<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1997
REGISTRATION NO. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
HALTER MARINE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13085 INDUSTRIAL SEAWAY ROAD 75-2656828
(State or other jurisdiction of GULFPORT, MISSISSIPPI 39503 (I.R.S. Employer
incorporation or organization) (601) 896-0029 Identification No.)
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------------
JOHN DANE III
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HALTER MARINE GROUP, INC.
13085 INDUSTRIAL SEAWAY ROAD
GULFPORT, MISSISSIPPI 39503
(601) 896-0029
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies of all communications, including all communications to the agent for
service, should be sent to:
MAUREEN O'CONNOR SULLIVAN R. JAY TABOR
VICE PRESIDENT AND GENERAL COUNSEL BAKER & BOTTS, L.L.P.
HALTER MARINE GROUP, INC. 2001 ROSS AVENUE
13085 INDUSTRIAL SEAWAY ROAD SUITE 700
GULFPORT, MISSISSIPPI 39503 DALLAS, TEXAS 75201
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: From time to time after the effective date of this Registration
Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================================
Proposed Proposed
Amount to maximum offering maximum aggregate Amount of
Title of each class of securities to be registered be registered price per share (1) offering price (1) Registration fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4 1/2% Convertible Subordinated Notes September $185,000,000 100% $185,000,000 $56,061(2)
15, 2004
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per share (3) -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights (4) -- -- -- --
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Such registration fee was paid in its entirety by the registrant in
connection with the filing of the registrant's Registration Statement on Form
S-1, Registration No. 333-6967, as filed on June 27, 1996.
(3) Such indeterminate number of shares of Common Stock as shall be issuable
upon conversion of the Notes being registered hereunder, including such shares
as may be issuable pursuant to antidilution adjustments. No additional
consideration will be received for the Common Stock and therefore no
registration fee is required pursuant to Rule 457(i).
(4) No additional fee is payable in respect of the Preferred Stock Purchase
Rights associated with shares of Common Stock.
-------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 22, 1997
PROSPECTUS
HALTER MARINE GROUP, INC.
$185,000,000
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2004 AND
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF
This Prospectus relates to the offering by certain securityholders (the
"Selling Securityholders") of up to an aggregate of $185,000,000 of 4 1/2%
Convertible Subordinated Notes due 2004 (the "Notes"), of Halter Marine Group,
Inc., a Delaware corporation ("Halter" or the "Company"), and the 5,873,016
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"), that are issuable upon conversion of the Notes (the "Shares" and
together with the Notes, the "Securities") at a current conversion rate of
31.746 shares per $1,000 principal amount of Notes (equivalent to a conversion
price of $31.50 per share (the "Conversion Price")), subject to adjustment in
certain events. The Notes are convertible at the option of the holders into
shares of Common Stock at any time at or before maturity, unless previously
redeemed or repurchased. The Notes were originally issued by the Company on
September 15, 1997 in a private placement. The conversion rate and the
Conversion Price set forth above reflect an adjustment to give effect to a
three-for-two stock split effected pursuant to a stock dividend (the "Stock
Split") declared by the Board of Directors of the Company on September 29, 1997,
to the holders of record of Common Stock as of October 15, 1997. The Stock Split
will be effected on October 31, 1997.
Interest on the Notes is payable semiannually in cash in arrears on March 15
and September 15 of each year, commencing on March 15, 1998. The Notes are
redeemable, in whole or in part, at the option of the Company, at any time on or
after September 15, 2000, at the redemption prices set forth herein, plus all
accrued and unpaid interest and liquidated damages, if any, to the date of
redemption. The Company will be required to offer to purchase the Notes upon a
Change of Control (as defined herein) at a redemption price of 100% of the
principal amount thereof, plus accrued and unpaid interest and liquidated
damages, if any, to the date of repurchase. There can be no assurance that the
Company will have available financial resources necessary to repurchase the
Notes in such circumstances.
The Notes are general, unsecured obligations of the Company, subordinated in
right of payment to all existing and future Senior Indebtedness (as defined
herein). In addition, the Notes are structurally subordinated to all
liabilities (including trade payables) of the Company's subsidiaries. The
Indenture (as defined herein) does not restrict the incurrence of Senior
Indebtedness or other indebtedness by the Company or its subsidiaries. At
September 30, 1997, the Company had no amounts of Senior Indebtedness
outstanding, but the Company's subsidiaries had approximately $29.7 million of
indebtedness, trade payables and other accrued liabilities outstanding. In
addition, at such date, the Company would have had available borrowing capacity
of approximately $127 million (subject to customary borrowing conditions) under
its existing revolving credit facility (the "Existing Credit Facility"). The
Company is negotiating with a group of banks for a new revolving credit facility
(the "New Credit Facility"), which will replace the Existing Credit Facility and
which is expected to provide for borrowings of up to $150 million. Indebtedness
under both the Existing Credit Facility and the New Credit Facility constitutes
Senior Indebtedness.
The Selling Securityholders may from time to time sell the Securities offered
hereby to or through one or more underwriters, directly to other purchasers or
through agents in ordinary brokerage transactions, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale, prices related to
then prevailing market prices or at negotiated prices. See "Plan of
Distribution." The distribution of the Notes is not subject to any underwriting
agreement. The Company will not receive any of the proceeds from the sale of
any of the Notes or the Shares offered by the Selling Securityholders hereunder.
All expenses of registration incurred in connection with this offering are being
borne by the Company, but all selling and other expenses incurred by the Selling
Securityholders will be borne by such Selling Securityholders. None of the
Securities offered pursuant to this Prospectus have been registered prior to the
filing of the Registration Statement of which this Prospectus is a part.
On October 20, 1997, the closing sale price of the Common Stock on the
American Stock Exchange (the "AMEX") (where it trades under the symbol "HLX")
was $54 per share. Such closing price does not reflect the effect of the Stock
Split, which will be effective on October 31, 1997.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is __________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company with
the Commission can be inspected and copied at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such reports, proxy and information statements and other
information can also be inspected at the offices of the American Stock Exchange,
Inc., 86 Trinity Place, New York, New York 10016. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants (including the Company) that file
electronically with the Commission. The address of the Commission's Web site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Securities offered
hereby. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information
pertaining to the Securities and the Company, reference is made to the
Registration Statement. Statements contained herein concerning the provisions
of any document are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference. Copies of the Registration
Statement and the exhibits may be inspected, without charge, at the offices of
the Commission, or obtained at prescribed rates from the Public Reference
Section of the Commission at the address set forth above.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT CONTAINED IN THIS PROSPECTUS ARE FORWARD-LOOKING
STATEMENTS. FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS GENERALLY ARE
ACCOMPANIED BY WORDS SUCH AS "ANTICIPATE," "BELIEVE," "ESTIMATE" OR "EXPECT" OR
SIMILAR STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, NO ASSURANCE CAN BE
GIVEN THAT SUCH EXPECTATIONS WILL PROVE CORRECT. FACTORS THAT COULD CAUSE THE
COMPANY'S RESULTS TO DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN SUCH
FORWARD-LOOKING STATEMENTS ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
PROSPECTUS AND UNDER "RISK FACTORS." ALL FORWARD-LOOKING STATEMENTS IN THIS
PROSPECTUS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS IN THIS PARAGRAPH.
1
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
THE COMPANY'S GENERAL COUNSEL, 13085 INDUSTRIAL SEAWAY ROAD, GULFPORT,
MISSISSIPPI 39503 WHOSE TELEPHONE NUMBER IS (601) 896-0029.
The following documents filed with the SEC (File No. 1-12159) are
incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1997;
2. The Company's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1997;
3. The Company's Current Report on Form 8-K/A filed July 31, 1997;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997;
5. The Company's Current Report on Form 8-K filed August 27, 1997;
6. The Company's Current Report on Form 8-K filed September 10, 1997;
7. The Company's Current Report on Form 8-K filed September 16, 1997;
8. The Company's Current Report on Form 8-K filed September 30, 1997;
9. The Company's Current Report on Form 8-K filed October 7, 1997;
10. The Company's Current Report on Form 8-K/A filed October 21, 1997; and
11. The description of the Company's Common Stock contained in Item 1 of
the Registration Statement on Form 8-A/A filed with the Commission on
September 25, 1996, including any amendment or report filed for the
purpose of updating such description filed with the Commission pursuant
to Section 13 of the Exchange Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated herein by reference and shall be a
part hereof from the date of filing of such documents.
Any statement contained in this Prospectus or in documents incorporated by
reference or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus, or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Prospectus except as
so modified or superseded.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a Prospectus is delivered, upon written
or oral request of any such person, a copy of any or all of the documents
incorporated by reference herein, other than exhibits to such documents not
specifically incorporated by reference. Requests for such copies should be
directed to the Company's General Counsel, 13085 Industrial Seaway Road,
Gulfport, Mississippi 39503 whose telephone number is (601) 896-0029.
2
<PAGE>
THE COMPANY
The Company is a leading provider of new construction, modification and
repair services for ocean-going vessels and mobile offshore rigs used for oil
and gas drilling and production and offshore construction. The Company is the
seventh largest shipbuilder, and largest builder of small to medium sized ocean-
going ships and barges and inland tow boats, in the United States. The Company,
which has built more than 2,000 vessels in the past 40 years, specializes in the
construction, repair and conversion of a wide variety of vessels for the
commercial and governmental markets. The Company has recently entered the
construction, modification and repair market for mobile offshore rigs as a
result of its acquisition of Texas Drydock, Inc., which was completed in May
1997.
The Company has 20 shipyards (including one that is idle but that is
scheduled to be reopened) which are strategically located along the Gulf Coast
from Texas to Florida. The Company's multiple shipyards employ advanced
manufacturing techniques, including modular construction and zone outfitting
methods, and provide the Company significant flexibility and efficiency in
manufacturing a wide variety of vessels. The Company believes that these
factors, together with its large and experienced engineering team and work
force, make the Company one of the most versatile and cost-efficient
shipbuilders in the United States.
Prior to September 1996, the Company was a wholly owned subsidiary of
Trinity Industries, Inc. ("Trinity"). On September 26, 1996, the Company
completed an initial public offering (the "IPO") of Common Stock pursuant to
which approximately 18.7% of the Common Stock, after the exercise of the
underwriters' overallotment option, was sold to the public. On March 31, 1997,
Trinity distributed to its stockholders, in a tax-free transaction (the "Trinity
Distribution"), all of the Common Stock held by Trinity (approximately 81.3% of
the Common Stock). In connection with the IPO and the Trinity Distribution
(collectively, the "Separation from Trinity"), the Company and Trinity entered
into various agreements for the purpose of establishing the terms governing
their on-going arrangements and relationships after the IPO.
The Company's corporate offices are located at 13085 Industrial Seaway
Road, Gulfport, Mississippi 39503, and its telephone number at such offices is
(601) 896-0029.
3
<PAGE>
RISK FACTORS
Prospective investors should carefully consider and evaluate the following
factors, together with the information and financial data set forth elsewhere in
this Prospectus, before making an investment in the Notes.
RISKS ASSOCIATED WITH LEVERAGE
The Company's recent acquisitions have significantly increased the
Company's leverage. At September 30, 1997, the Company had (i) total long-term
indebtedness of $188.7 million, of which $185 million is represented by the
Notes, (iii) stockholders' equity of $106.5 million and (iii) available
borrowing capacity of approximately $127 million (subject to customary borrowing
conditions) under the Existing Credit Facility. The Company has obtained a
waiver from its lenders under the Existing Credit Facility to permit the
issuance of the Notes. The waiver requires that the Existing Credit Facility be
replaced by a new credit facility by December 14, 1997. The Company is
negotiating with a group of banks for the New Credit Facility, which will
replace the Existing Credit Facility and is expected to provide for borrowings
of up to $150 million. In addition, the Indenture does not restrict the
incurrence of additional indebtedness by the Company or its subsidiaries. The
degree to which the Company is leveraged could have important consequences to
holders of the Notes, including (i) the ability of the Company to obtain any
necessary financing in the future for working capital, capital expenditures,
debt service requirements or other purposes may be limited; (ii) a substantial
portion of the Company's cash flows from operations must be dedicated to the
payment of the principal of and interest on its indebtedness and will not be
available for other purposes; (iii) the Company's level of indebtedness could
limit its flexibility in planning for, or reacting to, changes in its business
or in economic conditions; and (iv) the Company's level of indebtedness will
make it more vulnerable in the event of a downturn in its business.
The Company's ability to pay interest and principal on the Notes and to
satisfy its other debt obligations will depend upon its future operating
performance, which will be affected by prevailing economic conditions and
financial, business and other factors, certain of which are beyond its control,
as well as the availability of revolving credit borrowings under the Existing
Credit Facility or the New Credit Facility. The Company anticipates that its
net cash provided by operating activities, together with the balance of the net
proceeds from the sale of the Notes, funds available under the Existing Credit
Facility, which is required to be replaced by December 14, 1997, or the New
Credit Facility (once it is in place) and the potential issuance of industrial
revenue bonds, will be sufficient to meet its operating expenses, and working
capital, capital expenditures and debt service requirements, through at least
fiscal 1999. However, if the Company is unable to service its debt, it will be
forced to pursue one or more alternative strategies such as selling assets,
curtailing any expansion, restructuring or refinancing its indebtedness or
seeking additional equity capital. There can be no assurance that any of these
strategies could be effected on terms satisfactory to the Company, if at all.
DEPENDENCE ON CONDITIONS IN THE OFFSHORE OIL AND GAS DRILLING INDUSTRY
A significant portion of the Company's current contracts relate to the
construction of offshore support vessels and the construction, repair and
conversion of mobile offshore rigs. Customer demand for offshore support
vessels and mobile offshore rigs is dependent on, among other things, the level
of activity in offshore oil and gas exploration, development and production,
particularly in the Gulf of Mexico where many of the offshore support vessels
manufactured by the Company and the substantial majority of the mobile offshore
rigs modified or repaired by the Company have been put into service. The level
of activity in offshore oil and gas exploration, development and production is
affected by such factors as prevailing oil and gas prices, expectations about
future prices, the cost of exploring for, producing and delivering oil and gas,
the sale and expiration dates of available offshore leases, the discovery rate
of new oil and gas reserves in offshore areas, local and international political
and economic conditions, technological advances and the ability of oil and gas
companies to generate or otherwise obtain funds for capital expenditures.
Although the Company believes there will be an increase in demand for offshore
support vessels and mobile offshore rigs, the Company cannot predict future
levels of activity in offshore oil and gas exploration, development and
production.
4
<PAGE>
RISKS ASSOCIATED WITH CONTRACTUAL PRICING IN THE SHIPBUILDING AND MOBILE
OFFSHORE RIG INDUSTRY
Most of the contracts entered into by the Company, whether commercial or
governmental, are fixed-price contracts under which the Company retains all cost
savings on completed contracts but is also liable for the full amount of all
cost overruns. The Company attempts to cover anticipated increased costs of
labor and materials through an estimation of such costs, which is reflected in
the original price. Despite these attempts, however, the revenue, cost and
gross profit realized on a fixed-price contract will often vary from the
estimated amounts because of many factors, including changes in job conditions
and variations in labor and equipment productivity over the term of the
contract. These variations and the risks generally inherent in the shipbuilding
and mobile offshore rig industry may result in gross profits realized by the
Company being different from those originally estimated and may result in the
Company experiencing reduced profitability or losses on projects. Depending on
the size of the project, these variations from estimated contract performance
could have a significant effect on the Company's operating results for any
particular fiscal quarter or year.
Many of the Company's contracts contain provisions requiring the payment by
the Company of liquidated damages in the event that the Company fails to meet
specified performance deadlines. There can be no assurance that the Company
will not be required to make payments to customers under such liquidated damages
provisions or that the requirement to make such payments will not have a
material adverse effect on the Company's operating results.
In addition, the Company uses the percentage of completion method to
account for its contracts in process. Under this method, revenue from
construction contracts are measured by the percentage of labor hours incurred as
compared to estimated total labor hours for each contract. The timing of
recognition of revenue and expenses for financial reporting purposes may differ
materially from the timing of actual cash flows from contract payments received
and expenses paid. Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined. To the extent that such
provisions result in a loss or a reduction or elimination of previously reported
profits with respect to a project, the Company would recognize a charge against
current earnings, which could be material.
DEPENDENCE ON MANAGEMENT
The Company believes that its success to date is attributable to, and its
future performance will depend to a significant extent upon, the efforts and
abilities of John Dane III, the Company's Chairman, President and Chief
Executive Officer and its other current executive officers. The Company does
not have employment agreements with any of its executive officers. However,
John Dane III has entered into a noncompetition agreement with the Company. The
loss of the services of one or more of the Company's executive officers could
have a material adverse effect on the Company.
LIMITATION ON AVAILABILITY OF TRAINED SHIPYARD WORKERS
Shipyards located in certain portions of southern Louisiana, including the
Company's Lockport, Louisiana facility, are experiencing severe shortages of
skilled shipyard labor as a result of recent labor demands brought about by
increases in offshore drilling activities, the construction of offshore drilling
rigs and crewing of offshore vessels. This labor shortage has resulted in
increased costs of labor, and limitations on production capacity, for shipyards
in such portions of southern Louisiana, including the Company's Lockport
facility. While the Company's other shipyards are not currently experiencing
severe labor shortages, these shipyards are faced with limitations on the
availability of skilled labor that could limit the Company's ability to increase
production to the extent the Company might otherwise desire. No assurances can
be given regarding whether severe shortages will be experienced at these
shipyards in the future.
