<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1997
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________ to
_________
Commission File Number: 1-11849
AMERICAN RESIDENTIAL SERVICES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0484996
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
POST OAK TOWER, SUITE 725
5051 WESTHEIMER ROAD 77056-5604
HOUSTON, TEXAS (Zip Code)
(Address of principal executive offices)
(713) 599-0100
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
At August 13, 1997, 14,188,583 shares of Common Stock, par value
$.001 per share, of the Registrant were outstanding.
<PAGE> 2
AMERICAN RESIDENTIAL SERVICES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information........................................................................................1
Item 1 - Financial Statements.........................................................................................1
General Information................................................................................................1
Consolidated Balance Sheets as of December 31, 1996 and June 30, 1997 (Unaudited)..................................2
Consolidated Statements of Operations for the Three and Six Months Ended
June 30, 1996 and 1997 (Unaudited).........................................................................3
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1997 (Unaudited).........................................................................4
Notes to Consolidated Financial Statements.........................................................................5
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.......................11
Part II - Other Information..........................................................................................15
Item 4 - Submission of Matters to a Vote of Security Holders.........................................................15
Item 6 - Exhibits and Reports on Form 8-K............................................................................16
Signature............................................................................................................19
</TABLE>
i
<PAGE> 3
AMERICAN RESIDENTIAL SERVICES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL INFORMATION
American Residential Services, Inc. ("ARS" and, collectively with its
subsidiaries, the "Company") was incorporated in October 1995 and conducted no
operations of its own prior to the closing on September 27, 1996 of its initial
public offering of its common stock and its acquisition of seven residential
services businesses (the "Founding Companies"). For financial statement
presentation purposes, Atlas Services, Inc. ("Atlas"), one of the Founding
Companies, is the accounting acquiror. The Company has accounted for the
acquisitions of the remaining Founding Companies in accordance with the
purchase method of accounting, and their results of operations are included
with those of Atlas from September 30, 1996, the effective closing date of
their acquisition for accounting purposes.
Since September 30, 1996 and through June 30, 1997, the Company acquired
an additional 50 businesses (collectively with the Founding Companies other
than Atlas, the "Acquired Businesses"). Of the 50 Acquired Businesses, 35 (the
"Purchased Businesses") were accounted for under the purchase method of
accounting, and the remainder (the "Pooled Businesses") were accounted for
under the pooling-of-interests method of accounting.
The historical financial statements of the Company (including those of
Atlas prior to September 30, 1996) have been retroactively restated to give
effect to the operations of 13 of the 15 Pooled Businesses (the "Restated
Businesses"). The two remaining Pooled Businesses are not significant to prior
historical periods and are included in the consolidated results of the
Company beginning on the date of acquisition.
The consolidated financial statements herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission that permit certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles to be condensed or omitted. The
Company believes the presentation and disclosures herein are adequate to make
the information not misleading, and the financial statements reflect all
elimination entries and normal recurring adjustments that are necessary for a
fair presentation of the results for the three and six months ended June 30,
1996 and 1997.
Operating results for interim periods are not necessarily indicative of
the results for a full year. In addition, the pro forma combined financial
statement data for the three and six months ended June 30, 1996 presented
herein is not necessarily indicative of the results the Company would have
obtained had the events included in such pro forma data actually occurred when
assumed or of the Company's future results. It is suggested that these
consolidated financial statements be read in conjunction with the Consolidated
Financial Statements of the Company and the related notes thereto included in
ARS's Annual Report on Form 10-K for the year ended December 31, 1996.
1
<PAGE> 4
AMERICAN RESIDENTIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
--------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ..................................... $ 9,239 $ 5,093
Accounts receivable --
Trade, net ................................................. 27,504 36,468
Other ...................................................... 2,010 3,749
Costs and estimated earnings in excess of billings on
uncompleted contracts ...................................... 1,003 6,030
Inventories ................................................... 11,254 15,798
Prepaid expenses and other current assets ..................... 1,559 4,098
Net assets held for resale .................................... 338 500
--------- ---------
Total current assets .................................... 52,907 71,736
PROPERTY AND EQUIPMENT, net ........................................ 20,671 26,187
GOODWILL, net ...................................................... 131,193 171,996
OTHER NONCURRENT ASSETS ............................................ 1,380 5,431
--------- ---------
Total assets ............................................ $ 206,151 $ 275,350
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt .......................... $ 2,029 $ 291
Accounts payable and accrued liabilities ...................... 27,192 30,886
Unearned revenue on service and warranty contracts ............ 3,977 5,037
Billings in excess of costs and estimated earnings on
uncompleted contracts ...................................... 1,880 2,918
--------- ---------
Total current liabilities ............................... 35,078 39,132
LONG-TERM DEBT, net of current maturities .......................... 53,126 95,250
UNEARNED REVENUE ON SERVICE AND WARRANTY CONTRACTS.................. 633 934
DEFERRED INCOME TAXES .............................................. 2,494 3,342
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, $.001 par value, 10,000,000 shares authorized;
None issued and outstanding ................................ -- --
Common Stock, $.001 par value, 50,000,000 shares authorized;
12,906,543 and 13,881,836 shares issued and outstanding .... 13 14
Additional paid-in capital .................................... 125,637 143,604
Retained deficit .............................................. (10,830) (6,926)
--------- ---------
Total stockholders' equity ................................. 114,820 136,692
--------- ---------
Total liabilities and stockholders' equity .............. $ 206,151 $ 275,350
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE> 5
AMERICAN RESIDENTIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------------------------ ------------------------------------
Pro Forma* Pro Forma*
1996 1996 1997 1996 1996 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
REVENUES ................................ $ 23,912 $ 51,853 $ 86,183 $ 47,254 $ 94,698 $152,252
COST OF SERVICES ........................ 17,216 37,162 59,660 34,105 68,242 106,310
-------- -------- -------- -------- -------- --------
Gross profit ....................... 6,696 14,691 26,523 13,149 26,456 45,942
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES ........................... 5,638 10,481 16,312 10,862 19,867 32,340
-------- -------- -------- -------- -------- --------
Income from operations ............. 1,058 4,210 10,211 2,287 6,589 13,602
OTHER INCOME (EXPENSE):
Interest expense ................... (105) (85) (1,688) (193) (165) (2,808)
Interest income .................... 28 78 46 52 204 76
Other .............................. 39 53 302 142 186 489
-------- -------- -------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE
INCOME TAXES .................... 1,020 4,256 8,871 2,288 6,814 11,359
PROVISION FOR INCOME TAXES .............. 394 1,861 3,902 904 3,043 4,928
-------- -------- -------- -------- -------- --------
NET INCOME FROM CONTINUING OPERATIONS ... 626 2,395 4,969 1,384 3,771 6,431
LOSS FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAXES ..................... -- -- (92) -- -- (124)
-------- -------- -------- -------- -------- --------
NET INCOME .............................. $ 626 $ 2,395 $ 4,877 $ 1,384 $ 3,771 $ 6,307
======== ======== ======== ======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING ..... 3,602 11,615 13,733 3,602 11,615 13,572
======== ======== ======== ======== ======== ========
EARNINGS PER SHARE:
Continuing operations .............. $ 0.17 $ 0.21 $ 0.36 $ 0.38 $ 0.32 $ 0.47
Discontinued operations ............ -- -- -- -- -- (0.01)
-------- -------- -------- -------- -------- --------
Total .......................... $ 0.17 $ 0.21 $ 0.36 $ 0.38 $ 0.32 $ 0.46
======== ======== ======== ======== ======== ========
</TABLE>
----------------
* Pro forma combined results above include the results of (i) Atlas,
retroactively restated for the Restated Businesses and (ii) the remaining
Founding Companies combined as of January 1, 1996 and adjusted to reflect
prospective reductions in compensation agreed to in connection with the
acquisitions of those Founding Companies and the Restated Businesses,
certain other non-recurring charges, goodwill amortization, interest expense
and the impact of federal and state tax provisions on the pro forma
operating results.
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE> 6
AMERICAN RESIDENTIAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months
Ended June 30
1996 1997
------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................................... $ 1,384 $ 6,307
Adjustments to reconcile net income to net cash provided by (used in)
operating activities --
Depreciation and amortization .................................. 720 4,494
Deferred tax expense (benefit) ................................. (141) 794
Loss (gain) on sale of property and equipment .................. (6) (170)
Current taxes on acquired S corporations ....................... 807 458
Changes in operating assets and liabilities --
(Increase) decrease in --
Accounts receivable, net .............................. 446 (4,497)
Cost and estimated earnings in excess of billings on
uncompleted contracts ............................. 70 (4,785)
Inventories ........................................... (342) (1,921)
Prepaid expenses and other current assets ............. (2,055) (2,080)
Other noncurrent assets ............................... (35) (3,496)
Increase (decrease) in --
Accounts payable and accrued liabilities .............. 331 (2,363)
Unearned revenue on service and warranty contracts .... (209) 208
Billings in excess of costs and estimated earnings on
uncompleted contracts ............................. 212 838
Other, net ..................................................... (36) (1,842)
------- ---------
Net cash provided by (used in) operating activities ........ 1,146 (8,055)
------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ............................ (1,500) (3,365)
Proceeds from sales of property and equipment .................. 129 142
Cash paid for business acquisitions, net of cash acquired ...... (126) (22,857)
------- ---------
Net cash used in investing activities ...................... (1,497) (26,080)
------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt ........................... (1,444) (112,300)
Proceeds from long-term debt ................................... 2,665 144,799
S corporation dividends paid by the Founding Companies
and the Restated Businesses ................................ (644) (2,404)
Other, net ..................................................... (19) (106)
------- ---------
Net cash used in financing activities ...................... 558 29,989
------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................ 207 (4,146)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................... 2,638 9,239
------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................... $ 2,845 $ 5,093
======= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest ................................................... $ 118 $ 1,028
Income taxes ............................................... 573 846
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 7
AMERICAN RESIDENTIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
American Residential Services, Inc. ("ARS" and, collectively with its
subsidiaries, the "Company") was incorporated in October 1995 and conducted no
operations of its own prior to the closing on September 27, 1996 of its initial
public offering (the "IPO") of its common stock, par value $.001 per share
("Common Stock"), and its acquisition of seven residential services businesses
(the "Founding Companies"). For financial statement presentation purposes, Atlas
Services, Inc. ("Atlas"), one of the Founding Companies, is the accounting
acquiror. The Company has accounted for the acquisitions of the remaining
Founding Companies in accordance with the purchase method of accounting, and
their results of operations are included with those of Atlas from September 30,
1996, the effective closing date of their acquisition for accounting purposes.
Since September 30, 1996 and through June 30, 1997, the Company
acquired an additional 50 businesses (collectively with the Founding Companies
other than Atlas, the "Acquired Businesses"). Of the 50 Acquired Businesses,
35 (the "Purchased Businesses") were accounted for under the purchase method of
accounting, and the remainder (the "Pooled Businesses") were accounted for
under the pooling-of-interests method of accounting. The allocation of the
purchase price to the assets acquired and liabilities assumed in certain
purchase transactions has been initially recorded based on preliminary
estimates of fair value and may be revised as additional information concerning
the valuation of such assets and liabilities becomes available. Also, the
purchases are based on preliminary estimates of value assigned to the Common
Stock issued in all acquisitions accounted for under the purchase method of
accounting that carries certain restrictions regarding the disposition of such
stock by the holders, and such value may be revised as additional information
becomes available.
The historical financial statements of the Company (including those of
Atlas prior to September 30, 1996) have been retroactively restated to give
effect to the operations of 13 of the 15 Pooled Businesses (the "Restated
Businesses"). The two remaining Pooled Businesses are not significant to prior
historical periods and are included in the consolidated results of the Company
beginning on the date of acquisition.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
There have been no significant changes in the accounting policies of
the Company during the periods presented. For a description of these policies,
see Note 2 of the Notes to Consolidated Financial Statements of the Company in
ARS's Annual Report on Form 10-K for the year ended December 31, 1996.
5
<PAGE> 8
3. LONG-TERM DEBT
The Company has in place a revolving credit facility (the "Credit
Facility") with a syndicate of banks, including NationsBank of Texas, N.A.,
which acts as the agent. On March 3, 1997, the Company increased the total
commitment under the Credit Facility from $55.0 million, which was in place at
December 31, 1996, to $100.0 million. For a description of the Credit Facility,
see "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" in Item 2 of this Report. As of
June 30, 1997, the Company had $37.4 million in outstanding borrowings under
the Credit Facility, bearing interest at a weighted average rate of
approximately 7.99%.
On April 2, 1997, ARS sold $55.0 million aggregate principal amount
of its 7 1/4% Convertible Subordinated Notes due 2004 (the "7 1/4% Notes"). The
7 1/4% Notes are unsecured obligations of ARS and are convertible at $25.50 per
share, subject to adjustment in certain events, into an aggregate of 2,156,863
shares of Common Stock. The Company used substantially all the net proceeds of
the offering of the 7 1/4% Notes to repay indebtedness outstanding under the
Credit Facility.
4. EARNINGS PER SHARE
The following table summarizes weighted average shares outstanding for
each of the periods presented (in thousands).
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
--------------------------- ---------------------------
Pro Forma Pro Forma
1996 1996 1997 1996 1996 1997
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares issued in the acquisition of Atlas... 1,067 1,067 1,067 1,067 1,067 1,067
Shares issued in the acquisitions of
the Restated Businesses .................. 2,535 2,535 2,535 2,535 2,535 2,535
Shares issued in the formation of ARS ...... -- 1,267 1,267 -- 1,267 1,267
Shares issued to the remaining
stockholders of the Founding Companies ... -- 1,876 1,876 1,876 1,876
Shares sold in the IPO ..................... -- 4,830 4,830 -- 4,830 4,830
Shares awarded to certain employees and
consultants .............................. -- 40 40 -- 40 40
Shares issued in the acquisitions of
the Purchased Businesses and the
Pooled Businesses (excluding the
Restated Businesses) ..................... -- -- 1,727 -- -- 1,509
Stock options and warrant, net of
assumed repurchases of common shares
as treasury stock ........................ -- -- 391 -- -- 448
----- ------ ------ ----- ------ ------
Weighted average shares
outstanding ........................... 3,602 11,615 13,733 3,602 11,615 13,572
===== ====== ====== ===== ====== ======
</TABLE>
In February 1997, the Financial Standards Accounting Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share." SFAS No. 128 revised the methodology to be used in computing earnings
per share ("EPS") such that the computations required for primary and fully
diluted
6
<PAGE> 9
EPS are to be replaced with "basic" and "diluted" EPS. Basic EPS is computed by
dividing net income by the weighted average number of shares of common stock
outstanding during the year. Diluted EPS reflects the potential dilution that
could occur if securities and other contracts to issue common stock were
exercised or converted into common stock. Diluted EPS is computed in the same
manner as fully diluted EPS, except that, among other changes, the average share
price for the period is used in all cases when applying the treasury stock
method to potentially dilutive outstanding options.
The Company will adopt SFAS No. 128 effective December 15, 1997, and
will restate EPS for all periods presented. Presented below is the expected
impact of SFAS No. 128 on the Company's EPS for all periods presented.
<TABLE>
<CAPTION>
Three Months Ended June 30
-----------------------------------------------------------------
Pro Forma
1996 1996 1997
------------------ ------------------- -------------------
Basic Diluted Basic Diluted Basic Diluted
<S> <C> <C> <C> <C> <C> <C>
Net income from continuing operations $ 626 $ 626 $ 2,395 $ 2,395 $ 4,969 $ 4,969
Loss from discontinued operations ... -- -- -- -- (92) (92)
------ ------ ------- ------- ------- -------
Net income .......................... $ 626 $ 626 $ 2,395 $ 2,395 $ 4,877 $ 4,877
====== ====== ======= ======= ======= =======
Shares outstanding .................. 3,602 3,602 11,615 11,615 13,342 13,733
====== ====== ======= ======= ======= =======
Earnings per share:
Continuing operations .......... $ 0.17 $ 0.17 $ 0.21 $ 0.21 $ 0.37 $ 0.36
Discontinued operations ........ -- -- -- -- -- --
------ ------ ------- ------- ------- -------
Total .......................... $ 0.17 $ 0.17 $ 0.21 $ 0.21 $ 0.37 $ 0.36
====== ====== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------------------------------------------------
Pro Forma
1996 1996 1997
----------------- ------------------- --------------------
Basic Diluted Basic Diluted Basic Diluted
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net income from continuing operations .. $1,384 $1,384 $ 3,771 $ 3,771 $ 6,431 $ 6,431
Loss from discontinued operations ...... -- -- -- -- (124) (124)
------ ------ ------- ------- ------- -------
Net income ............................. $1,384 $1,384 $ 3,771 $ 3,771 $ 6,307 $ 6,307
====== ====== ======= ======= ======= =======
Shares outstanding ..................... 3,602 3,602 11,615 11,615 13,124 13,572
====== ====== ======= ======= ======= =======
Earnings per share:
Continuing operations ............. $ 0.38 $ 0.38 $ 0.32 $ 0.32 $ 0.49 $ 0.47
Discontinued operations ........... -- -- -- -- (0.01) (0.01)
------ ------ ------- ------- ------- -------
Total ............................. $ 0.38 $ 0.38 $ 0.32 $ 0.32 $ 0.48 $ 0.46
====== ====== ======= ======= ======= =======
</TABLE>
5. INCOME TAXES
The Company files a consolidated federal income tax return, which
includes the operations of all Acquired Businesses for periods subsequent to
the respective dates of acquisition. Acquired Businesses each file a "short
period" federal income tax return through their respective acquisition dates.
Certain of the Pooled Businesses were S corporations for income tax
purposes prior to their acquisition by the Company. Accordingly, any income tax
liabilities for the periods prior to their acquisition dates are the
responsibility of their former owners. For purposes of these consolidated
financial statements, federal and state income taxes have been reflected as if
these Pooled Businesses had filed C corporation tax returns for the
pre-acquisition periods, with the current income tax expense of those S
corporations reflected as an increase to additional paid-in capital.
7
<PAGE> 10
6. DISCONTINUED OPERATIONS
In 1996, the Company decided to discontinue its retail appliance sales
division to concentrate its financial and other resources on its core
residential services and commercial maintenance services businesses. The net
loss of this division is included in the statements of operations under
discontinued operations and therefore revenues, cost of sales, selling, general
and administrative expenses, other income and expense, and income taxes exclude
amounts associated with the discontinued division. Revenues from this division
were approximately $2.7 million and $5.1 million for the three and six months
ended June 30, 1997, respectively. Certain expenses have been allocated to
discontinued operations based on estimated divisional usage. All assets of these
operations are expected to be sold in 1997 and are reflected as net assets held
for sale in the accompanying balance sheet.
7. BUSINESS COMBINATIONS
POOLINGS
During the first six months of 1997, the Company acquired the 15
Pooled Businesses under the pooling-of-interests method in exchange for
2,662,730 shares of Common Stock. The results of operations of the 13 Restated
Businesses are included in all periods herein, while the results of operations
of the other two Pooled Businesses are included from their respective effective
acquisition dates. The combined revenues and net income of the 13 Restated
Businesses for the periods prior to their acquisition by the Company were as
follows (in millions):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
--------------------------- ---------------------------
1996 1997 1996 1997
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Revenues............................ $ 16.4 $ 8.5 $ 33.1 $ 23.3
Net Income.......................... 0.6 0.7 1.1 1.7
</TABLE>
PURCHASES
From September 30, 1996 through June 30, 1997, the Company accounted
for the acquisitions of the 35 Purchased Businesses under the purchase method of
accounting. The aggregate consideration paid in those transactions consisted of
$67.0 million in cash (including short-term notes that were subsequently
repaid with proceeds from borrowings under the Credit Facility), 2,123,151
shares of Common Stock and a promissory note in the principal amount of $1.8
million. The accompanying balance sheet as of June 30, 1997 includes
preliminary estimates of fair value and may be revised as additional
information concerning the valuation of the assets and liabilities of the
businesses acquired becomes available. Also, the purchases are based on
preliminary estimates of value assigned to the Company's Common Stock issued in
all acquisitions accounted for under the purchase method of accounting that
carries certain restrictions regarding the disposition of such stock by the
holders, and such value may be revised as additional information becomes
available.
8
<PAGE> 11
Subsequent to June 30, 1997 and through the date of filing of this
Report, the Company completed seven additional acquisitions (the "Subsequent
Acquisitions") for approximately $4.6 million in cash and 297,247 shares of
Common Stock. The Company will account for two of those acquisitions as
pooling-of-interests transactions and the remaining five acquisitions as
purchase transactions. The historical financial statements of the Company will
not be restated for either of the pooling-of-interests transactions as they are
not significant to prior historical periods and will be included in the
consolidated results of the Company beginning on the date of acquisition. The
businesses acquired in the Subsequent Acquisitions contributed approximately
$9.0 million and $9.5 million in revenues to the pro forma financial
information set forth below for the six months ended June 30, 1996 and 1997,
respectively.
Set forth below are unaudited pro forma combined revenue and net
income data reflecting the pro forma effect of the acquisitions of the Acquired
Businesses and the Subsequent Acquisitions, as if they had occurred at the
beginning of each period presented.
<TABLE>
<CAPTION>
Six Months
Ended June 30
--------------------------
(in millions, except per
share amounts)
(unaudited)
--------------------------
1996 1997
----------- ----------
<S> <C> <C>
Pro forma revenues............................................. $ 175.4 $ 187.5
=========== ==========
Pro forma net income from continuing operations................ $ 5.3 $ 6.7
=========== ==========
Pro forma net income per share from continuing operations...... $ 0.37 $ 0.46
=========== ==========
</TABLE>
Pro forma adjustments included in the amounts above primarily relate
to: (i) compensation differentials, reflecting reduced compensation amounts
agreed on in connection with the acquisitions, (ii) adjustment for rent expense
on certain leased facilities, reflecting reductions in rent agreed on in
connection with the acquisitions, (iii) adjustments for the effects of assets
distributed to and costs of certain leases assumed by owners of certain of the
businesses acquired, (iv) adjustments for pro forma goodwill amortization
expense using a 40-year estimated life, (v) eliminations of historical interest
expense related to certain obligations that were repaid or not assumed by the
Company, reduced by interest expense on borrowed funds used to pay the cash
portion of the purchase price of the businesses acquired, (vi) the issuance and
sale of the 7 1/4% Notes by ARS and the application of the proceeds from that
sale and (vii) adjustments to the federal and state income tax provisions
on pro forma operating results. Net income per share for the six months ended
June 30, 1996 and 1997 assumes all shares issued for the acquisitions of the
Acquired Businesses and the Subsequent Acquisitions had been outstanding for the
periods presented.
