SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 1997
FIRST SOUTH AFRICA CORP., LTD.
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(Exact Name of Registrant as Specified in Charter)
Bermuda 0-27494 n/a
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
Clarendon House, Church Street, Hamilton HM CX, Bermuda
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (441) 295-1422
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
On October 31, 1997, First South Africa Corp., Ltd. a Bermuda
corporation (the "Company"), consummated the private placement and sale of
15,000 Increasing Rate Senior Subordinated Convertible Debentures of the Company
due October 31, 2001 (the "Debentures"), at a purchase price of $1,000 per
Debenture, to two offshore investors including BT Global Credit Limited as the
lead investor (the "Offering) pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended, (the "Act") under
Regulation S promulgated thereunder. The Debentures are subject to the terms of
an Indenture dated October 29, 1997 by and between the Company and the American
Stock Transfer & Trust Company, as Trustee. Interest payable on the Debentures
is 4% per annum for the year ending October 31, 1998, 4.5% per annum for the two
years ending October 31, 2000, and 5% per annum for the year ending October 31,
2001, payable on a quarterly basis. In the event the Debentures shall not have
been redeemed or converted pursuant to the terms thereof and the Indenture prior
to the due date, the Company shall pay each registered holder of the Debentures
an additional amount equal to 22.25% of the principal amount of Debentures held
by each such registered holder.
The Debentures are convertible at any time (subject to prior
redemption) into shares of Common Stock at the initial conversion price of $9.50
per share of Common Stock, subject to adjustment in certain events. The
Debentures are redeemable after one year if the Company's Common Stock trades at
more than $14.25 per share (subject to adjustment in certain event) during an
agreed upon period of time (30 consecutive market days ending on the market day
prior to the date on which the notice of redemption is first given). The
redemption value of the debenture is 122.25% of the principal amount.
The Company has agreed to pay Bankers Trust Company ("BTC") a fee
equal to 4.5% of the total offering amount and to reimburse BTC for its
reasonable legal expenses with respect to such transaction up to an amount of
$50,000.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit Number Description
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*4.1 Indenture dated October 29, 1997 executed by the
Company and American Stock Transfer and Trust
Company, as trustee.
*4.2 Form of Debenture (See Exhibit A of Indenture in
Exhibit 4.1).
*99.1 Press Release dated October 31, 1997.
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* Filed herewith
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<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 31, 1997 FIRST SOUTH AFRICA CORP., LTD
By: /s/ Clive Kabatznik
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Name: Clive Kabatznik
Title: President
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<PAGE>
Commission File No. 0-27494
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FIRST SOUTH AFRICA CORP., LTD.
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Exhibit
Number Document Page Number
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*4.1 Indenture dated October 29, 1997 executed by the
Company and the American Stock Transfer and Trust
Company, as Trustee.
*4.2 Form of Debenture (included as Exhibit A to
Exhibit 4.1).
*99.1 Press Release dated October 31, 1997.
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*Filed herewith.
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FIRST SOUTH AFRICA CORP., LTD.
$15,000,000
Increasing Rate Senior Subordinated Convertible Debentures
Due October 31, 2001
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Indenture
Dated as of October 29, 1997
AMERICAN STOCK TRANSFER & TRUST COMPANY
Trustee
<PAGE>
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.........................................2
Section 1.02. Other Definitions...................................7
Section 1.03. Rules of Construction...............................7
ARTICLE II. THE SECURITIES
Section 2.01. Form and Dating.....................................8
Section 2.02. Execution and Authentication........................8
Section 2.03. Registrar, Paying Agent and
Conversion Agent....................................9
Section 2.04. Paying Agent to Hold Money in Trust. ...............9
Section 2.05. Securityholder Lists...............................10
Section 2.06. Transfer and Exchange..............................10
Section 2.07. Replacement Securities.............................11
Section 2.08. Outstanding Securities.............................11
Section 2.09. Treasury Securities................................11
Section 2.10. Temporary Securities...............................12
Section 2.11. Cancellation.......................................12
Section 2.12. Payment of Interest; Interest
Rights Preserved...................................12
Section 2.13. Legending of the Securities;
Restriction on Transfer............................14
Section 2.14. Notification Regarding Restricted
Securities.........................................15
Section 2.15. CUSIP Numbers......................................15
ARTICLE III. REDEMPTION
Section 3.01. Election to Redeem; Notice
to Trustee. .......................................15
Section 3.02. Selection by Trustee of Securities
to be Redeemed.....................................16
Section 3.03. Notice of Redemption...............................16
Section 3.04. Effect of Notice of Redemption.....................17
Section 3.05. Deposit of Redemption Price........................18
Section 3.06. Securities Redeemed in Part........................18
(i)
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TABLE OF CONTENTS (cont'd)
ARTICLE IV. COVENANTS
Section 4.01. Payment of Securities..............................18
Section 4.02. SEC Reports........................................18
Section 4.03. Compliance Certificate.............................19
Section 4.04. Usury Laws.........................................19
Section 4.05. Investment Company Act.............................19
Section 4.06. Dividend and Payment Restrictions
Affecting Subsidiaries.............................20
Section 4.07. Restriction on Payment of Dividends
and Stock Repurchases..............................20
Section 4.08. Restriction on Transactions With Affiliates........23
Section 4.09. Incurrence of Indebtedness.........................23
Section 4.10. Plan of Liquidation................................24
Section 4.11. Money for Security Payments to Be Held in Trust....26
Section 4.12. Change of Control. ...............................27
ARTICLE V. SUCCESSOR CORPORATION
Section 5.01. When Company May Merge, Etc........................28
ARTICLE VI. DEFAULTS AND REMEDIES
Section 6.01. Events of Default..................................29
Section 6.02. Acceleration.......................................32
Section 6.03. Other Remedies.....................................32
Section 6.04. Waiver of Past Defaults............................34
Section 6.05. Control by Majority................................34
Section 6.06. Limitation on Suits................................34
Section 6.07. Rights of Holders to Receive Payment...............35
Section 6.08. Collection Suit by Trustee.........................35
Section 6.09. Trustee May File Proofs of Claim...................36
Section 6.10. Priorities.........................................37
Section 6.11. Undertaking for Costs; Notice of Proceedings.......37
(ii)
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TABLE OF CONTENTS (cont'd)
ARTICLE VII. TRUSTEE
Section 7.01. Duties of Trustee..................................38
Section 7.02. Rights of Trustee..................................40
Section 7.03. Individual Rights of Trustee.......................41
Section 7.04. Trustee's Disclaimer...............................41
Section 7.05. Notice of Defaults.................................42
Section 7.06. Compensation and Indemnity.........................42
Section 7.07. Replacement of Trustee.............................43
Section 7.08. Successor Trustee by Merger, Etc...................44
Section 7.09. Eligibility; Disqualification......................44
ARTICLE VIII. DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations...............44
Section 8.02. Application of Trust Money.........................46
Section 8.03. Repayment to Company...............................46
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.........................46
Section 9.02. With Consent of Holders............................47
Section 9.03. Revocation and Effect of Consents. ................48
Section 9.04. Notation on or Exchange of Securities. ............49
Section 9.05. Trustee to Sign Amendments, Etc....................49
ARTICLE X. CONVERSION
Section 10.01. Conversion Privilege..............................49
Section 10.02. Conversion Procedure..............................50
Section 10.03. Fractional Shares.................................51
Section 10.04. Taxes on Conversion...............................51
Section 10.05. Company to Provide Stock..........................51
Section 10.06. Adjustment for Change in Capital Stock............52
Section 10.07. Adjustment for Rights Issue.......................53
Section 10.08. Adjustment for Other Distributions................53
Section 10.09. Adjustments for Common Stock Issue................54
Section 10.10. Adjustment for Convertible Securities Issue.......55
(iii)
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TABLE OF CONTENTS (cont'd)
Section 10.11. Current Market Price..............................55
Section 10.12. Consideration Received............................55
Section 10.13. When Adjustment May be Deferred...................56
Section 10.14. When No Adjustment Required.......................56
Section 10.15. Notice of Adjustment..............................57
Section 10.16. Voluntary Reduction...............................57
Section 10.17. Notice of Certain Transactions....................58
Section 10.18. Reorganization of Company.........................58
Section 10.19. Company Determination Final.......................59
Section 10.20. Trustee's Disclaimer..............................59
ARTICLE XI. SUBORDINATION
Section 11.01. Agreement to Subordinate..........................59
Section 11.02. Certain Definitions...............................60
Section 11.03. Liquidation; Dissolution; Bankruptcy..............60
Section 11.04. Default on Senior Indebtedness....................61
Section 11.05. Acceleration of Securities........................62
Section 11.06. When Distribution Must Be Paid Over. .............62
Section 11.07. Notice by Company.................................63
Section 11.08. Subrogation.......................................63
Section 11.09. Relative Rights...................................64
Section 11.10. Subordination May Not Be Impaired By Company......64
Section 11.11. Distribution or Notice to Representative..........64
Section 11.12. Trustee and Paying Agents Not Chargeable
with Knowledge Until Notice.......................65
Section 11.13. Ranking of Securities.............................65
ARTICLE XII. MISCELLANEOUS
Section 12.01. Notices; Reporting Date...........................66
Section 12.02. Communication by Holders with Other Holders.......67
Section 12.03. Certificate and Opinion as to Conditions
Precedent.........................................67
Section 12.04. Statements Required in Certificate Or Opinion.....67
(iv)
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TABLE OF CONTENTS (cont'd)
Section 12.05. When Treasury Securities Disregarded. ............68
Section 12.06. Rules by Trustee and Agents.......................68
Section 12.07. Legal Holidays....................................68
Section 12.08. Governing Law.....................................68
Section 12.09. No Adverse Interpretation of Other Agreements.....69
Section 12.10. No Recourse Against Others. ......................69
Section 12.11. Successors........................................69
Section 12.12. Duplicate Originals...............................69
Section 12.13. Separability......................................69
(v)
<PAGE>
INDENTURE, dated as of October 29, 1997 between FIRST SOUTH AFRICA
CORP., LTD., a Bermuda corporation (the "Company"), and AMERICAN STOCK TRANSFER
& TRUST COMPANY, a New York corporation (the "Trustee").
Intending to be legally bound hereby, each party agrees as follows for
the benefit of the other party and for the equal and ratable benefit of the
Holders of the Company's Increasing Rate Senior Subordinated Convertible
Debentures due October 31, 2001 (the "Securities");
<PAGE>
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar. See Section 2.03.
"Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or Assistant Secretary of the Company to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Capitalized Leases" means, with respect to any person, all obligations
of such person under any agreement to lease, or lease of, any real or personal
property that are required to be capitalized for financial reporting purposes in
accordance with GAAP and the amount of Indebtedness relating thereto shall be
the capitalized amount of such obligations determined in accordance with such
principles.
"Capital Stock" means any class of capital stock of the Company as it
exists on the date of this Indenture or as it may be constituted from time to
time and warrants, options and similar rights to acquire any such capital stock.
"Company" means the party named as such in this Indenture unless and
until a successor replaces it in accordance with this Indenture and thereafter
means the successor.
"Company Request" and "Company Order" mean, respectively, a written
request, order or consent signed in the name of the Company by its Chairman of
the Board, President, any
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Vice President, its Treasury or Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated Net Income" means, for any period, the aggregate of the
Net Income of the Company and its Subsidiaries (if any) for such period, on a
consolidated basis, determined in accordance with generally accepted accounting
principles, provided that (i) the Net Income of any person which is not a
Subsidiary or is accounted for by the Company by the equity method of accounting
or of any Subsidiary subject to restrictions, directly or indirectly, on the
payment of dividends or the making of any distribution to the Company shall be
included only to the extent of the amount of dividends or distributions paid to
the Company or a Subsidiary (other than a Subsidiary subject to any such
restriction), and (ii) the Net Income of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded. "Net Income" of any person shall mean the net income (loss) of such
person, determined in accordance with generally accepted accounting principles;
excluding, however, from the determination of Net Income any gain (but not loss)
realized upon the sale or other disposition (including, without limitation,
dispositions pursuant to leaseback transactions, except any gain from such
leaseback transaction may be amortized into Net Income over the term of the
lease) of any real property or equipment of such person which is not sold or
otherwise disposed of in the ordinary course of business, or of any capital
stock of the Company or a Subsidiary owned by such person.