MATTERS RELATING TO SEPARATION FROM TRINITY
Prior to the IPO, which was completed on September 26, 1996, the Company
operated as a wholly owned subsidiary of Trinity and from time to time relied
upon Trinity to provide credit and other financial support, services and
assistance. As a result, the Company has a limited independent operating
history. In addition, in connection with the Separation from Trinity, the
Company entered into various agreements with Trinity for the purpose of
establishing the terms governing their on-going arrangements and relationships.
The terms of such agreements were negotiated between affiliated parties, do not
reflect arms'-length dealings and may not be as favorable to the Company as
terms that would be available in similar agreements with unrelated third
parties. Such agreements provide, among other things, for certain prohibitions
on the ability of the Company to compete in Trinity's businesses.
5
<PAGE>
Trinity obtained a private letter ruling from the Internal Revenue Service
(the "IRS") to the effect that the Trinity Distribution would be treated as a
tax-free transaction. The agreements entered into between the Company and
Trinity in connection with the Separation from Trinity provide that the Company
will not take actions which could jeopardize the tax-free status of the Trinity
Distribution and that the Company will indemnify Trinity for any damages
resulting from actions by the Company that have the effect of destroying the
tax-free status of the Trinity Distribution. If the tax-free status of the
Trinity Distribution were destroyed as a result of actions taken by the Company,
such indemnification obligation would have a material adverse effect on the
Company. The Company has obtained an opinion from a nationally recognized
accounting firm to the effect that the sale of the Notes and the issuance of
Common Stock upon conversion of the Notes will not affect the tax-free status of
the Trinity Distribution. Such opinion is not binding on the IRS.
HIGHLY COMPETITIVE INDUSTRY
The shipbuilding and mobile offshore rig industry is highly competitive.
During the 1990's, the U.S. shipbuilding industry has been characterized by
substantial excess capacity because of the significant decline in U.S. Navy
shipbuilding spending and the difficulties experienced by U.S. shipbuilders in
competing successfully for international commercial projects against foreign
shipyards, many of which are heavily subsidized by their governments. As a
result of these factors, competition by U.S. shipbuilders for domestic
commercial projects has increased significantly. Such increased competition has
resulted in substantial pressure on pricing and profit margins.
Contracts for the construction of vessels, and for the construction,
conversion and repair of mobile offshore rigs, are usually awarded on a
competitive bid basis. Although the Company believes customers consider, among
other things, the availability and technical capabilities of equipment and
personnel, efficiency, condition of equipment, safety record and reputation,
price competition is currently a primary factor in determining which qualified
bidder is awarded a contract.
Private U.S. shipbuilders generally fall into two categories: (i) the six
largest shipbuilders capable of building large scale vessels for the U.S. Navy
and (ii) other shipyards that build small to medium sized vessels for
governmental and commercial markets. Each of the six largest shipbuilders is
substantially larger than the Company. The Company does not compete for U.S.
Navy large vessel construction projects. The Company competes for U.S.
government shipbuilding contracts on small to medium sized vessels principally
with approximately six to 12 U.S. shipbuilders, which may include one or more of
the six largest shipbuilders. The Company competes for domestic commercial
shipbuilding contracts principally with approximately ten to 15 U.S.
shipbuilders. The number and identity of competitors on particular projects
vary greatly, depending on the type of vessel and size of project. The Company
competes for mobile offshore rig construction, conversion and repair contracts
principally with two major U.S. competitors.
In connection with the Separation from Trinity, the Company entered into an
agreement with Trinity that prohibits the Company, for a period of four years
after completion of the IPO (which period will be extended under certain
circumstances), from engaging in any and all businesses and operations conducted
prior to the date of the IPO by Trinity or any of its subsidiaries other than
the Company Businesses (as defined herein), which include the construction and
repair of inland hopper barges and inland tank barges. Under the terms of this
agreement, the four-year noncompetition period is extended for a period of time
equal to any period during which the Company is constructing inland hopper
barges under an arrangement with Trinity. Under special arrangements with
Trinity, the Company has built a limited number of such vessels. Revenue
related to this business were $13.3 million, $26.2 million and $19.9 million for
fiscal years 1995, 1996 and 1997, respectively. Because the Company has
continuously been constructing such barges under an arrangement with Trinity
since the IPO, the four-year noncompetition period has not yet begun to run.
"Company Businesses" means the business and operations conducted prior to the
date of the IPO by Trinity and certain of its subsidiaries that consist of (i)
the construction, repair and conversion of ocean-going and inland vessels (other
than inland hopper barges and inland tank barges and the construction of
accessories for such barges) and (ii) the production of any component of or
accessory to any ocean-going or inland vessel being constructed by the Company
or any of its subsidiaries.
6
<PAGE>
OPERATING RISKS
The Company's activities involve the fabrication and refurbishment of large
steel structures, the operation of cranes and other heavy machinery and other
operating hazards that can cause personal injury or loss of life, severe damage
to and destruction of property and equipment and suspension of operations. The
failure of the structure of a vessel or mobile offshore rig after it leaves the
Company's shipyard can result in similar injuries and damages. Litigation
arising from any such occurrences may result in the Company being named as a
defendant in lawsuits asserting large claims. In addition, due to their
proximity to the Gulf of Mexico, the Company's facilities are subject to the
possibility of physical damage caused by hurricanes or flooding. Although the
Company maintains such insurance protection as it considers economically
prudent, there can be no assurance that any such insurance will be sufficient or
effective under all circumstances or against all hazards to which the Company
may be subject. A successful claim for which the Company is not fully insured
could have a material adverse effect on the Company.
LEGISLATIVE PROPOSALS TO MODIFY PROVISIONS OF JONES ACT
Pursuant to the requirements of the Merchant Marine Act of 1920 (the "Jones
Act"), all vessels transporting products between U.S. ports must be constructed
in U.S. shipyards, owned and crewed by U.S. citizens and registered under U.S.
law. Many customers elect to have vessels constructed at U.S. shipyards, even
if such vessels are intended for international use, in order to maintain
flexibility to use such vessels in the U.S. coastwise trade in the future. The
Company believes that substantially all of its revenue from U.S. commercial
shipbuilding contracts (which represented 41.1% of the Company's total revenue
for fiscal 1997) results from the sale of vessels capable of being used for U.S.
coastwise trade. In 1997, proposed legislation was introduced in Congress to
modify the provisions of the Jones Act to eliminate the requirement that ships
be constructed in the United States for U.S. coastwise trade. Similar bills
seeking to rescind or substantially modify the Jones Act and eliminate or
adversely affect the competitive advantages it affords to U.S. shipbuilders have
been introduced in Congress from time to time and are expected to be introduced
in the future. Although management believes it is unlikely that the Jones Act
requirements will be rescinded or materially modified in the foreseeable future,
there can be no assurance that this will not occur. Many foreign shipyards are
heavily subsidized by their governments and, as a result, there can be no
assurance that the Company would be able to effectively compete with such
shipyards if they were permitted to construct vessels for use in the U.S.
coastwise trade. The repeal of the Jones Act, or any amendment of the Jones Act
that would eliminate or adversely affect the competitive advantages provided to
U.S. shipbuilders, could have a material adverse effect on the Company's
business, financial condition and results of operations.
DEPENDENCE ON GOVERNMENT CONTRACTS
The Company builds vessels for the U.S. Navy, foreign nations and state and
local governments. Revenue derived from government customers accounted for
approximately 53% of the Company's total revenue in fiscal 1997. There can be no
assurance that the Company will be successful in obtaining new government
contracts, many of which are subject to strict competitive bidding requirements.
Purchases of vessels by governments, including the U.S. Government, generally
are subject to the uncertainties inherent in their respective budgeting and
appropriations processes, which are affected by political events over which the
Company has no control. Revenue derived from commercial (including energy) and
government customers accounted for approximately 61% and 39%, respectively, of
the Company's total revenue for the three months ended June 30, 1997.
Revenue derived from the construction of U.S. Navy vessels accounted for
approximately 37.4% of the Company's total revenue in fiscal 1997. With the end
of the Cold War and the pressure of domestic budget constraints, overall U.S.
Navy spending for new vessel construction has declined significantly since 1991.
U.S. Navy shipbuilding is expected to continue to decline during the remainder
of the decade. Although the Company believes that the small to medium sized
U.S. Navy vessels for which it competes are less likely to be cut back and, in
some cases, do not require specific Congressional appropriations, the Company
generally expects revenue and gross profit attributable to its current and any
future U.S. Navy contracts to decline over the next several years. Such
decreases, if not offset by increased revenue and profit from contracts with
other customers, could have a material adverse effect on the Company's business,
financial condition and results of operations.
7
<PAGE>
IMPACT OF ENVIRONMENTAL LAWS
The Company is subject to extensive and changing federal, state and local
laws (including common law) and regulations designed to protect the environment
("Environmental Laws"). The Company from time to time is involved in
administrative and other proceedings under Environmental Laws involving its
operations and facilities. Environmental Laws could impose liability for
remediation costs or result in civil or criminal penalties in cases of non-
compliance. Compliance with Environmental Laws increases the Company's costs of
doing business. Additionally, Environmental Laws have been subject to frequent
change; therefore, the Company is unable to predict the future costs or other
future impact of Environmental Laws on its operations. There can be no
assurance that the Company will not incur material liability related to the
Company's operations and properties under Environmental Laws.
SUBORDINATION OF NOTES
The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness, and are structurally subordinated to all liabilities
(including trade payables) of the Company's subsidiaries. The Indenture does
not restrict the incurrence of Senior Indebtedness or other indebtedness by the
Company or its subsidiaries. By reason of such subordination, in the event of
the insolvency, bankruptcy, liquidation, reorganization, dissolution or winding
up of the business of the Company, the assets of the Company will be available
to pay the amounts due on the Notes only after all Senior Indebtedness has been
paid in full and, therefore, there may not be sufficient assets remaining to pay
amounts due on any or all of the Notes then outstanding. As of September 30,
1997, the Company had no amounts of Senior Indebtedness outstanding, but the
Company's subsidiaries had approximately $29.7 million of indebtedness, trade
payables and other accrued liabilities outstanding. In addition, at such date,
the Company had available borrowing capacity of approximately $127 million
(subject to customary borrowing conditions) under the Existing Credit Facility.
The Company is negotiating with a group of banks for the New Credit Facility,
which will replace the Existing Credit Facility and is expected to provide for
borrowings of up to $150 million. Indebtedness under both the Existing Credit
Facility and the New Credit Facility constitutes Senior Indebtedness. See
"Description of Notes--Subordination."
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of the Common Stock could be subject to significant
fluctuations in response to the Company's operating results, changes in earnings
estimated by securities analysts or the Company's ability to meet those
estimates, publicity regarding the shipbuilding and mobile offshore rig industry
and other factors, some of which may be beyond the Company's control. There can
be no assurance that the market price of the Common Stock will not decline below
the price at which the shares of the Common Stock are currently being traded.
In addition, the stock markets have from time to time experienced extreme price
and volume volatility. These fluctuations may be unrelated to the operating
performance of particular companies whose shares are traded. Market
fluctuations may adversely affect the market price of the Common Stock.
LIMITATIONS ON REPURCHASE OF NOTES UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
offer to purchase the Notes. If a Change of Control were to occur, there can be
no assurance that the Company would have sufficient financial resources, or
would be able to arrange financing, to pay the repurchase price for all Notes
tendered by holders thereof. In addition, the Company's repurchase of the Notes
as a result of a Change of Control will be prohibited by the terms of the
Existing Credit Facility and the New Credit Facility and may be prohibited or
limited by, or create an event of default under, the terms of other agreements
related to borrowings which the Company may enter into from time to time.
Failure of the Company to purchase tendered Notes would constitute an Event of
Default under the Indenture. See "Description of Notes--Repurchase of Notes at
the Option of the Holder Upon a Change of Control."
ABSENCE OF EXISTING MARKET FOR NOTES
The Notes constitute a new issue of securities with no established trading
market. Although the Company intends to seek the listing of the Notes on the
AMEX concurrently with the effectiveness of the Registration Statement, there
can be no assurance that the Notes will be approved for listing thereon or on
any national securities exchange, or that they will be admitted to trading in an
inter-dealer automated quotation system. Donaldson, Lufkin & Jenrette
8
<PAGE>
Securities Corporation and Merrill Lynch, Pierce Fenner & Smith Incorporated
(collectively, the "Initial Purchasers") informed the Company at the time of the
initial purchase of the Notes, that they may make a market in the Notes. Such
market-making, however, may be suspended at any time without notice.
Although the Notes are designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market, no assurance
can be given that an active trading market for the Notes will develop or, if
such market develops, as to the liquidity or sustainability of such market. In
addition, if the Notes are listed on the AMEX, they thereafter will cease to be
eligible for trading in the PORTAL market. If a trading market does not develop
or is not maintained, holders of the Notes may experience difficulty in
reselling, or an inability to sell, the Notes. If a market for the Notes
develops, any such market may be discontinued at any time. If a public trading
market develops for the Notes, future trading prices of the Notes will depend on
many factors, including, among other things, prevailing interest rates, the
Company's operating results, the Common Stock price and the market for similar
securities. Depending on prevailing interest rates, the market for similar
securities and other factors, including the financial condition of the Company,
the Notes may trade at a discount from their principal amount.
CERTAIN ANTI-TAKEOVER EFFECTS
The Restated Certificate of Incorporation of the Company (the
"Certificate"), the Bylaws of the Company (the "Bylaws"), the Company's
Preferred Stock Purchase Rights (the "Rights") and applicable provisions of the
Delaware General Corporation Law (the "DGCL"), contain various provisions that
may hinder, delay or prevent the acquisition of control of the Company without
the approval of the Board of Directors of the Company. Certain provisions of
the Certificate and the Bylaws, among other things, (i) authorize the issuance
of "blank check" preferred stock, (ii) divide the Board of Directors of the
Company into three classes, the members of which serve for three-year terms,
(iii) establish advance notice requirements for director nominations and
stockholder proposals to be considered at annual meetings and (iv) prohibit
stockholder action by written consent. In addition, the Company has entered
into a Stockholder Rights Agreement with The Bank of New York, as rights agent,
pursuant to which each share of Common Stock has attached one Right which will
initially trade together with such share. The Rights would cause substantial
dilution to a person or group that attempts to acquire the Company on terms not
approved in advance by the Board of Directors of the Company. In addition,
Section 203 of the DGCL imposes certain restrictions on mergers and other
business combinations between the Company and any holder of 15% or more of the
Common Stock. See "Description of Capital Stock--Stockholder Rights Plan" and
"Description of Capital Stock--Delaware Business Combination Statute."
DIVIDEND POLICY
The Company does not anticipate paying any cash dividends on the Common
Stock in the foreseeable future. In addition, the Existing Credit Facility
restricts, and the New Credit Facility will restrict, the payment of dividends.
9
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1997
gives effect to the initial sale of the Notes and the use of the net proceeds
therefrom as if such transactions had occurred on June 30, 1997. The Unaudited
Pro Forma Consolidated Income Statement for the year ended March 31, 1997 gives
effect to (i) the acquisition of Texas Drydock, Inc. (the "TDI Acquisition") and
(ii) the initial sale of the Notes and the use of the net proceeds therefrom as
if such transactions had occurred on April 1, 1996. The Unaudited Pro Forma
Consolidated Income Statement for the three months ended June 30, 1997 gives
effect to the initial sale of the Notes and the use of the net proceeds
therefrom as if such transactions had occurred on April 1, 1996.
The TDI Acquisition was accomplished by the acquisition of 20% of the stock
of Texas Drydock, Inc. ("TDI") directly from shareholders of TDI and 100% of the
stock of Maritime Holdings, Inc., which held 80% of the stock of TDI. Maritime
Holdings, Inc. formerly owned several companies including TDI. Prior to the sale
of its stock to the Company, as a condition of the purchase agreement, Maritime
Holdings, Inc. divested all of its assets, except for the stock of TDI, and all
of its liabilities, so that when the Company purchased Maritime Holdings, Inc.,
its only asset was 80% of the stock of TDI, and it had no liabilities.
The Unaudited Pro Forma Consolidated Income Statement for the year ended
March 31, 1997 has been prepared giving consideration to the audited income
statement of TDI for the fiscal year ended September 30, 1996 adjusted
accordingly by unaudited income statements for the six-month periods ended March
31, 1997 and March 31, 1996.
The Unaudited Pro Forma Consolidated Financial Statements are not
necessarily indicative of the financial position or operating results that would
have been achieved had the TDI Acquisition and the sale of the Notes occurred at
the dates indicated, nor do such statements purport to project the results of
the Company for any future period.
The following Unaudited Pro Forma Consolidated Financial Statements should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the historical consolidated financial
statements of the Company and the historical consolidated financial statements
of TDI and the related notes thereto, in each case as incorporated herein by
reference from documents filed by the Company with the Commission, as described
under "Incorporation of Documents by Reference."