The pro forma results presented are not necessarily indicative of
actual results that might have occurred had the operations and management teams
of the Company and the businesses acquired been combined at the beginning of
the periods presented.
9
<PAGE> 12
8. SUBSEQUENT EVENTS
In July 1997, ARS registered an additional 10,000,000 shares of Common
Stock and $100.0 million aggregate principal amount of convertible subordinated
debt securities (the "Convertible Debt Securities") under the Securities Act of
1933, as amended pursuant to a shelf registration statement on Form S-4 for
issuance from time to time in connection with acquisitions. ARS is currently
authorized pursuant to its Credit Facility to issue up to $25.0 million
aggregate principal amount of Convertible Senior Subordinated Notes, Series A
(the "Series A Notes") (representing a series of the Convertible Debt
Securities), maturing April 15, 2004. Certain terms of the Series A Notes,
including the interest rate and the conversion price, will be determined by ARS
in connection with the acquisitions for which such notes are issued.
10
<PAGE> 13
AMERICAN RESIDENTIAL SERVICES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto included in Item 1 of this
Report and the financial statements and notes thereto included in ARS's Annual
Report on Form 10-K for the year ended December 31, 1996 (the "1996 Form
10-K"). Statements herein regarding future financial or operational performance
and results of the Company or other similar matters that are not historical
facts constitute forward-looking statements and are subject to numerous risks
and uncertainties, including but not limited to the availability of attractive
acquisition opportunities, the successful integration and profitable management
of businesses acquired, the improvement of operating efficiencies, the
availability of working capital and funding for future acquisitions, the
ability to grow internally through expansion of services and customer bases and
reduction of overhead, the level and nature of competition from other
residential services and commercial maintenance services providers and other
factors discussed in the 1996 Form 10-K.
The Company derives its revenues primarily from (i) owners and
occupants of homes and small commercial buildings, (ii) builders and developers
of new homes, residential developments and small commercial buildings and (iii)
owners and managers of large commercial, industrial and institutional
facilities. Cost of services consists primarily of salaries and benefits of
service and installation personnel, parts and materials, subcontracted
services, depreciation, maintenance, fuel and equipment rentals. Selling,
general and administrative expenses consist primarily of compensation and
related benefits payable to former owners of Acquired Businesses and to
management and administrative personnel, advertising, office rent and
utilities, communications and professional fees.
Prior to their acquisition by the Company, the Acquired Businesses
were managed as independent private businesses, and their results of operations
reflect different tax structures (S corporations and C corporations), which
have influenced, among other things, their historical levels of owners'
compensation. Certain owners agreed to reductions in their compensation and
benefits in connection with the acquisition of their businesses by the Company.
For financial reporting purposes, Atlas is presented as the acquiror
in all the acquisitions by ARS through September 30, 1996, the effective date
of the acquisitions of the Founding Companies. The Company's historical
financial statements for periods ended on or before September 30, 1996 are the
consolidated historical financial statements of Atlas retroactively restated to
give effect to the operations of the 13 Restated Businesses accounted for under
the pooling-of-interests method of accounting. As used in this discussion, the
"Company" means (i) Atlas prior to September 30, 1996 and (ii) ARS and its
consolidated subsidiaries on that date and thereafter, and the term "Acquired
Businesses" does not include Atlas.
11
<PAGE> 14
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE AND SIX MONTHS
ENDED JUNE 30, 1996
The following table sets forth various items as a percentage of the
Company's revenues:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
-------------- --------------
1996 1997 1996 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Revenues ...................................... 100.0% 100.0% 100.0% 100.0%
Cost of services .............................. 72.0 69.2 72.2 69.8
----- ----- ----- -----
Gross profit ............................ 28.0 30.8 27.8 30.2
Selling, general and administrative expenses .. 23.6 18.9 23.0 21.2
----- ----- ----- -----
Income from operations ................... 4.4 11.9 4.8 9.0
Interest expense .............................. (0.4) (2.0) (0.4) (1.9)
Interest and other income/(expense), net ...... 0.3 0.4 0.4 0.4
----- ----- ----- -----
Income from continuing operations before
income taxes ............................. 4.3 10.3 4.8 7.5
Income taxes .................................. 1.7 4.5 1.9 3.3
----- ----- ----- -----
Net income from continuing operations ......... 2.6% 5.8% 2.9% 4.2%
===== ===== ===== =====
</TABLE>
Revenues increased by 260.7% from $23.9 million for the three months
ended June 30, 1996 to $86.2 million for the three months ended June 30, 1997.
Revenues increased 222.0% from $47.3 million for the six months ended June 30,
1996 to $152.3 million for the six months ended June 30, 1997. Approximately
$56.1 million and $94.9 million of the increase from the three and six months
ended June 30, 1996 to the corresponding periods in 1997, respectively, resulted
from the inclusion of revenues from the Acquired Businesses that were accounted
for as purchase acquisitions. The remainder of the increase was primarily
attributable to increased demand for the Company's services in South Carolina
and the Washington, D.C. metropolitan area.
Cost of services increased 246.5% and 211.7% to $59.7 million and
$106.3 million for the three and six months ended June 30, 1997, respectively,
as compared to the corresponding periods in the prior year, reflecting
increased costs associated with the higher level of revenues. Gross profit, as
a percentage of revenues, increased from 28.0% for the three months ended June
30, 1996 to 30.8% for the three months ended June 30, 1997. Gross profit, as a
percentage of revenues, increased from 27.8% for the six months ended June 30,
1996 to 30.2% for the six months ended June 30, 1997. The improvement in gross
profit in 1997 was primarily attributable to the purchase acquisitions of
businesses providing residential maintenance services, which typically generate
higher margins than new residential installation services, as well as purchase
discounts from equipment vendors through consolidated purchasing.
Selling, general and administrative expenses increased $10.7 million
and $21.4 million to $16.3 million and $32.3 million for the three and six
months ended June 30, 1997, respectively, as compared to the corresponding
periods in the prior year. The increases were primarily due to the operations of
the Acquired Businesses that were accounted for as purchase acquisitions and
goodwill amortization associated with the purchase acquisitions, coupled with
the addition of ARS's corporate personnel and administrative infrastructure.
Interest expense increased $1.7 million and $2.8 million for the three
and six months ended June 30, 1997, respectively. The increase in both periods
was attributable to the issuance by ARS on April 2, 1997 of the 7 1/4% Notes (as
defined below) and borrowings under the Credit Facility (as defined below) to
fund the cash portion of the aggregate purchase price for the acquisitions of
the Acquired Businesses.
Interest and other income/(expense), net increased $0.3 million and
$0.4 million for the three and six months ended June 30, 1997. The increase was
primarily attributable to (i) gains realized on the non-recurring sale of excess
vehicles and equipment and (ii) rental income earned on property held by the
Company and leased to third parties.
The effective tax rate for the six months ended June 30, 1997 was
43.4%, representing management's estimate of the effective tax rate for fiscal
1997.
12
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1997, net cash used in operating
activities was $8.1 million, capital expenditures totaled $3.4 million and
net borrowings of debt amounted to $32.5 million. The Company anticipates
capital expenditures (exclusive of acquisitions) of approximately $4.0 million
during the remainder of 1997, primarily for computer equipment, leasehold
improvements and furniture and fixtures. The Company believes its cash flow
from operations and the borrowings available under its revolving credit
facility will be sufficient to support its ongoing operations and anticipated
capital expenditures for the remainder of 1997.
The Company has in place a revolving credit facility (the "Credit
Facility") with a syndicate of banks, including NationsBank of Texas, N.A, which
acts as the agent. On March 3, 1997, the Company increased the size of the
Credit Facility from $55.0 million to $100.0 million. Borrowings under the
Credit Facility may be used for general corporate purposes, including the
funding of any cash paid in connection with acquisitions, refinancing
indebtedness of businesses acquired, capital expenditures and working capital.
Loans under the Credit Facility bear interest at a designated variable base rate
plus a margin ranging from 0 to 50 basis points, depending on the ratio of the
Company's interest-bearing debt to its trailing 12-month earnings before
interest, taxes, depreciation and amortization. At the Company's option, the
loans may bear interest based on a designated London interbank offering rate
plus a margin ranging from 100 to 200 basis points, depending on the same ratio.
The margin is reset on a quarterly basis and also may be reset on the closing of
an acquisition involving cash consideration in excess of $5.0 million or upon a
principal repayment in excess of $5.0 million. Commitment fees of 30 to 50 basis
points per annum are payable on the unused portion of the line of credit. The
Credit Facility has a $5.0 million sublimit for standby letters of credit. The
Credit Facility requires the consent of the lenders for acquisitions exceeding a
certain level of cash consideration, prohibits the payment of dividends by the
Company (except for dividends payable in Common Stock and certain preferred
stock), does not permit the Company to incur or assume other indebtedness (other
than approved subordinated indebtedness) in excess of any amount equal to 5% of
its consolidated net worth and requires the Company to comply with certain
financial covenants. The Credit Facility will terminate and all amounts
outstanding, if any, thereunder will be due and payable in September 1999. The
Company's subsidiaries have guaranteed the repayment of all amounts due under
the Credit Facility, and the Company has pledged the stock of its operating
subsidiaries as collateral for its obligations under the Credit Facility. At
June 30, 1997, the Company's outstanding borrowings under the Credit Facility
were $37.4 million, bearing interest at a weighted average rate of 7.99%. As of
August 13, 1997, the Company had outstanding borrowings under the Credit
Facility in the amount of $45.0 million, bearing interest at a weighted average
rate of 7.07%.
On April 2, 1997, ARS sold $55.0 million aggregate principal amount of
its 7 1/4% Convertible Subordinated Notes due 2004 (the "7 1/4% Notes"). These
notes are unsecured obligations of ARS and are convertible into an aggregate of
2,156,863 shares of Common Stock of the Company at a conversion price of $25.50
per share, subject to adjustment in certain events. ARS used substantially all
the net proceeds from its sale of the 7 1/4% Notes to repay indebtedness
outstanding under the Credit Facility.
In January 1997, ARS registered 5,000,000 shares of its Common Stock
under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a shelf registration statement on Form S-4 for issuance from
time to time in connection with acquisitions. Through July 1997, the Company
issued an aggregate of 3,647,212 shares pursuant to that shelf registration
statement as part of the consideration for the acquisitions of 43 businesses.
13
<PAGE> 16
In July 1997, ARS registered an additional 10,000,000 shares of Common
Stock and $100.0 million aggregate principal amount of convertible subordinated
debt securities (the "Convertible Debt Securities") under the Securities Act
pursuant to a shelf registration statement on Form S-4 for issuance from time to
time in connection with acquisitions. ARS is currently authorized pursuant to
its Credit Facility to issue up to $25.0 million aggregate principal amount of
Convertible Senior Subordinated Notes, Series A (the "Series A Notes")
(representing a series of the Convertible Debt Securities), maturing April 15,
2004. Certain terms of the Series A Notes, including the interest rate and the
conversion price, will be determined by ARS in connection with the acquisitions
for which such notes are issued.
In 1997 (through June 30), the Company acquired 37 businesses for an
aggregate consideration of $25.5 million in cash, 3,445,241 shares of Common
Stock and a promissory note in the principal amount of $1.8 million. Since June
30, 1997 to the date of filing of this Report, the Company acquired an
additional seven businesses for an aggregate consideration of $4.6 million in
cash and 297,247 shares of Common Stock. All shares of Common Stock issued for
the acquisitions during 1997 were issued under ARS's shelf registration
statements. Funding of the cash portion of the purchase prices and repayment of
indebtedness assumed in connection with those acquisitions was provided by funds
from operations and borrowings under the Credit Facility.
The Company intends to continue to pursue attractive acquisition
opportunities of both residential services and commercial maintenance services
businesses. The timing, size or success of any acquisitions effort and the
associated potential capital commitments are unpredictable. The Company expects
to fund future acquisitions primarily through a combination of Common Stock,
working capital, cash flow from operations and borrowings, including the
unborrowed portion of the Credit Facility, issuances of the Convertible Debt
Securities and the possible public or private sale of additional debt or equity
securities.
SEASONALITY AND FLUCTUATIONS IN OPERATIONS RESULTS
The Company has experienced, and expects that it will in the future
experience, quarterly fluctuations in revenues, operating income and cash flows
as a result of changes in weather conditions. Except for certain areas of the
southern United States, the demand for new residential installations is lower
in the winter months because new construction activity is lower as a result of
colder weather (although the Company expects that such reduction in demand may
be partially offset by increases in the demand for commercial replacement
services generally experienced in the winter months). Demand for heating,
ventilation and air conditioning services is generally higher in the second and
third quarters. In addition to the effects of seasonality, the Company's
quarterly results may fluctuate as a result of a number of other factors,
including the timing of acquisitions and the cyclical nature of the
homebuilding industry which will influence the levels of housing starts from
time to time in the markets in which the Company engages in new residential
installation services and affect the Company's ability to maintain or increase
revenues from those services. Accordingly, quarterly comparisons of the
Company's revenues and operating results should not be relied on as an
indication of future performance, and the results of any quarterly period may
not be indicative of the results to be expected for a full year.
14
<PAGE> 17
AMERICAN RESIDENTIAL SERVICES, INC.
PART II - OTHER INFORMATION
ITEM 2 - CHANGES IN SECURITIES
On April 2, 1997, ARS sold $55.0 million aggregate principal amount of
its 7 1/4% Notes to Smith Barney Inc., Goldman, Sachs & Co. and Montgomery
Securities (the "Initial Purchasers") for resale by the Initial Purchasers to
"qualified institutional buyers" (as defined in Rule 144A promulgated under the
Securities Act). Neither the 7 1/4% Notes nor the underlying shares of
Common Stock were registered under the Securities Act. ARS sold the securities
in reliance on Section 4(2) under the Securities Act. The initial price to
investors totaled $55.0 million, and the discounts and commissions totaled $1.65
million. The 7 1/4% Notes are convertible into shares of Common Stock at any
time prior to their maturity on April 15, 2004 at a conversion price of $25.50
per share, subject to adjustment in certain events.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 3, 1997, the Company held its 1997 Annual Meeting of
Stockholders. The matters voted on at the meeting and the results thereof
are as follows:
A. Election of Class I Directors.
Stockholders elected the persons listed below as Class I directors whose
terms expire at the 2000 annual meeting of stockholders. Results by
nominee were:
<TABLE>
<CAPTION>
VOTED AUTHORITY
FOR WITHHELD
<S> <C> <C>
C. Clifford Wright, Jr. 9,400,491 46,609
Thomas N. Amonett 9,201,696 245,404
Elliot Sokolow 9,400,026 47,074
</TABLE>
The Class II directors, whose terms expire at the 1998 annual meeting of
stockholders, are Howard S. Hoover, Jr., Robert J. Cruikshank, Randall B. Hale
and Frank N. Menditch. The Class III directors, whose terms expire at the 1999
annual meeting of stockholders, are Gorden H. Timmons, Nolan Lehmann, William P.
McCaughey and Don D. Sykora.
B. Ratification of Appointment of Independent Public Accountants.
Stockholders ratified the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1997,
with 9,406,050 shares voted for, 21,720 shares voted against, 19,330 abstentions
and no broker non-votes.
15
<PAGE> 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
No. Description
- ------- -----------
*2.1 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which American Residential Services, Inc. ("ARS") and Climatic
Corporation of Vero Beach are parties (Form S-1, Reg. No.
333-06195, Ex. 2.1).
*2.2 Agreement and Plan of Reorganization dated as of June 13, 1996
to which ARS and Florida Heating and Air Conditioning, Inc. are
parties (Form S-1, Reg. No. 333-06195, Ex. 2.2).
*2.3 Agreement and Plan of Reorganization dated as of June 13, 1996
to which ARS and Atlas Services, Inc. are parties (Form S-1, Reg.
No. 333-06195, Ex. 2.3).
*2.4 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and DIAL ONE Meridian and Hoosier, Inc. are parties
(Form S-1, Reg. No. 333-06195, Ex. 2.4).
*2.5 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Bullseye Air Conditioning, Inc. are parties (Form
S-1, Reg. No. 333-06195, Ex. 2.5).
*2.6 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Florida Heating and Air Conditioning Duct, Inc. are
parties (Form S-1, Reg. No. 333-06195, Ex. 2.6).
*2.7 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Florida Heating and Air Conditioning Service, Inc.
are parties (Form S-1, Reg. No. 333-06195, Ex. 2.7).
*2.8 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and General Heating Engineering Company, Inc. are
parties (Form S-1, Reg. No. 333-06195, Ex. 2.8).
*2.9 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Enterprises Holding Company ("EHC") are parties
(Form S-1, Reg. No. 333-06195, Ex. 2.9).
*2.10 Form of Uniform Provisions for the Acquisition of Founding
Companies (Form S-1, Reg. No. 333-06195, Ex. 2.10).
*2.11 Agreement and Plan of Reorganization dated as of December 11,
1996 to which ARS and Metro Heating and Air Conditioning, Inc.
are parties (Form S-4, Reg. No. 333-18623, Ex. 2.11).
16
<PAGE> 19
Exhibit
No. Description
- ------- -----------
*3.1 Restated Certificate of Incorporation of ARS (Form S-1, Reg. No.
333-06195, Ex. 3.1).
*3.2 Bylaws of ARS (Form S-1, Reg. No. 333-06195, Ex. 3.2).
*3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock (Form S-1, Reg. No. 333-06195, Ex. 3.3).
*4.1 Form of Certificate representing Common Stock (Form S-1, Reg.
No. 333-06195, Ex. 4.1).
*4.2 Rights Agreement of ARS, including form of Rights Certificate as
Exhibit B thereto (Form S-8, Reg. No. 333-13299, Ex. 4.4).
*4.3 Registration Rights Agreement among ARS and the stockholders
listed on the signature pages thereto (Form S-1, Reg. No.
333-06195, Ex. 4.3).
*4.4. Stock Registration Agreement dated as of March 6, 1996 between
ARS and Equus II Incorporated (Form S-1, Reg. No. 333-06195, Ex.
4.4).
*4.5 Stock Piggyback Registration Agreement dated as of March 19, 1996
between EHC and NationsBank of Texas, N.A. ("NationsBank") (Form
S-1, Reg. No. 333-06195, Ex. 4.5).
*4.6 Revolving Loan Agreement dated March 3, 1997 among ARS,
NationsBank and the other parties designated therein (Form 10-K
for 1996, File No. 1-11849, Ex. 4.6).
*4.7 First Amendment to Revolving Loan Agreement dated March 24,
1997, among ARS, NationsBank and the other parties designated
therein (Form 10-K for 1996, File No. 1-11849, Ex. 4.7).
4.8 Second Amendment to Revolving Loan Agreement dated as of June 30,
1997, among ARS, NationsBank and the other parties designated
therein.
*4.9 Indenture dated as of April 1, 1997 between ARS and U.S. Trust
Company of Texas, N.A., as Trustee, relating to $55,000,000
aggregate principal amount of 7 1/4% Convertible Subordinated
Notes due 2004 of ARS (Form S-4, Reg. No. 333-18623,
Ex. 4.8).
*4.10 Registration Rights Agreement dated as of April 1, 1997 between
ARS and Smith Barney Inc., Goldman, Sachs & Co. and Montgomery
Securities (Form S-4, Reg. No. 333-18623, Ex. 4.9).
4.11 Indenture dated as of July 31, 1997, between ARS and U.S. Trust
Company of Texas, N.A., as Trustee, relating to Convertible
Subordinated Debt Securities of ARS.
17
<PAGE> 20
Exhibit
No. Description
- ------- -----------
ARS and certain of its subsidiaries are parties to certain debt
instruments under which the total amount of its securities
authorized does not exceed 10% of the total assets of ARS and its
subsidiaries on a consolidated basis. Pursuant to paragraph
4(iii)(A) of Item 601(b) of Regulation S-K, ARS agrees to furnish
a copy of such instruments to the Commission upon request.
*10.4 Amended and Restated Employment Agreement dated as of April 1,
1997 between ARS and Harry O. Nicodemus, IV (Form S-4, Reg. No.
333-18623, Ex. 10.4).
27.1 Financial Data Schedule
* Incorporated by reference.
(b) Reports on Form 8-K.
None
18
<PAGE> 21
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant, American Residential Services, Inc., has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN RESIDENTIAL SERVICES, INC.
Dated: August 14, 1997 By: /s/ HARRY O. NICODEMUS, IV
-----------------------------------
Harry O. Nicodemus, IV
Vice President
(Chief Financial Officer and
Chief Accounting Officer)
19
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
*2.1 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which American Residential Services, Inc. ("ARS") and Climatic
Corporation of Vero Beach are parties (Form S-1, Reg. No.
333-06195, Ex. 2.1).
*2.2 Agreement and Plan of Reorganization dated as of June 13, 1996
to which ARS and Florida Heating and Air Conditioning, Inc. are
parties (Form S-1, Reg. No. 333-06195, Ex. 2.2).
*2.3 Agreement and Plan of Reorganization dated as of June 13, 1996
to which ARS and Atlas Services, Inc. are parties (Form S-1, Reg.
No. 333-06195, Ex. 2.3).
*2.4 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and DIAL ONE Meridian and Hoosier, Inc. are parties
(Form S-1, Reg. No. 333-06195, Ex. 2.4).
*2.5 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Bullseye Air Conditioning, Inc. are parties (Form
S-1, Reg. No. 333-06195, Ex. 2.5).
*2.6 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Florida Heating and Air Conditioning Duct, Inc. are
parties (Form S-1, Reg. No. 333-06195, Ex. 2.6).
*2.7 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Florida Heating and Air Conditioning Service, Inc.
are parties (Form S-1, Reg. No. 333-06195, Ex. 2.7).
*2.8 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and General Heating Engineering Company, Inc. are
parties (Form S-1, Reg. No. 333-06195, Ex. 2.8).
*2.9 Agreement and Plan of Reorganization dated as of June 13, 1996 to
which ARS and Enterprises Holding Company ("EHC") are parties
(Form S-1, Reg. No. 333-06195, Ex. 2.9).
*2.10 Form of Uniform Provisions for the Acquisition of Founding
Companies (Form S-1, Reg. No. 333-06195, Ex. 2.10).
*2.11 Agreement and Plan of Reorganization dated as of December 11,
1996 to which ARS and Metro Heating and Air Conditioning, Inc.
are parties (Form S-4, Reg. No. 333-18623, Ex. 2.11).
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
*3.1 Restated Certificate of Incorporation of ARS (Form S-1, Reg. No.
333-06195, Ex. 3.1).