"Default" means any event which is, or after notice, or passage of time
or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as in effect
on the date of execution of this Indenture and as may thereafter be amended.
"GAAP" means generally accepted accounting principles in the United
States as in effect on the date of execution of this Indenture.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
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"Indebtedness" means, without duplication, with respect to any person,
as of any date, the principal of and any premium or interest on (a) all
indebtedness of such person for borrowed money and purchase money obligations
(including all indebtedness evidenced by notes, bonds, debentures or other
securities sold by such person) or in respect of letters of credit or similar
instruments issued for its own account, (b) all indebtedness incurred by such
person in the acquisition (whether by way of purchase, merger, consolidation or
otherwise and whether by such person or another person) of any business, real
property or other assets (except assets acquired in the ordinary course of the
conduct of the acquiror's usual business), (c) all indebtedness of any other
person secured by a lien to which the property or assets owned or held by such
first-named person is subject, whether or not the obligations secured thereby
shall have been assumed,(d) all Capitalized Leases, (e) guarantees by such
person of indebtedness described in clauses (a), (b),(c) or (d), and (f),
renewals, extensions, refundings, deferrals, restructurings, amendments and
modifications of any such indebtedness, obligation or guarantee.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary or any Assistant Secretary of the
Company.
"Officers' Certificate" means a certificate signed by two Officers or by
an Officer (other than the Secretary or an Assistant Secretary) and an Assistant
Secretary of the Company.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Parent" with respect to a person, means any corporation, partnership,
joint venture or other business entity which owns, directly or through one or
more Subsidiaries, shares of stock or other interests having general voting
power under
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ordinary circumstances to elect a majority of the board of directors, managers,
trustees or other governing body of such person.
"person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities means the date specified for that purpose in the
Securities.
"Restricted Securities" means Securities which were acquired by the
Holder thereof other than pursuant to an effective registration statement under
the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above and issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as in effect on the
date of execution of this Indenture and as may thereafter be amended.
"Special Record Date" for the payment of any defaulted interest means
the date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity", when used with respect to the Securities or any
installment of principal thereof or interest thereon, means the date specified
in the Securities as the fixed date on which the principal of such Securities or
such installment of principal or interest is due and payable.
"Subsidiary" means any person of which at the time of determination made
under this Indenture at least a majority of capital stock having ordinary voting
power for the election of
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directors or other governing body of such person is owned by the Company
directly or through one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the exchange or
in the market which is the principal United States market for the Common Stock
of the Company, as determined by the Board of Directors of the Company.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer its corporate trust matters.
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Section 1.02. Other Definitions.
Defined
Term in Section
---- ----------
"Accelerated Redemption Obligations".......................... 3.07
"Bankruptcy Law".............................................. 6.01
"Business Day"................................................ 4.10
"Common Stock"................................................ 10.01
"Conversion Agent"............................................ 2.03
"Custodian"................................................... 6.01
"Defaulted Interest".......................................... 2.12
"Disqualified Stock".......................................... 4.07
"Equity Interest"............................................. 4.07
"Event of Default"............................................ 6.01
"Legal Holiday"............................................... 12.08
"Offering Price".............................................. 10.07
"Paying Agent"................................................ 2.03
"Quoted Price"................................................ 10.03
"Registrar"................................................... 2.03
"Representative".............................................. 11.02
"Restricted Payments"......................................... 4.07
"Senior Indebtedness"......................................... 11.02
"U.S. Government Obligations"................................. 8.01
Section 1.03. Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP in effect on the date of execution of
this Indenture;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural
include the singular; and
(e) provisions apply to successive events and transactions.
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ARTICLE II.
THE SECURITIES
Section 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form set forth in
Exhibit A, the terms and provisions of which are a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage or agreements to which the Company is a party. 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.
Section 2.02. Execution and Authentication. Two Officers shall execute
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 a duly authorized agent of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $15,000,000 upon a written order of the
Company signed by an Officer of the Company. The aggregate principal amount of
Securities outstanding at any time may not exceed that amount except as provided
in Section 2.07.
The Securities shall be issuable in registered form without coupons and
only in denominations of $1,000 and any integral multiple thereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An
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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 right as an
Agent to deal with the Company or an affiliate.
Section 2.03. Registrar, Paying Agent and Conversion Agent. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented for payment ("Paying Agent") and an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
"Paying Agent" includes any additional paying agent; the term "Conversion Agent"
includes any additional conversion agent. The Company may change any Paying
Agent, Registrar, Conversion Agent or co-registrar without notice to any
Securityholder.
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 notify
the Trustee of the name and address of any such Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Conversion Agent, Paying Agent,
Registrar or co-registrar.
The Company initially appoints the Trustee as the Registrar, Paying
Agent and Conversion Agent.
Section 2.04. Paying Agent to Hold Money in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of the Securityholders or the
Trustee all moneys held by the Paying Agent for the payment of principal of or
interest on the Securities, and shall notify the Trustee of any default by the
Company in making any such payment. While such default continues, the Trustee
may require a Paying Agent to
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pay all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent shall have no further liability for the money. If
the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Securityholders all money held by it as Paying
Agent.
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 furnish to the Trustee on or before the tenth day
prior to each Interest Payment Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange. Subject to the requirements of
Section 2.13, where a Security is presented to the Registrar or a co-registrar
with a request to register a transfer, the Registrar shall register the transfer
as requested if duly endorsed or accompanied by a proper instrument or
instruments of assignment and transfer thereof and its requirements for such
transaction are met. Where Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registrations of transfers
and exchanges, the Company shall issue 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 may be imposed in relation thereto.
Neither the Company, the Trustee nor any other agent of the Company
shall be required (i) to issue, register the transfer of or exchange Securities
during a period beginning at the opening of 15 days before the day of any
selection of Securities for redemption under Section 3.01 and ending at the
close of business on the day of such day of selection; provided, however, that
such restriction shall not affect the ability of a holder to
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convert the Securities in accordance with Article X, or (ii) to register the
transfer of or exchange of any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
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, the Company shall issue
and the Trustee shall authenticate a replacement Security dated the date of the
lost, destroyed or wrongfully taken Security, if, in the case of a lost,
destroyed or wrongfully taken Security, the holder of such Security furnishes to
the Trustee evidence satisfactory to it, in its discretion, of the ownership of
and the destruction, loss or theft of such Security and shall furnish to the
Company and to the Trustee an indemnity bond sufficient in the judgment of the
Company and the Trustee to protect each of them and any agent for any loss which
any of them may suffer if a Security is replaced. The Company may charge for its
expenses in replacing a Security. Every replacement Security is an additional
obligation of the Company.
Section 2.08. Outstanding Securities. 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
as not outstanding. A Security does not cease to be outstanding because the
Company or one of its Subsidiaries or an Affiliate holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
Section 2.09. Treasury Securities. In determining whether the Holders of
the required principal amount of Securities have concurred in any direction,
waiver or consent, Securities owned by the Company or an Affiliate shall be
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considered as though they are not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned shall be disregarded.
Section 2.10. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities in
exchange for temporary Securities. Until so exchanged, the temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive 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 and shall, subject to the record-retention requirements of the Exchange
Act, destroy Securities surrendered for transfer, exchange, payment,
replacement, conversion or cancellation and deliver a certificate of such
destruction to the Company unless the Company instructs the Trustee in writing
to deliver the cancelled Securities to the Company. The Company may not issue
new Securities to replace Securities that it has paid or that have been
delivered to the Trustee for cancellation or that any Securityholder has
converted pursuant to Article X.
Section 2.12. Payment of Interest; Interest Rights Preserved. Interest
on any Security which is payable, and is punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the person in whose name that
Security is registered at the close of business on the Regular Record Date for
such interest payment.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease
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to be payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities are registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as in this
clause provided. Thereupon, the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date thereof to be
mailed, first-class postage prepaid, to each Holder of Securities at his
registered address, not less than 15 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed such Defaulted
Interest shall be paid to the persons in whose names the Securities are
registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following clause (b).
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(b) The Company may make payment of any Defaulted Interest on
the Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange or automated trading system on
which such Securities may be listed, and upon such notice as may be
required by such exchange or automated trading system, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section 2.06,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Section 2.13. Legending of the Securities; Restriction on Transfer. All
Securities originally issued hereunder pursuant to the exemption from
registration provided in Regulation S under the Securities Act shall bear the
following legend:
"SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE SOLD, OFFERED, OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO
A "U.S. PERSON" UNLESS THE SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT IS AVAILABLE. IN NO EVENT MAY
SUCH SECURITIES BE SOLD, OFFERED OR TRANSFERRED
IN THE UNITED STATES OR TO A "U. S. PERSON" FOR
A PERIOD OF FORTY (40) DAYS FROM THE DATE OF
THIS CERTIFICATE."
Prior to any transfer of any Security bearing such legend, in whole or
in part, the Holder thereof shall furnish to the Company and the Trustee an
Opinion of Counsel, who shall be reasonably satisfactory to the Company and the
Trustee, in substance reasonably satisfactory to the Company and the Trustee,
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to the effect that such Security has been registered under the Securities Act
and any applicable state laws, or registration is not required thereunder.
Section 2.14. Notification Regarding Restricted Securities. The Company
shall deliver to the Trustee and the Paying Agent an Officers' Certificate and
an Opinion of Counsel notifying the Trustee and the Paying Agent at any time
that the Company becomes aware that a Security ceases to be a Restricted
Security. The Trustee and Paying Agent may conclusively rely on such notice and
shall treat each Security as a Restricted Security until they receive such
notice with respect to such Security. The Company shall deliver to the Trustee
and the Paying Agent an Officers' Certificate and an Opinion of Counsel
notifying the Trustee and the Paying Agent whenever any registration statement
registering any of the Securities under the Securities Act is declared effective
by the SEC.
Section 2.15. CUSIP Numbers. The Company in issuing the Securities may
use a "CUSIP" number, and if so, the Trustee shall use the CUSIP number in
notices of redemption or exchange as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities.
ARTICLE III.
REDEMPTION
Section 3.01. Election to Redeem; Notice to Trustee. The Securities may
be redeemed at the election of the Company as a whole or in part from time to
time commencing on the period and at the redemption prices specified in
paragraph 5 of the Securities, together with accrued interest to the redemption
date. If the Company wishes to redeem any or all of the Securities pursuant to
paragraph 5 of the Securities, the Company shall, at least forty-five (45) days
prior to the redemption date fixed by the Company (unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such
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redemption date and of the principal amount of Securities to be redeemed. In the
case of any redemption, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with the provisions of this Indenture and of
the Securities with respect thereto.
Section 3.02. Selection by Trustee of Securities to be Redeemed. If less
than all the Securities are to be redeemed pursuant to paragraph 5 of the
Securities, the particular Securities to be redeemed shall be selected by the
Trustee, from the Securities not previously called for redemption by a method
that complies with the requirements of any exchange or automated quotation
system on which the Securities are listed and that the Trustee deems fair and
appropriate. The Trustee shall make the selection not more than sixty (60) days
and not less than thirty (30) days before the redemption date. 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. The Trustee shall notify
the Company promptly of the Securities or portions of Securities to be called
for redemption.