10
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- --------------- ---------
ASSETS
Current Assets:
<S> <C> <C> <C>
Cash............................................................... $ 3,022 $ 81,900 (1) $ 84,922
Contract receivables............................................... 49,972 -- 49,972
Costs and estimated earnings in excess of billings on uncompleted
contracts........................................................ 90,481 -- 90,481
Inventories........................................................ 10,251 -- 10,251
Other current assets............................................... 4,375 -- 4,375
-------- -------- --------
Total current assets............................................ 158,101 81,900 240,001
Property, plant and equipment, net................................... 86,493 -- 86,493
Excess of cost over net assets acquired.............................. 26,662 -- 26,662
Other assets......................................................... 285 6,100 (1) 6,385
-------- -------- --------
$271,541 $ 88,000 $359,541
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and other accrued liabilities..................... $ 32,909 $ -- $ 32,909
Billings in excess of costs and estimated earnings on uncompleted
contracts........................................................ 28,048 -- 28,048
Notes payable and current portion of long-term debt................ 33,056 (27,000)(1) 6,056
Deferred income taxes.............................................. 3,417 -- 3,417
-------- -------- --------
Total current liabilities....................................... 97,430 (27,000) 70,430
Long-term debt....................................................... 73,487 185,000 (1) 188,487
(70,000)(1)
Other noncurrent liabilities......................................... 1,911 -- 1,911
-------- -------- --------
Total liabilities............................................... 172,828 88,000 260,828
Stockholders' equity:
Common stock....................................................... 185 -- 185
Additional paid-in capital......................................... 84,214 -- 84,214
Retained earnings.................................................. 14,314 -- 14,314
-------- -------- --------
Total stockholders' equity...................................... 98,713 -- 98,713
-------- -------- --------
$271,541 $ 88,000 $359,541
======== ======== ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
11
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
YEAR ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
---------------------
COMPANY TDI ADJUSTMENTS PRO FORMA
--------- ---------- -------------- ----------
<S> <C> <C> <C> <C>
Contract revenue earned.................................. $406,797 $ 105,706 $ -- $512,503
Cost of revenue earned................................... 355,209 97,418 320 (2) 452,459
(488)(3)
-------- ---------- --------
Gross profit........................................... 51,588 8,288 168 60,044
Selling, general and administrative expenses............. 21,361 8,125 (4) 488 (3) 29,974
Amortization of excess of cost over net assets acquired.. -- -- 1,406 (5) 1,406
-------- --------- ---------- --------
Operating income....................................... 30,227 163 (1,726) 28,664
Other (income) expenses:
Interest expense....................................... 3,232 165 5,959 (6) 9,356
Gain on disposition of assets.......................... -- (462) -- (462)
Gain on settlement of lawsuit.......................... -- (1,732) -- (1,732)
Other, net............................................. (8) 9 -- 1
-------- --------- ---------- --------
3,224 (2,020) 5,959 7,163
-------- --------- ---------- --------
Income before income taxes............................... 27,003 2,183 (7,685) 21,501
Provision for income taxes............................... 10,887 767 (2,384)(7) 9,270
-------- --------- ---------- --------
Net income............................................... $ 16,116 $ 1,416 $ (5,302) $ 12,230
======== ========= ========== ========
Net income per share..................................... $ 0.88 $ 0.67
======== ========
Weighted average shares outstanding...................... 18,255 18,255
OTHER FINANCIAL DATA:
EBITDA(8)................................................ $ 38,126 $ 39,634
Depreciation and amortization............................ 7,899 1,345 2,597(9) 11,841
Capital expenditures..................................... 14,491 2,603 17,094
Ratio of earnings to fixed charges (10).................. 9.2x 3.3x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
12
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
THREE MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- --------------- ---------
<S> <C> <C> <C>
Contract revenue earned.................................. $149,069 $ -- $149,069
Cost of revenue earned................................... 130,504 -- 130,504
-------- --------- --------
Gross profit........................................... 18,565 -- 18,565
Selling, general and administrative expenses............. 7,884 -- 7,884
Amortization of excess of cost over net assets acquired.. 338 -- 338
-------- --------- --------
Operating income....................................... 10,343 -- 10,343
Other (income) expenses:
Interest expense....................................... 1,436 797 (11) 2,233
Other, net............................................. 138 -- 138
-------- --------- --------
1,574 797 2,371
-------- --------- --------
Income before income taxes............................... 8,769 (797) 7,972
Provision for income taxes............................... 3,358 (319)(7) 3,039
-------- --------- --------
Net income............................................... $ 5,411 $ (478) $ 4,933
======== ========= ========
Net income per share..................................... $ 0.29 $ 0.27
======== ========
Weighted average shares outstanding...................... 18,568 18,568
OTHER FINANCIAL DATA:
EBITDA(8)................................................ $ 13,073 $ 13,073
Depreciation and amortization............................ 2,730 218 (12) 2,948
Capital expenditures..................................... 11,879 11,879
Ratio of earnings to fixed charges(10)................... 7.1x 4.6x
</TABLE>
See accompanying Notes to Unaudited Pro Forma Consolidated Financial Statements.
13
<PAGE>
HALTER MARINE GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(1) To record the sale of $185 million of the Notes, net of debt issuance costs
of $6.1 million, and the use of the net proceeds therefrom as follows: (a)
payment of $97 million of outstanding loans under the Existing Credit
Facility and (b) increase of cash in the amount of $81.9 million. Assumes
additional borrowings under the Existing Credit Facility to repay $27
million of short-term notes issued in connection with the TDI Acquisition.
(2) To adjust depreciation expense resulting from the write-up of fixed assets
of TDI to fair values at the time of the TDI Acquisition.
(3) To reclassify certain expenses of TDI based on the accounting policies of
the Company.
(4) Includes an accrual for one-time bonuses of approximately $3.2 million at
March 31, 1997, which were paid to TDI employees in connection with the TDI
Acquisition. No such bonuses were paid or accrued in fiscal 1996.
(5) Amortization of excess of cost over net assets acquired in the TDI
Acquisition over 20 years.
(6) To record (a) interest expense on the Notes based on an assumed rate of
4.5% per annum; (b) the elimination of interest expense on outstanding
loans under the Existing Credit Facility; and (c) amortization of debt
issuance costs over the seven-year term of the Notes. Assuming the
investment of excess funds based on an average rate of 4.5% per annum,
interest expense would have decreased by approximately $3.0 million.
(7) Income tax effect of pro forma adjustments using the Company's effective
tax rate of approximately 40%.
(8) EBITDA (earnings before interest, taxes, depreciation and amortization
expense) is presented because it is a widely accepted financial indicator
used by certain investors and analysts to analyze and compare companies on
the basis of operating performance. EBITDA is not intended to represent
cash flows for the period, nor has it been presented as an alternative to
operating income as an indicator of operating performance and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP.
(9) Reflects amortization of excess of cost over net assets acquired in the TDI
Acquisition, depreciation expense resulting from the write-up of fixed
assets of TDI to fair values at time of the TDI Acquisition, and
amortization of debt issuance costs of the Notes.
(10) For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes, plus fixed charges.
Fixed charges consist of interest expense on all indebtedness and
amortization of deferred financing costs.
(11) To record (a) interest expense on the Notes based on an assumed rate of
4.5% per annum; (b) the elimination of interest expense on outstanding
loans under the Existing Credit Facility; (c) the elimination of interest
expense on the short-term notes issued in connection with the TDI
Acquisition; and (d) amortization of debt issuance costs over the seven-
year term of the Notes. Assuming the investment of excess funds based on an
average rate of 4.5% per annum, interest expense would have decreased by
approximately $921,000.
(12) Reflects amortization of debt issuance costs of the Notes.
14
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED MARCH 31, JUNE 30,
- ------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PRO FORMA PROFORMA
1993 1994 1995 1996 1997 1997 1996 1997 1997
- ---- ---- ---- ---- ---- ---- ---- ---- ----
16.6x 17.7x 7.7x 7.3x 9.2x 3.3x 7.2x 7.1x 4.6x
</TABLE>
For purposes of determining the ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes, plus fixed charges. Fixed
charges consist of interest expenses on all indebtedness and amortization of
deferred financing costs. The pro forma information for the year ended March
31, 1997 gives effect to (i) the TDI Acquisition and (ii) the initial sale of
the Notes and the use of the net proceeds therefrom as if these transactions had
occurred on April 1, 1996. The pro forma information for the three months ended
June 30, 1997 gives effect to the initial sale of the Notes and the use of the
net proceeds therefrom as if these transactions had occurred on April 1, 1996.
USE OF PROCEEDS
The Company will not receive any of the proceeds from any resales of the
Notes or the Shares by the Selling Securityholders pursuant to this Prospectus.
See "Selling Securityholders" for a list of those persons and entities receiving
the proceeds from the sales of the Notes or the Shares.
15
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the name of each Selling Securityholder and
relationship, if any, with the Company and (i) the amount of Notes owned by each
Selling Securityholder as of September 30, 1997, (ii) the maximum amount of
Notes which may be offered for the account of such Selling Securityholder under
this Prospectus, (iii) the amount of Common Stock owned by each Selling
Securityholder as of September 30, 1997, and (iv) the maximum amount of Common
Stock which may be offered for the account of such Selling Securityholder under
this Prospectus.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL COMMON STOCK
AMOUNT OF AMOUNT OF NOTES OWNED PRIOR COMMON STOCK
NAME OF SELLING SECURITYHOLDER.......... NOTES OWNED OFFERED HEREBY TO OFFERING (1) OFFERED HEREBY (2)
- ----------------------------------------- ------------ --------------- ----------------- ------------------
<S>..................................... <C> <C> <C> <C>
The Class 1C Company, Ltd............... $ 750,000 $ 750,000 23,809 23,809
Argent Classic Convertible
Arbitrage Fund, L.P.................... $ 1,000,000 $ 1,000,000 31,746 31,736
Argent Classic Convertible
Arbitrage Fund (Bermuda), Ltd.......... $ 2,000,000 $ 2,000,000 63,492 63,492
McMahan Securities Co. L.P.............. $ 750,000 $ 750,000 23,809 23,809
Carrigolt Capital (Bermuda) L.P......... $ 750,000 $ 750,000 23,809 23,809
Subtotal................................ $ 5,250,000 $ 5,250,000 166,666 166,166
Unnamed holders of Notes or any
future transferees, pledges, donees or
successors of or from any such
unnamed holders (3).................... $179,750,000 $179,750,000 5,706.350(4) 5,706,350
Total................................... $185,000,000 $185,000,000 5,873,016 5,873,016
</TABLE>
- ------------------------
(1) Comprises the shares of Common Stock into which the Notes held by such
Selling Securityholder are convertible at the initial conversion rate. The
Conversion Rate and the number of shares of Common Stock issuable upon
conversion of the Notes are subject to adjustment under certain
circumstances. See "Description of Notes -- Conversion Rights."
Accordingly, the number of shares of Common Stock issuable upon conversion
of the Notes may increase or decrease from time to time. Numbers shown
reflect the effect of the Stock Split, which will be effective on October
31, 1997.
(2) Assumes conversion into Common Stock of the full amount of Notes held by
the Selling Securityholder at the initial conversion rate and the offering
of such shares by such Selling Securityholder pursuant to this Prospectus.
The Conversion Rate and the number of shares of Common Stock issuable upon
conversion of the Notes is subject to adjustment under certain
circumstances. See "Description of Notes -- Conversion Rights."
Accordingly, the number of shares of Common Stock issuable upon conversion
of the Notes may increase or decrease form time to time. Fractional shares
will not be issued upon conversion of the Notes; rather, cash will be paid
in lieu of fractional shares, if any. Numbers shown reflect the effect of
the Stock Split, which will be effective on October 31, 1997.
(3) No such holder may offer Notes pursuant to this Prospectus until such
holder is included as a Selling Securityholder in a supplement to this
Prospectus in accordance with the Registration Rights Agreement (as defined
herein).
(4) Assumes that the unnamed holders of Notes or any future transferees,
pledgees, donees or successors of or from any such unnamed holder do not
beneficially own any Common Stock other than the Common Stock issuable upon
conversion of the Notes at the initial conversion rate.
16
<PAGE>
Because the Selling Securityholders may, pursuant to this Prospectus, offer
all or some portion of the Notes and Common Stock they presently hold or, with
respect to Common Stock, have the right to acquire upon conversion of such
Notes, no estimate can be given as to the amount of the Notes and Common Stock
that will be held by the Selling Securityholders upon termination of any such
sales. In addition, the Selling Securityholders identified above may have sold,
transferred or otherwise disposed of all or a portion of their Notes and Common
Stock since the date on which they provided the information regarding their
Notes and Common Stock, in transactions exempt from the registration
requirements of the Securities Act. See "Plan of Distribution."
Only Selling Securityholders identified above who beneficially own the
Notes and Common Stock set forth opposite each such Selling Securityholder's
name in the foregoing table on the effective date of the Registration Statement
may sell such Notes and Common Stock pursuant to this Prospectus. The Company
may from time to time, in accordance with the Registration Rights Agreement,
include additional Selling Securityholders in supplements to this Prospectus.
The Company will pay the expenses of registering the Notes and Common Stock
being sold hereunder.
17
<PAGE>
DESCRIPTION OF CREDIT FACILITIES
EXISTING CREDIT FACILITY
The Company is a party to the Existing Credit Facility with a group of
banks. This summary does not purport to be complete and is subject to the
detailed provisions of the loan agreements and various related documents entered
into in connection with the Existing Credit Facility.
The Existing Credit Facility provides for a revolving credit facility of
$135 million, with a $60 million sublimit for letters of credit. Borrowings
under the Existing Credit Facility are unsecured but are guaranteed by the
Company's subsidiaries. Borrowings under the Existing Credit Facility are
available for refinancing existing indebtedness, working capital and general
corporate purposes, including permitted acquisitions.
As of June 30, 1997, on a pro forma basis after giving effect to the sale
of the Notes and the use of the net proceeds therefrom, the Company would have
had available borrowing capacity of approximately $127 million (subject to
customary borrowing conditions) under the Existing Credit Facility. The Company
has obtained a waiver from its lenders under the Existing Credit Facility to
permit the issuance of the Notes. The waiver requires that the Existing Credit
Facility be replaced by a new credit facility by December 14, 1997.
Borrowings under the Existing Credit Facility bear interest, at the option
of the Company, at either (i) LIBOR plus 0.625% to 1.25% or (ii) the Base Rate
(as defined therein). The range of rates over LIBOR is set quarterly based on
the Company's ratio of funded debt to EBITDA (as defined therein). The Company
is required to pay certain fees in connection with the Existing Credit Facility,
including a commitment fee ranging from 0.25% to 0.375% of the unused portion of
the Existing Credit Facility.
The Existing Credit Facility includes several financial covenants. The
Company is required to maintain a minimum interest coverage ratio (as defined
therein) of not less than 4.0 to 1 , a minimum debt service coverage ratio (as
defined therein) of not less than 1.35 to 1 and a minimum current ratio (as
defined therein) of not less than 1.25 to 1.
The Existing Credit Facility contains customary representations and
warranties and requires compliance by the Company with certain other covenants,
including, among other things, covenants limiting (i) payment of dividends and
other distributions, (ii) consolidations and mergers, (iii) capital expenditures
and (iv) transactions with affiliates. The Existing Credit Facility also
contains customary events of default, including, among other things, (a) the
failure to pay interest, principal or fees when due, (b) the material inaccuracy
of representations or warranties, (c) insolvency, bankruptcy events or certain
material judgments and (d) a change of control of the Company.
NEW CREDIT FACILITY
The Company is negotiating for the New Credit Facility with a group of
banks for whom Whitney National Bank, BancBoston, N.A. and The First National
Bank of Chicago will act as co-agents. This summary includes anticipated terms
of the New Credit Facility, which terms may change in the course of negotiation
of the New Credit Facility. This summary does not purport to be complete and is
subject to the detailed provisions of the loan agreement and various related
documents to be entered into in connection with the New Credit Facility.
The New Credit Facility is expected to provide for a revolving credit
facility of $150 million, with a $60 million sublimit for letters of credit.
Borrowings under the New Credit Facility will be unsecured but will be
guaranteed by the Company's subsidiaries. Borrowings under the New Credit
Facility will be available for working capital and general corporate purposes,
including permitted acquisitions. All amounts outstanding under the New Credit
Facility will be due on September 30, 2002.
Borrowings under the New Credit Facility will bear interest, at the option
of the Company, at either (i) LIBOR plus 0.75% to 1.75% or (ii) the Base Rate
(as defined therein). The range of rates over LIBOR is set quarterly based on
the Company's ratio of funded debt (as defined therein) to EBITDA (as defined
therein). The Company will be required to pay certain fees in connection with
the New Credit Facility, including a commitment fee ranging from 0.2% to 0.5%
per year (depending on the Company's ratio of funded debt to EBITDA) on the
unused portion of the revolving credit facility.
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<PAGE>
The New Credit Facility will require that the Company meet certain
consolidated net worth requirements. In addition, the Company will be required
to maintain certain financial ratios, including an interest coverage ratio (as
defined therein), a minimum fixed charge coverage ratio (as defined therein) and
a maximum consolidated funded debt to EBITDA ratio (as defined therein).
The New Credit Facility will contain customary representations and
warranties and will require compliance by the Company with certain other
covenants, including, among other things, covenants limiting (i) payment of
dividends and other distributions, (ii) consolidations and mergers, (iii)
acquisitions and capital expenditures and (iv) transactions with affiliates.
The New Credit Facility also will contain customary events of default,
including, among other things, (a) the failure to pay interest, principal or
fees when due, (b) the material inaccuracy of representations or warranties, (c)
insolvency, bankruptcy events or certain material judgments and (d) a change of
control of the Company.