*3.2 Bylaws of ARS (Form S-1, Reg. No. 333-06195, Ex. 3.2).
*3.3 Certificate of Designation of Series A Junior Participating
Preferred Stock (Form S-1, Reg. No. 333-06195, Ex. 3.3).
*4.1 Form of Certificate representing Common Stock (Form S-1, Reg.
No. 333-06195, Ex. 4.1).
*4.2 Rights Agreement of ARS, including form of Rights Certificate as
Exhibit B thereto (Form S-8, Reg. No. 333-13299, Ex. 4.4).
*4.3 Registration Rights Agreement among ARS and the stockholders
listed on the signature pages thereto (Form S-1, Reg. No.
333-06195, Ex. 4.3).
*4.4 Stock Registration Agreement dated as of March 6, 1996 between
ARS and Equus II Incorporated (Form S-1, Reg. No. 333-06195, Ex.
4.4).
*4.5 Stock Piggyback Registration Agreement dated as of March 19, 1996
between EHC and NationsBank of Texas, N.A. ("NationsBank") (Form
S-1, Reg. No. 333-06195, Ex. 4.5).
*4.6 Revolving Loan Agreement dated March 3, 1997 among ARS,
NationsBank and the other parties designated therein (Form 10-K
for 1996, File No. 1-11849, Ex. 4.6).
*4.7 First Amendment to Revolving Loan Agreement dated March 24,
1997, among ARS, NationsBank and the other parties designated
therein (Form 10-K for 1996, File No. 1-11849, Ex. 4.7).
4.8 Second Amendment to Revolving Loan Agreement dated as of June 30,
1997, among ARS, NationsBank and the other parties designated
therein.
*4.9 Indenture dated as of April 1, 1997 from ARS to U.S. Trust
Company of Texas, N.A., as Trustee, relating to $55,000,000
aggregate principal amount of 7 1/4% Convertible Subordinated
Notes due 2004 of ARS (Form S-4, Reg. No. 333-18623, Ex. 4.8).
*4.10 Registration Rights Agreement dated as of April 1, 1997 between
ARS and Smith Barney Inc., Goldman, Sachs & Co. and Montgomery
Securities (Form S-4, Reg. No. 333-18623, Ex. 4.9).
4.11 Indenture dated as of July 31, 1997, between ARS and U.S. Trust
Company of Texas, N.A., as Trustee, relating to Convertible
Subordinated Debt Securities of ARS.
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<S> <C>
ARS and certain of its subsidiaries are parties to certain debt
instruments under which the total amount of its securities
authorized does not exceed 10% of the total assets of ARS and its
subsidiaries on a consolidated basis. Pursuant to paragraph
4(iii)(A) of Item 601(b) of Regulation S-K, ARS agrees to furnish
a copy of such instruments to the Commission upon request.
*10.4 Amended and Restated Employment Agreement dated as of April 1,
1997 between ARS and Harry O. Nicodemus, IV (Form S-4, Reg. No.
333-18623, Ex. 10.4).
27.1 Financial Data Schedule
</TABLE>
* Incorporated by reference.
<PAGE> 1
EXHIBIT 4.8
SECOND AMENDMENT TO REVOLVING LOAN AGREEMENT
This Second Amendment to Revolving Loan Agreement (this
"Second Amendment") is made and entered into as of the 30th day of June, 1997,
by and among AMERICAN RESIDENTIAL SERVICES, INC., a Delaware corporation
("Borrower"), NATIONSBANK OF TEXAS, N.A., as Agent and Issuing Lender under the
hereinafter defined Loan Agreement, and those Lenders under that Loan Agreement
which have executed and delivered this Second Amendment.
W I T N E S S E T H
WHEREAS, pursuant to that certain Revolving Loan Agreement (as
heretofore amended, the "Loan Agreement") dated March 3, 1997, among Borrower,
NationsBank of Texas, N.A., as Agent and Issuing Lender, and the other entities
designated therein as Lenders, Lenders and Issuing Lender agreed to make loans
and other extensions of credit to Borrower upon the terms and conditions
therein contained; and
WHEREAS, pursuant to that certain First Amendment to Revolving
Loan Agreement dated as of March 24, 1997, the parties hereto modified and
amended certain terms and provisions of the Loan Agreement; and
WHEREAS, the parties hereto desire to further modify and amend
certain terms and provisions of the Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Amendments to Loan Agreement. The Loan Agreement is modified
and amended as follows:
1.1 Subparagraph (d) of the definition of "Acquisition
Criteria" in Article I of the Loan Agreement is deleted in its entirety and the
following is substituted in place thereof:
(d) if the Acquisition Consideration to be paid is
not Approved Consideration, the sum of (i) the amount of the
Acquisition Consideration to be paid, plus (ii) the total amount of
Acquisition Consideration (other than Approved Consideration) paid by
Borrower, directly or indirectly through its Subsidiaries, for other
Acquired Businesses (and their respective Subsidiaries)
<PAGE> 2
during the shorter of (x) the period commencing on July 1, 1997,
through the Acquisition Date of that Acquired Business, or (y) the
12-month period preceding the Acquisition Date of that Acquired
Business, does not exceed the Maximum Permitted Consideration (for
purposes of clause (ii), Acquisition Consideration shall be adjusted to
reflect amounts actually paid by Borrower under any contingent earn-
out or other contingent obligations).
1.2 The definition of "Consolidated Funded Debt" in Article I of
the Loan Agreement is deleted in its entirety and the following is substituted
in place thereof:
"Consolidated Funded Debt" means, as of any date, all interest-bearing
Debt of Borrower and its Subsidiaries which is evidenced by promissory
notes, loan agreements, bonds or similar instruments, as such amount is
required to be shown on Borrower's consolidated balance sheet as of
that date prepared in accordance with GAAP (including, without
limitation, all Capitalized Lease Obligations and all Approved
Subordinated Debt, other than Approved Convertible Subordinated Notes
and Approved Seller Subordinated Debt).
1.3 The following terms and the definitions assigned to
such terms are added to and made a part of Article I of the Loan Agreement:
"Approved Seller Subordinated Debt" shall mean the convertible
subordinated notes, up to a maximum aggregate face amount of
$25,000,000.00, issued from time to time by Borrower pursuant to the
Shelf Indenture, as supplemented from time to time.
"Maximum Permitted Consideration" shall mean the greater of (a)
$50,000,000.00, or (b) an amount equal to twenty percent (20%) of
Borrower's total assets (determined quarterly as of the end of each
fiscal quarter of Borrower based upon the total assets of Borrower as
reported in Borrower's filed 10Q or Form 10K report for that fiscal
period, provided that adjustments to clause (b) shall be effective upon
the date of the filing of such report).
"Shelf Indenture" shall mean the Indenture dated a date in July 1997,
between Borrower and U.S. Trust Company of
-2-
<PAGE> 3
Texas, N.A., as Trustee, as filed by Borrower with the Securities and
Exchange Commission, pursuant to which Borrower intends to issue from
time to time in series convertible subordinated notes, each being
payable prior to maturity in semi-annual payments of interest only,
having a maturity of a date on or after April 15, 2004, and with a
redemption right on or after April 20, 2000, as amended, modified, or
supplemented from time to time to the extent permitted by this
Agreement.
2. Modification Fee. As independent consideration for entering
into this Second Amendment, contemporaneously with the execution and delivery
of this Second Amendment by the requisite parties hereto, Borrower shall pay to
Agent a modification fee equal to $15,000.00 for the account of those Lenders
which are signatories to this Second Amendment (which shall be divided equally
among such Lenders). Those Lenders which are signatories to this Second
Amendment constitute not less than the Required Lenders for the purpose of
modifying and amending the Loan Agreement in accordance with the terms of this
Second Amendment.
3. Approval of Subordinated Debt. The issuance of Approved Seller
Subordinated Debt is approved, and when issued, will constitute Approved
Subordinated Debt under the Loan Agreement, if and to the extent the series
pursuant to which such debt is issued does not modify the subordination
provisions in the Shelf Indenture and does not change the maturity date to a
date earlier than April 15, 2004.
4. Status of Indebtedness. Borrower acknowledges that the indebtedness
outstanding under the respective Notes on the date hereof is not subject to any
offsets, deductions, credits, charges, or claims of whatsoever kind or
character.
5. Defined Terms. Words and terms used herein which are defined
in the Loan Agreement are used herein as defined therein, except as
specifically modified by the terms of this Second Amendment.
6. Representations and Warranties. The representations and warranties
made by Borrower in Article V of the Loan Agreement are true and
correct in all material respects as of the date of this Second Amendment,
except for those representations and warranties that are limited by the terms
thereof to a specific date.
7. Miscellaneous.
7.1 Preservation of the Loan Agreement. Except as specifically
amended and modified by the terms of this Second Amendment, all of the terms,
-3-
<PAGE> 4
provisions, covenants, warranties, and agreements contained in the Loan
Agreement and in the other Loan Documents shall remain in full force and
effect.
7.2 Counterparts. This Second Amendment may be executed in two or
more counterparts, and it shall not be necessary that any one of the
counterparts be executed by all of the parties hereto. Each fully or partially
executed counterpart shall be deemed an original, but all such counterparts
taken together shall constitute but one and the same instrument.
7.3 NO ORAL AGREEMENTS. THE LOAN AGREEMENT, AS AMENDED BY THIS
SECOND AMENDMENT, AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Second Amendment
as of the date first above written.
AMERICAN RESIDENTIAL SERVICES,
INC., a Delaware corporation
By:
--------------------------
John D. Held,
Senior Vice President
AGENT:
-----
NATIONSBANK OF TEXAS, N.A., a
national banking association, as
Agent for Lenders
By:
--------------------------
Albert Welch
Vice President
ISSUING LENDER:
--------------
-4-
<PAGE> 5
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:
-------------------------
Albert Welch
Vice President
LENDERS:
-------
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By: ________________________
Albert Welch,
Vice President
NATIONAL CITY BANK OF KENTUCKY
By: __________________________
Donald R. Pullen, Jr.,
Vice President
BANQUE PARIBAS
By: _________________________
Scott Clingan,
Vice President
By: __________________________
Name: ________________________
Title: ________________________
THE FUJI BANK LIMITED, Houston Agency
By: __________________________
Greg Parten,
Vice President
GUARANTY FEDERAL BANK, F.S.B.
By: ___________________________
Mark Wayne,
Vice President
-5-
<PAGE> 6
SUMITOMO BANK, LTD.
By: _____________________________
John O'Neill,
Vice President
By: _____________________________
Name: ___________________________
Title: __________________________
By their execution hereof, the undersigned
Subsidiaries of Borrower, guarantors of the
Obligations, acknowledge and agree to this
Second Amendment:
AIR CONTROL HEATING AND AIR CONDITIONING, INC.,
a California corporation
A.K. LANDAN, INC., a California corporation
AMERICAN MECHANICAL SERVICES COMPANY, L.L.C., a
Delaware limited liability company
AMERICAN MECHANICAL SERVICES OF ARIZONA, INC.,
a Arizona corporation
AMERICAN MECHANICAL SERVICES OF CALIFORNIA, INC.,
a California corporation
AMERICAN MECHANICAL SERVICES OF COLORADO, INC.,
a Colorado corporation
By:________________________________
JOHN D. HELD
Vice President
-6-
<PAGE> 7
AMERICAN MECHANICAL SERVICES OF INDIANA, INC.,
an Indiana corporation
AMERICAN MECHANICAL SERVICES OF SACRAMENTO, INC.,
a California corporation
AMERICAN MECHANICAL SERVICES OF TEXAS, INC.,
a Delaware corporation
AMS AMERICAN MECHANICAL SERVICES OF MARYLAND, INC.,
a Maryland corporation
AMERICAN RESIDENTIAL SERVICES OF COLORADO, INC.,
a Colorado corporation
AMERICAN RESIDENTIAL SERVICES OF MICHIGAN, INC.,
a Michigan corporation
AMERICAN RESIDENTIAL SERVICES OF NEBRASKA, INC.,
a Nebraska corporation
AMERICAN RESIDENTIAL SERVICES OF NEVADA, INC.,
a Nevada corporation
AMERICAN RESIDENTIAL SERVICES OF OKLAHOMA, INC.,
an Oklahoma corporation
AMERICAN RESIDENTIAL SERVICES OF PENNSYLVANIA, INC.,
a Pennsylvania corporation
By:________________________________
JOHN D. HELD
Vice President
-7-
<PAGE> 8
AMERICAN RESIDENTIAL SERVICES OF VIRGINIA, INC.
a Virginia corporation
ARS ENERGY SERVICES COMPANY, a
Delaware corporation
ARS RESIDENTIAL HOLDING COMPANY, a
Delaware corporation
ARS RESIDENTIAL MANAGEMENT
COMPANY, a Delaware corporation
ARS AMERICAN RESIDENTIAL SERVICES OF TEXAS,
INC., a Delaware corporation
ADCOT, INC. (d/b/a A-ABC Appliances, a
Texas corporation
AMERICAN RESIDENTIAL SERVICES OF SOUTH
CAROLINA, INC., a South Carolina corporation
CAPE FEAR HEATING & AIR CONDITIONING
OF WILMINGTON, INC., a North Carolina
corporation
DOC PLUMBING, INC., a South Carolina
corporation
AMERICAN RESIDENTIAL SERVICES OF FLORIDA,
INC., a Florida corporation
By:________________________________
JOHN D. HELD
Vice President
-8-
<PAGE> 9
GENERAL HEATING & AIR CONDITIONING
COMPANY, INC., a Delaware corporation
GOLDEN TRIANGLE MECHANICAL, INC., a
South Carolina corporation
GODBY ACQUISITION, INC., an Indiana
corporation
GODBY BROTHERS, INC.,
a Delaware corporation
GODBY BROTHERS LLC,
a Delaware limited liability company
HESSION PLUMBING COMPANY, INC., an
Indiana corporation
ILLINOIS HEATING & AIR CONDITIONING,
INC., an Illinois corporation
KEENAN MECHANICAL SERVICES, INC., a
Virginia corporation
KIRBY HEATING & AIR, INC., a South Carolina
corporation
KORTE ELECTRIC, INC., a Delaware
corporation
By:________________________________
JOHN D. HELD
Vice President
-9-
<PAGE> 10
LARRY TEAGUE & SONS PLUMBING, INC., a Florida
corporation
MAIO MARKETING SYSTEMS, INC., a
California corporation
MAIO PLUMBING, HEATING & AIR, INC., a
California corporation
MCCANNICS, INC., a Delaware corporation
AMERICAN RESIDENTIAL SERVICES OF INDIANA,
INC., an Indiana corporation
AMERICAN RESIDENTIAL SERVICES OF NORTH
CAROLINA, INC., a North Carolina corporation
AMERICAN RESIDENTIAL SERVICES OF ILLINOIS,
INC., an Illinois corporation
PRO-FORMANCE, INC., a California corporation
R.F. MASTERS, INC., a South Carolina
corporation
ROOTER EXPRESS SERVICE, INC., a South
Carolina corporation
By:________________________________
JOHN D. HELD
Vice President
-10-
<PAGE> 11
SAGAMORE HEATING & COOLING, INC., an
Indiana corporation
SASSO AIR CONDITIONING, INC., a Delaware
corporation
SERVICE ENTERPRISE HOLDINGS, LLC, a
Texas limited liability company
SERVICE ENTERPRISES - HOUSTON, INC.
(d/b/a Crown Services), a Delaware
corporation
ARS AMERICAN RESIDENTIAL SERVICES OF
CALIFORNIA, INC., a California corporation
TED'S PLUMBING, INC., a Florida corporation
TRADEMARK ENTERPRISES, INC., a Delaware
corporation
USA HEATING & AIR CONDITIONING, INC., a
Delaware corporation
WEST HOUSTON SERVICES, INC., a Delaware
corporation
By:________________________________
JOHN D. HELD
Vice President
-11-
<PAGE> 1
EXHIBIT 4.11
- --------------------------------------------------------------------------------
AMERICAN RESIDENTIAL SERVICES, INC.
to
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
_______________
INDENTURE
Dated as of July 31, 1997
_______________
Convertible Subordinated Debt Securities
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I Definitions and Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Compliance Certificates and Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.03. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.04. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.05. Notices, etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.06. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.07. Conflict With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.08. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.09. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.10. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.11. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 1.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.13. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.14. No Security Interest Created . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.15. Limitation on Individual Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE II Security Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.01. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.02. Form of Trustee's Certificate of Authentification . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.01. Amount Unlimited; Issuable in Series. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3.02. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.03. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.04. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.05. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.07. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.08. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.10. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.01. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.02. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.03. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.04. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . 31
SECTION 5.06. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.07. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.08. Unconditional Right of Holders To Receive Principal,
Premium, Interest and To Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.09. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.12. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.13. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.03. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . 38
SECTION 6.05. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.06. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.07. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.08. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.09. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 41
SECTION 6.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.13. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . 43
SECTION 6.14. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII Holders' Lists and Reports by Trustee and Company . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.01. Company To Furnish Trustee Names and Addresses of
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 7.02. Preservation of Information; Communication to Holders . . . . . . . . . . . . . . . . . . . 47
SECTION 7.03. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.04. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease . . . . . . . . . . . . . . . . . . . 48
SECTION 8.01. Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . 48
SECTION 8.02. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.01. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 9.02. Supplemental Indentures With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.04. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.05. Conformity With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.06. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . 52
SECTION 9.07. Notice of Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE X Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.01. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.03. Money for Security Payments To Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.04. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.05. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.06. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.07. Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XI Redemption of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.01. Applicability of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.02. Election To Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.03. Selection by Trustee of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.04. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.06. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.07. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XII Subordination of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.01. Securities Subordinated to Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.02. Payment Over of Proceeds Upon Dissolution, etc. . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.03. Prior Payment to Senior Indebtedness On Acceleration of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.04. No Payment When Senior Indebtedness in Default . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.05. Payment Permitted If No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.06. Subrogation to Rights of Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . 64
SECTION 12.07. Provisions Solely To Define Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.08. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.09. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.10. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 12.11. Reliance on Judicial Order or Certificate of Liquidating
Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.12. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . 66
SECTION 12.13. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.14. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 12.15. Certain Conversions Deemed Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 12.16. No Suspension of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE XIII Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.01. Conversion Privilege and Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.02. Exercise of Conversion Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 13.03. Fractions of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 13.04. Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 13.05. Notice of Adjustments of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.06. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 13.07. Company To Reserve Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 13.08. Taxes on Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.09. Covenant as to Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.10. Cancellation of Converted Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.11. Provisions of Consolidation, Merger or Sale of Assets . . . . . . . . . . . . . . . . . . . 78
SECTION 13.12. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XIV Right To Require Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 14.01. Right To Require Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 14.02. Notice; Method of Exercising Repurchase Right . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 14.03. Deposit of Repurchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.04. Securities Not Repurchased on Repurchase Date . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.05. Securities Repurchased in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 14.06. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE XV Meetings of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 15.01. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 15.02. Call, Notice and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 15.03. Persons Entitled To Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 15.04. Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 15.05. Determination of Voting Rights; Conduct and
Adjournment of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 15.06. Counting Votes and Recording Action of Meetings . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
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<PAGE> 6
Certain Sections of this Indenture relating to
Sections 310 through 318 of the Trust Indenture Act of 1939:
<TABLE>
<S> <C>
Section 310(a)(1) 609
(a)(2) 609
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 609
(b) 608
Section 311(a) 613
(b) 613
Section 312(a) 701
702(a)
(b) 702(b)
(c) 702(c)
Section 313(a) 703(a)
(b) 703(a)
(c) 703(a)
(d) 703(b)
Section 314(a) 704
(a)(4) 1004
(b) Not Applicable
(c)(1) 102
(c)(2) 102
(c)(3) Not Applicable
(d) Not Applicable
(e) 102
Section 315(a) 601
(b) 602
(c) 601
(d) 601
(e) 514
Section 316(a)(1)(A) 502
512
(a)(1)(B) 513
(a)(2) Not Applicable
(b) 508
(c) 104(c)
Section 317(a)(1) 503
(a)(2) 504
(b) 1003
Section 318(a) 107
</TABLE>
________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
- v -
<PAGE> 7
INDENTURE, dated as of July 31, 1997, between AMERICAN
RESIDENTIAL SERVICES, INC., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), and U.S. TRUST
COMPANY OF TEXAS, N.A., a national banking association, as Trustee (herein
called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
convertible subordinated debentures, notes or other evidences of indebtedness
(herein called the "Securities"), to be issued in one or more series as in this
Indenture provided.
This Indenture is subject to the provisions of the Trust
Indenture Act and the rules and regulations of the Commission promulgated
thereunder which are required to be part of this Indenture and, to the extent
applicable, shall be governed by such provisions.
All things necessary to make this Indenture a valid agreement
of the Company in accordance with its terms have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as
the singular;
(b) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
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<PAGE> 8
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles, and, except as otherwise herein
expressly provided, the term "generally accepted accounting
principles" with respect to any computation required and permitted
hereunder shall mean such accounting principles as are generally
accepted and adopted by the Company at the date of this Indenture; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision; and
references herein to "Articles" and "Sections" are to Articles and
Sections of this Indenture unless otherwise specified.
Certain terms used in Articles V, XII, XIII and XIV are
defined in those Articles.
"Act," when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Additional Amounts" means any additional amounts that are
required by the express terms of a Security or by or pursuant to a Board
Resolution, under circumstances specified therein or pursuant thereto, to be
paid by the Company with respect to certain taxes, assessments or other
governmental charges imposed on certain Holders and that are owing to those
Holders.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of the specified Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 6.14 to act on behalf of the Trustee to
authenticate Securities.
"Board of Directors" means either 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 an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in Houston, Texas
or New York, New York are authorized or obligated to close by law or executive
order.
- 2 -
<PAGE> 9
"Change in Control" has the meaning specified in Section
14.06.
"Commission" means the Securities and Exchange Commission as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Instrument that Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing those duties at such time.
"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding-up of
the Company and which is not subject to redemption by the Company. However,
subject to the provisions of Section 13.11, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this Indenture or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided, that if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean that successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
President or one of its Vice Presidents, and by its Chief Financial Officer,
its Controller, its Treasurer, one of its Assistant Treasurers, its Secretary
or one of its Assistant Secretaries, and delivered to the Trustee.
"Consolidated Subsidiary" means a Subsidiary whose financial
statements are included in the most recent annual consolidated financial
statements of the Company and its Subsidiaries.
"Convertibility Commencement Date," when used with respect to
any Security, means the date fixed by or pursuant to this Indenture as the
first date on which that Security can be converted pursuant to Article XIII.