Section 3.03. Notice of Redemption. At least thirty (30) days but not
more than sixty (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 at such Holder's last registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price (determined in accordance
with paragraph 5 of the Securities);
(3) the conversion price;
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(4) the name and address of the Trustee and
Conversion Agent;
(5) that Securities called for redemption may be
converted at any time before the close of
business on the second business day prior to the
redemption date;
(6) that Holders who want to convert Securities must
satisfy the requirements in paragraph 8 of the
Securities;
(7) that Securities called for redemption must be
surrendered to the Trustee to collect the
redemption price;
(8) that interest on Securities called for
redemption ceases to accrue on and after the
redemption date; and
(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 will be issued.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
Section 3.04. Effect of Notice of Redemption. Once notice of redemption
is mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price. Upon surrender to the Trustee
(subject, however, to Section 2.13 and to the deposit by the Company of the
redemption price pursuant to Section 3.05), such Securities shall be paid at the
redemption price, plus accrued interest to the redemption date, but interest
installments due on or prior to the redemption date will be payable to the
holder of record at the close of business on the relevant record dates referred
to in the Securities.
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Section 3.05. Deposit of Redemption Price. Before the redemption date,
the Company shall deposit with the Trustee money, or at the Company's option,
shares of the Company's Common Stock in such amount to be determined pursuant to
paragraph 5 of the Securities, sufficient to pay the redemption price of, and
accrued interest on, all Securities to be redeemed on that date. The Trustee
shall return to the Company any money not required for that purpose.
Section 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Trustee shall authenticate for the Holder a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE IV.
COVENANTS
Section 4.01. Payment of Securities. The Company shall pay the principal
of and interest on the Securities on the dates and in the manner provided in the
Securities and in this Indenture, subject to the subordination provisions of
Article XI. Principal and interest shall be considered paid on the date due if
the Trustee or the Paying Agent holds at the opening of business on that date
money designated for and sufficient to pay all principal and interest then due.
The Company shall pay interest on overdue principal, compounded
quarterly, at the rate borne by the Securities; it shall pay interest on overdue
installments of interest at the same rate, in each case compounded quarterly, to
the extent lawful.
Section 4.02. SEC Reports. Within 15 days after the Company files with
the SEC copies of its annual reports and other information, documents and
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which it is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act, the Company shall deliver
the same with the Trustee. The Company shall timely
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comply with its reporting and filing obligations under the applicable federal
securities laws.
Section 4.03. Compliance Certificate. The Company shall deliver to the
Trustee, within 105 days after the end of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his knowledge the Company has kept, observed,
performed and fulfilled each and every covenant contained in this Indenture and
is not in default in the performance or observance of any of the terms,
provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which he may
have knowledge) and that to the best of his knowledge no event has occurred and
remains in existence by reason of which payments on account of principal of or
interest, if any, on the Securities are prohibited.
The Company will, so long as any of the Securities are outstanding,
deliver to the Trustee forthwith upon becoming aware of (i) any Default or Event
of Default or (ii) any default or event of default under any other mortgage,
Indenture or instrument as that term is used in Section 6.01(5), an Officers'
Certificate specifying such Default, Event of Default or default.
Section 4.04. Usury Laws. The Company will not assert, plead (as a
defense or otherwise) or in any manner whatsoever claim (and will actively
resist any attempt to compel it to assert, plead or claim) in any action, suit
or proceeding that the interest rate on the Securities violates present or
future usury or other laws relating to the interest payable on any indebtedness
and will not otherwise avail itself (and will actively resist any attempt to
compel it to avail itself) of the benefits of any such laws.
Section 4.05. Investment Company Act. The Company will not, and will
take such action so that none of the Subsidiaries will, register as, or conduct
their respective
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businesses or take any action which shall cause any of them to become or be
deemed to be, an investment company as defined under the Investment Company Act
of 1940 and the rules and regulations of the SEC thereunder.
Section 4.06. Dividend and Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction on the ability of any Subsidiary to
(i) pay dividends or make any other distributions, in cash or otherwise, on its
Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any of its Subsidiaries or pay any Indebtedness
owed to the Company or any of its Subsidiaries, (ii) make loans or advances to
the Company or any of its Subsidiaries, or (iii) transfer any of its properties
or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions in existence on the date of this Indenture,
including any renewal, refunding or refinancing thereof, and encumbrances or
restrictions existing under or by reason of (A) this Indenture and the
Securities, (B) applicable law, (C) any instrument governing Indebtedness or
Capital Stock of a person acquired by the Company, or any of its Subsidiaries,
in existence at the time of such acquisition (but not in connection with such
acquisition), including any renewals, refundings or refinancings thereof,
provided, that, the restrictions contained in such renewals, refundings or
refinancings are no more restrictive than those contained in such instrument at
the time of such acquisition, which encumbrance or restriction is not applicable
to any person, or to the properties or assets of any person, other than the
person, or the property or assets of the person, so acquired by the Company or
its Subsidiaries, (D) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, or (E) with respect to clause (iii) above, purchase money obligations
for property acquired in the ordinary course of business.
Section 4.07. Restriction on Payment of Dividends and Stock Repurchases.
The Company may not, (i) declare or pay any dividend or make any distribution on
its Capital Stock of any class to its stockholders (other than dividends or
distributions
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payable in shares of Capital Stock (other than Disqualified Stock) of the
Company), or (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interest of the Company, any Subsidiary or other Affiliate (other than
any such Equity Interests owned by the Company or any Subsidiary or other than
in connection with an acquisition of any business entity where payment includes
a stock in lieu of cash component), or (iii) permit any Subsidiary to declare or
pay any dividend on, or make any distribution to its stockholders of, any shares
of its capital stock, except to the Company or any Subsidiary (other than
dividends or distributions payable in Equity Interests of it or the Company), or
(iv) permit any Subsidiary to purchase, redeem or otherwise acquire or retire
for value any Equity Interests of such Subsidiary, the Company or any Affiliate
of either of them (other than any such Equity Interests owned by the Company or
any Subsidiary) (such restricted dividends, distributions, purchases,
redemptions or other acquisitions or retirements being collectively referred to
as "Restricted Payments") if at the time of such Restricted Payment:
(a) an Event of Default shall have occurred and be continuing,
or shall occur as a consequence thereof; or
(b) if upon giving effect to such Restricted Payment the
aggregate amount expended for all such Restricted Payments (the amount
expended for such purposes, if other than cash, to be conclusively
determined by the Board of Directors as evidenced by a Board Resolution)
subsequent to the date of execution of this Indenture shall exceed the
sum of:
(1) 50% of the aggregate Consolidated Net Income of the
Company accrued during fiscal quarters ending subsequent to September
30, 1997;
(2) the aggregate net proceeds, including cash and the
fair market value of property other than cash (as determined in good
faith by the Board of Directors as evidenced by a Board Resolution),
received by the Company from the issue or sale subsequent to the date of
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execution of this Indenture of Capital Stock of the Company (other than
Capital Stock subject to mandatory redemption or redemption at the
option of the holder, or is convertible or exchangeable for Indebtedness
in either case prior to the maturity of the Securities (collectively
"Disqualified Stock")) or of warrants to purchase such Capital Stock
(other than warrants to purchase such Disqualified Stock) other than in
connection with the conversion of any Indebtedness;
(3) the aggregate net proceeds received by the Company
subsequent to the date of execution of this Indenture from the issue or
sale of any debt securities or Disqualified Stock of the Company, if, at
the time of such contemplated Restricted Payment, such debt securities
or Disqualified Stock, as the case may be, have been converted into
Capital Stock of the Company; and
(4) (a) if such Restricted Payment is made on or prior
to June 30, 1998, $3,000,000 or (b) if such Restricted Payment is made
after June 30, 1998, $5,000,000.
For purposes of any calculation pursuant to the preceding sentence which is
required to be made within 60 days after the declaration of a dividend by the
Company or any Subsidiary, such dividend shall be deemed to be paid at the date
of declaration, and the subsequent payment of such dividend during such 60-day
period shall not be treated as an additional Restricted Payment.
Notwithstanding the foregoing, the provisions of this Section 4.07 will
not prevent (i) the payment of any dividend within 60 days after the date of
declaration with the payment complied with the foregoing provisions on the date
of declaration; or (ii) the retirement of any shares of the Company's Capital
Stock by exchange for, or out of the proceeds of the substantially concurrent
sale (other than to a Subsidiary) of, other shares of its Capital Stock (other
than any Disqualified Stock), and neither such retirement nor the proceeds
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of any such sale or exchange shall be included in any computation made under
this Section 4.07.
"Equity Interest" means Capital Stock or warrants, options or other
rights to acquire Capital Stock.
Section 4.08. Restriction on Transactions With Affiliates. The Company
will not, nor permit any Subsidiary to,(i) engage in any transaction with an
Affiliate of the Company or any Subsidiary on terms less favorable to the
Company or such Subsidiary than that which might be obtained at the time of such
transaction from unrelated entities, (ii) loan or advance any funds to any
Affiliate (other than to the Company or any of its direct or indirect
Subsidiaries) in excess of $250,000 in the aggregate outstanding at any time, or
(iii) purchase less than all of the Securities of an Affiliate or an entity
controlled by any Affiliate; provided, however, that any such purchase of all
Securities shall be deemed fair to the Company as evidenced by an opinion
rendered by an investment banker selected by independent directors of the
Company. The restrictions in this Section 4.08 shall not apply to intercompany
advances or bona fide transactions with or between Subsidiaries and/or the
Company to the extent not expressly precluded by this Indenture.
Section 4.09. Incurrence of Indebtedness. The Company will not, and will
not permit any Subsidiary to, directly or indirectly, create, incur, issue,
assume, guarantee or become liable with respect to, contingently or otherwise,
or extend the maturity of, any Indebtedness except for: (i) the Securities and
other obligations under this Indenture; (ii) Indebtedness of the Company
outstanding as of October 29, 1997; (iii) Senior Indebtedness; (iv) Capitalized
Lease obligations, letters of credit to finance trade payables, in each case to
the extent incurred in the ordinary course of business of the Company and its
Subsidiaries; (v) Indebtedness of the Company or a Subsidiary of the Company
secured by liens on assets used in the ordinary course of business by the
Company or any Subsidiary and of which the value of the collateral is equal to
at least 50% of the outstanding principal amount of such Indebtedness; (vi)
Indebtedness which is expressly junior in right of payment to the Securities; or
(vii) any amendment, removal, extension or refunding of such Indebtedness,
provided that the Company will not refinance any Indebtedness incurred pursuant
to clause (vi)
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unless such refinancing Indebtedness is expressly junior in right of payment to
the Securities.
Section 4.10. Plan of Liquidation. The Board of Directors or the
stockholders of the Company may not adopt any plan of liquidation (other than a
plan of liquidation incident to a permitted merger, consolidation, sale of
assets or other transaction described in Article V of this Indenture) which
provides for, contemplates or the effectuation of which is preceded by, (i) 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 V of
this Indenture being the Article which governs any such sale, lease, conveyance
or other disposition substantially as an entirety) and (ii) 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
Capital Stock of the Company, unless the Company shall have made provision for
the satisfaction of the Company's obligations hereunder and the Securities as to
the payment of principal and interest, in the amounts and in the manner set
forth below, (A) immediately following the adoption of such plan or (B) not less
than five business days ("Business Days") prior to the making of any such
liquidating distributions, whichever occurs first. The Company shall be deemed
to make provision for such payment only if the Company irrevocably deposits in
trust with the Trustee U.S. Government Obligations (as defined in Section 8.01)
sufficient to pay in full the redemption price that would be payable under
paragraph 5 of the Securities on the last Business Day of the second full
calendar month following the month in which such provision is made, plus
interest accrued and to accrue on the Securities to the last Business Day of
such second calendar month. No such liquidating distributions may be made by the
Company unless five Business Days have elapsed from the making of such provision
for payment of the Securities and the Company shall have certified to the
Trustee by an Officers' Certificate that the provisions of this Section 4.10
have been complied with.