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DESCRIPTION OF NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
were issued pursuant to an indenture (the "Indenture") dated as of September 15,
1997, by and between the Company and U.S. Trust Company of Texas, N.A., as
trustee (the "Trustee"). The following summary of the Notes, the Indenture and
the Registration Rights Agreement dated as of September 15, 1997 among the
Company and the Initial Purchasers (the "Registration Rights Agreement") does
not purport to be complete and is subject to, and is qualified in its entirety
by, reference to all of the provisions of the Indenture and the Registration
Rights Agreement, including the definitions therein of certain terms. The
Indenture and the Registration Rights Agreement have been filed as exhibits to
the Registration Statement of which this Prospectus is a part. Capitalized
terms used herein without definition have the meanings ascribed to them in the
Indenture or the Registration Rights Agreement, as appropriate. As used in this
section, the "Company" refers to Halter Marine Group, Inc., exclusive of its
Subsidiaries. Wherever particular provisions or defined terms of the Indenture
(or the form of Note which is part thereof) or the Registration Rights Agreement
are referred to in this summary, such provisions or defined terms are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference. Certain definitions of terms
used in the following summary are set forth under "--Certain Definitions" below.
GENERAL
The Notes are general, unsecured obligations of the Company, limited in
aggregate principal amount to $185,000,000. The Notes are subordinated in right
of payment to all Senior Indebtedness, as described under "--Subordination"
below. The Notes have been issued only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
The Notes will mature on September 15, 2004. The Notes bear interest at
the rate per annum stated on the cover page of this Prospectus from September
15, 1997, or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually in cash in arrears on March 15
and September 15 of each year, commencing March 15, 1998, to the persons in
whose names such Notes are registered at the close of business on the March 1
and September 1 immediately preceding such Interest Payment Date. Principal of,
premium, if any, and interest on, and liquidated damages with respect to, the
Notes will be payable, the Notes will be convertible and the Notes may be
presented for registration of transfer or exchange, at the office or agency of
the Company maintained for such purpose, which office or agency shall be
maintained in the Borough of Manhattan, The City of New York. Interest is
calculated on the basis of a 360-day year consisting of twelve 30-day months.
At the option of the Company, payment of interest and liquidated damages
may be made by check mailed to the Holders of the Notes at the addresses set
forth upon the registry books of the Company. No service charge will be made
for any registration of transfer or exchange of Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Until otherwise designated by the
Company, the Company's office or agency will be the corporate trust office of
the Trustee presently located in New York City.
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the repurchase of securities of the Company or the
incurrence of Indebtedness or Senior Indebtedness. The Indenture contains no
covenants or other provisions to afford protection to Holders of Notes in the
event of a highly leveraged transaction or a change of control of the Company,
except to the limited extent described under "--Repurchase of Notes at the
Option of the Holder Upon a Change of Control" below.
CONVERSION RIGHTS
Each Holder of Notes has the right at any time prior to the close of
business on the Stated Maturity of the Notes, unless previously redeemed or
repurchased, at the Holder's option, to convert any portion of the principal
amount thereof that is $1,000 or an integral multiple thereof into shares of
Common Stock at the Conversion Price set forth on the cover page of this
Prospectus (subject to adjustment as described below). The right to convert a
Note called for redemption or delivered for repurchase and not withdrawn will
terminate at the close of business on the Business Day immediately prior to the
Redemption Date or Repurchase Date for such Note, unless the Company
subsequently fails to pay the applicable Redemption Price or Repurchase Price,
as the case may be.
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In the case of any Note that has been converted into Common Stock after any
Record Date, but on or before the next Interest Payment Date, interest, the
stated due date of which is on such Interest Payment Date, shall be payable on
such Interest Payment Date notwithstanding such conversion, and such interest
shall be paid to the Holder of such Note who is a Holder on such Record Date.
Any Note converted after any Record Date but before the next Interest Payment
Date (other than Notes called for redemption) must be accompanied by payment of
an amount equal to the interest payable on such Interest Payment Date on the
principal amount of Notes being surrendered for conversion; provided no such
payment shall be required with respect to interest payable on September 15,
2000. No fractional shares of Common Stock will be issued upon conversion but,
in lieu thereof, an appropriate amount will be paid in cash by the Company based
on the market price of Common Stock (determined in accordance with the
Indenture) at the close of business on the day of conversion. As a result of
the foregoing provisions, Holders that surrender Notes for conversion on a date
that is not an Interest Payment Date will not receive any interest for the
period from the Interest Payment Date next preceding the date of conversion to
the date of conversion or for any later period, except for Notes that are called
for redemption.
The Conversion Price is subject to adjustment in certain events, including
(a) any payment of a dividend (or other distribution) payable in Common Stock on
any class of Capital Stock of the Company, (b) any issuance to all or
substantially all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
current market price of Common Stock (determined in accordance with the
Indenture); provided, however, that if such rights, options or warrants are only
exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (c)
certain subdivisions, combinations or reclassifications of Common Stock, (d) any
distribution to all or substantially all holders of Common Stock of evidences of
indebtedness, shares of Capital Stock other than Common Stock, cash or other
assets (including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above and excluding dividends and
distributions paid exclusively in cash and in mergers and consolidations to
which the third succeeding paragraph applies), (e) any distribution consisting
exclusively of cash (excluding any cash portion of distributions referred to in
(d) above, or cash distributed upon a merger or consolidation to which the third
succeeding paragraph applies) to all or substantially all holders of Common
Stock in an aggregate amount that, combined together with (i) all other such
all-cash distributions made within the then preceding 12 months in respect of
which no adjustments have been made and (ii) any cash and the fair market value
of other consideration paid or payable in respect of any tender or exchange
offer by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 15% of the Company's market capitalization (defined as being the product
of the then current market price of the Common Stock times the number of shares
of Common Stock then outstanding) on the record date of such distribution, and
(f) the completion of a tender or exchange offer made by the Company or any of
its Subsidiaries for Common Stock that involves an aggregate consideration that,
together with (i) any cash and other consideration payable in a tender or
exchange offer by the Company or any of its Subsidiaries for Common Stock
expiring within the 12 months preceding the expiration of such tender or
exchange offer in respect of which no adjustment has been made and (ii) the
aggregate amount of any such all-cash distributions referred to in (e) above to
all holders of Common Stock within the 12 months preceding the expiration of
such tender or exchange offer in respect of which no adjustments have been made,
exceeds 15% of the Company's market capitalization on the expiration of such
tender or exchange offer. No adjustment of the Conversion Price will be
required to be made until the cumulative adjustments amount to 1.0% or more of
the Conversion Price as last adjusted. On September 29, 1997, the Board of
Directors of the Company declared the Stock Split, to be effected pursuant to a
stock dividend to the holders of record of Common Stock as of the Record Date.
The Stock Split will be effective on October 31, 1997. The number of shares of
Common Stock issuable upon conversion of the Notes will be increased
appropriately to account for the Stock Split.
In the event of a taxable distribution to holders of Common Stock (or other
transaction) which results in any adjustment of the Conversion Price, the
Holders of Notes may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend; in
certain other circumstances, the absence of such an adjustment may result in a
taxable dividend to the holders of Common Stock.
The Company, from time to time and to the extent permitted by law, may
reduce the Conversion Price by any amount for any period of at least 20 Business
Days, in which case the Company shall give at least 15 days notice of such
reduction, if the Board of Directors has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in
the Conversion Price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for United States federal
income tax purposes. See "Certain United States Federal Income Tax
Consequences."
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<PAGE>
In case of any reclassification or change of outstanding shares of Common
Stock issuable upon conversion of the Notes (other than certain changes in par
value) or consolidation or merger of the Company with or into another Person or
any merger of another Person with or into the Company (with certain exceptions),
or in case of any sale, transfer or conveyance of all or substantially all of
the assets of the Company, each Note then outstanding will, without the consent
of any Holder of Notes, become convertible only into the kind and amount of
securities, cash and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance by a holder of the
number of shares of Common Stock into which such Note was convertible
immediately prior thereto, after giving effect to any adjustment event;
provided, that if the kind or amount of securities, cash and other property is
not the same for each share of Common Stock held immediately prior to such
reclassification, change, consolidation, merger, sale, transfer or conveyance,
any Holder who fails to exercise any right of election shall receive per share
the kind and amount of securities, cash or other property received per share by
a plurality of non-electing shares.
The Company will cause all registrations to be made with, and will obtain
any approvals by, any governmental authority under any Federal or state law of
the United States that may be required on the part of the Company in connection
with the conversion of the Notes into Common Stock. If at any time during the
two-year period following the date of the original issuance of the Notes a
registration statement under the Securities Act covering the shares of Common
Stock issuable upon conversion of the Notes is not effective or is otherwise
unavailable for effecting resales of such shares, shares of Common Stock issued
upon conversion of the Notes ("Restricted Shares") may not be sold or otherwise
transferred except in accordance with or pursuant to an exemption from, or
otherwise in a transaction not subject to, the registration requirements of the
Securities Act, and, if a registration statement under the Securities Act is not
effective or is otherwise unavailable for effecting resales of such shares at
the time of a conversion, the Restricted Shares will bear a legend to that
effect. The Transfer Agent for the Common Stock will not be required to accept
for registration of transfer any Restricted Shares, except upon presentation of
satisfactory evidence that these restrictions on transfer have been complied
with, all in accordance with such reasonable regulations as the Company may from
time to time agree with the Transfer Agent. Under certain circumstances, the
holders of the Restricted Shares will be entitled to liquidated damages during
such period. See "--Registration Rights; Liquidated Damages."
SUBORDINATION
The Notes are general, unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness. The Notes
are structurally subordinated in right of payment to all Indebtedness and other
liabilities (including trade payables) of the Company's Subsidiaries. At
September 30, 1997, the Company had no amounts of Senior Indebtedness
outstanding, but the Company's Subsidiaries had approximately $29.7 million of
Indebtedness, trade payables and other accrued liabilities outstanding. In
addition, at such date and on such pro forma basis, the Company would have had
available borrowing capacity of approximately $127 million (subject to customary
borrowing conditions) under the Existing Credit Facility. Pursuant to a waiver
obtained from the lenders under the Existing Credit Facility to permit the
issuance of the Notes, the Company is required to replace the Existing Credit
Facility with a new credit facility by December 14, 1997. The Company is
negotiating with a group of banks for the New Credit Facility, which will
replace the Existing Credit Facility and is expected to provide for borrowings
of up to $150 million. Indebtedness under both the Existing Credit Facility and
the New Credit Facility will constitute Senior Indebtedness. See "Description
of Credit Facilities." The Indenture does not restrict the incurrence of Senior
Indebtedness or other Indebtedness by the Company or its Subsidiaries or the
ability of the Company to transfer assets or business operations to its
Subsidiaries, subject to the provisions described under "--Repurchase of Notes
at the Option of the Holder Upon a Change of Control" and "--Limitation on
Merger, Sale or Consolidation" below.
The Indenture provides that no payment may be made by the Company on
account of the principal of, premium, if any, interest on or liquidated damages
with respect to, the Notes, or to acquire any of the Notes (including
repurchases of Notes at the option of the Holder) for cash or property (other
than Junior Securities), or on account of the redemption provisions of the
Notes, (i) upon the maturity of any Senior Indebtedness, by lapse of time,
acceleration (unless waived) or otherwise, unless and until all principal of,
premium, if any, and interest on such Senior Indebtedness are first paid in full
(or such payment is duly provided for), or (ii) in the event of default in the
payment of any principal of, premium, if any, or interest on any Senior
Indebtedness when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (collectively, a "Payment
Default"), unless and until such Payment Default has been cured or waived or
otherwise has ceased to exist. The payment of cash, property or securities
(other than Junior Securities) upon conversion of a Note will constitute payment
on a Note and therefore will be subject to the subordination provisions in the
Indenture.
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Upon (i) the happening of an event of default (other than a Payment
Default) that permits, or would permit with (a) the passage of time, (b) the
giving of notice, (c) the making of any payment of the Notes then required to be
made or (d) any combination thereof (collectively, a "Non-Payment Default"), the
holders of Senior Indebtedness having a principal amount then outstanding in
excess of $10 million (or with respect to which Senior Indebtedness the holders
are obligated to lend in excess of $10 million principal amount) or their
representative immediately to accelerate its maturity and (ii) written notice of
such Non-Payment Default given to the Company and the Trustee by the holders of
an aggregate of at least $10 million outstanding principal amount (or
commitments to lend up to at least $10 million in principal amount) of such
Senior Indebtedness or their representative (a "Payment Notice"), then, unless
and until such Non-Payment Default has been cured or waived or otherwise has
ceased to exist, no payment (by setoff or otherwise) may be made by or on behalf
of the Company on account of the principal of, premium, if any, interest on or
liquidated damages with respect to, the Notes, or to acquire or repurchase any
of the Notes for cash or property, or on account of the redemption provisions of
the Notes, in any such case other than payments made with Junior Securities.
Notwithstanding the foregoing, unless (i) the Senior Indebtedness in respect of
which such Non-Payment Default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period"), and (ii) such declaration has not been
rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required to pay all sums not paid to the Holders of the Notes during
the Payment Blockage Period due to the foregoing prohibitions and to resume all
other payments as and when due on the Notes. Not more than one Payment Notice
may be given in any consecutive 365-day period, irrespective of the number of
defaults with respect to Senior Indebtedness during such period. In no event,
however, may the total number of days during which any Payment Blockage Period
is or Payment Blockage Periods are in effect exceed 179 days in the aggregate
during any consecutive 365-day period.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities (i) the holders of all Senior Indebtedness
will first be entitled to receive payment in full (or have such payment duly
provided for) before the Holders of the Notes are entitled to receive any
payment on account of the principal of, premium, if any, interest on and
liquidated damages with respect to, the Notes (other than Junior Securities) and
(ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders of the Notes or the Trustee on behalf of the
Holders would be entitled (by setoff or otherwise), except for the subordination
provisions contained in the Indenture, will be paid by the liquidating trustee
or agent or other person making such a payment or distribution directly to the
holders of Senior Indebtedness or their representative to the extent necessary
to make payment in full of all such Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision therefor,
to the holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities) shall be
received by the Holders of the Notes or the Trustee on behalf of the Holders or
any Paying Agent at a time when such payment or distribution is prohibited by
the foregoing provisions, such payment or distribution shall be held in trust
for the benefit of the holders of Senior Indebtedness, and shall be paid or
delivered by such Holders or the Trustee or such Paying Agent, as the case may
be, to the holders of the Senior Indebtedness remaining unpaid or unprovided for
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay or to provide for the payment of all such
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes will affect the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, and interest on, and liquidated damages with
respect to, the Notes. The subordination provisions of the Indenture and the
Notes will not prevent the occurrence of any Default or Event of Default under
the Indenture or limit the rights of the Trustee or any Holder of any Notes,
subject to the preceding paragraphs, to pursue any other rights or remedies with
respect to the Notes.
The Company conducts certain of its operations through its Subsidiaries.
Accordingly, the Company's ability to meet its cash obligations in the future
will be dependent upon the ability of its Subsidiaries to make cash
distributions to the Company. The ability of its Subsidiaries to make
distributions to the Company is and will continue to be restricted by, among
other limitations, applicable provisions of the laws of national and state
governments and may be restricted by contractual provisions. The Indenture does
not limit the ability of the Company's Subsidiaries to incur such contractual
restrictions in the future. The right of the Company to participate in the
assets of any Subsidiary (and thus
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the ability of Holders of the Notes to benefit indirectly from such assets) is
generally subject to the prior claims of creditors, including trade creditors,
of that Subsidiary except to the extent that the Company is recognized as a
creditor of such Subsidiary, in which case the Company's claims would still be
subject to any security interest of other creditors of such Subsidiary. The
Notes, therefore, are structurally subordinated to creditors, including trade
creditors, of Subsidiaries of the Company with respect to the assets of the
Subsidiaries against which such creditors have a more direct claim.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a marshaling of assets or liabilities of the Company
and its Subsidiaries, Holders of Notes may receive ratably less than other
creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Notes are not subject to redemption prior to September 15, 2000 and are
redeemable on and after such date at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice to each Holder, at the
following Redemption Prices (expressed as percentages of the principal amount)
if redeemed during the 12-month period commencing September 15 of the years
indicated below, in each case (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date) together with accrued and unpaid interest and
liquidated damages, if any, to, but excluding, the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000................................ 102.57%
2001................................ 101.93
2002................................ 101.28
2003................................ 100.64
2004................................ 100.00
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
The Notes do not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption (the
"Redemption Date"), to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the registry books of the Registrar. The notice
of redemption must state the Redemption Date, the Redemption Price and the
amount of accrued interest and liquidated damages, if any, to be paid. Any
notice that relates to a Note to be redeemed in part only must state the portion
of the principal amount to be redeemed and must state that on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion thereof will be issued. On and after the
Redemption Date, interest will cease to accrue on the Notes or portions thereof
called for redemption, unless the Company defaults in its obligations with
respect thereto.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, the Company is required to make an irrevocable and unconditional
(except as described below) offer (the "Repurchase Offer") to purchase all Notes
on the date (the "Repurchase Date") that is no later than 45 Business Days
(except as described below) after the occurrence of such Change of Control at a
cash price (the "Repurchase Price") equal to 100% of the principal amount
thereof, together with accrued and unpaid interest and liquidated damages, if
any, to (but excluding) the Repurchase Date. A Holder of Notes may accept the
Repurchase Offer with respect to all or a portion of its Notes (provided that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof). The Repurchase Offer shall be made within 25 Business Days following
a Change of Control and shall remain open for 20 Business Days following its
commencement except to the extent that a longer period is required by applicable
law (the "Repurchase Offer Period"). Upon expiration of the Repurchase Offer
Period, the Company shall purchase all Notes tendered in response to the
Repurchase Offer. If required by applicable law, the Repurchase Date and the
Repurchase Offer Period may be
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<PAGE>
extended as so required; however, if so extended, it shall nevertheless
constitute an Event of Default if the Repurchase Date does not occur within 60
Business Days of the Change of Control.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest and liquidated damages, if any) of
all Notes so tendered and (iii) deliver to the Trustee the Notes so accepted,
together with an officers' certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Repurchase Price
(together with accrued and unpaid interest and liquidated damages, if any), and
the Trustee will promptly authenticate and mail or deliver to such Holders a new
Note or Notes equal in principal amount to any unpurchased portion of the Notes
surrendered. Any Notes not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Repurchase Offer on or as soon as practicable after the
Repurchase Date.