"Corporate Trust Office" means the office of the Trustee in
New York, New York at which at any particular time its corporate trust business
principally shall be administered.
"corporation" means a corporation, association, company,
joint-stock company or business trust.
- 3 -
<PAGE> 10
"Credit Facility" means, in each case as amended, restated,
modified, renewed, extended, increased, refunded, replaced or refinanced in
whole or in part from time to time: (a) the Revolving Loan Agreement dated
March 3, 1997, between the Company and NationsBank of Texas as Agent and
Issuing Lender, and the lenders party thereto from time to time; and (b) one or
more debt facilities with banks or other lenders providing for revolving credit
loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow
from such lenders against such receivables) or letters of credit.
"Current Market Price" has the meaning specified in Section
13.04.
"Defaulted Interest" has the meaning specified in Section
3.07.
"Designated Senior Indebtedness" means (a) the Credit Facility
and (b) any other Senior Indebtedness of the Company the principal amount of
which is $25 million or more and that has been designated by the Company as
"Designated Senior Indebtedness."
"Dollar" or "$" means at any time a dollar or other equivalent
unit in such coin or currency of the United States as at that time shall be
legal tender for the payment of public and private debts.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Holder" means a Person in whose name a Security of any series
is registered in the Security Register for that series.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including the terms of one or more series of Securities established as
contemplated by Section 3.01 and, for all purposes of this instrument and any
such supplemental indenture, the provisions of the Trust Indenture Act that are
deemed to be a part of and to govern this instrument and any such supplemental
indenture, respectively.
"Initial Conversion Price," when used with respect to any
Security to be converted, means the initial price per share of Common Stock
which is fixed for the conversion of that Security by or pursuant to this
Indenture, subject to adjustment after its issuance (or the earliest issuance
of any of its Predecessor Securities) pursuant to Article XIII.
"Interest Payment Date," when used with respect to any
Security, means the Stated Maturity of an installment of interest on that
Security.
- 4 -
<PAGE> 11
"Maturity," when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity thereof or by declaration of
acceleration, redemption or otherwise.
"Obligations" in respect of Senior Indebtedness means any
principal, interest, premiums, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documents governing any such
indebtedness.
"Officers' Certificate" means a certificate, in form
reasonably satisfactory to the Trustee, signed by the Chairman of the Board,
the Chief Executive Officer, the President or a Vice President, and by the
Chief Financial Officer, Controller, the Treasurer or an Assistant Treasurer,
the Secretary or an Assistant Secretary, of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion, in form and
substance reasonably satisfactory to the Trustee, of counsel, who may be
counsel for or an employee of the Company, and who shall be reasonably
acceptable to the Trustee.
"Original Issue Discount Security" means any Security that
provides for an amount less than the principal amount thereof to be due and
payable on a declaration of acceleration of the Maturity thereof pursuant to
Section 5.02.
"Outstanding," when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount have been
theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the
Holders of those Securities; provided, that if those Securities, or
portions thereof, are to be redeemed, notice of that redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(c) Securities that have been paid pursuant to Section
3.06 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or
- 5 -
<PAGE> 12
waiver hereunder, Securities owned by the Company or any other obligor on the
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that the
Trustee knows to be so owned shall be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company
or any other obligor on the Securities or any Affiliate of the Company or of
such other obligor.
"Paying Agent" means any Person, which may include the
Company, authorized by the Company to pay the principal of and premium, if any,
or interest on any one or more series of Securities on behalf of the Company.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities
of any series, means the place or places where the principal of (and premium,
if any) and interest on the Securities of that series are payable as specified
in accordance with Section 3.01, subject to the provisions of Section 10.02.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by that particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.06 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Record Date" means either a Regular Record Date or a Special
Record Date, as applicable.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to
be redeemed, means the price at which it is to be redeemed pursuant to this
Indenture on the applicable Redemption Date.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the date specified for that purpose as contemplated by
Section 3.01, or, if not so specified, the last day of the calendar month
preceding that Interest Payment Date if that Interest Payment Date is the 15th
day of the calendar month or the 15th day of the calendar month preceding that
Interest
- 6 -
<PAGE> 13
Payment Date if that Interest Payment Date is the first day of a calendar
month, whether or not that day is a Business Day.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.
"Repurchase Date" has the meaning specified in Section 14.01.
"Repurchase Event" has the meaning specified in Section 14.06.
"Repurchase Price" has the meaning specified in Section 14.01.
"Responsible Officer" means, when used with respect to the
Trustee, the chairman of the Board of Directors, any vice chairman of the Board
of Directors, the chairman of the trust committee, the chairman of the
executive committee, any vice chairman of the executive committee, the
president, any vice president (whether or not designated by numbers or words
added before or after the title "vice president"), the cashier, the secretary,
the treasurer, any trust officer, any assistant trust officer, any assistant
cashier, any assistant secretary, any assistant treasurer, or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 3.05.
"Senior Indebtedness" means the principal of and premium, if
any, and interest on (a) all secured indebtedness of the Company for money
borrowed under any Credit Facility, whether outstanding on the date of
execution of this Indenture or thereafter created, incurred or assumed, and (b)
all secured indebtedness of the Company for money borrowed, whether outstanding
on the date of execution of this Indenture or thereafter created, incurred or
assumed, and any amendments, renewals, extensions, modifications, refinancings,
replacements and refundings of any or all thereof. For the purposes of this
definition, "indebtedness for money borrowed" when used with respect to the
Company means (a) any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money (including without limitation fees,
penalties or other obligations in respect thereof), whether or not evidenced by
bonds, debentures, notes or other written instruments, (b) any deferred payment
obligation of, or any such obligation guaranteed by, the Company for the
payment of the purchase price of property or assets evidenced by a note or
similar instrument, and (c) any obligation of, or any such obligation
guaranteed by, the Company for the payment of rent or other amounts under a
lease of property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Company under
generally accepted accounting principles.
- 7 -
<PAGE> 14
"Significant Subsidiary" means at any time a Subsidiary that
is at that time a "significant subsidiary" of the Company within the meaning of
Rule 1.02(w) of Regulation S-X under the Securities Act of 1933, as amended
and in effect on the date of this Indenture.
"Special Record Date" for the payment of any Defaulted
Interest on the Securities of any series means a date fixed by the Trustee
pursuant to Section 3.07.
"Stated Maturity," when used with respect to any Security or
any installment of interest thereon, means the date specified in that Security
as the fixed date on which the principal of such Security or such installment
of interest is due and payable.
"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries or by the Company and one or more
other Subsidiaries. For the purposes of this definition, "voting stock" means
stock that ordinarily has voting power in the election of directors, whether at
all times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Termination of Trading" has the meaning specified in Section
14.06.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this Indenture was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
that date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Vice President," when used with respect to the Company, means
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president."
"Yield to Maturity," when used with respect to any Original
Issue Discount Security, means the yield to maturity, if any, set forth on the
face thereof.
- 8 -
<PAGE> 15
SECTION 1.02. Compliance Certificates and Opinions.
On any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall
furnish to the Trustee such certificates and opinions as may be required under
the Trust Indenture Act. Each such certificate or opinion shall be given in
the form of an Officers' Certificate, if to be given by officers of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply
with the requirements of the Trust Indenture Act and any other requirement set
forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual or firm signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation on which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual or such firm, he has or they have made such examination or
investigation as is necessary to enable him or them to express an
informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each
such individual or such firm, such condition or covenant has been
complied with.
SECTION 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, on a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to the matters on which his certificate or opinion
is based are erroneous. Any such certificate or Opinion of Counsel may be
based, insofar as it relates to factual matters, on a certificate of public
officials or on a certificate or opinion of, or representations by, an officer
or officers of the Company stating that the information with respect to such
factual matters is in the
- 9 -
<PAGE> 16
possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
SECTION 1.04. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be given
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by agents
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Section 6.01) conclusive in favor
of the Trustee and the Company, if made in the manner provided in this Section.
The record of any meeting of Holders shall be proved in the manner provided in
Section 15.06.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than
his individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by
the Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote
on any action, authorized or permitted to be given or taken by Holders. If not
set by the Company prior to the first solicitation of a Holder made by any
Person in respect of any such action, or, in the case of any such vote, prior
to such vote, the record date for any such action or vote shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 7.01) prior to such first solicitation or vote, as
the case may be. With regard to any record date, only the Holders on such date
(or their duly designated proxies) shall be entitled to give or take, or vote
on, the relevant action. Notwithstanding the foregoing, the Company shall not
set a record date for, and the provisions of this paragraph shall not apply
with respect to, any Act by the Holders pursuant to Section 5.01, 5.02 or 5.12.
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(d) The ownership of Securities of any series shall be
proved by the Security Register for that series.
(e) Any Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every Security
issued on the registration of transfer therefor or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
(f) Without limiting the foregoing, a Holder entitled
hereunder to give or take any action hereunder with regard to any particular
Security may do so with regard to all or any part of the principal amount of
such Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any different part of such
principal amount.
SECTION 1.05. Notices, etc., to Trustee and Company.
Any Act of Holders or other documents provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
2001 Ross Avenue, Dallas, Texas 75201, Attention: Corporate Trust
Administration, or at such superseding address has been previously
furnished in writing to the Holders and the Company by the Trustee; or
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company, addressed to it at Post Oak Tower, Suite 725,
5051 Westheimer Road, Houston, Texas 77506-5604 or at such superseding
address as has been previously furnished in writing to the Trustee by
the Company.
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, registered or certified with postage
prepaid, if mailed; when answered back if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by nationally recognized overnight air courier guaranteeing next day
delivery.
SECTION 1.06. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
Securities of any series of any event, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if made, given, furnished or filed
in writing to each Holder affected by such event, at his address as it appears
in the Security Register for that series, not later than the latest date (if
any), and not earlier than the
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earliest date (if any), prescribed for the giving of such notice. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance on such
waiver. All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, registered or certified with postage
prepaid, if mailed; when answered back if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by nationally recognized overnight air courier guaranteeing next day
delivery.
In the case of any notice this Indenture provides shall be
given by mail, if, by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Conflict With Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act or another provision that would be
required or deemed under such Act to be a part of and govern this Indenture if
this Indenture were subject thereto, the latter provision shall control. If
any provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.
SECTION 1.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
and the Trustee shall bind each of their respective successors and assigns,
whether so expressed or not.
SECTION 1.10. Separability Clause.
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.
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SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, the Holders of Securities and, with respect to Article
XII, the holders of Senior Indebtedness, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, BUT WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
SECTION 1.13. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security or the last date on which a Holder has the
right to convert his Securities shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal and premium, if any, or conversion of the
Securities need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, or on such
last day for conversion; provided, that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, to the next succeeding Business Day.
SECTION 1.14. No Security Interest Created.
Nothing in this Indenture or in the Securities, express or implied,
shall be construed to constitute a security interest under the Uniform
Commercial Code or similar legislation, as now or hereafter enacted and in
effect in any jurisdiction where property of the Company or its Subsidiaries is
or may be located.
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SECTION 1.15. Limitation on Individual Liability.
No recourse under or on any obligation, covenant or agreement
contained in this Indenture or in any Security, or for any claim based thereon
or otherwise in respect thereof, shall be had against any incorporator,
shareholder, officer or director, as such, past, present or future, of the
Company or any successor corporation, either directly or through the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the incorporators, shareholders,
officers or directors, as such, of the Company or any successor Person, or any
of them, because of the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any Security or implied therefrom; and that any and all
such personal liability of every name and nature, either at common law or in
equity or by constitution or statute, of, and any and all such rights and
claims against, every such incorporator, shareholder, officer or director, as
such, because of the creation of the indebtedness hereby authorized, or under
or by reason of the obligations, covenants or agreements contained in this
Indenture or in any Security or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Security.
ARTICLE II
SECURITY FORMS
SECTION 2.01. Forms Generally.
The Securities of each series shall be in substantially such
form or forms as shall be established by or pursuant to a Board Resolution or
in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities. A copy of the
Board Resolution establishing the form or forms of Securities or of any series
of Securities shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.03 for the authentication and delivery
of those Securities.
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing those Securities, as evidenced by their
execution thereof.
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SECTION 2.02. Form of Trustee's Certificate of Authentification.
The Trustee's certificate of authentification shall be in
substantially the following form:
"This is one of the Securities of the series designated,
described or provided for in the within-mentioned Indenture.
U.S. TRUST COMPANY OF TEXAS, N.A., as
Trustee
By
------------------------------------
Authorized Signatory".
ARTICLE III
THE SECURITIES
SECTION 3.01. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There
shall be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(a) the title of the Securities of the series (which
shall distinguish the Securities of the series from the Securities of
all other series);
(b) any limit on the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered on registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 3.04,
3.05, 3.06, 9.06, 11.07, 13.02 or 14.05);
(c) the date or dates on which the principal of and any
premium on the Securities of the series is payable or the method of
determination thereof;
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(d) the rate or rates (which may vary among Securities of
the series), or the method of determination thereof, at which the
Securities of the series shall bear interest, if any, whether and
under what circumstances Additional Amounts with respect to such
Securities shall be payable, the date or dates from which that
interest shall accrue, the Interest Payment Dates on which that
interest shall be payable and, if other than as set forth in Section
1.01, the Regular Record Date for the interest payable on such
Securities on any Interest Payment Date;
(e) the place or places where, subject to the provisions
of Section 10.02, the principal of, any premium or interest on and any
Additional Amounts with respect to the Securities of the series shall
be payable;
(f) the period or periods within which, the price or
prices (whether denominated in cash, securities or otherwise) at which
and the terms and conditions on which (which period or periods, price
or prices and terms and conditions may vary among Securities of the
series) Securities of the series may be redeemed, in whole or in part,
at the option of the Company, if the Company is to have that option,
and the manner in which the Company must exercise any such option;
(g) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices (whether
denominated in cash, securities or otherwise) at which and the terms
and conditions on which (which period or periods, price or prices and
terms and conditions may vary among Securities of the series)
Securities of the series shall be redeemed or purchased in whole or in
part pursuant to that obligation;
(h) the denomination in which any Securities of the
series shall be issuable, if other than denominations of $1,000 and
any integral multiple thereof;
(i) the currency or currencies (including composite
currencies) in which payment of the principal of, any premium or
interest on and any Additional Amounts with respect to the Securities
of the series shall be payable if other than Dollars;
(j) if the principal of, any premium or interest on or
any Additional Amounts with respect to the Securities of the series
are to be payable, at the election of the Company or a Holder thereof,
in a currency or currencies (including composite currencies) other
than that in which the Securities are stated to be payable, the
currency or currencies (including composite currencies) in which
payment of the principal of or any premium or interest on or any
Additional Amounts with respect to Securities of the series as to
which such election is made shall be payable, and the periods within
which and the terms and conditions on which that election is to be
made;
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<PAGE> 23
(k) if the amount of payments of principal of, any
premium or interest on or any additional amounts with respect to the
Securities of the series may be determined with reference to any
commodities, currencies or indices, or values, rates or prices, the
manner in which those amounts shall be determined;
(l) if other than the entire principal amount thereof,
the portion of the principal amount of Securities of the series which
shall be payable on declaration of acceleration of the Maturity
thereof pursuant to Section 5.02;
(m) any additional means of satisfaction and discharge of
this Indenture with respect to Securities of the series pursuant to
Section 4.01 and any additional conditions to discharge pursuant to
Section 4.01;
(n) any deletions or modifications of or additions to the
Events of Default set forth in Section 5.01 or covenants of the
Company set forth in Article X pertaining to the Securities of the
series;
(o) if the Securities of the series are to be
subordinated pursuant to Article XII to unsecured indebtedness or
other liabilities, the modification for purposes only of the series of
the definition of "Senior Indebtedness" herein; and
(p) any other terms of the series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially
identical, except as to denomination and except as is otherwise provided in
this Section 3.01 or may otherwise be provided in or pursuant to the Board
Resolution referred to above and (subject to Section 3.03) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
At the option of the Company, interest on the Securities of
any series that bears interest may be paid by mailing a check to the address of
any Holder as such address shall appear in the Security Register.
If any of the terms of the series are established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of that
action together with that Board Resolution shall be certified by the Secretary
or an Assistant Secretary of the Company and delivered to the Trustee at or
prior to the delivery of the Officers' Certificate setting forth the terms of
the series.
SECTION 3.02. Denominations.
The Securities of each series shall be issuable in such
denominations as shall be specified as contemplated by Section 3.01. In the
absence of any such provisions with respect to the
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Securities of any series, the Securities of that series denominated in Dollars
shall be issuable in denominations of $1,000 and any integral multiple thereof.
Unless otherwise provided as contemplated by Section 3.01 with respect to any
series of Securities, any Securities of a series denominated in a currency
other than Dollars shall be issuable in denominations that are the equivalent,
as determined by the Company by reference to the noon buying rate in The City
of New York for cable transfers for such currency, as such rate is reported or
otherwise made available by the Federal Reserve Bank of New York, on the
applicable issue date for such Securities, of $1,000 and any integral multiple
thereof.
SECTION 3.03. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by
its Chairman of the Board, its Chief Executive Officer, its President, its
Chief Financial Officer or one of its Vice Presidents, under its corporate seal
or a facsimile thereof reproduced thereon attested by its Secretary or one of
its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any series
executed by the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of those Securities; and the
Trustee in accordance with such Company Order shall either at one time or from
time to time pursuant to such instructions as may be described therein
authenticate and deliver such Securities as in this Indenture provided and not
otherwise. Such Company Order shall specify (or will state that an Officers'
Certificate will specify) the amount of Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated, and
shall certify (or a related Officers' Certificate shall certify) that all
conditions precedent to the issuance of such Securities contained in this
Indenture have been complied with.
If the form or terms of the Securities of any series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 2.01 and 3.01, in authenticating those Securities, and accepting the
additional responsibilities under this Indenture in relation to those
Securities, the Trustee shall be entitled to receive, and (subject to Section
6.01) shall be fully protected in relying on, an Opinion of Counsel stating:
(a) if the form of those Securities has been established
by or pursuant to Board Resolution as permitted by Section 2.01, that
such form has been established in conformity with the provisions of
this Indenture;
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(b) if the terms of those Securities have been
established by or pursuant to Board Resolution as permitted by Section
3.01, that such terms have been established in conformity with the
provisions of this Indenture; and
(c) that those Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except as such enforcement
is subject to the effect of (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally, (ii) general principles of equity
(regardless of whether that enforcement is considered in a proceeding
in equity or at law) and (iii) any implied covenant of good faith and
fair dealing.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on
such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature, and such
certificate on any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder and is entitled to the benefits of the Indenture. Notwithstanding
the foregoing, if any Security shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
3.09 together with a written statement (which need not comply with Section 1.03
and need not be accompanied by an Opinion of Counsel) stating that such
Security has never been issued and sold by the Company, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits of this
Indenture.
The Trustee may appoint an Authenticating Agent pursuant to
the terms of Section 6.14.
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SECTION 3.04. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute, and on Company Order the Trustee shall
authenticate and deliver, temporary Securities of that series which are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing those Securities may determine, as evidenced by their execution of
those Securities. Every such temporary Security shall be executed by the
Company and shall be authenticated and delivered by the Trustee on the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Security or Securities in lieu of which it is issued.
If temporary Securities of any series are issued, the Company
will cause definitive Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Securities of any
series, the temporary Securities of that series shall be exchangeable for those
definitive Securities on surrender of the temporary Securities at any office or
agency of the Company designated pursuant to Section 10.02, without charge to
the Holder. On surrender for cancellation of any one or more temporary
Securities of any series, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive Securities
of the same series and of like tenor, of any authorized denominations and of a
like aggregate principal amount. Until so exchanged the temporary Securities
of any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of that series.
SECTION 3.05. Registration, Registration of Transfer and Exchange.
(a) The Company shall cause to be kept for each series of
Securities at one of the offices or agencies maintained pursuant to Section
10.02 a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities of that series. The
Trustee is hereby initially appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
(b) On surrender for registration of transfer of any
Security of any series at the office or agency in a Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series and of like tenor, of any authorized
denominations and of a like aggregate principal amount.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series and of like tenor, of any
authorized denominations and of a like aggregate principal amount, on surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
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Trustee shall authenticate and deliver, the Securities that the Holder making
the exchange is entitled to receive.
(c) All Securities issued on any registration of transfer
or exchange of Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered on such registration of transfer or
exchange.
(d) Every Security presented or surrendered for
registration of transfer or for exchange shall (if so required by the Company
or the Trustee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
(e) No service charge shall be made for any registration
of transfer or exchange of Securities, except as provided in Section 3.06. The
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
3.04, 9.06, 11.07, 13.02 or 14.05 not involving any transfer.
(f) The Company shall not be required (i) to issue,
register the transfer of or exchange Securities of any series during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities of that series selected for redemption and
ending at the close of business on the day of the mailing of the relevant
notice of redemption or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security of any series is surrendered to the
Trustee, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series and of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (b) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding. The Trustee may
charge the Company for the Trustee's expenses in replacing such Security.
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In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
On the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section 3.06 in lieu of any destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series duly issued
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. 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 (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. Unless otherwise provided with respect to the Securities of any
series, payment of interest may be made at the option of the Company by check
mailed or delivered to the address of any Person entitled thereto as such
address shall appear in the Securities Register.
Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease 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 (or
their respective Predecessor Securities) of that series 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
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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 therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of that
series at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their respective
Predecessor Securities) of that series are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful manner
not inconsistent with the requirements of any securities exchange on
which those Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to
the Trustee of the proposed payment pursuant to this clause (b), such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 3.07, 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.
In the case of any Security of any series which is converted
after any Regular Record Date and on or prior to the next succeeding Interest
Payment Date (other than any Security whose Maturity is prior to such Interest
Payment Date), interest on that Security whose Stated Maturity is on such
Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Security (or one or more of its Predecessor Securities) is registered at the
close of business on such Regular Record Date, provided, however, that
Securities of any series so surrendered for conversion shall (except in the
case of those Securities or portions thereof called for redemption) be
accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount being surrendered for conversion.
Except as otherwise expressly provided in the immediately preceding sentence,
in the case of any Security of any series which is converted, interest whose
Stated Maturity is after the date of conversion of that Security shall not be
payable.
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SECTION 3.08. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name that Security is registered as the owner of
that Security for the purpose of receiving payment of principal of and premium,
if any, and (subject to Section 3.07) interest on that Security and for all
other purposes whatsoever, whether or not that Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 3.09. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer, exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be
promptly canceled by it. The Company may at any time deliver to the Trustee for
cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Securities held by the Trustee shall be disposed of as
directed by a Company Order.