The Company shall redeem all of the then outstanding Securities on the
last Business Day of the second full calendar month following the month in which
provision is made by the Company for the payment of principal and interest
pursuant to the preceding paragraph, at the same redemption price payable on the
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date of such redemption under paragraph 5 of the Securities, plus all accrued
and unpaid interest on such Securities to the date of such redemption.
Notwithstanding the foregoing, no liquidating distributions may be made
by the Company if a Default or Event of Default has occurred and is continuing
nor may any such liquidating distribution be made if for any reason the
application of the proceeds of any instruments held or to be held in trust by
the Trustee pursuant to this Section 4.10 are or could become subject to any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting the Trustee's application of such proceeds in the
manner provided in this Section 4.10.
At least 10 days but not more than 90 days prior to the date on which
the Securities are to be redeemed by the Company pursuant to this Section 4.10,
the Company shall mail or cause the Trustee to mail, at the Company's expense, a
notice of redemption to each Holder stating that all of the Securities are to be
redeemed, identifying the Section of this Indenture pursuant to which the
Securities are to be redeemed, describing the facts which require such
redemption and otherwise complying with the notice provisions of Section 3.03.
If the Company has irrevocably deposited in trust with the Trustee U.S.
Government Obligations in accordance with the provisions of this Section 4.10,
the Company may terminate all of its obligations under this Indenture other than
the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 7.07, 7.08
and 8.03, and in Article IV and Article XI, all of which shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's obligations
in Section 7.07 and 8.03 shall survive.
After a deposit made pursuant to this Section 4.10, the Trustee upon
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified above.
In order to have money available on the applicable redemption date
specified above to pay principal and interest on the Securities, and on each
principal or Interest Payment Date,
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if any, occurring prior to such payment date to pay principal and interest on
the Securities, the U.S. Government Obligations shall be payable as to principal
or interest on or before such redemption date or principal or Interest Payment
Date in such amounts as will provide the necessary money. U.S. Government
Obligations shall not be callable at the issuer's option.
The Trustee shall hold in trust the U.S. Government Obligations
deposited with it pursuant to this Section 4.10. It shall apply the money from
U.S. Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities at the
times and in the amounts specified in this Indenture, including this Section
4.10, and in the Securities, including, without limitation, paragraph 1 thereof.
Money and securities so held in trust are subject to Article XI.
Section 4.11. Money for Security Payments to Be Held in Trust. If the
Company shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal of or interest on the Securities, segregate and
hold in trust for the benefit of the Securityholders a sum sufficient to pay the
principal or interest so becoming due until such sum shall be paid to such
persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or prior to each date for the payment of the principal of or interest on the
Securities, deposit with a Paying Agent or the Trustee a sum sufficient to pay
the principal or interest so becoming due, such sum to be held in trust for the
benefit of the Securityholders; and, unless such Paying Agent is the Trustee,
the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of or interest on the Securities
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(and on the Senior Indebtedness to the extent required by Article XI) in
trust for the benefit of the Securityholders (and the holders of such
Senior Indebtedness) until such sums shall be paid to such persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the making of any
payment of principal or interest;
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent; and
(4) maintain such records as may reasonably be requested
by the Trustee and furnish to the Trustee such records as the Trustee
may require.
The Company may at any time pay, or direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Company or such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by the Company or such Paying Agent; and, upon such payment by
any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money, subject in all cases to the terms
and provisions of Article XI hereof.
Section 4.12. Change of Control. In the event of a "Change of Control"
(as defined below) of the Company, the Company will be obligated for a period of
30 days following the date of such Change of Control, upon the written notice of
the Securityholder to the Company, to repurchase the Securities in consideration
of an amount equal to 122.25% of the principal amount owed to such
Securityholder with respect to the Securities. For the purposes of this Section
4.12 a "Change of Control" means (1) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the assets
of the Company, on a consolidated basis, in one transaction or a series of
related transactions, if, immediately after giving effect to such transaction,
any "person"
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or "group," is or becomes the "beneficial owner," directly or indirectly, of
more than 50% of the total voting power in the aggregate normally entitled to
vote in the election of directors, manager, or trustees, as applicable, of the
surviving or transferee Company, (ii) any "person" or "group," is or becomes the
beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate of all classes of Capital Stock of the Company then
outstanding normally entitled to vote in elections of directors, or (iii) during
any period of 12 consecutive months after the issue date, individuals who at the
beginning of any such 12-month period constituted the Board of Directors of the
Company (together with any new directors whose election by the Board of
Directors or whose nomination for election by shareholders of the Company was
approved by a vote of the majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in office.
The Company will provide the Trustee with written notice of any such Change of
Control within 5 days of the occurrence thereof. The Trustee will provide each
Securityholder with a copy of such written notice of Change of Control within 5
days of its receipt thereof.
ARTICLE V.
SUCCESSOR CORPORATION
Section 5.01. When Company May Merge, Etc. The Company shall not
consolidate with or merge into, or transfer all or substantially all of its
assets in one or more related transactions, to, any person unless:
(1) the Company shall be the surviving entity, or the
corporation formed by or surviving any such consolidation or merger (if other
than the Company), or to which such sale, conveyance or lease shall have been
made, shall expressly assume by supplemental indenture all the obligations of
the Company under the Securities and this Indenture, except that it need not
assume the obligations of the Company as to conversion of Securities if pursuant
to Section 10.18 the Company or another
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person enters into a supplemental indenture obligating it to deliver the
securities, cash or other assets deliverable upon conversion of Securities;
(2) immediately after giving effect to such transaction no
Default or Event of Default shall have occurred and be continuing; and
(3) the corporation formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
conveyance or lease shall have been made, has a net worth not less than the
Consolidated Net Worth of the Company at the date hereof or immediately prior to
such merger or transfer of assets.
The Company shall deliver to the Trustee prior to the proposed
transaction an Officers' Certificate to the foregoing effect and an Opinion of
Counsel only as to clause (1) above stating that the proposed transaction and
such supplemental indenture comply with this Indenture.
The surviving, transferee or lessee corporation shall be the successor
Company, but the predecessor Company in the case of a transfer or lease shall
not be released from the obligation to pay the principal of and interest on the
Securities.
ARTICLE VI.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. An "Event of Default" occurs if:
(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 ten (10) days;
(2) the Company defaults in the payment of principal and
premium, if any, of any Security when the same becomes due and payable and the
default continues for a period of ten (10) days;
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(3) the Company defaults in the making of a deposit of any
sinking fund payment when and as due pursuant to this Indenture and the default
continues for a period of ten (10) days;
(4) the Company fails to comply with or perform any of its other
covenants or agreements in, or provisions of, the Securities or this Indenture
and the Default continues for the period and after the notice specified below;
(5) the Company defaults under any bond, debenture, note or
other evidence of indebtedness for money borrowed by the Company or under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any indebtedness for money borrowed by the
Company which default shall constitute a failure to pay any portion of interest
or principal when due after any applicable grace period or if the effect of such
event of default is to cause or permit the acceleration of such indebtedness
prior to its expressed maturity, and such event of default results in an
acceleration of a principal amount of such indebtedness without such
indebtedness having been discharged or such acceleration having been rescinded
or annulled, provided, that the aggregate indebtedness in default under this
clause (5) is in excess of $200,000;
(6) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(D) makes a general assignment for the benefit of
its creditors, or
(E) generally is unable to pay its debts as the same
become due;
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(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Subsidiary or for all or substantially all of its property, or
(C) orders the liquidation of the Company or any
Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; and
(8) in the event that the Company's reporting obligations
pursuant to Section 13 or 15(d) of the Exchange Act suspended or terminated.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law or other applicable and similar law for the relief of
debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
A Default under clause (4) is not an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the outstanding Securities
notifies the Company of the default and the Company does not cure the default
within 30 days after receipt of the notice. The notice must specify the Default,
demand that it be remedied and state that the notice is a "Notice of Default."
If the Holders of 25% in principal amount of the outstanding Securities request
the Trustee to give such notice on their behalf, the Trustee shall do so.
Subject to the provisions of Sections 7.01 and 7.02, the Trustee shall
not be charged with knowledge of any Event of Default, other then an Event of
Default pursuant to Section 6.01(1) or 6.01(2), unless written notice thereof
shall have been given to the Trustee at its address set forth in Section 12.02
by the Company, the Paying Agent, the Holder of a Security or an agent of any
Holder or any holder of any indebtedness.
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The Company shall promptly notify the Trustee of the occurrence of a
Default under clause (4) or (5).
Upon the occurrence of an Event of Default, the Holders of a majority in
principal amount of the outstanding Securities may select a person to serve as
director of the Company until the Event of Default is cured.
Section 6.02. Acceleration. If an Event of Default (other than an Event
of Default specified in Sections 6.01(6) and (7)) occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at least 25% in
aggregate principal amount of the then outstanding Securities by written notice
to the Company and the Trustee, may declare to be due and payable immediately
the principal amount of the outstanding Securities plus accrued interest to the
date of acceleration. Upon such declaration such principal and interest shall be
due and payable immediately.
At any time after such a declaration of acceleration has been made, the
Holders of a majority in principal amount of the outstanding Securities, by
written notice to the Trustee, may rescind an acceleration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived, except nonpayment of
principal or interest that has become due solely because of the acceleration;
and if the Company has paid or deposited with the Trustee a sum sufficient to
pay all overdue installments of interest on all Securities, the principal of any
Securities which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities, and all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 6.03. 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
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of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and recovery of judgment shall, after provision for the
payment of reasonable compensation, expense, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of the Holders of
the Securities in respect of which judgment has been recovered.
If the Trustee or any Securityholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Securityholder, then and in every such case the Company,
the Trustee and the Securityholders shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of the Trustee and the
Securityholders shall continue as though no such proceeding had been instituted.
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 remedies are cumulative to the extent
permitted by law.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and 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.
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Section 6.04. Waiver of Past Defaults. Subject to Section 9.02, the
Holders of a majority in principal amount of the outstanding Securities by
notice to the Trustee may waive an existing Default or Event of Default and its
consequences, except a continuing Default or Event of Default in the payment of
principal of or interest on any Security. When a Default is waived, it is cured.
Section 6.05. Control by Majority. The Holders of a majority in
principal amount of outstanding Securities 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 the Trustee; provided, however:
(1) such direction shall not be in conflict with any rule of law
or with this Indenture,
(2) the Trustee shall have the right to decline to follow any
such direction if the Trustee, being advised by an opinion of its counsel,
determines that the action so directed may not lawfully be taken or if the
Trustee in good faith shall, by an Officer, determine that the proceedings so
directed would involve it in personal liability or be unduly prejudicial to the
Holders not taking part in such direction, and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 6.06. 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 and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense;
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(4) the Trustee does not comply with the request within thirty
(30) days after receipt of the request and the offer and, if requested,
provision of indemnity; and
(5) during such 30-day period the Holders of a majority in
principal amount of the Securities do not give the Trustee a direction
inconsistent with such request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the absolute and unconditional right under
this Indenture of any Holder of a Security to receive payment of 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, shall not be impaired or affected without the
consent of the Holder.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to bring suit for the enforcement of the right to convert
the Security shall not be impaired or affected without the consent of the
Holder.
Section 6.08. Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 6.01(1) or (2) occurs and
continues for a period of thirty (30) days, the Company, upon demand of the
Trustee, will pay to the Trustee, for the benefit of the Securityholders the
whole amount of principal and interest then due on such Securities; and in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses and
disbursements and advances of the Trustee, its agents and counsel. If the
Company fails to pay such amount forthwith upon such demand, the Trustee, in its
own name and as trustee of an express trust, may institute a judicial proceeding
against the Company and may prosecute such proceeding to judgment or final
decree, and may enforce the same to recover the amount of principal and interest
remaining unpaid adjudged or decreed to be payable in the manner provided by law
out of the property of the Company.