The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change of Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent on
the facts and circumstances existing at such time. As a result, there may be a
degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company, and, thus, the removal of incumbent
management. The Change of Control purchase feature resulted from negotiations
between the Company and the Initial Purchasers.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders of the Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger, spin-off or similar
transaction that may adversely affect Holders, if such transaction does not
constitute a Change of Control. Moreover, certain events with respect to the
Company which may involve an actual change of control of the Company may not
constitute a Change of Control for purposes of the Indenture.
The Company may not have sufficient financial resources available to
fulfill its obligation to repurchase the Notes upon a Change of Control or to
repurchase other debt securities of the Company or its Subsidiaries providing
similar rights to the holders thereof. Further, the right to require the
Company to repurchase Notes as a result of the occurrence of a Change of Control
could create an event of default under Senior Indebtedness as a result of which
any repurchase could, absent a waiver, be blocked by the subordination
provisions of the Notes. Failure of the Company to repurchase the Notes when
required would result in an Event of Default with respect to the Notes whether
or not such repurchase is permitted by the subordination provisions. Any such
default would, in turn, cause a default under the Existing Credit Facility (and
the New Credit Facility, once it is in place) and may cause a default under
other Senior Indebtedness. Moreover, the Change of Control may cause an event
of default under Senior Indebtedness. As a result, in each case, any repurchase
of the Notes could, absent a waiver, be blocked by the subordination provisions
of the Notes. See "--Subordination" above.
Except as described herein, no modification of the Indenture regarding the
provisions on repurchase at the option of any Holder of a Note upon a Change of
Control that adversely affects a Holder is permissible without the consent of
the Holder of the Note so affected. In the event of a Change of Control, if
Holders of in excess of two-thirds of the outstanding aggregate principal amount
of the Notes so determine at any time following the occurrence of such Change of
Control and before the close of business on the Business Day immediately
preceding the Repurchase Date, such event shall not be treated as a Change of
Control for purposes of the Indenture. In such event, (i) the Company shall not
be required to make the Repurchase Offer, (ii) to the extent the Repurchase
Offer has already been made, such Repurchase Offer shall be deemed revoked and
(iii) to the extent any Notes have been tendered in response to any such revoked
Repurchase Offer, such tender shall be rescinded and the Notes so tendered shall
be promptly returned to the Holders thereof. For purposes of any such
determination by the Holders of the outstanding Notes, Notes held by the Company
or an Affiliate of the Company (including any Person that would become an
Affiliate of the Company (or its successor) as a consequence of the event or
series of events that otherwise would be treated as a Change of Control for
purposes of the Indenture) shall be disregarded.
To the extent applicable, the Company will comply with the provisions of
Rule 13e-4 or any other tender offer rules under the Securities Act, and will
file a Schedule 13E-4 or any other schedule required under such rules, in
connection with any offer by the Company to repurchase Notes at the option of
the Holders upon a Change of Control.
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LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into, or sell, lease, convey or transfer all
or substantially all of its assets (on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons (other than to its wholly owned Subsidiaries),
unless (i) either (a) in the case of a merger or consolidation the Company is
the surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Notes and the Indenture;
and (ii) no Default or Event of Default shall exist immediately before or after
giving effect to such transaction.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and the Company will be released from its obligations under the
Indenture and the Notes, except as to any obligations that arise from or as a
result of such transaction.
REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee, within 15 days after it is or would have been required to file such
with the Commission, annual and quarterly consolidated financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the Commission if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
Commission and, in each case, together with a management's discussion and
analysis of financial condition and results of operations as such would be so
required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest on, or liquidated damages with respect to,
the Notes as and when due and payable and the continuance of any such failure
for 30 days, (ii) the failure by the Company to pay all or any part of the
principal of, or premium, if any on the Notes when and as the same become due
and payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, pursuant to any Repurchase Offer, (iii) the failure of the
Company to perform any conversion of Notes required under the Indenture and the
continuance of any such failure for 30 days, (iv) the failure by the Company to
observe or perform any other covenant or agreement contained in the Notes or the
Indenture and, subject to certain exceptions, the continuance of such failure
for a period of 60 days after written notice is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes outstanding, (v) certain events of
bankruptcy, insolvency or reorganization in respect of the Company or any of its
Significant Subsidiaries, (vi) failure of the Company or any Significant
Subsidiary to make any payment at maturity, including any applicable grace
period, in respect of Indebtedness (other than non-recourse obligations) in an
amount in excess of $15 million and continuance of such failure for 30 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
Notes outstanding, (vii) default by the Company or any Significant Subsidiary
with respect to any Indebtedness (other than non-recourse obligations), which
default results in the acceleration of Indebtedness in an amount in excess of
$15 million without such Indebtedness having been discharged or such
acceleration having been rescinded or annulled for 30 days after written notice
is given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of Notes outstanding and
(viii) final unsatisfied judgments not covered by insurance aggregating in
excess of $20 million, at any one time rendered against the Company or any of
its Significant Subsidiaries and not stayed, bonded or discharged within 60
days. The Indenture provides that if a Default occurs and is continuing, the
Trustee must, within 90 days after the occurrence of such Default, give to the
Holders notice of such Default, but the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the best interest of the Holders, except in the case of a
Default in the payment of
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the principal of, premium, if any, or interest on or liquidated damages with
respect to, any of the Notes when due or in the payment of any redemption or
repurchase obligation.
The Indenture provides that if an Event of Default occurs and is continuing
(other than an Event of Default specified in clause (v) above with respect to
the Company), then in every such case, unless the principal of all of the Notes
shall have already become due and payable, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Notes then outstanding, by
notice in writing to the Company (and to the Trustee if given by Holders), may
declare all principal, premium, if any, accrued interest and liquidated damages,
if any, on or with respect to the Notes to be due and payable immediately. If
an Event of Default specified in clause (v) above with respect to the Company
occurs, all principal, premium, if any, accrued interest and liquidated damages,
if any, will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of the Trustee or the Holders. The Holders
of no less than a majority in aggregate principal amount of Notes generally are
authorized to rescind such acceleration if all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and interest on, and
liquidated damages with respect to, the Notes that have become due solely by
such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a default
in the payment of principal of, interest on, or liquidated damages with respect
to, any Note not yet cured, or a default with respect to any covenant or
provision that cannot be modified or amended without the consent of the Holder
of each outstanding Note affected. Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding will 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.
The Indenture provides that no Holder may pursue any remedy under the
Indenture, except for a default in the payment of principal, premium, if any, or
interest or liquidated damages, if any, on the Notes, unless the Holder gives to
the Trustee written notice of a continuing Event of Default, the Holders of at
least 25% in principal amount of the outstanding Notes make a written request to
the Trustee to pursue the remedy, such Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense, the Trustee
does not comply with the request within 60 days after receipt of the request and
the offer of indemnity, and the Trustee shall not have received a contrary
direction from the Holders of a majority in principal amount of the outstanding
Notes.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company and the Trustee are permitted to amend or supplement the Indenture or
any supplemental indenture or modify the rights of the Holders; provided, that
no such modification may, without the consent of each Holder affected thereby:
(i) change the Stated Maturity of any Note or reduce the principal amount
thereof or the rate (or extend the time for payment) of interest thereon or any
premium payable upon the redemption thereof, or change the place of payment
where, or the coin or currency in which, any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the conversion of
any Note or the enforcement of any such payment on or after the due date thereof
(including, in the case of redemption, on or after the Redemption Date), or
reduce the Repurchase Price, or alter the Repurchase Offer (other than as set
forth herein) or redemption provisions in a manner adverse to the Holders, or
(ii) reduce the percentage in principal amount of the outstanding Notes, the
consent of whose Holders is required for any such amendment, supplemental
indenture or waiver provided for in the Indenture or (iii) adversely affect the
right of such Holder to convert Notes. A supplemental indenture entered into in
compliance with the "Limitation on Merger, Sale or Consolidation" covenant would
not require the consent of the Holders of the Notes.
NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that no stockholder, employee, officer, director or
partner, as such, past, present or future, of the Company or any successor
corporation shall have any personal liability in respect of the obligations of
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the Company under the Indenture or the Notes by reason of his, her or its status
as such stockholder, employee, officer, director or partner.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the
Indenture. The Company or Trustee may require a Holder, among other things, to
furnish appropriate endorsements, legal opinions and transfer documents, and to
pay any taxes and fees required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Notes selected for
redemption. Also, the Company is not required to transfer or exchange any Notes
for a period of 15 days before the mailing of a Repurchase Offer or notice of
redemption.
The registered holder of a Note may be treated as the owner of it for all
purposes.
BOOK ENTRY, DELIVERY AND FORM
Notes initially held by "qualified institutional buyers," as defined in
Rule 144A under the Securities Act ("QIBs"), were evidenced by one or more
global Notes (the "U.S. Global Note"), which were deposited on September 15,
1997, the date of the closing of the sale of the Notes (the "Closing Date"),
with, or on behalf of, the Depositary and registered in the name of Cede & Co.
("Cede") as the Depositary's nominee. Notes held by Persons who acquired such
Notes in compliance with Regulation S under the Securities Act (a "Non-U.S.
Person") were initially evidenced by one or more global Notes (the "Regulation S
Global Note"), which were deposited on the Closing Date with, or on behalf of,
the Depositary and registered in the name of Cede as the Depositary's nominee,
for the accounts of the Euroclear System ("Euroclear") and Cedel, S.A.
("Cedel"). Beneficial interests in the Regulation S Global Note may only be held
through Euroclear or Cedel, and any resale or transfer of such interests to U.S.
Persons shall only be permitted as described below. The U.S. Global Note and
the Regulation S Global Note are hereinafter collectively referred to as the
"Global Note." Except as set forth below, the Global Note may be transferred, in
whole or in part, only to another nominee of the Depositary or to a successor of
the Depositary or its nominee.
QIBs may hold their interests in the U.S. Global Note directly through the
Depositary if such holders are participants in the Depositary, or indirectly
through organizations which are participants in the Depositary (the
"Participants"). Transfers between Participants will be effected in the
ordinary way in accordance with the Depositary's rules and will be settled in
Federal funds.
Non-U.S. Persons may hold their interests in the Regulation S Global Note
directly through Cedel or Euroclear, or indirectly through organizations that
are participants in Cedel or Euroclear. Cedel and Euroclear will hold interests
in the Regulation S Global Note on behalf of their participants through the
Depositary. Transfers between participants in Euroclear and Cedel will be
effected in the ordinary way in accordance with their respective rules and
operating procedures.
Notes that were (i) originally issued to or transferred to institutional
"accredited investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not QIBs or Non-U.S. Persons or to any other persons who
are not QIBs or Non-U.S. Persons or (ii) issued as described below were issued
in the form of registered definitive securities ("Certificated Notes"). Upon
the transfer to a QIB or Non-U.S. Person of Certificated Notes, such
Certificated Notes will, unless the Global Note has previously been exchanged
for Certificated Notes, be exchanged for an interest in the Global Note
representing the principal amount of Notes being transferred. For a description
of the restrictions on the transfer of Certificated Notes, see "Notice to
Investors."
The Depositary has advised the Company that it is a limited-purpose trust
company that was created to hold securities for its Participants and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants (including Euroclear and Cedel). The Depositary's Participants
include securities brokers and dealers (including the Initial Purchasers), banks
and trust companies, clearing corporations and certain other organizations.
Access to the Depositary's system is also available to other entities such as
banks, brokers, dealers and trust companies (collectively, "Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. QIBs may elect to hold Notes
purchased by them through the Depositary. QIBs who are not Participants may
beneficially own securities held by or on behalf of the Depositary only through
Participants or Indirect Participants. Persons that are not QIBs or Non-U.S.
Persons may not hold through the Depositary.
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Pursuant to procedures established by the Depositary, (i) upon deposit of
the Global Note, the Depositary credited the accounts of Participants designated
by the Initial Purchasers with an interest in the Global Note and (ii) ownership
of the Notes evidenced by the Global Note are shown on, and the transfer of
ownership thereof are effected only through, records maintained by the
Depositary (with respect to the interests of Participants), the Participants and
the Indirect Participants. The laws of some states require that certain persons
take physical delivery in definitive form of securities that they own and that
security interests in negotiable instruments can only be perfected by delivery
of certificates representing the instruments. Consequently, the ability to
transfer Notes evidenced by the Global Note will be limited to such extent. For
certain other restrictions on the transferability of the Notes, see "Notice to
Investors."
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by the Global Note for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in a Global Note will not be entitled to have Notes represented by such Global
Note registered in their names, will not receive or be entitled to receive
physical delivery of Certificated Notes, and will not be considered the owners
or holders thereof under the Indenture for any purpose, including with respect
to the giving of any directions, instructions or approvals to the Trustee
thereunder. As a result, the ability of a Person having a beneficial interest
in Notes represented by a Global Note to pledge such interest to Persons that do
not participate in the Depositary's system, or to otherwise take actions with
respect to such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Notes by the Depositary, or for maintaining, supervising or reviewing any
records of the Depositary relating to such Notes.
Payments with respect to the principal of, premium, if any, interest on,
and liquidated damages with respect to, any Note represented by a Global Note
registered in the name of the Depositary or its nominee on the applicable record
date are payable by the Trustee to or at the direction of the Depositary or its
nominee in its capacity as the registered Holder of the Global Note representing
such Notes under the Indenture. Under the terms of the Indenture, the Company
and the Trustee may treat the Persons in whose names the Notes, including the
Global Notes, are registered as the owners thereof for the purpose of receiving
such payments and for any and all other purposes whatsoever. Consequently,
neither the Company nor the Trustee has or will have any responsibility or
liability for the payment of such amounts to beneficial owners of Notes
(including, principal, premium, if any, interest, or liquidated damages with
respect thereto), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Note as shown
on the records of the Depositary. Payments by the Participants and the Indirect
Participants to the beneficial owners of Notes are governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
Holders who desire to convert their Notes into Common Stock pursuant to the
terms of the Notes should contact their brokers or other Participants or
Indirect Participants to obtain information on procedures, including proper
forms and cut-off times, for submitting such requests.
If (i) the Company notifies the Trustee in writing that the Depositary is
no longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the Depositary of
the Global Note, Certificated Notes will be issued to each person that the
Depositary identifies as the beneficial owner of the Notes represented by the
Global Note. In addition, subject to certain conditions, any Person having a
beneficial interest in a Global Note may, upon request to the Trustee, exchange
such beneficial interest for Notes in the form of Certificated Notes. Upon any
such issuance, the Trustee is required to register such Certificated Notes in
the name of such Person or Persons (or the nominee of any thereof), and cause
the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the Notes, and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from the Depositary
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the Notes to be issued).
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GOVERNING LAW
The Indenture and the Notes provide that they are to be governed in
accordance with the laws of the State of New York.
THE TRUSTEE
U.S. Trust Company of Texas, N.A. is the Trustee under the Indenture. A
successor Trustee may be appointed in accordance with the terms of the
Indenture.
The Indenture contains certain limitations on the rights of the Trustee, in
the event it becomes a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined), it must eliminate such conflict or resign.
In case an Event of Default shall occur (and shall not be cured), the
Trustee is required to use the degree of care of a prudent person in the conduct
of his own affairs in the exercise of its powers. Subject to such provisions,
the Trustee is under no obligation to exercise any of its rights or powers under
the Indenture at the request of any of the Holders of Notes, unless they shall
have offered to the Trustee reasonable security or indemnity.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under GAAP.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Change of Control" means (i) an event or series of events as a result of
which any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d) of the Exchange Act) (excluding the Company or any wholly owned Subsidiary
thereof) is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable) of more than 50% of the combined voting power of the then
outstanding securities entitled to vote generally in elections of directors,
managers or trustees, as applicable, of the Company or any successor entity
("Voting Stock"), (ii) the completion of any consolidation or merger of the
Company with or into any other Person, or sale, conveyance, transfer or lease by
the Company of all or substantially all of its assets to any Person, or any
merger of any other Person into the Company in a single transaction or series of
related transactions, and, in the case of any such transaction or series of
related transactions, the outstanding Common Stock is changed or exchanged as a
result, unless the stockholders of the Company immediately before such
transaction own, directly or indirectly, immediately following such transaction,
at least a majority of the combined voting power of the outstanding voting
securities of the Person resulting from such transaction in substantially the
same proportion as their ownership of the Voting Stock immediately before such
transaction, or (iii) such time as the Continuing Directors do not constitute a
majority of the Board of Directors (or, if applicable, a successor corporation
to the Company); provided that a Change of Control shall not be deemed to have
occurred if either (x) the last sale price of the Common Stock for any five
trading days during the 10 trading days immediately preceding the Change of
Control is at least equal to 105% of the Conversion Price in effect on such day,
or (y) with respect to a merger or consolidation otherwise constituting a Change
of Control described in clause (ii) above, at least 90% of the consideration in
such transaction or transactions consists of common stock or securities
convertible into common stock that are, or upon issuance will be, traded on a
United States national securities exchange or approved for quotation on the
Nasdaq National Market.