SECTION 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.01
for Securities of any series, interest on the Securities of each series shall
be computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.
This Indenture shall on Company Request cease to be of further
effect (except as expressly provided for in this Article IV), and the Trustee,
at the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and
delivered (other than (A) Securities that have been destroyed,
lost or stolen and which have been replaced or paid as
provided in Section 3.06 and (B) Securities for whose payment
money has theretofore been deposited in trust or segregated
and held in trust by the Company
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and thereafter repaid to the Company or discharged from such
trust, as provided in Section 10.03) have been delivered to
the Trustee for cancellation; or
(ii) all those Securities not theretofore
delivered to the Trustee for cancellation
(A) have become due and payable, or
(B) will become due and payable at their
Stated Maturity within one year, or
(C) are to be called for redemption
within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by
the Trustee in the name, and at the expense, of the
Company, or
(D) are delivered to the Trustee for
conversion in accordance with Article XIII,
and the Company, in the case of (A), (B), (C) or (D) above, has
irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for the purpose of paying an amount in cash
sufficient (without consideration of any investment of such cash) to
pay and discharge the entire indebtedness on those Securities not
theretofore delivered to the Trustee for cancellation for principal
and premium, if any, and interest and Additional Amounts, if any, to
the date of such deposit (in the case of Securities that have become
due and payable) or to the Stated Maturity or Redemption Date, as the
case may be; provided that the Trustee is irrevocably instructed to
apply such amount to said payments with respect to those Securities;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this
Indenture, the following rights or obligations under the Securities and this
Indenture shall survive until otherwise terminated or discharged hereunder:
(a) Article XIII, Article XIV and the Company's obligations under Sections
3.04, 3.05, 3.06, 10.02 and 10.03, in each case with respect to any Securities
described in subclause (ii) of clause (a) of this Section 4.01, (b) this
Article IV, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including the obligations of the Company to the Trustee
under Section 6.07, and the obligations of the Trustee or the Company to any
Authenticating Agent under
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Section 6.14 and (d) if money shall have been deposited with the Trustee
pursuant to subclause (ii) of clause (a) of this Section 4.01, the rights of
Holders of any Securities described in that subclause (ii) to receive, solely
from the trust fund described in that subclause (ii), payments in respect of
the principal of, and premium (if any) and interest on and Additional Amounts
(if any) with respect to, those Securities when such payments are due.
SECTION 4.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be
held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal,
premium, if any, interest and Additional Amounts, if any, for whose payment
such money has been deposited with the Trustee. All moneys deposited with the
Trustee pursuant to Section 4.01 (and held by it or any Paying Agent) for the
payment of Securities subsequently converted shall be returned to the Company
on Company Request.
SECTION 4.03. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with this Article IV by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article IV until such time as the Trustee
or Paying Agent is permitted to apply all money held in trust with respect to
the Securities; provided, however, that if the Company makes any payment of
principal of, any premium or interest on or any Additional Amounts with respect
to any Security following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of the Securities to receive
such payment from the money so held in trust.
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default.
"Event of Default," wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for that Event of Default and whether it shall be occasioned by the
provisions of Article XII or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
unless it either is inapplicable to a particular
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series of Securities or is specifically deleted or modified in or pursuant to
the supplemental indenture or Board Resolution establishing that series or in
the form of the Security for that series;
(a) default in the payment of the principal of or
premium, if any, on any Security of that series at its Maturity,
whether or not such payment is prohibited by the provisions of Article
XII; or
(b) default in the payment of any interest on or any
Additional Amounts with respect to any Security of that series when it
becomes due and payable, whether or not such payment is prohibited by
the provisions of Article XII, and continuance of such default for a
period of 30 days; or
(c) failure to provide timely notice of a Repurchase
Event in accordance with the provisions of Article XIV; or
(d) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section 5.01 specifically dealt with or which has
been expressly included in this Indenture solely for the benefit of
one or more series of Securities other than that series), and
continuance of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(e) default under one or more bonds, notes, debentures or
other evidences of indebtedness for money borrowed by the Company or
any Consolidated Subsidiary or under one or more mortgages, indentures
or instruments under which there may be issued or by which there may
be secured or evidenced any indebtedness for money borrowed by the
Company or any Consolidated Subsidiary, whether such indebtedness now
exists or shall hereafter be created, which default individually or in
the aggregate shall constitute a failure to pay the principal of
indebtedness in excess of $10,000,000 when due and payable after the
expiration of any applicable grace period with respect thereto or
shall have resulted in the principal of indebtedness in excess of
$10,000,000 becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without
such indebtedness having been discharged, or such acceleration having
been rescinded or annulled, within a period of 30 days after there
shall have been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that
series a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such
acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" hereunder; or
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(f) the filing or commencement of an involuntary case or
other proceeding against the Company or any Significant Subsidiary of
the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or thereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official
of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a
period of 90 days; or an order for relief shall be entered against the
Company or any Significant Subsidiary of the Company under the federal
bankruptcy laws as now or hereafter in effect; or
(g) the filing or commencement by the Company or any
Significant Subsidiary of the Company of a voluntary case or other
proceeding seeking liquidation, reorganization or other similar relief
with respect to itself or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect, or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or the
Company or any Significant Subsidiary of the Company shall consent to
any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced
against it or shall make a general assignment for the benefit of
creditors; or
(h) any other Event of Default provided with respect to
Securities of that series as contemplated by Section 3.01.
Notwithstanding the foregoing provisions of this Section 5.01,
if the principal of, any premium or any interest on or any Additional Amounts
with respect to the Securities of any series is payable in a currency or
currencies (including a composite currency) other than Dollars and such
currency (or currencies) is (or are) not available to the Company for making
payment thereof because of the imposition of exchange controls or other
circumstances beyond the control of the Company (a "Conversion Event"), the
Company will be entitled to satisfy its obligations to Holders of the
Securities of that series by making such payment in Dollars in an amount equal
to the Dollar equivalent of the amount payable in such other currency
currencies, as determined by the Company by reference to the noon buying rate
in The City of New York for cable transfers for such currency ("Exchange
Rate"), as such Exchange Rate is certified for customs purposes by the Federal
Reserve Bank of New York on the date of such payment, or, if such rate is not
then available, on the basis of the most recently available Exchange Rate.
Notwithstanding the foregoing provisions of this Section 5.01, any payment made
under such circumstances in Dollars where the required payment is in a currency
or currencies other than Dollars will not constitute an Event of Default under
this Indenture.
Promptly after the occurrence of a Conversion Event respecting
Securities of any series, the Company shall give written notice thereof to the
Trustee; and the Trustee, promptly after receipt of such notice, shall give
notice thereof in the manner provided in Section 1.06 to the Holders of those
Securities. Promptly after the making of any payment in Dollars as a result of
a Conversion
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Event respecting Securities of any series, the Company shall give notice in the
manner provided in Section 1.06 to the Holders of those Securities, setting
forth the applicable Exchange Rate and describing the calculation of such
payments.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to any Outstanding
Securities of any series occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of (a) the series affected by such default (in the case
of an Event of Default described in clause (a), (b), or (h) of Section 5.01) or
(b) all series of Securities (subject to the immediately following sentence, in
the case of other Events of Default) may declare the principal amount (or, if
any such Securities are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Securities of the series affected by such default or all series, as the case
may be, to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), and on any such declaration
such principal amount (or specified amount) shall become immediately due and
payable. If an Event of Default described in clause (f) or (g) of Section 5.01
shall occur, the principal amount of the Outstanding Securities of all series
ipso facto shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration with
respect to Securities of any series (or of all series, as the case may be) has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of a majority in principal amount of the Outstanding Securities of that series
(or of all series, as the case may be), by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if
(a) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(i) all overdue interest on, and any Additional
Amounts with respect to, all Securities of that series (or of
all series, as the case may be),
(ii) the principal of (and premium, if any, on)
any Securities of that series (or of all series, as the case
may be) which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
or rates prescribed therefor in such Securities (in the case
of Original Issue Discount Securities, the Securities' Yield
to Maturity),
(iii) to the extent that payment of such interest
is lawful, interest on overdue interest and any Additional
Amounts at the rate or rates prescribed therefor in such
Securities (in the case of Original Issue Discount Securities,
the Securities' Yield to Maturity) and
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(iv) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(b) all Events of Default with respect to Securities of
that series (or of all series, as the case may be), other than the
non-payment of the principal of Securities of that series (or of all
series, as the case may be) which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on or
any Additional Amounts with respect to any Security of any series when
such interest or Additional Amounts shall have become due and payable
and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of or
premium, if any, on any Security of any series at the Maturity
thereof,
the Company will, on demand of the Trustee, pay to it, for the benefit of the
Holders of the Securities of that series, the whole amount then due and payable
on those Securities for principal and premium, if any, and interest and any
Additional Amounts, and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal and premium, if any, and
on any overdue interest and Additional Amounts, at the rate borne by those
Securities (or in the case of Original Issue Discount Securities, the Yield to
Maturity of those 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, disbursements and advances of the
Trustee and each predecessor Trustee, their respective agents and counsel, and
any other amounts due the Trustee or any predecessor Trustee under Section
6.07.
If the Company fails to pay such amounts forthwith on such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid and may prosecute any such proceeding to judgment or final decree, and
may enforce the same against the Company (or any other obligor on those
Securities) and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company (or any other obligor
on those Securities), wherever situated.
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If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of those
Securities 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 5.04. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or
any other obligor on the Securities of any series), its property or its
creditors, the Trustee shall be entitled and empowered, by intervention in such
proceeding or otherwise, to take any and all actions authorized under the Trust
Indenture Act in order to have the claims of the applicable Holders and the
Trustee allowed in any such proceeding. In particular, the Trustee shall be
authorized to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each applicable Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the applicable Holders, to
pay to the Trustee any amount due it and each predecessor Trustee for the
reasonable compensation, expenses, disbursements and advances of the Trustee
and each predecessor Trustee and their respective agents and counsel, and any
other amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder of Securities of any series any plan of reorganization, arrangement,
adjustment or composition affecting those Securities or the rights of any
Holder thereof or to authorize the Trustee to vote in respect of the claim of
that Holder in any such proceeding; provided, however, that the Trustee may, on
behalf of the Holders of those Securities, vote for the election of a trustee
in bankruptcy or similar official and may be a member of the Creditors'
Committee.
SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities of any series may be prosecuted and enforced by the Trustee without
the possession of any of those Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee and each
predecessor Trustee and their respective agents and counsel, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has
been recovered.
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SECTION 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article V
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal
of, premium, if any, or interest on or any Additional Amounts with respect to
the Securities of any series, on presentation of those Securities and the
notation thereon of the payment if only partially paid and on surrender thereof
if fully paid:
FIRST: Subject to Article XII, to the holders of Senior
Indebtedness;
SECOND: To payment of all amounts due the Trustee under
Section 6.07;
THIRD: To the payment of the amounts then due and unpaid for
principal of, premium, if any, and interest on and any Additional
Amounts with respect to the Securities in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on those Securities for principal, premium, if any, interest
and Additional Amounts, respectively; and
FOURTH: The balance, if any, to the Company or any other
Person or Persons determined to be entitled thereto.
To the fullest extent allowed under applicable law, if for the
purpose of obtaining judgment against the Company in any court it is necessary
to convert the sum due in respect of the principal of or any premium or
interest on or any Additional Amounts with respect to the Securities of any
series (the "Required Currency") into a currency in which a judgment will be
rendered (the "Judgment Currency"), the rate of exchange used will be the rate
at which in accordance with normal banking procedures the Trustee could
purchase in The City of New York the Required Currency with the Judgment
Currency on the New York Business Day next preceding that on which final
judgment is given. Neither the Company nor the Trustee will be liable for any
shortfall nor will either the Company or the Trustee it benefit from any
windfall in payments to Holders of Securities under this Section 5.06 caused by
a change in exchange rates between the time the amount of a judgment against
the Company is calculated as above and the time the Trustee converts the
Judgment Currency into the Required Currency to make payments under this
Section 5.06 to Holders of Securities, but payment of that judgment will
discharge all amounts owed by the Company on the claim or claims underlying
that judgment.
SECTION 5.07. Limitation on Suits.
No Holder of any Security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
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(a) an Event of Default with respect to Securities of
that series has occurred and is continuing and that Holder has
previously given written notice to the Trustee of that continuing
Event of Default;
(b) the Holders of not less than 25% in principal amount
of the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity satisfactory to it against the costs, expenses
and liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities of
that series;
it being understood and intended that no one or more of those Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other of those Holders, or to obtain or to seek to obtain priority or
preference over any other of those Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all those Holders.
SECTION 5.08. Unconditional Right of Holders To Receive Principal, Premium,
Interest and To Convert.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
(subject to Section 3.07) interest on and any Additional Amounts with respect
to such Security on the respective Stated Maturities expressed in that Security
(or, in the case of redemption, on the Redemption Date or, in the case of a
repurchase pursuant to Article XIV, on the Repurchase Date) and to convert such
Security in accordance with Article XIII and to institute suit for the
enforcement of any such payment and right to convert, and such rights shall not
be impaired without the consent of that Holder.
SECTION 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder of Securities of any series has
instituted any proceeding to enforce any right or remedy under this Indenture
and that proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to that Holder, then and in every
such case, subject to any determination in that proceeding, the Company, the
Trustee
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and the Holders of Securities of that series shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and those Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in Section 3.06,
no right or remedy herein conferred on or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing on any Event of Default with
respect to that Security shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article V or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders.
With respect to Securities of any series, the Holders of a
majority in principal amount of the Outstanding Securities of that series shall
have the right to 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 relating to or arising under an Event of Default
described in clause (a), (b) or (h) of Section 5.01, and with respect to all
Securities the Holders of a majority in principal amount of all Outstanding
Securities shall have the right to direct the time, method and place of
conducting any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, not relating to or arising under such an Event
of Default; provided, that:
(a) such direction shall not be in conflict with any rule
of law or with this Indenture;
(b) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction; and
(c) subject to the provisions of Section 6.01, the
Trustee shall have the right to decline to follow any such direction
if the Trustee in good faith shall determine that the
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action so directed would involve the Trustee in personal liability or
would be unduly prejudicial to Holders not joining in such direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Securities of any series may on behalf of the Holders of all
the Securities of that series waive any past default hereunder with respect to
that series and its consequences, and the Holders of a majority in principal
amount of all Outstanding Securities may on behalf of the Holders of all
Securities waive any other past default hereunder and its consequences, except
in each case a default
(a) in the payment of the principal of or premium, if
any, or interest on or any Additional Amounts with respect to any
Security, or
(b) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
the Holder of each Outstanding Security affected.
On any such waiver, the waived default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 5.14 shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% in principal amount of the Outstanding Securities of any series, or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, or premium, if any, or interest on or any Additional Amounts with
respect to any Security on or after the Stated Maturity or Maturities expressed
in such Security (or, in the case of redemption, on or after the Redemption
Date).
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ARTICLE VI
THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by this Indenture and the Trust Indenture Act for securities issued
pursuant to indentures qualified thereunder. Except as otherwise provided
herein, notwithstanding the foregoing, no provision of this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur any
financial liability or risk 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
satisfactory to it against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
6.01. The Trustee shall not be liable (a) for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts or (b) with respect to any action taken or omitted to be taken
by it in good faith in accordance with the direction of the Holders of not less
than a majority in aggregate principal amount of the then Outstanding
Securities of any series or all series, determined as provided in Section 5.12,
relating to the time, method and place of conducting any proceeding or any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, under this Indenture with respect to those Securities. Prior to
the occurrence of an Event of Default with respect to Securities of any series
and after the curing or waiving of all Events of Default with respect to all
series which may have occurred: (a) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this Indenture and in
the Trust Indenture Act, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Indenture and in the Trust Indenture Act, and no implied covenants or
obligations shall be read in to this Indenture against the Trustee; and (b) in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions therein, on any statements, certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture and believed by
the Trustee to be genuine and to have been signed or presented by the proper
party or parties; but in the case of any such statements, certificates or
options which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform on their face to the requirements of
this Indenture. If a default or an Event of Default with respect to Securities
of any series has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of
care and skill in its exercise thereof as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs.
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SECTION 6.02. Notice of Defaults.
The Trustee shall give the Holders of Securities of each
series notice of any default hereunder with respect to the Securities of that
series known to it as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default with respect to the
Securities of that series of the character specified in Section 5.01(d), no
such notice to those Holders shall be given until at least 30 days after the
occurrence thereof; and provided, further, that, except in the case of a
default in payment of principal of, premium, if any, or interest on or any
Additional Amounts with respect to any Securities of any series, the Trustee
may withhold notice to the Holders of those Securities if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of those Holders. For the purpose of this
Section 6.02, the term "default" with respect to the Securities of any series
means any event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to those Securities.
SECTION 6.03. Certain Rights of Trustee.
Subject to the provisions of Section 6.01:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting on 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;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely on an Officers'
Certificate;
(d) the Trustee may 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;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity satisfactory to it against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(f) before the Trustee acts or refrains from acting with
respect to any matter contemplated by this Indenture, it may require
an Officers' Certificate or an Opinion of
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Counsel, which shall conform to the provisions of Section 1.02, and
the Trustee shall be protected and shall not be liable for any action
it takes or omits to take in good faith and without gross negligence
in reliance on such certificate or opinion;
(g) the Trustee shall not be required to give any bond or
surety in respect of the performance of its power and duties
hereunder;
(h) 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; and
(i) 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.
SECTION 6.04. Not Responsible for Recitals or Issuance of Securities.
The statements and recitals contained herein and in the
Securities and in any other document in connection with the sale of the
Securities, except the Trustee's certificate of authentication, shall be taken
as the statements of the Company, and the Trustee and any Authenticating Agent
assume no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee and any Authenticating Agent shall not be accountable
for the use or application by the Company of Securities or the proceeds
thereof.
SECTION 6.05. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 6.08 and 6.13, may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 6.06. Money Held in Trust.
Money held by the Trustee or any Paying Agent in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee or any Paying Agent
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shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 6.07. Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (including its
services as Security Registrar or Paying Agent, if so appointed by the
Company) as may be mutually agreed on in writing by the Company and
the Trustee (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee and each predecessor Trustee promptly on its
request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of it in connection with the
performance of its duties under any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel and all other persons not
regularly in its employ) except to the extent any such expense,
disbursement or advance may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee and each predecessor Trustee
(each, an "indemnitee") for, and to hold the indemnitee harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder
and its duties hereunder (including its services as Security Registrar
or Paying Agent, if so appointed by the Company), including
enforcement of this Indenture (including this Section 6.07) and
including the costs and expenses of defending itself against or
investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The Company
shall defend any claim or threatened claim asserted against an
indemnitee for which it may seek indemnity, and the indemnitee shall
cooperate in the defense unless, in the reasonable opinion of the
indemnitee's counsel, the indemnitee has an interest adverse to the
Company or a potential conflict of interest exists between the
indemnitee and the Company, in which case the indemnitee may have
separate counsel and the Company shall pay the reasonable fees and
expenses of such counsel; provided that the Company shall only be
responsible for the reasonable fees and expenses of one law firm (in
addition to local counsel) in any one action or separate substantially
similar actions in the same jurisdiction arising out of the same
general allegations or circumstances, such law firm to be designated
by the indemnitee.
As security for the performance of the obligations of the
Company under this Section 6.07, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the Holders of particular
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Securities, and the Securities are hereby subordinated to such prior lien. The
obligations of the Company under this Section to compensate and indemnify the
Trustee and any predecessor Trustee and to pay or reimburse the Trustee and any
predecessor Trustee for expenses, disbursements and advances, and any other
amounts due the Trustee or any predecessor Trustee under this Section 6.07,
shall constitute an additional obligation hereunder and shall survive the
satisfaction and discharge of this Indenture.
When the Trustee or any predecessor Trustee incurs expenses or
renders services in connection with the performance of its obligations
hereunder (including its services as Security Registrar or Paying Agent, if so
appointed by the Company) after an Event of Default specified in Section
5.01(f) or (g) occurs, those expenses and the compensation for those services
are intended to constitute expenses of administration under any applicable
bankruptcy, insolvency or other similar federal or state law to the extent
provided in Section 503(b)(5) of Title 11 of the United States Code, as now or
hereafter in effect.
SECTION 6.08. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting
interest, as defined in this Section 6.08, with respect to the Securities of
any series, it shall, within 90 days after ascertaining that it has such
conflicting interest, either eliminate that conflicting interest or resign with
respect to the Securities of that series in the manner and with the effect
hereinafter specified in this Article VI.
(b) In the event that the Trustee shall fail to comply
with the provisions of paragraph (a) of this Section 6.08 with respect to the
Securities of any series, the Trustee shall, within 10 days after the
expiration of the 90-day period referred to in that paragraph (a), transmit by
mail to all Holders of Securities of that series, as their names and addresses
appear in the Security Register for that series, notice of that failure.
(c) For the purposes of this Section, the term
"conflicting interest" shall have the meaning specified in Section 310(b) of
the Trust Indenture Act and the Trustee shall comply with Section 310(b) of the
Trust Indenture Act; provided, that there shall be excluded from the operation
of Section 310(b)(1) of the Trust Indenture Act with respect to the Securities
of any series any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in Section
310(b)(1) of the Trust Indenture Act are met. For purposes of the preceding
sentence, the optional provision permitted by the second sentence of Section
310(b)(9) of the Trust Indenture Act shall be applicable.
SECTION 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
a Person that (i) is eligible pursuant to the Trust Indenture Act to act as
such, (ii) has (or, in the case of a corporation
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included in a bank holding company system, whose related bank holding company
has) a combined capital and surplus of at least $50,000,000 and (iii) has a
Corporate Trust Office in the Borough of Manhattan, The City of New York, or a
designated agent. If such Person publishes reports of conditions at least
annually, pursuant to law or to the requirements of a Federal or state
supervising or examining authority, then for the purposes of this Section 6.09,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 6.09, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article VI.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article VI shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee for those
Securities which is required by Section 6.11 shall not have been delivered to
the resigning Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee for those Securities.
(c) The Trustee may be removed at any time with respect
to the Securities of any series by an Act of the Holders of a majority in
principal amount of the Outstanding Securities of that series delivered to the
Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section
6.08 with respect to the Securities of any series after written
request therefor by the Company or by any Holder who has been a bona
fide Holder of a Security of that series for the last six months, or
(ii) the Trustee shall cease to be eligible under
Section 6.09 with respect to the Securities of any series and shall
fail to resign after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security of that series
for the last six months, or
(iii) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
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<PAGE> 48
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to the Securities of all series, or (ii) subject to Section
5.14, any Holder who has been a bona fide Holder of a Security for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause with respect to the Securities of one or more series, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee or Trustees with
respect to those Securities (it being agreed that any such successor Trustee
may be appointed with respect to the Securities of one or more or all of those
series and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and such successor Trustee or Trustees
shall comply with the applicable requirements of Section 6.11. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company and accepted appointment in the manner required by
Section 6.11, any Holder who has been a bona fide Holder of a Security of that
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of that
series.