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If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Securityholders by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.09. Trustee May File Proofs of Claim. In the case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Company upon the Securities or the property of the
Company or its creditors, the Trustee (irrespective of whether the principal of
the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(1) to file and prove a claim for the whole amount of principal
and interest owing and unpaid in respect of the Securities and to file
such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Securityholders allowed in
such judicial proceeding, and
(2) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) 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
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Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to 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 proceedings.
Section 6.10. Priorities. If the Trustee collects any money pursuant to
this Article, it shall pay out the money in the following order:
First: to holders of Senior Indebtedness to the extent required
by Article XI;
Second: to the Trustee for amounts due under Section 7.07;
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 or any other person lawfully entitled
thereto.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section.
Section 6.11. Undertaking for Costs; Notice of Proceedings. (a) 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
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claims or defenses made by the party litigant. This Section 6.11(a) does not
apply to a suit by the Trustee, a suit by a Holder pursuant of Section 6.06 or
6.07 or a suit by Holders of more than 10% in principal amount of the then
outstanding Securities.
(b) In the event that the Trustee institutes a judicial proceeding or
proceedings for the benefit of the Securityholders as provided in this
Indenture, the Trustee shall give prior written notice of such proceeding(s), if
any, to the holders of Senior Indebtedness or the Representative of such holders
where the Senior Indebtedness is known to the Trustee.
ARTICLE VII.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default with respect to the Securities has occurred
and is continuing and the Trustee has actual knowledge thereof, 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 undertakes to perform, with respect to the
Securities, only those duties that are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this Indenture
against the Trustee.
(2) In the absence of bad faith on its part, the Trustee may,
with respect to the Securities, 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
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this Indenture. However, in the case of any certificates or opinions which by
any provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine such certificates and opinions to determine whether
they conform to the requirements of this Indenture.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by an Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it.
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(g) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with the Company. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.
Section 7.02. Rights of Trustee.
Subject to Section 7.01,
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(3) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may require, and, in the absence of bad faith
on its part, rely upon, an Officers' Certificate;
(4) as a condition to the taking, suffering or omission of any
act contemplated hereunder, the Trustee may, but is not required to, consult
with counsel and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against
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the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(6) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company, personally or by agent
or attorney;
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
Section 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Agent may do the same with like
rights. The Trustee, however, must comply with Sections 7.09.
Section 7.04. Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities; it shall not
be accountable for the Company's use of the proceeds from the Securities; it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee; it shall not be responsible for any
statement by the Company in the Indenture or document used in connection with
the sale of the Securities; and it shall not be responsible for any statement in
the Securities other than its certificate of authentication.
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Section 7.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the Default within 30 days after it occurs. Except in the case of a
Default in payment of principal of or interest on any Security or in the making
of a required sinking fund payment pursuant to Article XII or a redemption
payment pursuant to Article III, the Trustee shall be protected in withholding
the notice if and so long as the board of directors of the Trustee, the
executive or any trust committee of such board and/or Officers of the Trustee in
good faith determine(s) that withholding the notice is in the interests of
Securityholders.
Section 7.06. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
Trustee's compensation hereunder shall not be limited by any law on compensation
relating to the trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, advances and
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and out-of-pocket expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee for and hold it harmless against
any expense, loss or liability incurred by it in connection with the
administration of this trust and its duties hereunder, except as set forth in
the next paragraph. The Trustee shall notify the Company promptly of any claim
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 shall not pay for any settlement of any claim without its consent, which
consent will not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any loss
or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except money or property held in trust to pay
principal of or interest
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on particular Securities, and subject to the terms and provisions of Article XI.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.07. Replacement of Trustee. A resignation or removal of the
Trustee and the appointment of a successor Trustee shall become effective only
upon the successor Trustee's acceptance of appointment as provided in this
Section. The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company and may appoint a successor
Trustee with the Company's consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.09;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian 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. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Securities may
petition any
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court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.09, 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 (subject to the lien provided for in Section 7.06), the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail notice of its succession
to each Securityholder. Notwithstanding replacement of the Trustee pursuant to
this Section, the Company's obligation under Section 7.06 shall continue for the
benefit of the retiring Trustee with respect to expenses, losses and liabilities
incurred by it prior to such replacement.
Section 7.08. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into or transfers all or substantially all
of its corporate trust business to, another corporation or national banking
association, the successor corporation or national banking association without
any further act shall be the successor Trustee.
Section 7.09. Eligibility; Disqualification. The Trustee shall have a
combined capital and surplus of at least $10,000,000 as set forth in its most
recent published annual report of condition.
ARTICLE VIII.
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations. The Company may
terminate all of its obligations under the
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Securities and this Indenture (except that the Company's obligations under
Sections 7.06 and 8.03 shall survive) if all outstanding Securities previously
authenticated and issued (other than destroyed, lost or stolen Securities which
have been replaced or paid) have been delivered to the Trustee for cancellation.
In addition, the Company may terminate all of its obligations under this
Indenture if:
(1) the Securities mature within twelve months or all of them
are to be called for redemption within twelve months under arrangements
satisfactory to the Trustee for giving the notice of redemption; and
(2) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations sufficient to pay principal of and interest
on the outstanding Securities to maturity or redemption, as the case may be, and
the Company delivers to the Trustee an Officers' Certificate stating that all
conditions precedent to satisfaction and discharge of the Indenture have been
complied with, and an Opinion of Counsel to the same effect. Immediately after
making the deposit, the Company shall give notice of such event and the proposed
date of payment to each Securityholder. The Company may make the deposit only
during the one-year period and only if Article XI permits it.
The Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07,
7.06, 7.07 and 8.03, and in Article IV and Article XI, however, shall survive
until the Securities are no longer outstanding. Thereafter, the Company's
obligations in Sections 7.06 and 8.03 shall survive.
After a deposit and delivery of the Officers' Certificate and Opinion of
Counsel made pursuant to this Section 8.01, 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.
In order to have money available on a payment date to pay principal or
interest on the Securities, the U.S. Government
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Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
"U.S. Government Obligations" means direct obligations of the United
States for the payment of which the full faith and credit of the United States
is pledged.
Section 8.02. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to Section
8.01. It shall apply the deposited money and the money from the U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and Securities
so held in trust are subject to Article XI, except for money and Securities
previously paid as provided hereunder and held in trust for sinking fund
payments in accordance with Article XII.
Section 8.03. Repayment to Company. Subject to Section 8.01, the Trustee
and the Paying Agent shall promptly pay to the Company upon request any excess
money or securities held by them at any time. The Trustee and the Paying Agent
shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years. After payment to the
Company, Securityholders entitled to any of such money must look to the Company
for payment as general creditors unless applicable abandoned property law
designates another person and all liability of the Trustee or Paying Agent with
respect to such money shall thereupon cease.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders. The Company, when authorized
by a Board Resolution, and with the consent of the Trustee, may amend or
supplement this Indenture or the Securities without notice to or consent of any
Securityholders:
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(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Section 5.01 and 10.18;
(3) to provide for uncertificated Securities in addition to
certificated Securities; or
(4) to make any change that does not adversely affect the legal
rights of any Securityholder.
Section 9.02. With Consent of Holders. The Company, when authorized by a
Board Resolution, and with the consent of the Trustee, may amend or supplement
this Indenture or the Securities without notice to any Securityholder but with
the written consent of the Holders of at least a majority in principal amount of
the outstanding Securities. The Holders of a majority in principal amount of the
outstanding Securities may waive compliance by the Company with any provision of
this Indenture or the Securities without notice to any Securityholder. Without
the consent of each Securityholder affected, however, an amendment, supplement
or waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of
interest, including default interest, on any Security;
(3) reduce the principal of or extend the fixed maturity of any
Security;
(4) waive a default in the payment of the principal of or
interest on any Security;
(5) make any Security payable in money other than that stated in
the Security;
(6) make any change in Article X that adversely affects the
rights of a Holder of Securities;
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(7) make any change in Section 6.04, 6.07 or 9.02 (third
sentence);
(8) make any change in Article XI that adversely affects the
rights of any Securityholder; or
(9) make any change in Article XII that adversely affects the
rights of any Securityholder.
An amendment under this Indenture may not make any change that adversely
affects the rights under Article XI of any holder of an issue of Senior
Indebtedness unless the holders of the issue pursuant to its terms consent to
the change.
After an amendment under this Section becomes effective, the Company
shall mail to the Holders a notice briefly describing the amendment.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplement, but it shall
be sufficient if such consent approves the substance thereof.
Section 9.03. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to an amendment, supplement or
waiver by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. Any such Holder or subsequent Holder, however, may revoke
the consent as to his Security or portion of a Security. Such revocation shall
be effective only 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 is of the type described in any of clauses
(1) through (9) of Section 9.02. In such 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.
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Section 9.04. 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 regarding the changed terms and return
it to the Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Security shall issue, and the Trustee shall
authenticate, a new Security that reflects the changed terms.
Section 9.05. Trustee to Sign Amendments, Etc. The Trustee shall sign
any amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver 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 any amendment, supplement or waiver, the Trustee may
rely on and be fully protected by an Opinion of Counsel which shall state that
such amendment, supplement or waiver is permitted or authorized by this
Indenture. The Company may not sign an amendment until the Board of Directors
approves it.
ARTICLE X.
CONVERSION
Section 10.01. Conversion Privilege. Subject to and upon compliance with
the provisions of this Article, a Securityholder may convert a Security into
Common Stock at any time in whole or from time to time in part as stated in
paragraph 7 of the Securities. The number of shares issuable upon conversion of
a Security is determined as follows: Divide the principal amount to be converted
by the conversion price in effect on the conversion date. Round the result to
the nearest 1/100th of a share.
The initial conversion price is stated in paragraph 7 of the Securities.
The conversion price is subject to adjustment.
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A Holder may convert a portion of a Security if the portion is $1,000 or
an integral multiple of $1,000. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion to a portion of it.
"Common Stock" means Common Stock, $.01 par value per share, of the
Company, as it exists on the date of this Indenture or as it may be constituted
from time to time.
Any portion of any Security converted into Common Stock pursuant to this
Indenture shall be deemed to have been paid in full upon such conversion.
Thereafter, this Indenture shall no longer apply to the converted Security
(i.e., the Common Stock), and no holder of any Common Stock received in
conversion shall have any rights under this Indenture respecting such former
Security or Common Stock, provided, that, this Indenture shall continue to
apply, and the Securityholder shall have the benefits hereunder, respecting any
portion of any Security not so converted.
Section 10.02. Conversion Procedure. To convert a Security a Holder must
satisfy the requirements in paragraph 7 of the Securities. The date on which the
Holder satisfies all those requirements is the conversion date. As soon as
practical, the Company shall deliver through the Conversion Agent a certificate
for the number of full shares of Common Stock issuable upon the conversion and a
check for any fractional share. The person in whose name the certificate is
registered shall be treated as a stockholder of record on and after the
conversion date.
No payment or adjustment will be made for accrued interest on a
converted Security or dividends on any Common Stock issued on conversion;
provided however a Holder of a Security at the close of business on an interest
payment record date will be entitled to receive the interest payable, in cash,
on such Security on the corresponding interest payment date notwithstanding the
conversion of such Security on or subsequent to such interest payment record
date but prior to such interest payment date.
If a Holder converts more than one Security at the same time, the number
of full shares issuable upon the conversion
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shall be based on the total principal amount of the Securities converted.
Upon a surrender of a Security that is converted in part, the Company
shall issue and the Trustee shall authenticate for the Holder a new Security
equal in principal amount to the unconverted portion of the Security
surrendered.
If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding day that is not a Legal Holiday.