"Continuing Director" means at any date a member of the Board of Directors
(i) who was a member of such board on the date of initial issuance of the Notes
or (ii) who was nominated or elected by at least a majority of the directors who
were Continuing Directors at the time of such nomination or election or whose
election to the Board of
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Directors was recommended or endorsed by at least a majority of the directors
who were Continuing Directors at the time of such nomination or election.
"Disqualified Capital Stock" means, with respect to the Company, Capital
Stock of the Company that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by the Company, in
whole or in part, on or prior to the Stated Maturity of the Notes, provided that
only the portion of such Capital Stock which is so convertible, exercisable,
exchangeable or redeemable or subject to repurchase prior to such Stated
Maturity shall be deemed to be Disqualified Capital Stock.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the lender has recourse to all or any
portion of the assets of such person), (ii) evidenced by credit or loan
agreements, bonds, notes, debentures or similar instruments (including, without
limitation, notes or similar instruments given in connection with the
acquisition of any business, properties or assets of any kind), (iii) evidenced
by bankers' acceptances or similar instruments issued or accepted by banks, (iv)
for the payment of money relating to a Capitalized Lease Obligation or (v)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any letter of credit; (b) all obligations of such Person issued
or assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (c) all net obligations of such Person under Interest Swap and
Hedging Obligations; (d) all liabilities of others of the kind described in the
preceding clauses (a), (b) or (c) that such Person has guaranteed or that is
otherwise its legal liability, or which is secured by a lien on property of such
Person, and all obligations to purchase, redeem or acquire any Capital Stock;
and (e) any and all deferrals, renewals, extensions, modifications,
replacements, restatements, refinancings and refundings (whether direct or
indirect) of, or any indebtedness or obligation issued in exchange for, any
liability of the kind described in any of the preceding clauses (a), (b), (c) or
(d), or this clause (e), whether or not between or among the same parties.
"Interest Swap and Hedging Obligations" means the obligations of any Person
under any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement or other interest rate hedge agreement, interest rate collar agreement
or other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Junior Securities" means any Qualified Capital Stock and any Indebtedness
of the Company that is fully subordinated in right of payment to the Notes and
has no scheduled installment of principal due, by redemption, sinking fund
payment or otherwise, on or prior to the Stated Maturity of the Notes.
"Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, any
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the
Company, unless the instrument creating or evidencing such Indebtedness provides
that such Indebtedness is not senior or superior in right of payment to the
Notes or is pari passu with, or subordinated to, the Notes; provided that in no
event shall Senior Indebtedness include (a) Indebtedness of the Company owed or
owing to any Subsidiary of the Company or any officer, director or employee of
the Company or any Subsidiary of the Company, (b) Indebtedness representing or
with respect to any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services or (c) any liability for taxes owed or owing
by the Company or any Subsidiary of the Company.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect as of the date of the Indenture.
"Stated Maturity" when used with respect to any Note, means September 15,
2004.
"Subsidiary" with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
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together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material United States federal income
and estate tax considerations relating to the purchase, ownership and
disposition of the Notes and of Common Stock into which Notes may be converted,
but does not purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations promulgated or proposed thereunder ("Treasury Regulations"),
judicial authority and current administrative rulings and practice, all of which
are subject to change, possibly on a retroactive basis. This summary deals only
with holders that will hold Notes and Common Stock into which Notes may be
converted as "capital assets" (within the meaning of Section 1221). This
summary does not purport to deal with all aspects of U.S. federal income
taxation that might be relevant to particular holders in light of their personal
investment circumstances or status, nor does it address tax considerations
applicable to investors that may be subject to special tax rules, such as
certain financial institutions, tax-exempt organizations, insurance companies,
dealers in securities or currencies, persons that will hold Notes as a position
in a hedging transaction, "straddle" or "conversion transaction" for tax
purposes, or persons that have a "functional currency" other than the U.S.
dollar. Moreover, the effect of any applicable state, local or foreign tax laws
is not discussed. The Company has not sought any ruling from the IRS with
respect to the statements made and the conclusions reached in the following
summary, and there can be no assurance that the IRS will not take adverse
positions on examination. THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION
ONLY. INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME AND
ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR
UNDER ANY APPLICABLE TAX TREATY.
UNITED STATES HOLDERS
As used herein, the term "United States Holder" means the beneficial owner
of a Note or Common Stock that for United States federal income tax purposes is
(i) a citizen or resident of the United States, (ii) treated as a domestic
corporation or domestic partnership, or (iii) an estate or trust that is subject
to United States federal income taxation on a net income basis in respect of the
Notes or Common Stock. A trust will be a "United States Holder" of a Note only
if the trust is subject to the supervision of a court within the United States
and the control of a United States fiduciary as described in Section 7701 (a)
(30) of the Code.
Payment of Interest
Interest on a Note generally will be included in the income of a United
States Holder as ordinary income at the time such interest is received or
accrued, in accordance with such Holder's method of accounting for United States
federal income tax purposes. The Notes will not have original issue discount.
Amortizable Bond Premium
If a United States Holder of a Note acquires the Note at a cost that is in
excess of the amount payable at maturity (after reducing such costs by an amount
equal to the value of the conversion option), the United States Holder may elect
under Section 171 of the Code to amortize the excess cost (as an offset to
interest income) on a constant interest rate basis over the term of such Note.
However, because the Notes may be redeemed at the option of the Company at a
price in excess of their principal amount, a United States holder may be
required to amortize any bond premium based on the earlier call date and the
call price payable at that time. If the United States Holder makes an election
to amortize bond premium, the tax basis of all such United States Holder's Notes
will be reduced by the allowable bond premium amortization. The amortization
election would apply to all debt instruments held or subsequently acquired by
the electing purchaser and cannot be revoked without permission from the IRS.
On conversion of a Note into shares of Common Stock, no additional amortization
of any bond premium would be allowed, and any remaining premium would be added
to the United States Holder's basis in the Common Stock received.
Market Discount
Investors acquiring Notes pursuant to this Prospectus should consider that
the resale of those Notes may be adversely affected by the market discount
provisions of Sections 1276 through 1278 of the Code. Except as described
below, gain recognized on the disposition of a Note that has accrued market
discount will be treated as ordinary income,
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and not capital gain, to the extent of the accrued market discount. "Market
discount" is defined generally as the excess, if any, of (i) the principal
amount of the Note over (ii) the tax basis of the Note in the hands of the
United States Holder immediately after its acquisition.
Under a de minimis exception, there is no market discount if the excess of
the principal amount of the obligation over the United States Holder's tax basis
in the obligation is less than 0.25% of the principal amount multiplied by the
number of complete years after the acquisition date to the obligation's date of
maturity. Unless the United States Holder elects to accrue market discount on a
constant yield basis, the accrued market discount generally would be the amount
calculated by multiplying the market discount by a fraction, the numerator of
which is the number of days the obligation has been held by the United States
Holder and the denominator of which is the number of days after the United
States Holder's acquisition of the obligation up to and including its maturity
date.
If a United States Holder of a Note acquired with market discount disposes
of such Note in any transaction other than a sale, exchange or involuntary
conversion, such United States Holder will be deemed to have realized an amount
equal to the fair market value of the Note and will be required to recognize as
ordinary income any accrued market discount. See the discussion below under " -
- -Sale, Exchange or Redemption of the Notes" for the tax consequences of a sale
or exchange. A partial principal payment (if any) on a Note will be includable
as ordinary income upon receipt to the extent of any accrued market discount
thereon. Although it is not free from doubt, any accrued market discount not
previously taken into income prior to a conversion of a Note into shares of
Common Stock should carry over to the Common Stock received on conversion and be
treated as ordinary income upon a subsequent disposition of such Common Stock,
to the extent of any gain recognized on such disposition. A United States
Holder of a Note acquired at a market discount also may be required to defer the
deduction of all or a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the Note until the maturity of the Note or the
earlier disposition of the Note in a taxable transaction.
A United States Holder of a Note acquired at a market discount may elect to
include the market discount in income as it accrues (on either a straight-line
basis or a constant yield basis). This election would apply to all market
discount obligations as acquired by the electing United States Holder on or
after the first day of the first year to which the election applies. The
election may be revoked only with the consent of the IRS. If a United States
Holder of a Note elects to include market discount in income currently, the
rules discussed above regarding (i) ordinary income recognition resulting from a
sale and certain other disposition transactions and (ii) deferral of interest
deductions would not apply.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange or redemption of a Note, subject to the market
discount rules discussed above, a United States Holder generally will recognize
capital gain or loss equal to the difference between (i) the amount of cash
proceeds and the fair market value of any property received on the sale,
exchange or redemption (except to the extent such amount is attributable to
accrued and unpaid interest not previously recognized by such Holder, which is
taxable as ordinary income) and (ii) such Holder's adjusted tax basis in the
Note. A United States Holder's adjusted tax basis in a Note generally will
equal the cost of the Note to such Holder, less any principal payments received
by such Holder and increased by any market discount previously included in
income by such Holder. Such capital gain or loss will be long-term capital gain
or loss if the United States Holder's holding period in the Note is more than 18
months at the time of sale, exchange or redemption. Gains from the sale or
exchange of assets held for more than one year, but not more than 18 months,
qualify for a tax rate that is less favorable than the long-term rate but more
favorable than the rate applicable to ordinary income.
Conversion of the Notes
A United States Holder generally will not recognize any income, gain or
loss upon conversion of a Note into Common Stock, except with respect to cash
received in lieu of a fractional share of Common Stock. Such Holder's tax basis
in the Common Stock received on conversion of a Note will be the same as such
Holder's adjusted tax basis in the Note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the Common Stock received on conversion will generally include the holding
period of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon conversion
should be treated as a payment in exchange for the fractional share of Common
Stock. Accordingly, the receipt of cash in lieu of a fractional share of Common
Stock generally should result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the United
States Holder's adjusted tax basis in the fractional share).
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Dividends on the Common Stock
The amount of any distribution by the Company in respect of the Common
Stock will be equal to the amount of cash and the fair market value, on the date
of distribution, of any property distributed. Generally, distributions will be
treated as a dividend, subject to tax as ordinary income, to the extent of the
Company's current or accumulated earnings and profits, then as a tax-free return
of capital to the extent of the Holder's tax basis in the Common Stock and
thereafter as gain from the sale or exchange of such stock.
In general, a dividend distribution to a corporate United States Holder
will qualify for the 70% dividends received deduction if the Holder owns less
than 20% of the voting power and value of the Company's stock (other than any
non-voting, non-convertible, non-participating preferred stock). A corporate
United States Holder that owns 20% or more of the voting power and value of the
Company's stock (other than any nonvoting, non-convertible, non-participating
preferred stock) generally will qualify for an 80% dividends received deduction.
The dividends received deduction is subject, however, to certain holding period,
taxable income and other limitations.
If at any time (i) the Company makes a distribution of cash or property to
its stockholders or purchases Common Stock and such distribution or purchase
would be taxable to such stockholders as a dividend for United States federal
income tax purposes (e.g., distributions of evidences of indebtedness or assets
of the Company, but generally not stock dividends or rights to subscribe for
Common Stock) and, pursuant to the antidilution provisions of the Indenture, the
conversion price of the Notes is decreased, or (ii) the conversion price of the
Notes is decreased at the discretion of the Company, such decrease in conversion
price may be deemed to be the payment of a taxable dividend to United States
Holders of Notes (pursuant to Section 305 of the Code) to the extent of the
Company's current or accumulated earnings and profits. Such Holders of Notes
could therefore have taxable income as a result of an event pursuant to which
they received no cash or property.
Sale of Common Stock
Upon the sale or exchange of Common Stock, a United States Holder generally
will recognize capital gain or loss equal to the difference between (i) the
amount of cash and the fair market value of any property received upon the sale
or exchange and (ii) such Holder's adjusted tax basis in the Common Stock. Such
capital gain or loss will be long-term if the United States Holder's holding
period in the Common Stock is more than eighteen months at the time of the sale
or exchange. A United States Holder's basis and holding period in Common Stock
received upon conversion of a Note are determined as discussed above under "--
Conversion of the Notes."
Information Reporting and Backup Withholding Tax
In general, certain information is required to be reported by the payor to
the IRS with respect to payments of principal, premium, if any, and interest on
a Note (including the payment of liquidated damages under the Registration
Rights Agreement), payments of dividends on Common Stock, payments of the
proceeds of the sale of a Note and payments of the proceeds of the sale of
Common Stock to certain noncorporate United States Holders. The payor will be
required to withhold backup withholding tax at the rate of 31% if (a) the payee
fails to furnish a taxpayer identification number ("TIN") to the payor or
establish an exemption from backup withholding, (b) the IRS notifies the payor
that the TIN furnished by the payee is incorrect, (c) there has been a notified
payee under reporting with respect to interest, dividends or original issue
discount described in Section 3406(c) of the Code or (d) there has been a
failure of the payee to certify under the penalty of perjury that the payee is
not subject to backup withholding under the Code. Any amounts withheld under the
backup withholding rules from a payment to a United States Holder will be
allowed as a credit against such Holder's United States federal income tax and
may entitle the Holder to a refund, provided that the required information is
furnished to the IRS.
NON-UNITED STATES HOLDERS
As used herein, the term "Non-United States Holder" means any beneficial
owner of a Note or Common Stock that is not a United States Holder.
Payment of Interest
Generally, interest income of a Non-United States Holder that is not
effectively connected with a United States trade or business will be subject to
a withholding tax at a 30% rate (or, if applicable, a lower treaty rate).
However, interest paid on a Note by the Company or any Paying Agent to a Non-
United States Holder will qualify for the
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"portfolio interest exemption" and therefore, subject to the discussion of
backup withholding below, will not be subject to United States federal income
tax or withholding tax, provided that such interest income is not effectively
connected with a United States trade or business of the Non-United States Holder
and provided that the Non-United States Holder (i) does not actually or
constructively own (pursuant to the conversion feature of the Notes or
otherwise) 10% or more of the combined voting power of all classes of stock of
the Company entitled to vote, (ii) is not a controlled foreign corporation
related to the Company actually or constructively through stock ownership, (iii)
is not a bank which acquired the Notes in consideration for an extension of
credit made pursuant to a loan agreement entered into in the ordinary course of
business and (iv) either (a) provides a Form W-8 (or a suitable substitute form)
signed under penalties of perjury that includes its name and address and
certifies as to its non-United States status in compliance with applicable law
and regulations, or (b) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business holds the Note and provides a statement to the Company or
its agent under penalties of perjury in which it certifies that such a Form W-8
(or a suitable substitute) has been received by it from the Non-United States
Holder or qualifying intermediary and furnishes the Company or its agent with a
copy thereof.
Proposed Treasury Regulations would provide alternative methods for
satisfying the certification requirement described in clause (iv) above. The
proposed Treasury Regulations also would require, in the case of Notes held by a
foreign partnership, that (i) the certification described in clause (iv) above
be provided by the partners rather than by the foreign partnership and (h) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. The proposed Treasury Regulations are proposed to be effective
for payments made after December 31, 1997. There can be no assurance that the
proposed Treasury Regulations will be adopted or as to the provisions that they
will include if and when adopted in temporary or final form.
Except to the extent that an applicable treaty otherwise provides, a Non-
United States Holder generally will be taxed in the same manner as a United
States Holder with respect to interest if the interest income is effectively
connected with a United States trade or business of the Non-United States
Holder. Effectively connected interest received by a corporate Non-United
States Holder may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate (or, if applicable, a lower treaty rate).
Even though such effectively connected interest is subject to income tax, and
may be subject to the branch profits tax, it is not subject to withholding tax
if the Holder delivers a properly executed IRS Form 4224 to the payor.
Sale, Exchange or Redemption of the Notes
A Non-United States Holder of a Note will generally not be subject to
United States federal income tax or withholding tax on any gain realized on the
sale, exchange or redemption of the Note (including the receipt of cash in lieu
of fractional shares upon conversion of a Note into Common Stock but not
including any amount representing interest or accrued market discount) unless
(1) the gain is effectively connected with a United States trade or business of
the Non-United States Holder, (2) in the case of a Non-United States Holder who
is an individual, such Holder is present in the United States for a period or
periods aggregating 183 days or more during the taxable year of the disposition
and certain other requirements are met, or (3) the Holder is subject to tax
pursuant to the provisions of the Code applicable to certain United States
expatriates.