(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of any
series to all Holders of the Securities of that series in the manner provided
in Section 1.06. Each notice shall include the name of the successor Trustee
and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on request of the Company or the successor Trustee, such retiring Trustee
shall, on payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each such successor Trustee so appointed shall
execute and deliver an indenture supplemental hereto wherein each such successor
Trustee shall accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each such
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successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (ii) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee and (iii) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and on
the execution and delivery of such supplemental indenture, the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Securities of that or those series
to which the appointment of such successor Trustee relates; but, on request of
the Company or any such successor Trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates.
(c) On request of any such successor Trustee, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section 6.11, as the case may be.
(d) No successor Trustee shall accept its appointment
unless, at the time of that acceptance, that successor Trustee shall be
qualified and eligible under this Article VI.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article VI, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated those Securities.
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SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor on the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents
acceptable to and at the expense of the Company which shall be authorized to
act on behalf of the Trustee to authenticate Securities issued on original
issue and on exchange, registration of transfer, partial conversion or partial
redemption or pursuant to Section 3.06, and Securities so authenticated shall
be entitled to the benefits of this Indenture and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder. Wherever
reference is made in this Indenture to the authentication and delivery of
Securities by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a Person organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having (or, in the case of a corporation
included in a bank holding company system, whose related bank holding company
has) a combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for the purposes of this Section 6.14, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
an Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 6.14.
Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such Person shall be otherwise eligible under
this Section 6.14, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Company. On receiving
such a notice of resignation or on such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.14, the Trustee may appoint a successor
Authenticating Agent acceptable to the Company and shall mail notice of such
appointment by first-class mail, postage prepaid, to all Holders of
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Securities for which such successor Authenticating Agent has been appointed as
their names and addresses appear in the Security Register. Any successor
Authenticating Agent on acceptance of its appointment under this Section 6.14
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible to act as
such under the provisions of this Section 6.14.
Any Authenticating Agent by the acceptance of its appointment
shall be deemed to have represented to the Trustee that it is eligible for
appointment as Authenticating Agent under this Section 6.14 and to have agreed
with the Trustee that: it will perform and carry out the duties of an
Authenticating Agent as herein set forth, including, among other duties, the
duties to authenticate Securities when presented to it in connection with the
original issuance and with exchanges, registrations of transfer or redemptions
or conversions thereof or pursuant to Section 3.06; it will keep and maintain,
and furnish to the Trustee from time to time as requested by the Trustee,
appropriate records of all transactions carried out by it as Authenticating
Agent and will furnish the Trustee such other information and reports as the
Trustee may reasonably require; and it will notify the Trustee promptly if it
shall cease to be eligible to act as Authenticating Agent in accordance with
the provisions of this Section 6.14. Any Authenticating Agent by the
acceptance of its appointment shall be deemed to have agreed with the Trustee
to indemnify the Trustee against any loss, liability or expense incurred by the
Trustee and to defend any claim asserted against the Trustee by reason of any
acts or failures to act of such Authenticating Agent, but such Authenticating
Agent shall have no liability for any action taken by it in accordance with the
specific written direction of the Trustee.
The Trustee shall not be liable for any act or any failure of
the Authenticating Agent to perform any duty either required herein or
authorized herein to be performed by such person in accordance with this
Indenture.
The Company agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this Section.
If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternative certificate of authentication in the
following form:
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"This is one of the Securities of the series designated,
described or provided for in the within-mentioned Indenture.
U.S. TRUST COMPANY OF TEXAS, N.A.,
As Trustee
By
--------------------------------------
As Authenticating Agent
By
--------------------------------------
Authorized Signatory"
Notwithstanding any provision of this Section 6.14 to the
contrary, if at any time any Authenticating Agent appointed hereunder with
respect to any series of Securities shall not also be acting as the Security
Registrar hereunder with respect to that series of Securities, then, in
addition to all other duties of an Authenticating Agent hereunder, such
Authenticating Agent shall also be obligated: (a) to furnish to the Security
Registrar for that series of Securities promptly all information necessary to
enable that Security Registrar to maintain at all times an accurate and current
Security Register for that series of Securities; and (b) prior to
authenticating any Security of that series denominated in a foreign currency,
to ascertain from the Company the units of such foreign currency that are
required to be determined by the Company pursuant to Section 3.02.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. Company To Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the
Trustee with respect to each series of Securities:
(a) semi-annually, not more than 15 days after each
Regular Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of the
Securities of that series as of such Regular Record Date and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished.
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Notwithstanding the foregoing, so long as the Trustee is the Security
Registrar, no such list shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communication to Holders.
(a) The Trustee shall preserve, in as current a form as
is reasonably practicable, the names and addresses of Holders of Securities of
each series contained in the most recent list furnished to the Trustee as
provided in Section 7.01 and the names and addresses of Holders of those
Securities received by the Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided in Section 7.01 on
receipt of a new list so furnished.
(b) The rights of Holders to communicate with other
Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act or otherwise in accordance with this
Indenture.
SECTION 7.03. Reports by Trustee.
(a) Not later than 60 days following each May 15, the
Trustee shall transmit to Holders such reports concerning the Trustee and its
actions under this Indenture as may be required pursuant to the Trust Indenture
Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange on
which the Securities of any series are listed, with the Commission and with the
Company. The Company will notify the Trustee when the Securities are listed on
any stock exchange.
SECTION 7.04. Reports by Company.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and
such summaries thereof, as may be required pursuant to the Trust Indenture Act
at the times and in the manner provided pursuant to the Trust Indenture Act;
provided, that any such information, documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall
be filed with the Trustee within 15 days after the same is so required to be
filed with the Commission.
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person in one transaction or a series of related
transactions, and the Company shall not permit any Person to consolidate with
or merge into the Company, unless:
(a) in case the Company shall consolidate with or merge
into another Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person in one transaction
or a series of related transactions, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties
and assets of the Company substantially as an entirety shall be a
corporation, partnership, limited liability company or trust, shall be
organized and validly existing under the laws of the United States of
America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of, premium, if any, and
interest on and any Additional Amounts with respect to all the
Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and
shall have provided for conversion rights in accordance with Section
13.11;
(b) immediately after giving effect to such transaction,
no Event of Default with respect to Securities of any series, and no
event which, after notice or lapse of time or both, would become an
Event of Default with respect to Securities of any series, shall have
occurred and be continuing;
(c) such consolidation, merger, conveyance, transfer or
lease does not adversely affect the validity or enforceability of the
Securities of any series; and
(d) the Company or the successor Person has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article VIII
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
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SECTION 8.02. Successor Substituted.
On any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease the
properties and assets of the Company substantially as an entirety to any Person
in one transaction or a series of related transactions in accordance with
Section 8.01, the successor Person formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except
in the case of a transfer by lease, the predecessor Person shall be relieved of
all obligations and covenants under this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to set forth the terms of the Securities of any
unissued series, including the additional indebtedness or other
liabilities to which the Securities of that series will be
subordinated as contemplated by Section 3.01; or
(b) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities; or
(c) for the benefit of the Holders of Securities of any
or all series, to add to the covenants of the Company, add an
additional Event of Default or surrender any right or power conferred
herein or in the Securities of any series on the Company (and if any
such covenant, Event of Default or surrender is to be for the benefit
of Holders of Securities of less than all series, stating that such
covenants, Event of Default or surrender is or are being included
solely for the benefit of the Holders of Securities of those series
referred to in the supplemental indenture); or
(d) to secure the Securities of any or all series; or
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(e) to make provision with respect to the conversion
rights of Holders pursuant to the requirements of Section 13.11; or
(f) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
adversely affected by such change in or elimination of such provision;
or
(g) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the
defeasance and discharge of any series of Securities pursuant to
Section 4.01; provided, however, that any such action shall not
adversely affect the interest of the Holders of Securities of such
series or any other series of Securities in any material respect; or
(h) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11(b); or
(i) to cure any ambiguity or omission, to correct or
supplement any provision herein or in the Securities of any or all
series which may be defective or inconsistent with any other provision
herein or in the Securities of any or all series, or to make any other
provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
Indenture; provided, that such action pursuant to this clause (i)
shall not adversely affect the interests of the Holders of Securities
of any series in any material respect and the Trustee may rely on an
Opinion of Counsel to that effect.
SECTION 9.02. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, or, if the rights of one or more, but
less than all, series of Outstanding Securities are to be affected, then with
the consent of the Holders of not less than a majority in principal amount of
all the series of Outstanding Securities so to be affected, by Act of said
Holders (acting as one class) delivered to the Company and the Trustee, the
Company, when authorized by a Board Resolution, and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected
thereby,
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(a) change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any Security, or
reduce the principal amount thereof or the rate of interest thereon,
any Additional Amounts with respect thereto or any premium payable on
the redemption thereof, or reduce the amount of the principal of any
Original Issue Discount Security that would be due and payable on a
declaration of acceleration of the Maturity thereof pursuant to
Section 5.02, or change any Place of Payment where, or the coin or
currency or currencies (including composite currencies) in which, any
Security or any premium or any interest thereon or Additional Amount
with respect thereto is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or adversely affect the right to convert any
Security as provided in Article XIII (except as permitted by Section
9.01(e)), or modify the provisions of Article XIV, or the provisions
of this Indenture with respect to the subordination of the Securities
(except as contemplated by Section 3.01 and permitted by Section
9.01(a)), in a matter adverse to the Holders; or
(b) reduce the percentage in principal amount of
Outstanding Securities the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture; or
(c) modify any of the provisions of this Section 9.02,
Section 5.13 or Section 10.06, except to increase any percentage
provided herein or therein or to provide with respect to any
particular series the right to condition the effectiveness of any
supplemental indenture as to that series on the consent of the Holders
of a specified percentage of the aggregate principal amount of
Outstanding Securities of that series (which provision may be made
pursuant to Section 3.01 without the consent of any Holder) or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that this
clause (c) shall not be deemed to require the consent of any Holder
with respect to changes in the references to "the Trustee" and
concomitant changes in this Section 9.02 and Section 10.06, or the
deletion of this proviso, in accordance with the requirements of
Sections 6.11(b) and 9.01(g).
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section 9.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if that Act approves the substance
thereof.
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The determination of the Trustee as to the series of
Securities the rights of which are to be affected pursuant to this Section 9.02
shall be conclusive, and the Trustee in making that determination shall be
protected in relying on an Opinion of Counsel.
SECTION 9.03. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article IX or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 6.01) shall be fully protected in relying
on, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that adversely affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indentures.
On the execution of any supplemental indenture under this
Article IX, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of Securities theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
SECTION 9.05. Conformity With Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
IX shall conform to the requirements of the Trust Indenture Act.
SECTION 9.06. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article IX may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and (at the
specific direction of the Company) authenticated and delivered by the Trustee
in exchange for Outstanding Securities of that series.
SECTION 9.07. Notice of Supplemental Indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to Section 9.02, the Company shall transmit
to the Holders of Securities of all series affected thereby a notice setting
forth the substance of that supplemental indenture.
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ARTICLE X
COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each
series of Securities that it will duly and punctually pay the principal of,
premium, if any, and interest on and any Additional Amounts with respect to the
Securities of that series in accordance with the terms of those Securities and
this Indenture.
SECTION 10.02. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for each
series of Securities an office or agency where Securities of that series may
be presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer, where Securities of that series may
be surrendered for exchange or conversion and where notices and demands to or
on the Company in respect of the Securities of that series and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of any such office or agency. If
at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more
other offices or agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in each Place of Payment for Securities of any
series for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 10.03. Money for Security Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before each due date
of the principal of, premium, if any, or interest on or any Additional Amounts
with respect to any of the Securities of that series, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the entire amount 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.
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Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, on or prior to each due date of the
principal of, premium, if any, or interest on or any Additional Amounts with
respect to any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay the entire amount so becoming due, such sum to be held as
provided by the Trust Indenture Act, 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 or the Company for each series of Securities 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 10.03, that such Paying
Agent will: (a) comply with the provisions of the Trust Indenture Act and this
Indenture applicable to it as a Paying Agent and hold all sums held by it for
the payment of principal of or any premium or interest on or any Additional
Amounts with respect to the Securities of that series in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to those Persons
or otherwise disposed of as herein provided; (b) give the Trustee notice of any
default by the Company (or any other obligor on the Securities) in the making
of any payment in respect of the Securities of that series; and (c) at any time
during the continuance of any default by the Company (or any other obligor on
the Securities of that series) in the making of any payment in respect of the
Securities of that series, on the written request of the Trustee, forthwith pay
to the Trustee all sums held in trust by such Paying Agent for payment in
respect of the Securities of that series, and account for any funds disbursed.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee on the same trusts as those on which such sums were held by the Company
or such Paying Agent; and, on such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on or any Additional Amounts with respect to any
Security of any series and remaining unclaimed for two years after that
principal, premium, if any, interest or Additional Amounts, if any, has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of
that Security shall thereafter, as an unsecured general creditor, look only to
the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the Company
as trustee thereof, shall thereon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
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SECTION 10.04. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and observance of
any of the terms, provisions and conditions of this Indenture (without regard
to any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 10.05. Existence.
Subject to Article VIII, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises and the existence,
rights (charter and statutory) and franchises of each Subsidiary; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and that the loss thereof is not disadvantageous in any material respect to the
Holders of Securities of any series.
SECTION 10.06. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Section 10.05, or any covenant added for
the benefit of any series of Securities as contemplated by Section 3.01 (unless
otherwise specified pursuant to Section 3.01) if before or after the time for
such compliance the Holders of a majority in principal amount of the
Outstanding Securities of all series affected by that omission (acting as one
class) shall, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no
such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
SECTION 10.07. Additional Amounts.
If the Securities of a series expressly provide for the
payment of Additional Amounts, the Company will pay to the Holder of any
Security of that series Additional Amounts as expressly provided therein.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Security
of any series or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of Additional Amounts provided for in this Section 10.07 to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to the provisions of this Section 10.07 and express
mention of the payment of
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Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made.
If the Securities of a series provide for the payment of
Additional Amounts, at least 10 days prior to the first Interest Payment Date
with respect to that series of Securities (or if the Securities of that series
will not bear interest prior to Maturity, the first day on which a payment of
principal and any premium is made), and at least 10 days prior to each date of
payment of principal and any premium or interest if there has been any change
with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company shall furnish the Trustee and the Company's principal
Paying Agent or Paying Agents, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal of and any premium or interest on the
Securities of that series shall be made to Holders of Securities of that series
who are United States Aliens without withholding for or on account of any tax,
assessment or other governmental charge described in the Securities of that
series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities and the Company will
pay to such Paying Agent the Additional Amounts required by this Section. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to
hold them harmless against any loss, liability or expense reasonably incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section 10.07.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.01. Applicability of Article.
Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with their terms and (except
as otherwise specified as contemplated by Section 3.01 for Securities of any
series) in accordance with this Article XI.
SECTION 11.02. Election To Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Securities of any series, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter period shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of that series
to be redeemed. In case of any redemption at the election of the Company of
all the Securities of any series, the Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a shorter period shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date.
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SECTION 11.03. Selection by Trustee of Securities To Be Redeemed.
If less than all the Securities of any series are to be
redeemed, the particular Securities of that series to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee,
from the Outstanding Securities of that series not previously called for
redemption, by lot or pro rata or by such other method as the Trustee shall
deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of that series of a denomination larger than the minimum
authorized denomination for Securities of that series.
If any Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption.
Securities of any series which have been converted during a selection of
Securities of that series to be redeemed shall be treated by the Trustee as
Outstanding for the purpose of such selection. In any case where more than one
Security of the same series is registered in the same name, the Trustee in its
discretion may treat the aggregate principal amount so registered as if it were
represented by one Security of that series.
The Trustee shall promptly notify the Company and each
Security Registrar in writing of the Securities selected for redemption and, in
the case of any Securities selected for partial redemption, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
SECTION 11.04. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 15 nor more than 60 days prior to the
Redemption Date, to the Trustee and to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
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(c) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts) of the
particular Securities to be redeemed,
(d) that on the Redemption Date the Redemption Price will
become due and payable on each such Security to be redeemed and that
(unless the Company shall default in payment of the Redemption Price)
interest thereon will cease to accrue on and after said date,
(e) that the redemption is for a sinking fund, if that is
the case,
(f) the conversion price, the date on which the right to
convert the Securities to be redeemed will terminate and the place or
places where such Securities may be surrendered for conversion, and
(g) the place or places where such Securities are to be
surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request received by the Trustee at least 25 days prior to the Redemption Date,
by the Trustee in the name and at the expense of the Company.
SECTION 11.05. Deposit of Redemption Price.
At or prior to 10:00 a.m. (Houston, Texas time) on any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, and any Additional Amounts with respect to,
all the Securities or portions thereof which are to be redeemed on that date
other than any Securities called for redemption on that date which have been
converted prior to the date of such deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held
in trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.07) be paid to the Company on
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 11.06. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest and any Additional Amounts) such Securities shall cease to
bear interest
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or be entitled to any Additional Amounts. On surrender of any such Security
for redemption in accordance with said notice, such Security shall be paid by
the Company at the Redemption Price, together with accrued interest and any
Additional Amounts to the Redemption Date; provided, however, that installments
of interest whose Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.07.
If any Security called for redemption shall not be so paid on
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
SECTION 11.07. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company maintained for that purpose
pursuant to Section 10.02 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series, of any authorized
denomination as requested by such Holder, in an aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal of the
Security so surrendered.
ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 12.01. Securities Subordinated to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and agrees, that, at
all times and in all respects, the indebtedness represented by the Securities
and the payment of the principal of, premium, if any, and interest on and any
Additional Amounts with respect to each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness. Obligations in respect of Senior
Indebtedness will not be deemed to have been paid in full unless the holders
thereof shall have received payment in full in cash or cash equivalents with
respect thereto.
Each Holder of the Securities by its acceptance thereof
acknowledges and agrees that the subordination provisions included herein are,
and are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness, whether such Senior Indebtedness was created or acquired
before or after the issuance of Securities, to acquire and/or continue to hold
such
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Senior Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring
and/or continuing to hold such Senior Indebtedness.
SECTION 12.02. Payment Over of Proceeds Upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding, relative to the Company or to its creditors, as such, or to
a substantial part of its assets, or (b) any proceeding for the liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
general assignment for the benefit of creditors or any other marshaling of
assets and liabilities of the Company, then and in any such event the holders
of Senior Indebtedness shall be entitled to receive payment in full of all
Obligations due or to become due on or in respect of all Senior Indebtedness
before the Holders of the Securities are entitled to receive any payment or
distribution of any kind or character, whether in cash, property or
securities, on account of principal of, premium, if any, or interest on or any
Additional Amounts with respect to the Securities, and to that end the holders
of Senior Indebtedness shall be entitled to receive, for application to the
payment thereof, any payment or distribution of any kind or character,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities, which may be payable or
deliverable in respect of the Securities in any such case, proceeding,
dissolution, liquidation or other winding up or event. In furtherance of the
foregoing, but not by way of limitation thereof, in the event of any case or
proceeding described in clause (a) above in or as a result of which the Company
is excused from the obligation to pay all or any part of the interest otherwise
payable in respect of any Senior Indebtedness during the period subsequent to
the commencement of any such case or proceeding, all or such part, as the case
may be, of such interest shall be payable out of, and to that extent shall
diminish and be at the expense of, reorganization dividends or other
distributions in respect of the Securities.
In the event that, notwithstanding the foregoing provisions of
this Section 12.02, the Trustee or the Holder of any Security shall have
received any payment or distribution of any kind or character in respect of the
Securities, whether in cash, property or securities, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full, such payment or
distribution shall be held by the Trustee (if the Trustee has knowledge that
such payment or distribution is prohibited by this Section 12.02) or by such
Holder (in trust) for the holders of Senior Indebtedness, and shall be paid
forthwith over and delivered to, the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
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To the extent any payment of or distribution in respect of
Senior Indebtedness (whether by or on behalf of the Company, as proceeds of
security or enforcement of any right of set off or otherwise) is declared to be
fraudulent or preferential, set aside or required to be paid to any receiver,
trustee in bankruptcy, liquidating trustee, agent or other similar Person under
any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then if such payment or distribution is recovered by, or paid over to, such
receiver, trustee in bankruptcy, liquidating trustee, agent or other similar
Person, the Senior Indebtedness or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment
has not occurred.
For purposes of this Article XII only, (a) a "distribution"
may consist of cash, securities or other property, by set-off or otherwise and
(b) the words "cash, property or securities" shall not be deemed to include
securities of the Company as reorganized or readjusted or securities of the
Company or any other corporation provided for by a plan of reorganization or
readjustment, which securities are subordinated in right of payment to all
Senior Indebtedness which may at the time be outstanding to substantially the
same extent as, or to a greater extent than, the Securities are so subordinated
as provided in this Article XII. The consolidation of the Company with, or the
merger of the Company into, another Person or the liquidation or dissolution of
the Company following the conveyance or transfer of its properties and assets
substantially as an entirety to another Person on the terms and conditions set
forth in Article VIII shall not be deemed a dissolution, winding up,
liquidation, reorganization, general assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Section 12.02 if the Person formed by such consolidation or into which the
Company is merged or which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part
of such consolidation, merger, conveyance or transfer, comply with the
conditions set forth in Article VIII.
SECTION 12.03. Prior Payment to Senior Indebtedness On Acceleration of
Securities.
If any Securities are declared due and payable before their
Stated Maturity, the Company shall promptly notify all holders of Senior
Indebtedness of such event. In the event that any Securities are declared due
and payable before their Stated Maturity, then and in such event the holders of
Senior Indebtedness shall be entitled to receive payment in full of all
Obligations in respect of Senior Indebtedness before the Holders of the
Securities are entitled to receive any payment or other distribution (including
any payment which may be payable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Securities) on account of the principal of, premium, if any, or interest on or
any Additional Amounts with respect to the Securities or on account of the
purchase or other acquisition of Securities, and on any such event the Holders
of the Securities shall, to the extent permitted by law, be prohibited for a
period of 180 days thereafter from making any bankruptcy filing with respect to
the Company or from filing suit to enforce their rights under this Indenture
(provided, however, that if the acceleration of Securities is rescinded or
annulled prior to the expiration of such 180-day period, such prohibition shall
terminate on such earlier date as the acceleration of such Securities is
rescinded or annulled), subject to the rights, if any, under this Article XII
of the holders, from time
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to time, of Senior Indebtedness to receive the cash, property or securities
receivable on the exercise of such rights.