Section 10.03. Fractional Shares. The Company will not issue a
fractional share of Common Stock upon conversion of a Security. Instead the
Company will deliver its check for the current market value of the fractional
share. The current market value of a fraction of a share is determined as
follows: Multiply the current market price of a full share by the fraction and
round the result to the nearest cent.
The current market price of a share of Common Stock is the quoted price
(the "Quoted Price") of the Common Stock on the New York Stock Exchange (or on
such national securities exchange or automated trading system on which the
Common Stock is then primarily traded) on the last Trading Day prior to the
conversion date. In the absence of such a quotation, the Company shall determine
the current market price on the basis of such quotations as it considers
appropriate.
Section 10.04. Taxes on Conversion. If a Holder of a Security converts
it, the Company shall pay any documentary, stamp or similar issue or transfer
tax due on the issue of shares of Common Stock upon the conversion. However, the
Holder shall pay any such tax which is due because the shares are issued in a
name other than the Holder's name.
Section 10.05. Company to Provide Stock. The Company shall reserve out
of its authorized but unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion of the Securities.
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All shares of Common Stock which may be issued upon conversion of the
Securities shall be fully paid and non- assessable.
The Company will endeavor to comply with all securities laws regulating
the offer and delivery of shares of Common Stock upon conversion of Securities
and will endeavor to list such shares on each national securities exchange on
which the Common Stock is listed.
Section 10.06. Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
Capital Stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of
its Capital Stock;
then the conversion privilege and the conversion price in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of Capital Stock of the
Company which he would have owned immediately following such action if he had
converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of it may
receive shares of two or more classes of Capital Stock of the Company, the
Company shall determine the
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allocation of the adjusted conversion price between the classes of Capital
Stock. After such allocation, the conversion privilege and the conversion price
of each class of Capital Stock shall thereafter be subject to adjustment on
terms comparable to those applicable to Common Stock in this Article.
Section 10.07. Adjustment for Rights Issue. If the Company distributes
any rights or warrants to all holders of its Common Stock entitling them for a
period expiring within 60 days after the record date mentioned below to
subscribe for or purchase shares of Common Stock at a price per share less than
the current market price per share on that record date, then the conversion
privilege and the conversion price in effect immediately prior to such action
shall be adjusted to equal the offering price (the "Offering Price") per share
of the additional shares if such Offering Price is less than the then conversion
price.
The adjustment shall be made successively whenever any such rights or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights or
warrants.
Section 10.08. Adjustment for Other Distributions. If the Company
distributes to all holders of its Common Stock any of its assets or debt
securities or any rights or warrants to purchase debt securities, assets or
other securities of the Company, the conversion price shall be adjusted in
accordance with the formula:
M - F
-----
C'= C x M
where:
C' = the adjusted conversion price.
C = the current conversion price.
M = the current market price per share of Common
Stock on the record date mentioned below.
F = the fair market value on the record date of the
assets, securities, rights or warrants
applicable to one share of Common Stock. The
Board of Directors shall determine the fair
market value.
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The adjustment shall be made successively whenever any such distribution
is made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution.
This Section does not apply to cash dividends or cash distributions made
in the ordinary course of business and paid out of consolidated current or
retained earnings as shown on the books of the Company. Also, this Section does
not apply to rights or warrants referred to in Section 10.07.
Section 10.09. Adjustments for Common Stock Issue. If the Company issues
shares of Common Stock for a consideration per share less than the current
market price per share on the date the Company fixes the Offering Price of such
additional shares, then the conversion privilege and the conversion price in
effect immediately prior to such action shall be adjusted to equal the Offering
Price if such Offering Price is less than the conversion price.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This Section does not apply to (i) any of the transactions described in
Sections 10.07 and 10.08, (ii) the conversion of Securities, or the conversion
or exchange of other securities convertible or exchangeable for Common Stock,
(iii) Common Stock issued to the Company's employees under bona fide employee
benefit plans adopted by the Board of Directors and approved by the holders of
Common Stock when required by law, if such Common Stock would otherwise be
covered by this Section (but only to the extent that the aggregate number of
shares excluded hereby and issued after the date of this Indenture shall not
exceed 5% of the Common Stock outstanding at the time of the adoption of each
such plan, exclusive of antidilution adjustments thereunder), (iv) Common Stock
upon the exercise of rights or warrants issued to the holders of Common Stock,
(v) Common Stock issued, directly or indirectly, to stockholders of any person
which merges into the Company in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger, (vi) Common Stock
issued in a bona fide public offering pursuant to a firm commitment
underwriting,(vii) Common
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Stock issued upon the exercise of options or warrants issued by the Company
prior to the date of this Indenture, or (viii) Common Stock issued pursuant to
any transaction contemplated by Section 4.07(ii) or any other provision of this
Indenture.
Section 10.10. Adjustment for Convertible Securities Issue. If the
Company issues any securities convertible into or exchangeable for Common Stock
(other than securities issued in transactions described in Sections 10.07 and
10.08 or the Securities) for a consideration per share of Common Stock initially
deliverable upon conversion or exchange of such securities less than the current
market price per share on the date of issuance of such securities, then the
conversion privilege and the conversion price in effect immediately prior to
such action shall be adjusted to equal the Offering Price if such Offering Price
is less than the then conversion price.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This Section does not apply to (i) convertible securities issued to
stockholders of any person which merges into the Company, or with a Subsidiary
of the Company, in proportion to their stock holdings of such person immediately
prior to such merger, upon such merger or any similar transactions (including
the purchase of assets or stock) or (ii) convertible securities issued in a bona
fide public offering pursuant to a firm commitment underwriting.
Section 10.11. Current Market Price. In Sections 10.07, 10.08, 10.09,
and 10.10 the current market price per share of Common Stock on any date is the
average of the Quoted Prices of the Common Stock for 30 consecutive Trading Days
commencing 45 Trading Days before the date in question. In the absence of one or
more such quotations, the Company shall determine the current market price on
the basis of such quotations as it considers appropriate.
Section 10.12. Consideration Received. For purposes of any computation
respecting consideration received pursuant to Sections 10.09 and 10.10, the
following shall apply:
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(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that
in no case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the issue
or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive,
and described in a Board Resolution which shall be filed with the
Trustee; and
(3) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company
for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the conversion
or exchange thereof (the consideration in each case to be determined in
the same manner as provided in clauses (1) and (2) of this Section).
Section 10.13. When Adjustment May be Deferred. No adjustment in the
conversion price need be made unless the adjustment would require an increase or
decrease of at least 1% in the conversion price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment.
All calculations under this Article shall be made to the nearest cent or
to the nearest 1/100th of a share, as the case may be.
Section 10.14. When No Adjustment Required. No adjustment need be made
for a transaction referred to in Sections 10.06, 10.07, 10.08, 10.09 or 10.10 if
Securityholders are to
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participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which holders of Common Stock participate in the transaction.
No adjustment need be made for a change in the par value or no par value
of the Common Stock.
To the extent the Securities become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
Section 10.15. Notice of Adjustment. Whenever the conversion price is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee a certificate from the
Company's independent public accountants briefly stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence that the adjustment is correct.
Section 10.16. Voluntary Reduction. The Company from time to time may
reduce the conversion price by any amount for any period of time if the period
is at least 20 days and if the reduction is irrevocable during the period,
provided, that in no event may the conversion price be less than the par value
of a share of Common Stock.
Whenever the conversion price is reduced, the Company shall mail to
Securityholders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced conversion price takes effect. The
notice shall state the reduced conversion price and the period it will be in
effect.
A reduction of the conversion price does not change or adjust the
conversion price otherwise in effect for purposes of Sections 10.06, 10.07,
10.08, 10.09 and 10.10.
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Section 10.17. Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an
adjustment in the conversion price pursuant to Sections 10.06,
10.07, 10.08, 10.09 or 10.10 and if the Company does not let
Securityholders participate pursuant to Section 10.14;
(2) the Company takes any action that would require a
supplemental indenture pursuant to Section 10.18; or
(3) there is a liquidation or dissolution of the
Company,
the Company shall mail to Securityholders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least 15
days before such date. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
Section 10.18. Reorganization of Company. If the Company is a party to a
transaction subject to Section 5.01, upon consummation of such transaction the
Securities shall automatically become convertible into the kind and amount of
securities, cash or other assets which the Holder of a Security would have owned
immediately after the consolidation, merger, transfer or lease if the Holder had
converted the Security immediately before the effective date of the transaction.
Concurrently with the consummation of such transaction, the corporation formed
by or surviving any such consolidation or merger if other than the Company, or
the person to which such sale or conveyance shall have been made, shall enter
into a supplemental indenture so providing and further providing for adjustments
which shall be as nearly equivalent as may be practical to the adjustments
provided for in this Article. The
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successor Company shall mail to Securityholders a notice describing the
supplemental indenture.
If the issuer of securities deliverable upon conversion of Securities
under the supplemental indenture is an Affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
indenture.
If this Section applies, Sections 10.06, 10.07, 10.08 and 10.09 do not
apply.
Section 10.19. Company Determination Final. Any determination that the
Company or the Board of Directors must make pursuant to Section 10.03, 10.06,
10.08, 10.09, 10.10, 10.11, 10.12 or 10.14 is conclusive.
Section 10.20. Trustee's Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article should be made, how it should be
made or what it should be. The Trustee has no duty to determine whether any
provisions of a supplemental indenture under Section 10.18 are correct. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities. The Trustee shall not be
responsible for the Company's failure to comply with this Article. Each
Conversion Agent other than the Company shall have the same protection under
this Section as the Trustee.
ARTICLE XI.
SUBORDINATION
Section 11.01. Agreement to Subordinate. The Company and the Trustee
agree, and each Securityholder by accepting a Security agrees, that the
indebtedness evidenced by the Securities is subordinated in right of payment, to
the extent and in the manner provided in this Article, to the prior payments in
full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or later incurred, and that the subordination is for the benefit of
the holders of Senior Indebtedness. Notwithstanding anything in this Indenture
or any Security to the contrary, any and all payments, distributions, proceeds,
moneys
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and/or other assets and properties paid to or collected, realized, or otherwise
received by the Trustee, the Paying Agent or any Securityholder in connection
with any payment or other action by the Company, any Subsidiary or any other
person acting on behalf of the Company, or any exercise or other enforcement
under the Indenture or any Security, shall be subject to the terms and
provisions of this Article.
Section 11.02. Certain Definitions.
"Representatives" means the indenture trustee or other trustee,
agent, administrator or representative for an issue of Senior Indebtedness as
and if designated by the holder or holders of such Senior Indebtedness from time
to time by written notice to the Trustee from such holder(s) or such other
person.
"Senior Indebtedness" means all Indebtedness of the Company for
money borrowed from a bank, insurance company or any other institutional lender,
whether secured by assets of the Company or any Subsidiary or unsecured,
outstanding at any time (including future advances), all Indebtedness of the
Company which is secured by liens or assets used in the ordinary course of
business by the Company or any Subsidiary and the value of the collateral is
equal to at least 50% of the then outstanding principal amount of such
Indebtedness, all together with interest thereon, all Indebtedness of the
Company represented by the 9% Senior Subordinated Convertible Debentures due
June 15, 2004 issued by the Company prior to the date hereof, but excluding from
Senior Indebtedness, Indebtedness of the Company to any of its Subsidiaries for
money borrowed or advanced from any such Subsidiary and Indebtedness which by
its terms is not superior in right of payment to the Securities.
Section 11.03. Liquidation; Dissolution; Bankruptcy. Upon any
distribution to creditors and/or stockholders of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property:
(1) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or cash equivalents of the principal of and
interest (including
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interest accruing after the commencement of any such proceeding) to the
date of payment on the Senior Indebtedness before Securityholders shall
be entitled to receive any payment of principal of or interest on
Securities; and
(2) until the Senior Indebtedness is paid in full in cash or
cash equivalents, any distribution to which Securityholders would be
entitled but for this Article shall be made to holders of Senior
Indebtedness as their interests may appear, except that Securityholders
may receive securities that are subordinated to Senior Indebtedness to
at least the same extent as the Securities.