Conversion of the Notes
In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of a Note into Common Stock by a Non-United States
Holder except with respect to the receipt of cash in lieu of fractional shares
by Non-United States Holders upon conversion of a Note where any of the
conditions described above under "Non-United States Holders--Sale, Exchange or
Redemption of the Notes" is satisfied.
Sale or Exchange of Common Stock
Subject to the discussion below under "FIRPTA Treatment of Non-United
States Holders," a Non-United States Holder generally will not be subject to
United States federal income tax or withholding tax on the sale or exchange of
Common Stock unless any of the conditions described above under "Non-United
States Holders--Sale, Exchange or Redemption of the Notes" is satisfied.
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FIRPTA Treatment of Non-United States Holders
Under the Foreign Investment in Real Property Tax Act of 1980, as amended
("FIRPTA"), foreign persons generally are subject to United States federal
income tax on capital gain realized on the disposition of any interest (other
than solely as a creditor) in a corporation that is a United States real
property holding corporation (a "USRPHC"). For this purpose, a foreign person
is defined as any holder who is a foreign corporation (other than certain
foreign corporations that elect to be treated as domestic corporations), a non-
resident alien individual, a non-resident fiduciary of a foreign estate or
trust, or a foreign partnership. Under FIRPTA, a corporation is a USRPHC if the
fair market value of the United States real property interests held by the
corporation is 50% or more of the aggregate fair market value of certain assets
of the corporation.
The Company does not currently believe that it is a USRPHC. Thus, a
foreign person that holds shares of the Common Stock of the Company generally
will not be subject to the U.S. federal income tax on a sale or other
disposition of the shares of Common Stock. Even if a corporation meets the test
for a USRPHC, a foreign person would generally not be subject to tax, or
withholding in respect to such tax, on gain from a sale or other disposition of
such corporation's stock solely by reason of the corporation's USRPHC status if
the stock is regularly traded on an established securities market ("regularly
traded") during the calendar year in which such sale or disposition occurs,
provided that such holder does not own, actually or constructively, stock with a
fair market value in excess of 5 percent of the fair market value of all such
stock outstanding at any time during the shorter of the five-year period
preceding such disposition or the holder's holding period. The Company believes
that the Common Stock will be treated as regularly traded.
Dividends
Distributions by the Company with respect to the Common Stock that are
treated as dividends paid (or deemed paid), as described above under "United
States Holders--Dividends on the Common Stock" to a Non-United States Holder
(excluding dividends that are effectively connected with the conduct of a trade
or business in the United States by such Holder and are taxable as described
below) will be subject to United States federal withholding tax at a 30% rate
(or lower rate provided under any applicable income tax treaty). Except to the
extent that an applicable tax treaty otherwise provides, a Non-United States
Holder will be taxed in the same manner as a United States Holder on dividends
paid (or deemed paid) that are effectively connected with the conduct of a trade
or business in the United States by the Non-United States Holder. If such Non-
United States Holder is a foreign corporation, it may also be subject to a
United States branch profits tax on such effectively connected income at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
Even though such effectively connected dividends are subject to income tax, and
may be subject to the branch profits tax, they will not be subject to U.S.
withholding tax if the holder delivers IRS Form 4224 to the payor.
Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of the
Treasury Regulations, for purposes of determining the applicability of a tax
treaty rate. Under Treasury Regulations that are proposed to be effective for
distributions after 1997, however, a non-U.S. holder of Common Stock who wishes
to claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements. In addition, under the
proposed Treasury Regulations, in the case of common stock held by a foreign
partnership, the certification requirement would generally be applied to the
partners of the partnership and the partnership would be required to provide
certain information, including a United States taxpayer identification number.
The proposed Treasury Regulations also provide look-through rules for tiered
partnerships. It is not certain whether, or in what form, the proposed Treasury
Regulations will be adopted as final regulations.
Death of a Non-United States Holder
A Note held by an individual who is a Non-United States Holder at the time
of his or her death will not be includable in the decedent's gross estate for
United States estate tax purposes, provided that such Holder or beneficial owner
did not at the time of death actually or constructively own 10% or more of the
combined voting power of all classes of stock of the Company entitled to vote,
and provided that, at the time of death, payments with respect to such Notes
would not have been effectively connected with the conduct by such Non-United
States Holder of a trade or business within the United States.
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Common Stock actually or beneficially held (other than through a foreign
corporation) by a Non-United States Holder at the time of his or her death (or
previously transferred subject to certain retained rights or powers) will be
subject to United States federal estate tax unless otherwise provided by an
applicable estate tax treaty.
Information Reporting and Backup Withholding Tax
United States information reporting requirements and backup withholding tax
will not apply to payments on a Note to a Non-United States Holder if the
statement described in "Non-United States Holders--Payment of Interest" is duly
provided by such holder, provided that the payor does not have actual knowledge
that the holder is a United States person.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Note or any payment of the
proceeds of the sale of Common Stock effected outside the United States by a
foreign office of a "broker" (as defined in applicable Treasury Regulations),
unless such broker is (i) a United States person, (ii) a foreign person that
derives 50% of more of its gross foreign income for certain periods from
activities that are effectively connected with the conduct of a trade or
business in the United States or (iii) a controlled foreign corporation for
United States federal income tax purposes. Payment of the proceeds of any such
sale effected outside the United States by a foreign office of any broker that
is described in (i), (ii) or (iii) of the preceding sentence will not be subject
to backup withholding tax, but will be subject to information reporting
requirements unless such broker has documentary evidence in its records that the
beneficial owner is a Non-United States Holder and certain other conditions are
met, or the beneficial owner otherwise establishes an exemption. Payment of the
proceeds of any such sale to or through the United States office of a broker is
subject to information reporting and backup withholding requirements, unless the
beneficial owner of the Note provides the statement described in "Non-United
States Holders--Payment of Interest" or otherwise establishes an exemption.
If paid to an address outside the United States, dividends on Common Stock
held by a Non-United States Holder will generally not be subject to the
information reporting and backup withholding requirements described in this
section, provided that the payor does not have actual knowledge that the holder
is a United States person. However, under the proposed Treasury Regulations,
dividend payments will be subject to information reporting and backup
withholding unless applicable certification requirements are satisfied. See the
discussion above with respect to rules applicable to foreign partnerships under
the proposed Treasury Regulations.
THE COMPANY
Under Section 279 of the Code, interest paid or incurred by a corporation
with respect to certain convertible, subordinated indebtedness that is utilized
to provide consideration for the acquisition of stock in another corporation (or
a substantial portion of the assets of another corporation) is not deductible
for federal income tax purposes to the extent interest on such "corporate
acquisition indebtedness" as defined in Section 279 exceeds $5 million per year,
reduced by the interest paid on certain other indebtedness that does not
constitute "corporate acquisition indebtedness" for purposes of Section 279, but
is used to fund corporate acquisitions. The Notes may constitute "corporate
acquisition indebtedness" for purposes of Section 279 of the Code, which could
result in all or a portion of the interest payments under the Notes not being
deductible for federal income tax purposes. Although there can be no assurance,
the Company does not anticipate that any significant portion of the interest
deductions with respect to the Notes will be disallowed pursuant to Section 279.
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PLAN OF DISTRIBUTION
The Notes were issued to the Selling Securityholders in connection with an
underwritten private placement and are convertible into Common Stock as
described in "Description of Notes -- Conversion Rights." The Company entered
into the Registration Rights Agreement with the Initial Purchasers for the
benefit of holders of the Notes to register their Notes and such Common Stock
under the Securities Act under certain circumstances and at certain times. The
Registration Rights Agreement provides for cross-indemnification of the Selling
Securityholders and the Company for losses, claims, damages, liabilities and
expenses arising, under certain circumstances, out of the registration of the
Notes and such Common Stock.
The Notes and such Common Stock may be sold from time to time by the
Selling Securityholders. The Selling Securityholders may from time to time sell
all or a portion of the Notes and such Common Stock in transactions on the
American Stock Exchange, in negotiated transactions, or a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Notes and
such Common Stock may be sold directly or through underwriters or broker-
dealers. If the Notes or shares of Common Stock are sold through underwriters
or broker-dealers, the Selling Securityholders may pay underwriting discounts or
brokerage commissions and charges. The methods by which the Notes and such
Common Stock may be sold include (i) a block trade in which the broker or dealer
so engaged will attempt to sell the securities as agent but may position and
resell a portion of the block as principal to facilitate the transaction, (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for its own account pursuant to this Prospectus, (iii) exchange distributions
and/or secondary distributions in accordance with the rules of the American
Stock Exchange, (iv) ordinary brokerage transactions and transactions in which
the broker solicits purchasers, and (v) privately negotiated transactions.
Pursuant to the provisions of the Registration Rights Agreement, the
Company will pay the costs and expenses incident to its registration and
qualification of the Notes and Common Stock offered hereby, including
registration and filing fees. In addition, the Company has agreed to indemnify
the Selling Securityholders against certain liabilities, including liabilities
arising under the Securities Act.
The Selling Securityholders and any underwriter or broker-dealer
participating in the distribution of the Notes and Common Stock may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profits,
discounts, commissions or concessions paid or allowed to any such underwriter or
broker-dealer may be deemed to be underwriting discounts and commissions under
the Securities Act. The Selling Securityholders may indemnify any broker-dealer
that participates in transactions involving the sale of Notes and Common Stock
against certain liabilities, including liabilities under the Securities Act.
In addition, any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this Prospectus. There can be no
assurance that any Selling Securityholder will sell any or all of the Notes or
Common Stock described herein, and any Selling Securityholder may transfer,
devise or gift such securities by other means not described herein.
LEGAL MATTERS
Certain legal matters with respect to the Notes and Shares will be passed
upon by Baker & Botts, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of Halter Marine Group, Inc.
appearing in Halter Marine Group, Inc.'s Annual Report on Form 10-K for the year
ended March 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
The consolidated financial statements of Texas Drydock, Inc. and subsidiary
as of September 30, 1995 and 1996, and for each of the years then ended, have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
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================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
-----------------------------
TABLE OF CONTENTS
PAGE
----
Available Information......................... 1
Incorporation of Documents by Reference....... 2
The Company................................... 3
Risk Factors.................................. 4
Pro Forma Consolidated Financial Statements... 10
Ratio of Earnings to Fixed Charges............ 15
Use of Proceeds............................... 15
Selling Securityholders....................... 16
Description of Credit Facilities.............. 18
Description of Notes.......................... 20
Certain United States Federal Income Tax
Consequences................................. 33
Plan of Distribution.......................... 39
Legal Matters................................. 39
Experts....................................... 39
================================================================================
================================================================================
HALTER MARINE GROUP, INC.
$185,000,000
4 1/2% CONVERTIBLE SUBORDINATED NOTES
DUE 2004
AND
SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF
-----------------------------------------
PROSPECTUS
-----------------------------------------
__________, 1997
================================================================================
<PAGE>
PART II
=======
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All of the expenses in connection with the distribution of the Notes and
Shares are set forth below and will be borne by the Registrant.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee........................................... $56,061
American Stock Exchange Listing Fee........................ 17,500
*Legal Fees and Expenses.................................... 15,000
*Accounting Fees and Expenses............................... #
-------
*Total................................................. $ #
=======
</TABLE>
- --------------------
*Estimated.
#To be included by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law
Section 145 (a) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b) of Section 145. Such determination shall be
made (1) by the board of directors by a majority vote of directors who were not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
II-1
<PAGE>
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of Title 8 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision may eliminate or limit the liability of a director for any act or
omission occurring prior to the date when such provision became effective.
Certificate of Incorporation
The Certificate of Incorporation of the Company provides that a director of
the Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except, if required
by the DGCL as amended from time to time, for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, which concerns
unlawful payments of dividends, stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit.
Neither the amendment nor repeal of such provision will eliminate or reduce the
effect of such provision in respect of any matter occurring, or any cause of
action, suit or claim that, but for such provision, would accrue or arise, prior
to such amendment or repeal.
While the Certificate provides directors with protection from awards for
monetary damages for breaches of their duty of care, it does not eliminate such
duty. Accordingly, the Certificate will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.
The Certificate provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was or has agreed to become a director or officer of the
Company or is or was serving or has agreed to serve at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving or having agreed to serve as a director,
officer, employee or agent, will be indemnified and held harmless by the Company
to the fullest extent authorized by the DGCL, as the same exists or may
thereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, amounts paid or to be paid in settlement and excise
taxes or penalties arising under ERISA) reasonably incurred or suffered by such
person in connection therewith. Such right to indemnification includes the
right to have the Company pay the expenses incurred in defending any such
proceeding in advance of its final disposition, subject to the provisions of the
DGCL. Such rights are not exclusive of any other right which any person may
have or thereafter acquire under any statute, provision of the Certificate,
Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
No repeal or modification of such provision will in any way diminish or
adversely affect the rights of any director, officer, employee or agent of the
Company thereunder in respect of any occurrence or matter arising prior to any
such repeal or modification. The Certificate also specifically authorizes the
Company to maintain insurance and to grant similar indemnification rights to
employees or agents of the Company.
Bylaws
The Bylaws of the Company provide that each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person, or a person of whom such person is the
legal representative, is or was or has agreed to become a director or officer of
the Company or is or was serving or has agreed to serve at the request of the
Company
II-2
<PAGE>
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceedings is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving or having agreed to serve as a director,
officer, employee or agent shall be indemnified and held harmless by the Company
to the fullest extent authorized by the DGCL, as the same exists or may
thereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability or loss (including attorneys'
fees, judgments, fines, amounts paid or to be paid in settlement and excise
taxes or penalties arising under ERISA) reasonably incurred or suffered by such
person in connection therewith, and such indemnification shall continue as to a
person who has ceased to serve in the capacity which initially entitled such
person to indemnity thereunder and shall inure to the benefit of such person's
heirs, executors and administrators. Such right to indemnification includes the
right to have the Company pay the expenses incurred in defending any such
proceeding in advance of its final disposition, subject to the provisions of the
DGCL. Such rights are not exclusive of any other right which any person may have
or thereafter acquire under any statute, provision of the Certificate, Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise. No
repeal or modification of such provision will in any way diminish or adversely
affect the rights of any director, officer, employee or agent of the Company
thereunder in respect of any occurrence or matter arising prior to any such
repeal or modification. The Bylaws also specifically authorize the Company to
maintain insurance to protect itself and any director, officer, employee or
agent of the Company.
Indemnification Agreements
The Company has entered into Indemnification Agreements pursuant to which
it will indemnify certain of its directors and officers against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
incurred as a result of the fact that any director or officer, in his capacity
as such, is made or threatened to be made a party to any suit or proceeding.
Such persons will be indemnified to the fullest extent now or hereafter
permitted by the DGCL. The Indemnification Agreements also provide for the
advancement of certain expenses to such directors and officers in connection
with any such suit or proceeding.
ITEM 16. EXHIBITS
4.1 Indenture dated September 15, 1997 between the Company and United States
Trust Company of Texas, N.A., as Trustee for the Company's 4 1/2%
Convertible Subordinated Notes due 2004.
4.2 Registration Rights Agreement dated September 15, 1997, among the Company
and Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
5.1 Opinion of Baker & Botts, L.L.P.
12.1 Statement regarding Computation of Ratios.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included on signature pages to the Registration
Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of United States Trust Company of Texas, N.A.
99.1 Purchase Agreement dated September 9, 1997, among the Company and
Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Gulfport, State of Mississippi, on the 21st day of
October, 1997.
HALTER MARINE GROUP, INC.
By: /s/ Keith L. Voigts
-----------------------------------------
Keith L. Voigts
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below authorizes and appoints each of Rick S. Rees and Keith L. Voigts, and each
of them severally, acting alone and without the other, as his attorney-in-fact
to execute in the name of such person and to file any amendments to this
Registration Statement (including any post-effective amendments) necessary or
advisable to enable the Company to comply with the Securities Act of 1933 and
any rules, regulations and requirements of the Securities and Exchange
Commission in respect thereof, in connection with the registration of the
securities which are the subject of this Registration Statement as such
attorney-in-fact may deem appropriate.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------ ----------------------------------------------- ----------------
<S> <C> <C>
/s/ John Dane III Chairman, President and Chief Executive Officer October 21, 1997
- ------------------------ (Principal Executive Officer) and Director
John Dane III
/s/ Keith L. Voigts Senior Vice President October 21, 1997
- ------------------------ (Principal Financial and Accounting Officer)
Keith L. Voigts
/s/ Rick S. Rees Executive Vice President and Director October 21, 1997
- ------------------------
Rick S. Rees
/s/ Kenneth W. Lewis Director October 21, 1997
- ------------------------
Kenneth W. Lewis
/s/ Daniel J. Mortimer Director October 21, 1997
- ------------------------
Daniel J. Mortimer Director October 21, 1997
- ------------------------
Angus R. Cooper, II Director October 21, 1997
- ------------------------
Burt H. Keenan
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
4.1 Indenture dated September 15, 1997 between the Company and United States
Trust Company of Texas, N.A., as Trustee for the Company's 4 1/2%
Convertible Subordinated Notes due 2004.
4.2 Registration Rights Agreement dated September 15, 1997, among the Company
and Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
5.1 Opinion of Baker & Botts, L.L.P.
12.1 Statement regarding Computation of Ratios.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney (included on signature pages to the Registration
Statement).
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of United States Trust Company of Texas, N.A.