In the event that, notwithstanding the foregoing, the Company
shall make any payment or distribution to the Trustee or the Holder of any
Security prohibited by the foregoing provisions of this Section 12.03, such
payment or distribution shall be held by the Trustee (if the Trustee has
knowledge that such payment or distribution is so prohibited) or by such Holder
(in trust) for the holders of Senior Indebtedness, and shall be paid forthwith
over and delivered (a) to the holders of Senior Indebtedness or their
respective Representatives as their respective interests may appear or (b) as a
court of competent jurisdiction shall direct, in each case, for application to
the payment of all Obligations with respect to Senior Indebtedness remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness.
The provisions of this Section 12.03 shall not apply to any
payment with respect to which Section 12.02 would be applicable.
SECTION 12.04. No Payment When Senior Indebtedness in Default.
The Company may not make any payment (whether by redemption,
purchase, retirement, defeasance or otherwise) to the Trustee or any Holder on
account of the principal of, premium, if any, or interest on or any Additional
Amounts with respect to the Securities and may not acquire from the Trustee or
any Holder any Securities (other than payments and other distributions made
from any defeasance trust created pursuant to Section 4.01 if the applicable
deposit does not violate Article IV or this Article XII) until all principal
and other Obligations with respect to the Senior Indebtedness of the Company
have been paid in full if:
(a) a default in the payment of any principal of,
premium, if any, or interest on Designated Senior Indebtedness occurs;
or
(b) a default, other than a payment default, on
Designated Senior Indebtedness occurs and is continuing that then
permits holders of the Designated Senior Indebtedness as to which such
default relates to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from a Person who
is a Representative of the holders of such Designated Senior
Indebtedness, provided, that if such Designated Senior Indebtedness is
of the type referred to in clause (b) of the definition thereof, the
Payment Blockage Notice shall be given by a Representative of the
holders of at least 20% of such Designated Senior Indebtedness. If
the Trustee receives any such Payment Blockage Notice, no subsequent
Payment Blockage Notice shall be effective for purposes of this
Section 12.04 unless and until 360 days shall have elapsed since the
date of commencement of the payment blockage period resulting from the
immediately prior Payment Blockage Notice. No nonpayment default in
respect of any Designated Senior Indebtedness that existed or was
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continuing on the date of delivery of any Payment Blockage Notice to
the Trustee shall be, or be made, the basis for subsequent Payment
Blockage Notices.
The Company shall resume payments on and distributions in
respect of the Securities and may acquire Securities on:
(a) in the case of a default referred to in subparagraph
(a) of the preceding paragraph, the date on which the default is cured
or waived, or
(b) in the case of a default referred to in subparagraph
(b) of the preceding paragraph, the earliest of (i) the date on which
such nonpayment default is cured or waived, (ii) the date the
applicable Payment Blockage Notice is retracted by written notice to
the Trustee from the Person who is a Representative of the holders of
the relevant Designated Senior Indebtedness and (iii) 179 days after
the date on which the applicable Payment Blockage Notice is received
unless (A) any of the events described in subparagraph (a) of the
preceding paragraph has occurred and is continuing or (B) a Default or
Event of Default under clause (f) or (g) of Section 5.01 has occurred,
if this Article XII otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
In the event that, notwithstanding the foregoing, the Company
shall make any payment or distribution to the Trustee or the Holder of any
Security prohibited by the foregoing provisions of this Section 12.04, such
payment or distribution shall be held by the Trustee (if the Trustee has
knowledge that such payment or distribution is so prohibited) or by such Holder
(in trust) for the holders of Senior Indebtedness, and shall be paid forthwith
over and delivered (a) to the holders of Senior Indebtedness or their
respective Representatives as their respective interests may appear or (b) as a
court of competent jurisdiction shall direct, in each case for application to
the payment of all Obligations with respect to Senior Indebtedness remaining
unpaid to the extent necessary to pay such Obligations in full in accordance
with their terms, after giving effect to any concurrent payment or distribution
to or for the holders of Senior Indebtedness.
The provisions of this Section 12.04 shall not apply to any
payment with respect to which Section 12.02 would be applicable.
SECTION 12.05. Payment Permitted If No Default.
Nothing contained in this Article XII or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the Company, at any
time except under the circumstances referred to in Section 12.02 or under the
conditions described in Section 12.03 or 12.04, from making payments at any
time of principal of, premium, if any, or interest on or any Additional Amounts
with respect to the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
principal of, premium, if any, or interest on or any Additional
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Amounts with respect to the Securities if, at the time of such application by
the Trustee, it did not have knowledge within the meaning of Section 12.10 that
such payment would have been prohibited by the provisions of this Article XII.
SECTION 12.06. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Obligations in respect
of Senior Indebtedness, the Holders of the Securities shall be subrogated to
the extent of the payments or distributions made to the holders of Senior
Indebtedness pursuant to the provisions of this Article XII (equally and
ratably with the holders of all indebtedness of the Company which by its
express terms is subordinated to other indebtedness of the Company to
substantially the same extent as the Securities are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of Senior
Indebtedness to receive payments and distributions applicable to the Senior
Indebtedness until the principal of, premium, if any, and interest on and any
Additional Amounts with respect to the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article XII, and no
payments over pursuant to the provisions of this Article XII to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as
among the Company, its creditors other than holders of Senior Indebtedness and
the Holders of the Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
SECTION 12.07. Provisions Solely To Define Relative Rights.
The provisions of this Article XII are and are intended solely
for the purpose of defining the relative rights of the Holders of the
Securities on the one hand and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Article XII or elsewhere in this Indenture or
in the Securities is intended to or shall: (a) impair, as among the Company,
its creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of, premium, if any, and
interest on and any Additional Amounts with respect to the Securities as and
when the same shall become due and payable in accordance with their terms; (b)
affect the relative rights against the Company or the Holders of the Securities
and creditors of the Company other than the holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law on default under this Indenture,
subject to the rights, if any, under this Article XII of the holders of Senior
Indebtedness to receive distributions otherwise payable or deliverable to the
Trustee or such Holder.
SECTION 12.08. Trustee To Effectuate Subordination.
Each holder of a Security by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to effectuate the subordination
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provided in this Article XII and appoints the Trustee his attorney-in-fact for
any and all such purposes.
SECTION 12.09. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the preceding
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Trustee or the Holders of
the Securities and without impairing or releasing the subordination provided in
this Article XII or the obligations hereunder of the Trustee or the Holders of
the Securities to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or
supplement in any manner Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is outstanding; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company and any other Person.
SECTION 12.10. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article XII or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts that would prohibit
the making of any payment to or by the Trustee in respect of the Securities,
unless and until the Trustee shall have received written notice thereof from
the Company or a holder of Senior Indebtedness or from any Representative
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 6.01, shall be entitled in all respects to
assume that no such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section 12.10 at least two
Business Days prior to the date on which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment of
the principal of, premium, if any, or interest on or any Additional Amounts
with respect to any Security), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may be
received by it within two Business Days prior to such date.
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Subject to the provisions of Section 6.01, the Trustee shall
be entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a Representative
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a Representative therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article XII, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Article
XII, and if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 12.11. Reliance on Judicial Order or Certificate of Liquidating
Agent.
On any payment or distribution in respect of the Securities or
Senior Indebtedness referred to in this Article XII, the Trustee, subject to
the provisions of Section 6.01, and, so long as the provisions of this Article
XII have been brought to the attention of the court, tribunal, trustee or other
Person making the payment or distribution, the Holders of the Securities shall
be entitled to rely on any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XII.
SECTION 12.12. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness and shall not be liable to any such holders
if it shall, absent gross negligence or wilful misconduct, mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which holders of Senior Indebtedness shall be
entitled by virtue of this Article XII or otherwise. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in
this Article XII, and no implied covenants or obligations with respect to the
holders of Senior Indebtedness shall be read into this Article XII against the
Trustee.
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SECTION 12.13. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XII with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.07.
SECTION 12.14. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article XII shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article XII in addition to or in place of the
Trustee; provided, however, that Section 12.13 shall not apply to the Company
or any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
SECTION 12.15. Certain Conversions Deemed Payment.
For the purposes of this Article XII only, (a) the issuance
and delivery of junior securities on conversion of Securities in accordance
with Article XIII shall not be deemed to constitute a payment or distribution
on account of the principal of, premium, if any, or interest on or any
Additional Amounts with respect to Securities or on account of the purchase or
other acquisition of Securities, and (b) the payment, issuance or delivery of
cash, property or securities (other than junior securities) on conversion of a
Security shall be deemed to constitute payment on account of the principal of
such Security. For the purposes of this Section 12.15, the term "junior
securities" means (a) shares of any class of capital stock of the Company and
(b) securities of the Company which are subordinated in right of payment to all
Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a
greater extent than, the Securities are so subordinated as provided in this
Article XII. Nothing contained in this Article XII or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than holders of Senior Indebtedness and the
Holders of the Securities, the right, which is absolute and unconditional, of
the Holder of any Security to convert such Security in accordance with Article
XIII.
SECTION 12.16. No Suspension of Remedies.
Except as provided in Section 12.03, nothing contained in this
Article XII shall limit the right of the Trustee or the Holders of the
Securities of any series to take any action to accelerate the maturity of the
Securities of that series pursuant to the provisions described under Article V
and as set forth in this Indenture or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if any, under this
Article XII of the holders, from time to time, of Senior
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Indebtedness to receive the cash, property or securities receivable on the
exercise of such rights or remedies.
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.01. Conversion Privilege and Conversion Price.
Subject to and on compliance with the provisions of this
Article XIII, at the option of the Holder thereof, any Security of any series
or any portion of the principal amount thereof which equals $1,000 or any
integral multiple thereof may be converted at any time on or following the
Convertibility Commencement Date for that Security at the principal amount
thereof, or of such portion thereof, into fully paid and nonassessable shares
(calculated as to each conversion to the nearest 1/100 of a share) of Common
Stock, at the conversion price for that Security, determined as hereinafter
provided, in effect at the time of conversion. Such conversion right shall
expire at the close of business on the Stated Maturity of the final payment of
principal of that Security. In case a Security or portion thereof is called
for redemption, such conversion right in respect of the Security or portion so
called shall expire at the close of business on the second business day
preceding the applicable Redemption Date, unless the Company defaults in making
the payment due on redemption.
The price at which shares of Common Stock shall be delivered
on conversion of any Security (herein called the "conversion price") shall be
initially the Initial Conversion Price per share of Common Stock which is fixed
for that Security by or pursuant to this Indenture. The conversion price shall
be adjusted in certain instances as provided in paragraphs (a), (b), (c), (d),
(e), (f) and (i) of Section 13.04.
SECTION 13.02. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of
any Security of any series shall surrender that Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained pursuant to Section 10.02 for that series, accompanied by written
notice to the Company in the form provided in the Security (or such other
notice as is acceptable to the Company) at such office or agency that the
Holder elects to convert that Security or, if less than the entire principal
amount thereof is to be converted, the portion thereof to be converted.
Securities surrendered for conversion during the period from the opening of
business on any Regular Record Date for that Security next preceding any
Interest Payment Date for that Security to the close of business on that
Interest Payment Date (except in the case of Securities or portions thereof
which have been called for redemption on a Redemption Date, or which are
repurchasable on a Repurchase Date, occurring, in either case, within such
period) must be accompanied by payment in New York Clearing House funds or
other funds acceptable to the
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Company of an amount equal to the interest payable on that Interest Payment
Date on the principal amount of Securities being surrendered for conversion.
Except as provided in the immediately preceding sentence and subject to the
last paragraph of Section 3.07, no payment or adjustment shall be made on any
conversion on account of any interest accrued on the Securities surrendered for
conversion or on account of any dividends on the Common Stock issued on
conversion.
Securities shall be deemed to have been converted immediately
prior to the close of business on the day of their surrender for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of those Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable on conversion of those Securities
shall be treated for all purposes as having become the record holder or holders
of such Common Stock as and after such time. As promptly as practicable on or
after the conversion date, the Company shall issue and shall deliver at such
office or agency a certificate or certificates for the number of full shares of
Common Stock issuable on conversion, together with payment in lieu of any
fraction of a share, as provided in Section 13.03.
In the case of any Security of any series which is converted
in part only, on such conversion the Company shall execute and the Trustee
shall authenticate and deliver to the Holder thereof, at the expense of the
Company, a new Security or Securities of the same series and like tenor and of
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the principal amount of such Security.
SECTION 13.03. Fractions of Shares.
No fractional share of Common Stock shall be issued on
conversion of Securities of any series. If more than one Security of the same
series shall be surrendered for conversion at one time by the same Holder, the
number of full shares which shall be issuable on conversion thereof shall be
computed on the basis of the aggregate principal amount of the Securities (or
specified portions thereof) so surrendered. Instead of any fractional share of
Common Stock which would otherwise be issuable on conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
of the Closing Price (as hereinafter defined) at the close of business on the
day of conversion (or, if such day is not a Trading Day (as hereafter defined),
on the Trading Day immediately preceding such day).
SECTION 13.04. Adjustment of Conversion Price.
(a) In case the Company shall pay or make a dividend or
other distribution on the Common Stock exclusively in Common Stock or shall pay
or make a dividend or other distribution on any other class of capital stock of
the Company which dividend or distribution includes Common Stock, each
conversion price in effect for the Securities of each series at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying that conversion price by a fraction of
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which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the day following
the date fixed for such determination. For the purpose of this paragraph (a),
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(b) Subject to paragraph (g) of this Section 13.04, in
case the Company shall pay or make a dividend or other distribution on the
Common Stock consisting exclusively of, or shall otherwise issue to all holders
of the Common Stock, rights or warrants entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share less than
the Current Market Price (determined as provided in paragraph (h) of this
Section 13.04) on the date fixed for the determination of stockholders entitled
to receive such rights or warrants, each conversion price in effect for the
Securities of each series at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying that
conversion price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock
so offered for subscription or purchase would purchase at such Current Market
Price and the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph (b), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company shall not issue any rights or warrants in respect of shares of
Common Stock held in the treasury of the Company.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, each conversion
price in effect for the Securities of each series at the opening of business on
the day following the day on which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common Stock, each
conversion price in effect for the Securities of each series at the opening of
business on the day following the day on which such combination becomes
effective shall be proportionately increased, such reduction or increase, as
the case may be, to become effective immediately after the opening of business
on the day following the day on which subdivision or combination becomes
effective.
(d) Subject to the last sentence of this paragraph (d)
and to paragraph (g) of this Section 13.04, in case the Company shall, by
dividend or otherwise, distribute to all holders of the Common Stock evidences
of its indebtedness, shares of any class of its capital stock, cash or other
assets (including securities, but excluding any rights or warrants referred to
in paragraph (b) of this
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Section 13.04, excluding any dividend or distribution paid exclusively in cash
and excluding any dividend or distribution referred to in paragraph (a) of this
Section 13.04), each conversion price for the Securities of each series shall
be reduced by multiplying that conversion price as it was in effect immediately
prior to the close of business on the date fixed for the determination of
stockholders entitled to such distribution by a fraction of which the numerator
shall be the Current Market Price (determined as provided in paragraph (h) of
this Section 13.04) on such date less the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution) on such date of the portion of the evidences of
indebtedness, shares of capital stock, cash and other assets to be distributed
applicable to one share of Common Stock and the denominator shall be such
Current Market Price, such reduction to become effective immediately prior to
the opening of business on the day following such date. If the Board of
Directors determines the fair market value of any distribution for purposes of
this paragraph (d) by reference to the actual or when-issued trading market for
any securities comprising part or all of such distribution, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price pursuant to paragraph (h) of this Section 13.04, to the
extent possible. For purposes of this paragraph (d), any dividend or
distribution that includes shares of Common Stock, rights or warrants to
subscribe for or purchase shares of Common Stock or securities convertible into
or exchangeable for shares of Common Stock shall be deemed to be (i) a dividend
or distribution of the evidences of indebtedness, cash, assets or shares of
capital stock other than such shares of Common Stock, such rights or warrants
or such convertible or exchangeable securities (making any conversion price
reduction required by this paragraph (d)) immediately followed by (ii) in the
case of such shares of Common Stock or such rights or warrants, a dividend or
distribution thereof (making any further conversion price reduction required by
paragraphs (a) and (b) of this Section 13.04, except any shares of Common Stock
included in such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of paragraph (a) of this Section 13.04), or (iii) in the case of such
convertible or exchangeable securities, a dividend or distribution of the
number of shares of Common Stock as would then be issuable on the conversion or
exchange thereof, whether or not the conversion or exchange of such securities
is subject to any conditions (making any further conversion price reduction
required by paragraph (a) of this Section 13.04, except the shares deemed to
constitute such dividend or distribution shall not be deemed "outstanding at
the close of business on the date fixed for such determination" within the
meaning of paragraph (a) of this Section 13.04).
(e) In case the Company shall, by dividend or otherwise,
at any time distribute to all holders of the Common Stock cash (excluding any
cash that is distributed as part of a distribution referred to in paragraph (d)
of this Section 13.04 or in connection with a transaction to which Section
13.11 applies) in an aggregate amount that, together with (i) the aggregate
amount of any other distributions to all holders of the Common Stock made
exclusively in cash within the 12 months preceding the date fixed for the
determination of stockholders entitled to such distribution and in respect of
which no conversion price adjustment pursuant to this paragraph (e) has been
made previously and (ii) the aggregate of any cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) as of such date of
determination of any other consideration payable in respect of any tender
offer by the
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Company or a Subsidiary for all or any portion of the Common Stock consummated
within the 12 months preceding such date of determination and in respect of
which no conversion price adjustment pursuant to paragraph (f) of this Section
13.04 has been made previously, exceeds the greater of (A) 12.5% of the product
of the Current Market Price (determined as provided in paragraph (h) of this
Section) on such date of determination times the number of shares of Common
Stock outstanding on such date or (B) the Company's consolidated retained
earnings on the date fixed for determining the stockholders entitled to such
distribution (determined without giving effect to such distribution), each
conversion price for the Securities of each series shall be reduced by
multiplying that conversion price as it was in effect immediately prior to the
close of business on such date of determination by a fraction of which the
numerator shall be the Current Market Price (determined as provided in
paragraph (h) of this Section 13.04) on such date less the amount of such cash
previously distributed or to be distributed at such time applicable to one
share of Common Stock and the denominator shall be such Current Market Price,
such reduction to become effective immediately prior to the opening of business
on the day following such date.
(f) In case a tender offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall be consummated and
such tender offer shall involve an aggregate consideration having a fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) as of the last time (the
"Expiration Time") that tenders may be made pursuant to such tender offer (as
it shall have been amended) that, together with (i) the aggregate of the cash
plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) as of
the Expiration Time of the other consideration paid in respect of any other
tender offer by the Company or a Subsidiary for all or any portion of the
Common Stock consummated within the 12 months preceding the Expiration Time and
in respect of which no conversion price adjustment pursuant to this paragraph
(f) has been made previously and (ii) the aggregate amount of any distributions
to all holders of the Common Stock made exclusively in cash within the 12
months preceding the Expiration Time and in respect of which no conversion
price adjustment pursuant to paragraph (e) of this Section 13.04 has been made
previously, exceeds the greater of (A) 12.5% of the product of the Current
Market Price (determined as provided in paragraph (h) of this Section 13.04)
immediately prior to the Expiration Time times the number of shares of Common
Stock outstanding (including any tendered shares) at the Expiration Time or (B)
the Company's consolidated retained earnings as of the Expiration Time
(determined without giving effect to the purchase of tendered shares), each
conversion price for the Securities of each series shall be reduced by
multiplying that conversion price as it was in effect immediately prior to the
Expiration Time by a fraction of which the numerator shall be (1) the product
of the Current Market Price (determined as provided in paragraph (h) of this
Section 13.04) immediately prior to the Expiration Time times the number of
shares of Common Stock outstanding (including any tendered shares at the
Expiration Time) minus (2) the fair market value (determined as aforesaid) of
the aggregate consideration payable to stockholders on consummation of such
tender offer and the denominator shall be the product of (1) such Current
Market Price times (2) such number of outstanding shares at the Expiration Time
minus the number of shares accepted for payment in such tender offer (the
"Purchased Shares"), such reduction to become effective immediately prior to
the opening of
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business on the day following the Expiration Time; provided, that if the number
of Purchased Shares or the aggregate consideration payable therefor has not
been finally determined by such opening of business, the adjustment required by
this paragraph (f) shall, pending such final determination, be made based on
the preliminarily announced results of such tender offer, and, after such final
determination shall have been made, the adjustment required by this paragraph
(f) shall be made based on the number of Purchased Shares and the aggregate
consideration payable therefor as so finally determined.
(g) The reclassification of Common Stock into securities
that include securities other than Common Stock (other than any
reclassification on a consolidation or merger to which Section 13.11 applies)
shall be deemed to involve (i) a distribution of such securities other than
Common Stock to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
stockholders entitled to such distribution" within the meaning of paragraph (d)
of this Section 13.04), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall
be deemed to be "the day on which such subdivision becomes effective" or "the
day on which such combination becomes effective", as the case may be, and "the
day on which such subdivision or combination becomes effective" within the
meaning of paragraph (c) of this Section 13.04).
Rights or warrants issued by the Company to all holders of the
Common Stock entitling the holders thereof to subscribe for or purchase shares
of Common Stock (either initially or under certain circumstances), which rights
or warrants (i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable and (iii) are also issued in respect of future
issuances of Common Stock, in each case in clauses (i) through (iii) until the
occurrence of a specified event or events ("Trigger Event"), shall for purposes
of this Section 13.04 not be deemed issued until the occurrence of the earliest
Trigger Event. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the date of this Indenture, are subject
to subsequent events, on the occurrence of each of which such rights or
warrants shall become exercisable to purchase different securities, evidences
of indebtedness or other assets, then the occurrence of each such event shall
be deemed to be such date of issuance and record date with respect to new
rights or warrants (and a termination or expiration of the existing rights or
warrants without exercise by the holder thereof). In addition, in the event of
any distribution (or deemed distribution) of such rights or warrants, or any
Trigger Event with respect thereto, that was counted for purposes of
calculating a distribution amount for which an adjustment to any conversion
price under this Section 13.04 was made, (i) in the case of any such rights or
warrants that shall all have been redeemed or repurchased without exercise by
any holders thereof, that conversion price shall be readjusted on such final
redemption or repurchase to give effect to such distribution or Trigger Event,
as the case may be, as though it were a cash distribution, equal to the per
share redemption or repurchase price received by a holder or holders of Common
Stock with respect to such rights or warrants (assuming such holder had
retained such rights or warrants), made to all holders of Common Stock as of
the date of such redemption or repurchase, and (ii) in the case of such rights
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or warrants that shall have expired or been terminated without exercise by any
holders thereof, that conversion price shall be readjusted as if such rights
and warrants had not been issued.