Section 11.04. Default on Senior Indebtedness. Upon the maturity of any
Senior Indebtedness by lapse of time, acceleration or otherwise, all such Senior
Indebtedness shall first be paid in full, or such payment duly provided for in
cash or cash equivalents or in a manner satisfactory to the holders of such
Senior Indebtedness, before any payment is made by the Company, the Trustee, the
Paying Agent or any other person acting on behalf of the Company on account of
the principal or interest on the Securities.
The Company may not pay or prepay any principal of, interest on or other
amount respecting the Securities and may not acquire any Securities for cash or
for any other asset or property (other than Capital Stock of the Company), or
cause, suffer or permit the Trustee, the Paying Agent, any Subsidiary of the
Company or any other person acting on behalf of the Company to do so, and
neither the Trustee, nor any Securityholder nor any person acting on behalf of
any of them may seek to receive or collect any payment or other amount under
this Indenture or any Security, or may exercise or otherwise enforce any of
their respective rights, powers, privileges, remedies and interests under this
Indenture or any Security, if:
(1) a default on Senior Indebtedness occurs and is continuing
that permits holders of such Senior Indebtedness to accelerate its
maturity, and
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(2) (i) the default is the subject of judicial proceedings, (ii)
the Company shall have received notice respecting the continuation of a
default under the Senior Indebtedness and specifically requesting the
imposition of the standstill period provided by this Section, or (iii)
the Company receives a notice of the acceleration of any of the Senior
Indebtedness, which notice is from a person who may give them pursuant
to such Senior Indebtedness.
If the Company receives any such notice, a similar notice received
within nine months thereafter relating to the same default on the same issue of
Senior Indebtedness shall not be effective for purposes of this Section.
The Company may resume payments on the Securities and may acquire them
when:
(a) the default is cured or waived,
(b) 150 days pass after the notice is given if the default is a
result of the failure to make any payment due under the instruments and
agreements governing Senior Indebtedness and is not the subject of
judicial proceedings, or
(c) 120 days pass after the notice is given if the default is
for any reason other than as set forth in clause (b) and is not the
subject of judicial proceedings,
if this Article otherwise permits the payment or acquisition at that time.
Section 11.05. Acceleration of Securities. If payment of the Securities
is accelerated because of an Event of Default, the Company shall promptly notify
holders of Senior Indebtedness of the acceleration. The Company may pay the
Securities after such acceleration occurs if this Article permits the payment at
that time.
Section 11.06. When Distribution Must Be Paid Over. Any payments,
distributions, proceeds, monies and/or other assets
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and properties paid to or collected, realized or otherwise received by the
Trustee, the Paying Agent, any Securityholder or any person acting therefor in
connection with any payment or other action by the Company, any Subsidiary or
any other person acting on behalf of the Company, or any exercise or other
enforcement under this Indenture or any Security, during any time when the
Company is not permitted to make payments on the Securities under this Article,
any and all such payments, distributions, proceeds, monies or other assets and
properties shall be held by the recipient in trust for the benefit of, and shall
be paid forthwith over and delivered to the holders of Senior Indebtedness (pro
rata as to each of such holders on the basis of the respective amounts of Senior
Indebtedness held by them) or their Representative or the trustee under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness may
have been issued, as their respective interests may appear, for application to
the payment of all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
If a distribution is made to Securityholders that because of this
Article should not have been made to them, the Securityholders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness and pay
it over to them as their interests may appear.
Section 11.07. Notice by Company. The Company shall promptly notify the
Trustee and the Paying Agent of any facts known to the Company that would cause
a payment of principal of or interest on the Securities to violate this Article,
but failure to give such notice shall not affect the subordination of the
Securities to the Senior Indebtedness provided in this Article. Nothing in this
Article shall apply to claims of, or payment to, the Trustee under or pursuant
to Section 7.07.
Section 11.08. Subrogation. After all Senior Indebtedness is paid in
full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to the Securityholders have been
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applied to the payment of Senior Indebtedness. A distribution made under this
Article to holders of Senior Indebtedness which otherwise would have been made
to Securityholders is not, as between the Company and Securityholders, a payment
by the Company on Senior Indebtedness.
Section 11.09. Relative Rights. This Article defines the relative rights
of Securityholders and holders of Senior Indebtedness. Nothing in this Indenture
shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness to receive distribution
otherwise payable to Securityholders, except as otherwise provided
herein.
If the Company fails because of this Article to pay principal of or
interest on Security on the due date, the failure is still a Default or Event of
Default.
Section 11.10. Subordination May Not Be Impaired By Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by its failure to comply with this Indenture.
Section 11.11. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to the Representative.
Whenever the Trustee is required or permitted to give any notice of default,
redemption, acceleration, payment and the like to any Securityholder, the
Trustee shall send a copy of each such notice to the holders of Senior
Indebtedness who have given the Trustee a written request for copies thereof
(individually or through their Representative).
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Section 11.12. Trustee and Paying Agents Not Chargeable with Knowledge
Until Notice. Notwithstanding any of the provisions of this Section 11 or any
other provisions of this Indenture, the Trustee and any paying agent shall not
at any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment of moneys to or by the Trustee or any paying
agent, unless and until a Trust Officer of the Trustee or such paying agent, as
the case may be, shall have received written notice thereof from the Company or
a holder of a Senior Indebtedness, or any trustee thereof, and, prior to the
receipt of any such written notice, the Trustee and any other paying agent shall
be entitled to assume that no such facts exist. If at least two Business Days
prior to the date upon which the terms of any such moneys may become payable for
any purpose (including, without limitation, the payment of either the principal
of or the interest on any Security) a Trust Officer of the Trustee or paying
agent, as the case may be, shall not have received with respect to such moneys
the notice provided for in this Section 11.12, then, anything contained herein
to the contrary notwithstanding, the Trustee shall have full power and authority
to receive such moneys 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 the commencement of such two Business Day period.
Nothing contained in this Section 11.12 shall limit the right of the holders of
Senior Indebtedness to recover payments as contemplated by Section 11.04 or any
other applicable provision of this Indenture.
Section 11.13. Ranking of Securities. The indebtedness evidenced by the
Securities shall rank senior to all indebtedness evidenced by securities of the
Company issued by the Company after the date of this Indenture, any other
evidence of Indebtedness of the Company except for Senior Indebtedness as
defined in Section 11.02, and the Capital Stock of the Company, including any
rights or warrants entitling holders thereof to subscribe for or purchase shares
of Capital Stock of the Company or any securities convertible into or
exchangeable for shares of Capital Stock of the Company issued by the Company
after the date of this Indenture.
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<PAGE>
ARTICLE XII.
MISCELLANEOUS
Section 12.01. Notices; Reporting Date. Any notice or communication
shall be sufficiently given if in writing and delivered in person or mailed by
first-class mail addressed as follows:
if to the Company:
First South Africa Corp., Ltd.
c/o First South Africa Management Corp.
2665 South Bayshore
Suite 702
Coconut Grove, Florida 33133
Attention: Clive Kabatznik
President
if to the Trustee:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: George Karfunkel
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to such Securityholder at the address which appears on the registration books of
the Registrar and shall be sufficiently given to such Securityholder if so
mailed by first class mail within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it, except that
notice to the Trustee shall only be effective upon receipt
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thereof by the Trustee. If the Company mails a notice or communication to
Securityholders it shall mail a copy of such notice to the Trustee and each
Agent at the same time. All notices or communications shall be in writing.
Section 12.02. Communication by Holders with Other Holders.
Securityholders may communicate with other Securityholders with respect to their
rights under this Indenture or the Securities.
Section 12.03. Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel, stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 12.04. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the person signing such certificate or
opinion has read such covenant or condition and the definitions relating
thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
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(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 12.05. When Treasury Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Affiliate of the Company shall be disregarded, except that for the
purpose of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which the Trustee knows are
so owned shall be so disregarded. Upon request of the Trustee, the Company shall
furnish to the Trustee promptly an Officer's Certificate listing and identifying
all Securities, if any, known by the Company to be owned by or held for the
account of the Company, or any Affiliate of the Company and the Trustee shall be
entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are outstanding for the purposes of any such determination.
Section 12.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by, or at a meeting of, Securityholders. 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 banking institutions are not required to be open in the city
in which the Trustee administers its corporate trust business. If a payment date
is a Legal Holiday at a place of payment, payment may be made at the 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. Each of the parties agrees to submit
to the jurisdiction of the federal and state courts of the State of New York in
New York City in any action or proceeding arising out of or relating to this
Indenture.
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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. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
Section 12.10. No Recourse Against Others. Liabilities of directors,
officers, employees and stockholders, as such, of the Company are waived and
released as provided in paragraph 19 of the Securities.
Section 12.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
Section 12.12. Duplicate Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
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, and a Holder shall have no claim therefor against
any party hereto.
FIRST SOUTH AFRICA CORP., LTD.
By:_____________________________
Name:
Title:
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:_____________________________
Name:
Title:
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<PAGE>
EXHIBIT A
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED, OR
OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A "U.S. PERSON" UNLESS THE
SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE. IN NO EVENT MAY
SUCH SECURITIES BE SOLD, OFFERED OR TRANSFERRED IN THE UNITED STATES OR TO A "U.
S. PERSON" FOR A PERIOD OF FORTY (40) DAYS FROM THE DATE OF THIS CERTIFICATE.
No._________ $________________
FIRST SOUTH AFRICA CORP., LTD.
INCREASING RATE SENIOR SUBORDINATED CONVERTIBLE DEBENTURES
DUE OCTOBER 31, 2001
promises to pay to _____________________________________________________________
or registered assigns the principal sum of______________________________________
($___________) on October 31, 2001
The provisions set forth on
Annex A hereto are incorporated
as if set forth on the face
hereof.
Interest Payment Dates:
December 15, March 15,
June 15, September 15.
Record Dates:
December 1, March 1,
June 1, September 1.
DATED:
Certificate of Authentication
This Security is one of the Securities described in the within mentioned
Indenture.
AMERICAN STOCK TRANSFER AND FIRST SOUTH AFRICA CORP., LTD.
TRUST COMPANY, as Trustee
By:___________________________ By:___________________________
Authorized Signature
By:___________________________
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<PAGE>
ANNEX A
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FIRST SOUTH AFRICA CORP., LTD.
INCREASING RATE SENIOR SUBORDINATED CONVERTIBLE DEBENTURES
DUE OCTOBER 31, 2001
1. Interest. First South Africa, Corp., Ltd., a Bermuda corporation
(the "Company"), promises to pay interest on the principal amount of this
Security at the rate of (i) 4.0% for the one-year period ending October 31,
1998, (ii) 4.5% for each of the one-year periods ending October 31, 1999, and
October 31, 2000, respectively, and (iii) 5.0% for the one-year period ending
October 31, 2001. The Company will pay interest quarterly in arrears commencing
December 15, 1997. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Security
(except defaulted interest) to the persons who are registered holders of
Securities at the close of business on the record date for the next interest
payment date even though Securities are canceled after the record date and on or
before the interest payment date. 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. The Company will pay interest by its check
payable in such money mailed to the holder's registered address. In the event
the Securities shall not have been redeemed or converted pursuant to the terms
hereof and the Indenture prior to the due date set forth above, the Company
shall pay each registered holder of the Securities an additional amount equal to
22.25% of the principal amount of Securities held by each such registered
holder. Interest commences accruing from the date of initial issuance of this
Security.
3. Paying Agent, Registrar and Conversion Agent. Initially, American
Stock Transfer & Trust Company (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 any Securityholder. The Company
or any of its subsidiaries may act in such capacity.
