thereof): $ _________
Date: ________________________ Signature: ___________________
(Sign exactly as your name
appears on the other side of
this Note)
*Signature
Guarantee: ________________________________________________
Taxpayer Identification Number: ___________________________
*Guarantor must be a member of one of the following recognized signature
guarantee program: (1) the Securities Transfer Agents Medallion Program, (2)
the New York Stock Exchange Medallion Signature Program and (3) the Stock
Exchange Medallion Program.
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