Notwithstanding any other provision of this Section 13.04 to
the contrary, rights, warrants, evidences of indebtedness, other securities,
cash or other assets (including, without limitation, any rights distributed
pursuant to any stockholder rights plan) shall be deemed not to have been
distributed for purposes of this Section 13.04 if the Company makes proper
provision so that each holder of Securities of each series who converts a
Security (or any portion thereof) of that series after the date fixed for
determination of stockholders entitled to receive such distribution shall be
entitled to receive on such conversion, in addition to the shares of Common
Stock issuable on such conversion, the amount and kind of such distributions
which that holder would have been entitled to receive if such holder had,
immediately prior to such determination date, converted that Security into
Common Stock.
(h) For the purpose of any computation under this
paragraph (h) and paragraphs (b), (d) and (e) of this Section 13.04, the
current market price per share of Common Stock (the "Current Market Price") on
any date shall be deemed to be the average of the daily Closing Prices for the
five consecutive Trading Days selected by the Company commencing not more than
20 Trading Days before, and ending not later than, the date in question;
provided, however, that (i) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to any conversion price pursuant to paragraph (a), (b), (c), (d),
(e) or (f) of this Section 13.04 occurs on or after the 20th Trading Day prior
to the date in question and prior to the "ex" date for the issuance or
distribution requiring such computation, the Closing Price for each Trading Day
prior to the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the same fraction by which that conversion price is so
required to be adjusted as a result of such other event, (ii) if the "ex" date
for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (a), (b), (c), (d), (e) or (f) of this Section 13.04 occurs on or
after the "ex" date for the issuance or distribution requiring such computation
and on or prior to the date in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by which that
conversion price is so required to be adjusted as a result of such other event,
and (iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (ii) of this proviso, the Closing
Price for each Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value on the date in
question (as determined by the Board of Directors in a manner consistent with
any determination of such value for purposes of paragraph (d) or (e) of this
Section 13.04, whose determination shall be conclusive and described in a Board
Resolution) of the evidences of indebtedness, shares of capital stock or assets
being distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date. For the purpose of any computation
under paragraph (f) of this Section 13.04, the Current Market Price on any date
shall be deemed to be the average of the daily Closing Prices for the five
consecutive Trading Days selected by the Company commencing on or after the
latest (the "Commencement Date") of (i) the
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date 20 Trading Days before the date in question, (ii) the date of commencement
of the tender offer requiring such computation and (iii) the date of the last
amendment, if any, of such tender offer involving a change in the maximum
number of shares for which tenders are sought or a change in the consideration
offered, and ending not later than the Expiration Time of such tender offer;
provided, however, that if the "ex" date for any event (other than the tender
offer requiring such computation) that requires an adjustment to any conversion
price pursuant to paragraph (a), (b), (c), (d), (e) or (f) of this Section
13.04 occurs on or after the Commencement Date and prior to the Expiration Time
for the tender offer requiring such computation, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the conversion
price is so required to be adjusted as a result of such other event. The
closing price for any Trading Day (the "Closing Price") shall be the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange,
on the Nasdaq National Market or, if the Common Stock is not listed or admitted
to trading on any national securities exchange or quoted on the Nasdaq National
Market, the average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm selected from
time to time by the Company for that purpose. For purposes of this paragraph,
the term "Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are generally not traded on the
applicable securities exchange or in the applicable securities market and the
term "'ex' date," (i) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Closing Prices were
obtained without the right to receive such issuance or distribution, (ii) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective and (iii) when used with respect to any tender
offer means the first date on which the Common Stock trades regular way on such
exchange or in such market after the last time that tenders may be made
pursuant to such tender offer (as it shall have been amended).
(i) The Company may make such reductions in any
conversion price for any Security, in addition to those required by paragraphs
(a), (b), (c), (d), (e) and (f) of this Section 13.04, as it considers to be
advisable (as evidenced by a Board Resolution) in order that any event treated
for federal income tax purposes as a dividend of stock or stock rights shall
not be taxable to the recipients or, if that is not possible, to diminish any
income taxes that are otherwise payable because of such event.
(j) No adjustment in any conversion price for any
Security shall be required unless such adjustment (plus any other adjustments
not previously made by reason of this paragraph (j)) would require an increase
or decrease of at least 1% in that conversion price; provided, however,
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that any adjustments which by reason of this paragraph (j) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment of that conversion price.
(k) Notwithstanding any other provision of this Section
13.04, no adjustment to any conversion price for any Security shall reduce that
conversion price below the then par value per share of the Common Stock, and
any such purported adjustment shall instead reduce that conversion price to
that par value. The Company hereby covenants not to take any action to
increase the par value per share of the Common Stock.
SECTION 13.05. Notice of Adjustments of Conversion Price.
Whenever any conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion
price in accordance with Section 13.04 and shall prepare an Officers'
Certificate signed by the Treasurer of the Company setting forth the
adjusted conversion price and showing in reasonable detail the facts
on which such adjustment is based, and such certificate shall
forthwith be filed (with a copy to the Trustee) at each office or
agency maintained pursuant to Section 10.02 for the purpose of
conversion of the Securities to which the adjusted conversion price
applies; and
(b) a notice stating that the conversion price has been
adjusted and setting forth the adjusted conversion price shall
forthwith be prepared, and as soon as practicable after it is
prepared, such notice shall be mailed by the Company to all Holders of
Securities to which the adjusted conversion price applies at their
last addresses as they shall appear in the Security Register.
SECTION 13.06. Notice of Certain Corporate Action.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on the Common Stock payable (i) otherwise than
exclusively in cash or (ii) exclusively in cash in an amount that
would require any conversion price adjustment pursuant to paragraph
(e) of Section 13.04; or
(b) the Company shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other
rights (excluding shares of capital stock or options for capital stock
issued pursuant to a benefit plan for employees, officers or directors
of the Company); or
(c) of any reclassification of the Common Stock (other
than a subdivision or combination of the outstanding shares of Common
Stock), or of any consolidation, merger or share exchange to which the
Company is a party and for which approval of any
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stockholders of the Company is required, or of the sale or transfer of
all or substantially all the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender
offer for all or a portion of the outstanding shares of Common Stock
(or shall amend any such tender offer to change the maximum number of
shares being sought or the amount or type of consideration being
offered therefor);
then the Company shall cause to be filed at each office or agency maintained
pursuant to Section 10.02, and shall cause to be mailed to all Holders at their
last addresses as they shall appear in the Security Register, at least 21 days
(or 11 days in any case specified in clause (a), (b) or (e) above) prior to the
applicable record, effective or expiration date hereinafter specified, a notice
stating (i) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights or warrants, or, if a record is
not to be taken, the date as of which the holders of Common Stock of record who
will be entitled to such dividend, distribution, rights or warrants are to be
determined, (ii) the date on which such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable on such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up, or (iii) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of any amendment thereto). Neither the failure to give
any such notice nor any defect therein shall affect the legality or validity of
any action described in clauses (a) through (e) of this Section 13.06.
SECTION 13.07. Company To Reserve Common Stock.
The Company shall at all times reserve and keep available,
free from preemptive and other rights, out of the authorized but unissued
Common Stock or out of the Common Stock held in the treasury of the Company,
for the purpose of effecting the conversion of Securities, the full number of
shares of Common Stock then issuable on the conversion of all outstanding
Securities. Shares of Common Stock issuable on conversion of outstanding
Securities shall be issued out of the Common Stock held in the treasury of the
Company to the extent available.
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SECTION 13.08. Taxes on Conversions.
The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Securities pursuant hereto. The Company shall not, however, be required to pay
any tax that may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that of the Holder
of the Security or Securities to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
SECTION 13.09. Covenant as to Common Stock.
The Company covenants that all shares of Common Stock which
may be issued on conversion of Securities will on issue be fully paid and
nonassessable and, except as provided in Section 13.08, the Company will pay
all taxes, liens and charges with respect to the issue thereof.
SECTION 13.10. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to
the Trustee to be canceled by or at the direction of the Trustee, which shall
dispose of the same as provided in Section 3.09.
SECTION 13.11. Provisions of Consolidation, Merger or Sale of Assets.
In case of any consolidation of the Company with, or merger of
the Company into, any other Person, any merger of another Person into the
Company (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock) or
any sale or transfer of all or substantially all the assets of the Company
(other than to a wholly-owned Subsidiary), the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, shall execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Security then Outstanding shall
have the right thereafter, during the period such Security shall be convertible
as specified in or pursuant to this Indenture, to convert such Security only
into the kind and amount of securities, cash and other property, if any,
receivable on such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Security might have been
converted immediately prior to such consolidation, merger, sale or transfer,
assuming such holder of Common Stock (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash
and other property receivable on such consolidation, merger, sale or transfer
(provided that if the kind or amount of securities, cash and other property
receivable on such consolidation, merger, sale or transfer is not the same for
each share of Common Stock held immediately prior to such consolidation,
merger, sale or transfer by other than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not
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have been exercised ("nonelecting share"), then for the purpose of this Section
13.11 the kind and amount of securities, cash and other property receivable on
such consolidation, merger, sale or transfer by each nonelecting share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares). Such supplemental indenture shall provide for adjustments
which, for events subsequent to the effective date of such supplemental
indenture, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article XIII. The above provisions of this
Section 13.11 shall similarly apply to successive consolidations, mergers,
sales or transfers.
SECTION 13.12. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under
this Article XIII should be made, how it should be made or what such adjustment
should be, but may accept as conclusive evidence of the correctness of any such
adjustment, and shall be protected in relying on, the Officers' Certificate
with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 13.05. The Trustee makes no representation as to the
validity or value of any securities or assets issued on conversion of
Securities, and the Trustee shall not be responsible for the Company's failure
to comply with any provisions of this Article XIII.
The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
executed pursuant to Section 13.11, but may accept as conclusive evidence of
the correctness thereof, and shall be protected in relying on, the Officers'
Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 1.02 in connection with that supplemental
indenture.
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 14.01. Right To Require Repurchase.
In the event that there shall occur a Repurchase Event (as
defined in Section 14.06), then each Holder of each then Outstanding Security
shall have the right, at such Holder's option, to require the Company to
purchase, and on the exercise of such right, the Company shall, subject to the
provisions of Section 12.03, purchase, all or any part of such Holder's then
Outstanding Securities on the date (the "Repurchase Date") that is 30 days
after the date the Company gives notice of the Repurchase Event as contemplated
in Section 14.02(a) at a price (the "Repurchase Price") equal to 100% of the
principal amount thereof, together with accrued and unpaid interest to the
Repurchase Date.
- 79 -
<PAGE> 86
SECTION 14.02. Notice; Method of Exercising Repurchase Right.
(a) On or before the 15th day after the occurrence of a
Repurchase Event, the Company, or at the request of the Company received by the
Trustee at least 40 days prior to the Repurchase Date, the Trustee (in the name
and at the expense of the Company), shall give notice of the occurrence of the
Repurchase Event and of the repurchase right set forth herein arising as a
result thereof by first-class mail, postage prepaid, to the Trustee and to each
Holder of the Securities that were Outstanding when the Repurchase Event
occurred at such Holder's address appearing in the Security Register. The
Company shall also deliver a copy of such notice of a repurchase right to the
Trustee.
Each notice of a repurchase right shall state:
(i) the event constituting the Repurchase Event and the
date thereof,
(ii) the Repurchase Date,
(iii) the date by which the repurchase right must be
exercised,
(iv) the Repurchase Price and
(v) the instructions a Holder must follow to exercise a
repurchase right.
No failure of the Company to give the foregoing notice shall
limit any Holder's right to exercise a repurchase right. The Trustee shall
have no affirmative obligation to determine if there shall have occurred a
Repurchase Event.
(b) To exercise a repurchase right, a Holder shall
deliver to the Company (or an agent designated by the Company for such purpose
in the notice referred to in (a) above) and to the Trustee on or before the
close of business on the Repurchase Date (i) written notice of the Holder's
exercise of such right, which notice shall set forth the name of the Holder,
the principal amount of the Security or Securities (or portion of a Security)
to be repurchased and a statement that an election to exercise the repurchased
right is being made thereby, and, together with the written notice to the
Trustee, (ii) the Security or Securities with respect to which the repurchase
right is being exercised, duly endorsed for transfer to the Company. Such
written notice shall be irrevocable.
In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall on the Repurchase Date pay
or cause to be paid in cash to the Holder thereof the Repurchase Price of the
Security or Securities as to which the repurchase right has been exercised. In
the event that a repurchase right is exercised with respect to less than the
entire principal amount of a surrendered Security of any series, the Company
shall execute and deliver to the Trustee and the Trustee shall authenticate for
issuance in the name of the Holder a new Security or Securities of that series
in the aggregate principal amount of the unrepurchased portion of such
surrendered security.
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<PAGE> 87
SECTION 14.03. Deposit of Repurchase Price.
On or prior to the Repurchase Date, the Company shall deposit
with the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money sufficient to pay the Repurchase Price of the Securities which
are to be repaid on the Repurchase Date.
SECTION 14.04. Securities Not Repurchased on Repurchase Date.
If the Repurchase Price of any Security surrendered for
repurchase shall not be paid on the Repurchase Date therefor, the principal
shall, until paid, bear interest to the extent permitted by applicable law from
that Repurchase Date at the rate per annum borne by that Security.
SECTION 14.05. Securities Repurchased in Part.
Any Security of any series which is to be repurchased only in
part shall be surrendered at any office or agency of the Company designated for
that purpose pursuant to Section 10.02 (with, if the Company or the Trustee so
requires, due endorsement by, or written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of that
Security without service charge, a new Security or Securities of that series
and of like tenor and any authorized denomination as requested by such Holder,
in an aggregate principal amount equal to and in exchange for the unrepurchased
portion of the principal of the Security so surrendered.
SECTION 14.06. Certain Definitions.
For purposes of this Article:
(a) With respect to any Security, a "Repurchase Event"
shall have occurred on the occurrence of a Change in Control or a
Termination of Trading after the date that Security (or its earliest
Predecessor Security) is issued and on or prior to the Stated Maturity
of the final payment of principal of that Security.
(b) A "Change in Control" shall occur when:
(i) all or substantially all the assets of the Company or
of the Company and its subsidiaries, taken as a whole, are sold in one
transaction or any series of related transactions as an entirety to
any Person or related group of Persons;
(ii) there shall be consummated any consolidation or
merger of the Company (A) in which the Company is not the continuing
or surviving corporation (other than a consolidation or merger with a
wholly owned subsidiary of the Company in which all shares
- 81 -
<PAGE> 88
of Common Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for the same consideration) or
(B) pursuant to which the Common Stock would be converted into cash,
securities or other property, in each case, other than a consolidation
or merger of the Company in which the holders of the Common Stock
immediately prior to the consolidation or merger have, directly or
indirectly, at least a majority of the total voting power of all
classes of capital stock entitled to vote generally in the election of
directors of the continuing or surviving corporation immediately after
such consolidation or merger in substantially the same proportion as
their ownership of Common Stock immediately before such transaction;
(iii) any person, or any persons acting together which
would constitute a "group" for purposes of Section 13(d) of the
Exchange Act (a "Group"), together with any Affiliates thereof, shall
beneficially own (as defined in Rule 13d-3 under the Exchange Act) at
least 50% of the total voting power of all classes of capital stock of
the Company entitled to vote generally in the election of directors of
the Company;
(iv) at any time during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board
of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election
by the stockholders of the Company was approved by a vote of 66 % 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; or
(v) the Company is liquidated or dissolved or adopts a
plan of liquidation or dissolution.
(c) A "Termination of Trading" shall occur if the Common
Stock (or other common stock into which the Securities are then convertible) is
neither listed for trading on a U.S. national securities exchange nor approved
for trading on an established automated over-the-counter trading market in the
United States.
ARTICLE XV.
MEETINGS OF HOLDERS OF SECURITIES
SECTION 15.01. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any or all series may be
called at any time and from time to time pursuant to this Article XV to make,
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be made, given or taken by
Holders of Securities of such series.
- 82 -
<PAGE> 89
SECTION 15.02. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders
of Securities of any series for any purpose specified in Section 15.01, to be
held at such time and at such place in Houston, Texas, or in any other
location, as the Trustee shall determine. Notice of every meeting of Holders
of Securities of any series, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 1.06, not less than 20 nor
more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in aggregate principal amount of the
Outstanding Securities of any series, shall have requested the Trustee for that
series to call a meeting of the Holders of Securities of that series for any
purpose specified in Section 15.01, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first publication of the notice of that meeting
within 30 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the
Holders of Securities of that series in the amount above specified, as the case
may be, may determine the time and the place in Houston, Texas, for such
meeting and may call such meeting for such purposes by giving notice thereof as
provided in Subsection (a) of this Section 15.02.
SECTION 15.03. Persons Entitled To Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (a) a Holder of one or more Outstanding
Securities of that series or (b) a Person appointed by an instrument in writing
as proxy for a Holder or Holders of one or more Outstanding Securities of that
series by such Holder or Holders. The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 15.04. Quorum; Action.
The Persons entitled to vote a majority in aggregate principal
amount of the Outstanding Securities of a series shall constitute a quorum for
a meeting of Holders of Securities of that series. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting
shall, if convened at the request of Holders of Securities of that series, be
dissolved. In any other case, the meeting may be adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such meeting. In the absence of a quorum at any such adjourned
meeting, such adjourned meeting may be further adjourned for a period of not
less than 10 days as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Subject to Section 15.05(d), notice of
the reconvening of any adjourned meeting shall be given as provided in Section
15.02(a), except that such notice need be given only once not less than five
days prior to the date on which the meeting is scheduled to be
- 83 -
<PAGE> 90
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly that Persons entitled to vote a majority in principal amount of the
Outstanding Securities of that series shall constitute a quorum.
Except as limited by the proviso to Section 9.02, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted by the affirmative vote of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of that series; provided, however, that, except as limited by the
proviso to Section 9.02, any resolution with respect to any request, demand,
authorization, direction, notice, consent or waiver which this Indenture
expressly provides may be made, given or taken by the Holders of a specified
percentage that is less than a majority in aggregate principal amount of the
Outstanding Securities of a series may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in aggregate
principal amount of the Outstanding Securities of that series.
Except as limited by the proviso to Section 9.02, any
resolution passed or decision taken at any meeting of Holders of Securities of
any series duly held in accordance with this Section 15.04 shall be binding on
all the Holders of Securities of that series, whether or not present or
represented at the meeting.
SECTION 15.05. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) The holding of Securities shall be proved in the
manner specified in Section 1.04 and the appointment of any proxy shall be
proved in the manner specified in Section 1.04 or by having the signature of
the Person executing the proxy witnessed or guaranteed by any trust company,
bank or banker deemed by the Trustee to be satisfactory. Such regulations may
provide that written instruments appointing proxies, regular on their face, may
be presumed valid and genuine without the proof specified in Section 1.04 or
other proof.
(b) The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
15.02(b), in which case the Company or the Holders of Securities of the series
calling the meeting, as the case may be, shall appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of all series represented at the meeting.
(c) At any meeting each Holder of a Security of each
series represented at the meeting and each proxy shall be entitled to one vote
for each $1,000 principal amount of the Outstanding Securities of that series
held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Security challenged as not Outstanding
and ruled by the chairman of the meeting to be not Outstanding. The chairman
of the meeting shall have no right to vote, except as a Holder of a Security of
a series represented at the meeting or as a proxy.
- 84 -
<PAGE> 91
(d) Any meeting of Holders of Securities of any series
duly called pursuant to Section 15.02 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in aggregate
principal amount of the Outstanding Securities of all series represented at the
meeting; and the meeting may be held as so adjourned without further notice.
SECTION 15.06. Counting Votes and Recording Action of Meetings.
The vote on any resolution submitted to any meeting of Holders
of Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of that series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of that series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record, at least in
duplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to such record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that such notice was given as provided in Section 15.02 and, if
applicable, Section 15.04. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
-----------------------------------------
This Indenture may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
- 85 -
<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
AMERICAN RESIDENTIAL SERVICES, INC.
By
----------------------------------------
C. Clifford Wright, Jr.
President and Chief Executive Officer
Attest:
- -----------------------------------
John D. Held
Secretary
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By
----------------------------------------
William J. Barber
Vice President
Attest:
- -----------------------------------
Name:
Title:
- 86 -
<PAGE> 93
STATE OF TEXAS )
) ss.
COUNTY OF HARRIS )
On the ___ day of ___________ 1997, before me personally came C.
Clifford Wright, Jr.,to me known, who, being by me duly sworn, did depose and
say that he is President and Chief Executive Officer of American Residential
Services, Inc., one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
----------------------------------
Notary Public
STATE OF ___________ )
) ss.:
COUNTY OF _________ )
On the __ day of _______, 1997, before me personally came William J.
Barber, to me known, who, being by me duly sworn, did depose and say that he is
a Vice President of U.S. Trust Company of Texas, N.A., a national banking
association, described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such seal; that it was so affixed by authority of the Board of Directors of
said corporation; and that he signed his name thereto by like authority.
-----------------------------------
Notary Public
- 87 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF AMERICAN RESIDENTIAL SERVICES, INC. AND
SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,093
<SECURITIES> 0
<RECEIVABLES> 37,748
<ALLOWANCES> 1,280
<INVENTORY> 15,798
<CURRENT-ASSETS> 71,736
<PP&E> 57,490
<DEPRECIATION> 31,303
<TOTAL-ASSETS> 275,350
<CURRENT-LIABILITIES> 39,132
<BONDS> 95,250
0
0
<COMMON> 14
<OTHER-SE> 136,692
<TOTAL-LIABILITY-AND-EQUITY> 275,350
<SALES> 152,252
<TOTAL-REVENUES> 152,252
<CGS> 106,310
<TOTAL-COSTS> 106,310
<OTHER-EXPENSES> 32,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,808
<INCOME-PRETAX> 11,359
<INCOME-TAX> 4,928
<INCOME-CONTINUING> 6,431
<DISCONTINUED> (124)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,307
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