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<PAGE>
4. Indenture. The Company issued the Securities under an Indenture
dated as of October 29, 1997, (the "Indenture") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture for a statement of them. The Securities are limited to the
aggregate principal amount of $15,000,000.
5. Redemption. The Securities may be redeemed by the Company at any
time or from time to time commencing October 31, 1998, at the Company's option,
in whole or in part, upon not less than 30 nor more than 60 days' notice, mailed
to the registered holders thereof at their last registered addresses, at the
redemption price (which price shall be equal to 122.25% of the principal
amount), plus accrued and unpaid interest to the redemption date (and subject to
the right of any record holder to receive the interest payable on the applicable
Interest Payment Date that is on or prior to the redemption date) if the average
of the closing prices of the Company's Shares of Common Stock published by
Nasdaq for each of the 30 consecutive Market Days ending on the market day prior
to the date on which such notice of redemption is first given is equal to or
greater than 150% of the conversion price on each of such 30 market days
provided, however, that the Company may, at its option, pay such amount due
under this paragraph 5 (the "Redemption Amount") by depositing with the Trustee
such number of shares of Common Stock equal to (x) the Redemption Amount,
divided by (y) the average closing trading price of the Common Stock during the
20 Business Days prior to the date on which notice of redemption is first given.
6. Selection and Notice of Redemption. Notice of redemption will be
mailed at least thirty (30) but not more than sixty (60) days before the
redemption date to each holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 may be redeemed in part
but only in whole multiples of $1,000. On and after the redemption date,
interest ceases to accrue on Securities or portions thereof called for
redemption.
7. Conversion. A holder of a Security may convert it into Common
Stock of the Company at any time, subject to prior redemption and compliance
with the terms of the Indenture. If the Security is called for redemption, the
holder may convert it
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<PAGE>
at any time before the close of business on the fifth business day prior to the
redemption date. The initial conversion price shall be equal to $9.50 per share
of Common Stock, subject to adjustment in certain events. To determine the
number of shares issuable upon conversion of a Security, divide the principal
amount to be converted by the conversion price in effect on the conversion date
and round the result to the nearest 1/100th of a Share. On conversion, no
payment or adjustment for interest will be made. The Company will deliver a
check for any fractional share.
To convert a Security a holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to a
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent, and (4) pay any transfer or
similar tax if required. A holder may convert a portion of a Security if the
portion is $1,000 or an integral multiple of $1,000.
The conversion price is subject to adjustment as set forth in the
Indenture upon the occurrence of certain events, including: (i) the issuance of
stock of the Company as a dividend or distribution on any shares of the Common
Stock; (ii) subdivisions, combinations and certain reclassifications of the
Common Stock; (iii) the issuance to all holders of Common Stock of certain
rights or warrants entitling them to subscribe for or purchase Common Stock at
less than the then current conversion price (as determined in the manner set
forth in the Indenture); (iv) the distribution to all holders of Common Stock of
any shares of capital stock of the Company (other than the Common Stock),
evidences of indebtedness of the Company or other assets (including securities,
but excluding any rights or warrants referred to above, excluding any dividend
or distribution paid in cash out of earned surplus of the Company); (v) the
distribution to all holders of Common Stock of cash in the aggregate amount of
such cash distribution; (vi) the issuance of shares of Common Stock for less
consideration than the then current conversion price (other than shares issued
in exchange for securities of the Company issued prior to the date hereof or as
otherwise provided in the Indenture); and (vii) the issuance of securities
convertible into or exchangeable for shares of Common Stock (other than pursuant
to transactions described above and with certain exceptions) for a consideration
per share of Common Stock
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<PAGE>
deliverable on such conversion or exchange that is less than the then current
conversion price of the Common Stock on the date of issuance of such security.
No adjustment in the conversion price will be required unless such
adjustment would require a change of at least 1% in the price then in effect;
but any adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment.
The Company from time to time may voluntarily reduce the conversion
price for a period of time, provided that the conversion price is not less than
the par value of a share of Common Stock.
If the Company consolidates or merges into or sells, leases,
transfers or otherwise disposes of all or substantially all of its assets, the
Securities will become convertible into the kind and amount of Securities, cash
or other assets which the holders of the Securities would have owned immediately
after the transaction if the holders had converted the Securities immediately
before the effective date of the transaction at the conversion price in effect
immediately prior to such effective date.
8. Subordination. The Securities are subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness (as
defined in the Indenture). To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company agrees,
and each Securityholder by accepting a Security agrees, to the subordination and
authorizes the Trustee to give it effect. The indebtedness evidenced by the
Securities shall rank senior to all indebtedness evidenced by securities of the
Company issued by the Company after the date of the Indenture, any other
evidence of Indebtedness of the Company except as expressly provided for in the
Indenture, and the Capital Stock of the Company, including any rights or
warrants entitling holders thereof to subscribe for or purchase shares of
Capital Stock of the Company or any securities convertible into or exchangeable
for shares of Capital Stock of the Company issued by the Company after the date
of the Indenture.
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<PAGE>
9. Denominations, Transfer, Exchange. The Securities are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A holder may transfer or exchange Securities in accordance
with the Indenture. The Registrar may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar need not
transfer or exchange any Security or portion of a Security selected for
redemption, or transfer or exchange any Security for a period of 15 days before
a selection of Securities to be redeemed.
10. Persons Deemed Owners. The registered holder of a Security may be
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal, premium,
if any, or interest on the Securities 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 any of such money must look to the Company for
payment as general creditors unless an "abandoned property" law designates
another person.
12. Amendment, Supplement, Waiver. Subject to certain exceptions, the
Indenture or the Securities may be amended or supplemented with the consent of
the holders of at least a majority in principal amount of the outstanding
Securities and any past default or compliance with any provision may be waived
with the consent of the holders of a majority in principal amount of the
outstanding Securities. Without the consent of any Securityholder, the Company
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, omission, defect or inconsistency or to provide for
uncertificated Securities in addition to certificated Securities or to make any
change that does not adversely affect the rights of any Securityholder.
13. Successor Corporation. When a successor corporation assumes all
the obligations of its predecessor under the Securities and the Indenture and if
immediately thereafter no Default or Event of Default exists, the predecessor
corporation will be released from those obligations.
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<PAGE>
14. Defaults and Remedies. An Event of Default is:
(i) failure of the Company to pay interest on
any Security for 10 days, (ii) failure of the Company to
pay any principal installment when due and payable for a
period of 10 days, (iii) default in the deposit of any
sinking fund payment when and as due which continues for a
period of ten days, (iv) failure by the Company for 30
days after written notice to the Company by the Trustee or
to the Company and the Trustee by the holders of 25% in
principal amount of the outstanding Securities, to comply
with any of its other agreements and covenants in the
Indenture and the Securities; (v) certain defaults under
and accelerations prior to maturity of other indebtedness;
(vi) certain events of bankruptcy, insolvency or
reorganization, and (vii) suspension or termination of the
Company's reporting obligations pursuant to Sections 13
and 15(d) of the Securities Exchange Act of 1934, as
amended.
The Indenture provides that the Trustee will, within 30 days after
the occurrence of a Default, give the Securityholders notice of all uncured
Defaults known to it (the term "Default" to include the events specified above,
without grace or notice), provided that, except in the case of default in the
payment of principal of or interest on any of the Securities, or failure to make
a required sinking fund deposit or a redemption payment pursuant to Article III
of the Indenture, the Trustee shall be protected in withholding such notice if
it in good faith determines that the withholding of such notice is in the
interest of the Securityholders.
In case an Event of Default occurs and is continuing, the Trustee or
the holders of not less than 25% in aggregate principal amount of the Securities
then outstanding, by notice in writing to the Company (and to the Trustee if
given by the Securityholders), may declare to be due and payable the principal
amount of the Securities then outstanding plus accrued interest to the date of
acceleration, and upon any such declaration the same shall become and shall be
immediately due and payable. Securityholders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
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<PAGE>
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Such declaration may be rescinded by holders of a majority in
principal amount of outstanding Securities if all existing Events of Default
have been cured and waived (except nonpayment of principal or interest on
Securities then outstanding that has become due solely because of the
acceleration) and if the rescission would not conflict with any judgment or
decree.
Defaults (except, unless theretofore cured, a default in payment of
principal of or interest on the Securities or a default with respect to a
provision which cannot be modified under the terms of the Indenture without the
consent of each Security affected) may be waived by the holders of a majority in
principal amount of outstanding Securities upon the conditions provided in the
Indenture.
Upon the occurrence of an Event of Default, the holders of a majority
in principal amount of the outstanding Securities may select a person to serve
as director of the Company until the Event of Default is cured.
The Indenture requires the Company to file periodic reports with the
Trustee as to the absence of defaults.
15. Discharge of Indenture. The Indenture will be discharged and
canceled, except for certain Sections thereof, subject to the terms of the
Indenture, upon the payment of all the Securities or upon the irrevocable
deposit with the Trustee or Paying Agent of money, or shares, as the case may
be, sufficient for such payment or redemption.
16. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Company or its affiliates, and may otherwise
deal with the Company or its affiliates, as if it were not Trustee.
17. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect
-8-
<PAGE>
of or by reason of, such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
19. Abbreviations. Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), J TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= custodian), and U/G/MA (= Uniform Gifts
to Minors Act).
The Company will furnish to any Securityholder upon written request
and without charge a copy of the Indenture. Requests may be made to: President,
First South Africa Corp., Ltd., c/o First South Africa Management Corp., 2665
South Bayshore, Suite 702, Coconut Grove, Florida 33133.
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<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Security 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 Security on the books of Travel Ports of America, Inc.
The agent may substitute another to act for him.
Date: _____________ Your Signature: __________________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS SECURITY).
Signature Guarantee:*___________________________________________________
- --------
* Needed only if the stock certificate is to be
registered in a name other than that of the record
holder.
<PAGE>
CONVERSION NOTICE
To convert this Security into Common Stock of First South Africa
Corp., Ltd., check the line below:
______________
To convert only part of this Security, state the principal amount to
be converted:
$__________________
If you want the stock certificate made out in another person's name, fill in the
form below:
(Insert other person's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type other person's name, address and zip code).
Date: _____________ Your Signature: __________________________
(SIGN EXACTLY AS YOUR NAME APPEARS ON THE OTHER SIDE OF THIS SECURITY).
Signature Guarantee:*___________________________________________________________
- --------
* Needed only if the stock certificate is to be
registered in a name other than that of the record
holder.
FROM: First South Africa Corp. Ltd.
2665 South Bayshore Drive
Coconut Grove, FL 33133
www.firstsouthafrica.com
Contact: Rebecca Freeman (305) 857-5009
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
FIRST SOUTH AFRICA CORP., LTD., ANNOUNCES PLACEMENT OF $15 MILLION INCREASING
RATE SENIOR SUBORDINATED CONVERTIBLE DEBENTURES
Coconut Grove, FL, October 31, 1997 -- First South Africa Corp., Ltd.
(Nasdaq-FSACF) today announced that it closed a $15 million private placement of
four year increasing rate senior subordinated convertible debentures paying
interest of 4% per annum for the year ending October 31, 1998, 4.5% per annum
for the two years ending October 31, 2000, and 5% per annum for the year ended
October 31, 2001, such interest being payable on a quarterly basis. The
conversion price is $9.50 per share (subject to adjustment in certain event) and
the debentures are redeemable after one year if First South Africa's common
stock trades at more than $14.25 per share (subject to adjustment in certain
event). The redemption value of the debenture is 122.25% of the principal
amount.
First South Africa has indicated that it intends to utilize the proceeds of this
offering primarily for additional acquisitions.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS
(OTHER THAN DISTRIBUTORS) UNLESS THE SECURITIES ARE REGISTERED UNDER SUCH ACT OR
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.