99.1 Purchase Agreement dated September 9, 1997, among the Company and
Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
<PAGE>
Exhibit 4.1
================================================================================
HALTER MARINE GROUP, INC.,
Issuer,
and
U.S. TRUST COMPANY OF TEXAS, N.A.,
Trustee
------------------------------
INDENTURE
Dated as of September 15, 1997
------------------------------
$185,000,000
4 1/2% Convertible Subordinated Notes due 2004
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE..................... 1
SECTION 1.1. Definitions.............................................. 1
SECTION 1.2. Incorporation by Reference of TIA........................ 8
SECTION 1.3. Rules of Construction.................................... 9
ARTICLE II. THE SECURITIES................................................ 10
SECTION 2.1. Form and Dating.......................................... 10
SECTION 2.2. Execution and Authentication............................. 10
SECTION 2.3. Registrar and Paying Agent............................... 11
SECTION 2.4. Paying Agent to Hold Assets in Trust..................... 11
SECTION 2.5. Securityholder Lists..................................... 12
SECTION 2.6. Transfer and Exchange.................................... 12
SECTION 2.7. Replacement Securities................................... 18
SECTION 2.8. Outstanding Securities................................... 18
SECTION 2.9. Treasury Securities...................................... 19
SECTION 2.10. Temporary Securities..................................... 19
SECTION 2.11. Cancellation............................................. 19
SECTION 2.12. Defaulted Interest....................................... 19
ARTICLE III. REDEMPTION................................................... 20
SECTION 3.1. Right of Redemption...................................... 20
SECTION 3.2. Notices to Trustee....................................... 21
SECTION 3.3. Selection of Securities to Be Redeemed................... 21
SECTION 3.4. Notice of Redemption..................................... 21
SECTION 3.5. Effect of Notice of Redemption........................... 22
SECTION 3.6. Deposit of Redemption Price.............................. 23
SECTION 3.7. Securities Redeemed in Part.............................. 23
ARTICLE IV. COVENANTS..................................................... 23
SECTION 4.1. Payment of Securities.................................... 23
SECTION 4.2. Maintenance of Office or Agency.......................... 24
SECTION 4.3. Corporate Existence...................................... 24
SECTION 4.4. Payment of Taxes and Other Claims........................ 24
SECTION 4.5. Maintenance of Properties and Insurance.................. 25
SECTION 4.6. Compliance Certificate; Notice of Default................ 25
SECTION 4.7. Reports.................................................. 26
SECTION 4.8. Limitation on Status as Investment Company............... 26
SECTION 4.9. Waiver of Stay, Extension or Usury Laws.................. 26
SECTION 4.10. Rule 144A Information Requirement........................ 26
</TABLE>
i
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<TABLE>
<S> <C>
ARTICLE V. SUCCESSOR CORPORATION......................................... 27
SECTION 5.1. Limitation on Merger, Sale or Consolidation............. 27
SECTION 5.2. Successor Corporation Substituted....................... 27
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES............................... 28
SECTION 6.1. Events of Default....................................... 28
SECTION 6.2. Acceleration of Maturity Date; Rescission and
Annulment............................................... 30
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by
Trustee................................................ 31
SECTION 6.4. Trustee May File Proofs of Claim........................ 31
SECTION 6.5. Trustee May Enforce Claims Without Possession
of Securities........................................... 32
SECTION 6.6. Priorities.............................................. 32
SECTION 6.7. Limitation on Suits..................................... 33
SECTION 6.8. Unconditional Right of Holders to Receive
Principal, Premium, Interest and Liquidated Damages..... 33
SECTION 6.9. Rights and Remedies Cumulative.......................... 34
SECTION 6.10. Delay or Omission Not Waiver............................ 34
SECTION 6.11. Control by Holders...................................... 34
SECTION 6.12. Waiver of Past Default.................................. 34
SECTION 6.13. Undertaking for Costs................................... 35
SECTION 6.14. Restoration of Rights and Remedies...................... 35
ARTICLE VII. TRUSTEE..................................................... 35
SECTION 7.1. Duties of Trustee....................................... 36
SECTION 7.2. Rights of Trustee....................................... 37
SECTION 7.3. Individual Rights of Trustee............................ 38
SECTION 7.4. Trustee's Disclaimer.................................... 38
SECTION 7.5. Notice of Default....................................... 38
SECTION 7.6. Reports by Trustee to Holders........................... 38
SECTION 7.7. Compensation and Indemnity.............................. 39
SECTION 7.8. Replacement of Trustee.................................. 40
SECTION 7.9. Successor Trustee by Merger, Etc........................ 41
SECTION 7.10. Eligibility; Disqualification........................... 41
SECTION 7.11. Preferential Collection of Claims Against Company....... 41
SECTION 7.12. Other Capacities........................................ 41
ARTICLE VIII. SATISFACTION AND DISCHARGE................................. 41
SECTION 8.1. Satisfaction and Discharge of Indenture................. 41
SECTION 8.2. Repayment to the Company................................ 42
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS.......................... 42
SECTION 9.1. Supplemental Indentures Without Consent of Holders...... 42
SECTION 9.2. Amendments, Supplemental Indentures and Waivers
with Consent of Holders................................. 42
SECTION 9.3. Compliance with TIA..................................... 44
SECTION 9.4. Revocation and Effect of Consents....................... 44
</TABLE>
ii
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<TABLE>
<S> <C>
SECTION 9.5. Notation on or Exchange of Securities.................... 44
SECTION 9.6. Trustee to Sign Amendments, Etc.......................... 45
ARTICLE X. MEETINGS OF SECURITYHOLDERS.................................... 45
SECTION 10.1. Purposes for Which Meetings May Be Called................ 45
SECTION 10.2. Manner of Calling Meetings............................... 45
SECTION 10.3. Calling of Meetings by the Company or Holders............ 46
SECTION 10.4. Who May Attend and Vote at Meetings...................... 46
SECTION 10.5. Regulations May Be Made by Trustee; Conduct of the
Meeting; Voting Rights; Adjournment...................... 46
SECTION 10.6. Voting at the Meeting and Record to Be Kept.............. 47
SECTION 10.7. Exercise of Rights of Trustee or Holders May Not Be
Hindered or Delayed by Call of Meeting................... 47
ARTICLE XI. RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL.......... 48
SECTION 11.1. Repurchase of Securities at Option of the Holder
Upon a Change of Control................................. 48
SECTION 11.2. Rescission of Change of Control Determination............ 50
ARTICLE XII. SUBORDINATION................................................ 50
SECTION 12.1. Securities Subordinated to Senior Indebtedness........... 50
SECTION 12.2. No Payment on Securities in Certain Circumstances........ 51
SECTION 12.3. Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or
Reorganization........................................... 52
SECTION 12.4. Securityholders to Be Subrogated to Rights of
Holders of Senior Indebtedness........................... 53
SECTION 12.5. Obligations of the Company Unconditional................. 53
SECTION 12.6. Trustee and Other Agents Entitled to Assume
Payments Not Prohibited in Absence of Notice............. 54
SECTION 12.7. Application by Trustee of Assets Deposited with It....... 54
SECTION 12.8. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness............ 54
SECTION 12.9. Securityholders Authorize Trustee to Effectuate
Subordination of Securities.............................. 55
SECTION 12.10. Right of Trustee to Hold Senior Indebtedness............. 55
SECTION 12.11. Article XII Not to Prevent Events of Default............. 55
SECTION 12.12. No Duty of Trustee and Other Agents to Holders of
Senior Indebtedness...................................... 55
ARTICLE XIII. CONVERSION OF SECURITIES.................................... 56
SECTION 13.1. Conversion Privilege..................................... 56
SECTION 13.2. Exercise of Conversion Privilege......................... 56
SECTION 13.3. Fractional Interests..................................... 57
SECTION 13.4. Conversion Price......................................... 57
SECTION 13.5. Adjustment of Conversion Price........................... 58
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 13.6. Continuation of Conversion Privilege in Case of
Reclassification, Change, Merger, Consolidation
or Sale of Assets......................................... 62
SECTION 13.7. Notice of Certain Events.................................. 63
SECTION 13.8. Taxes on Conversion....................................... 64
SECTION 13.9. Company to Provide Stock.................................. 64
SECTION 13.10. Disclaimer of Responsibility for Certain Matters.......... 65
SECTION 13.11. Return of Funds Deposited for Redemption of
Converted Securities...................................... 65
ARTICLE XIV. MISCELLANEOUS................................................. 65
SECTION 14.1. TIA Controls.............................................. 65
SECTION 14.2. Notices................................................... 65
SECTION 14.3. Communications by Holders with Other Holders.............. 66
SECTION 14.4. Certificate and Opinion as to Conditions Precedent........ 66
SECTION 14.5. Statements Required in Certificate or Opinion............. 67
SECTION 14.6. Rules by Trustee, Paying Agent, Registrar................. 67
SECTION 14.7. Legal Holidays............................................ 67
SECTION 14.8. Governing Law............................................. 67
SECTION 14.9. No Adverse Interpretation of Other Agreements............. 68
SECTION 14.10. No Recourse Against Others................................ 68
SECTION 14.11. Successors................................................ 68
SECTION 14.12. Duplicate Originals....................................... 68
SECTION 14.13. Severability.............................................. 68
SECTION 14.14. Table of Contents, Headings, Etc.......................... 69
SECTION 14.15. Qualification of Indenture................................ 69
SECTION 14.16. Registration Rights....................................... 69
EXHIBIT A - Form of Security................................................ A-1
EXHIBIT B - Accredited Investor Letter...................................... B-1
EXHIBIT C - Form of Conversion Notice....................................... C-1
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.8;
7.10;
14.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 14.3
(c) 14.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6;
14.2
(d) 7.6
314(a) 4.6;
13.2
(b) N.A.
(c)(1) 2.2;
7.2;
14.4
(c)(2) 7.2;
14.4
(c)(3) N.A.
(d) N.A.
(e) 14.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5;
7.6;
14.2
(c) 7.1(a)
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
(d) 2.8;
6.11;
7.1(b)(c)
(e) 6.13
316(a) (last sentence) 2.9
(a)(1)(A) 6.11
(a)(1)(B) 6.12
(a)(2) N.A.
(b) 6.12;
6.7
317(a)(1) 6.3
(a)(2) 6.4
(b) 2.4
318(a) 14.1
</TABLE>
- ------------------
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed a part
of the Indenture.
vi
<PAGE>
INDENTURE, dated as of September 15, 1997, between HALTER MARINE GROUP,
INC., a Delaware corporation (the "Company"), and U.S. TRUST COMPANY OF TEXAS,
N.A., a national banking association formed under the laws of the United States
of America, as Trustee.
Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of the Company's 4 1/2%
Convertible Subordinated Notes due 2004:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
------------
"Acceleration Notice" shall have the meaning specified in Section 6.2.
-------------------
"Affiliate" means any person directly or indirectly controlling or
---------
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the terms "control," "controlling" and "controlled"
mean the power to direct the management and policies of a person, directly or
through one or more intermediaries, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means the Trustee and any Registrar, Paying Agent, co-Registrar,
-----
authenticating agent or Securities Custodian.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal, state
--------------
or foreign law for the relief of debtors.
"Beneficial owner" for purposes of the definition of Change of Control has
----------------
the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act (as
in effect on the Issue Date), whether or not applicable, except that a "person"
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time or upon the occurrence of certain events.
"Board of Directors" means, with respect to any person, the Board of
------------------
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
----------------
resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
------------
that is not a day on which banking institutions in New York, New York or Dallas,
Texas are authorized or obligated by law or executive order to close.
1
<PAGE>
"Capitalized Lease Obligation" means, as to any Person, the obligation of
----------------------------
such Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under GAAP.
"Capital Stock" means, with respect to any corporation, any and all shares,
-------------
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Cash" means such coin or currency of the United States of America as at
----
the time of payment shall be legal tender for the payment of public and private
debts.
"Change of Control" means (i) an event or series of events as a result of
-----------------
which any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d) of the Exchange Act) (excluding the Company or any wholly-owned subsidiary
thereof) is or becomes, directly or indirectly, the Beneficial Owner of more
than 50% of the Voting Stock, (ii) the completion of any consolidation with or
merger of the Company into any other Person, or sale, conveyance, transfer or
lease by the Company of all or substantially all of its assets to any Person, or
any merger of any other Person into the Company in a single transaction or
series of related transactions, and, in the case of any such transaction or
series of related transactions, the outstanding Common Stock of the Company is
changed or exchanged as a result, unless the stockholders of the Company
immediately before such transaction own, directly or indirectly, immediately
following such transaction, at least a majority of the combined voting power of
the outstanding voting securities of the Person resulting from such transaction
in substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction, or (iii) such time as the Continuing
Directors do not constitute a majority of the Board of Directors of the Company
(or, if applicable, a successor corporation to the Company); provided that a
Change of Control shall not be deemed to have occurred if either (x) the last
sale price of the Common Stock for any five Trading Days during the 10 Trading
Days immediately preceding the Change of Control is at least equal to 105% of
the Conversion Price in effect on such day, or (y) with respect to a merger or
consolidation otherwise constituting a Change of Control described in clause
(ii) above, at least 90% of the consideration in such transaction or
transactions consists of common stock or securities convertible into common
stock that are, or upon issuance will be, traded on a United States national
securities exchange or approved for quotation on the Nasdaq National Market.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Common Stock" means the Company's common stock, par value $.01 per share,
------------
or as such stock may be reconstituted from time to time.
"Company" means the party named as such in this Indenture until a successor
-------
replaces it pursuant to the Indenture, and thereafter means such successor.
"Continuing Director" means at any date a member of the Company's Board of
-------------------
Directors (i) who was a member of such board on the Issue Date or (ii) who was
nominated or elected by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election
2
<PAGE>
or whose election to the Company's Board of Directors was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election.
"Conversion Price" shall have the meaning specified in Section 13.4.
----------------
"Conversion Shares" shall have the meaning specified in Section 13.5(l).
-----------------
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
---------
or similar official under any Bankruptcy Law.
"Date of Conversion" shall have the meaning specified in Section 13.2.
------------------
"Default" means any event or condition that is, or after notice or passage
-------
of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
------------------
"Definitive Securities" means Securities that are in the form of Security
---------------------
attached hereto as Exhibit A that do not include the information called for by
footnotes 1 and 3 thereof.
"Depositary" means, with respect to the Securities issuable or issued in
----------
whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital Stock" means, with respect to the Company, Capital
--------------------------
Stock of the Company that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by the Company, in
whole or in part, on or prior to the Stated Maturity of the Notes, provided that
only the portion of such Capital Stock which is so convertible, exercisable,
exchangeable or redeemable or subject to repurchase prior to such Stated
Maturity shall be deemed to be Disqualified Capital Stock.
"Distribution Date" shall have the meaning specified in Section 13.5(l).
-----------------
"DTC" shall have the meaning specified in Section 2.3.
---
"Event of Default" shall have the meaning specified in Section 6.1.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated by the SEC thereunder.
"Expiration Time" shall have the meaning specified in Section 13.5(f).
---------------
3
<PAGE>
"GAAP" means United States generally accepted accounting principles set
----
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession which are in effect in the United States; provided,
--------
however, that for purposes of determining compliance with covenants in the
- -------
Indenture, "GAAP" means such generally accepted accounting principles which are
in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph referred to
---------------
in footnote 1 and the additional schedule referred to in footnote 3 to the form
of Security attached hereto as Exhibit A. There shall be separate Global
Securities, with separate CUSIP Numbers, to evidence interests (x) in the
Securities held by "qualified institutional buyers," as defined in Rule 144A
under the Securities Act, and (y) in the Securities held by persons who acquired
their interest in the Securities in compliance with Regulation S under the
Securities Act.
"Holder" or "Securityholder" means the person in whose name a Security is
------ --------------
registered on the Registrar's books.
"Indebtedness" of any person means, without duplication, (a) all
------------
liabilities and obligations, contingent or otherwise, of any such Person, (i) in
respect of borrowed money (whether or not the lender has recourse to all or any
portion of the assets of such Person), (ii) evidenced by credit or loan
agreements, bonds, notes, debentures or similar instruments (including, without
limitation, notes or similar instruments given in connection with the
acquisition of any business, properties or assets of any kind), (iii) evidenced
by bankers' acceptances or similar instruments issued or accepted by banks, (iv)
for the payment of money relating to a Capitalized Lease Obligation or (v)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any letter of credit; (b) all obligations of such Person issued
or assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (c) all net obligations of such person under Interest Swap and
Hedging Obligations; (d) all liabilities of others of the kind described in the
preceding clauses (a), (b) or (c) that such Person has guaranteed or that is
otherwise its legal liability, or which is secured by a lien on property of such
Person, and all obligations to purchase, redeem or acquire any Capital Stock;
and (e) any and all deferrals, renewals, extensions, modifications,
replacements, restatements, refinancings and refundings (whether direct or
indirect) of, or any indebtedness or obligation issued in exchange for, any
liability of the kind described in any of the preceding clauses (a), (b), (c) or
(d), or this clause (e), whether or not between or among the same parties.
"Indenture" means this Indenture, as amended or supplemented from time to
---------
time in accordance with the terms hereof.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
------------------
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Interest Payment Date" means the stated due date of an installment of
---------------------
interest on the Securities.
4
<PAGE>
"Interest Swap and Hedging Obligation" means the obligations of any Person
------------------------------------
under any interest rate protection agreement, interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement or other interest rate hedge agreement, interest rate collar agreement
or other similar agreement or arrangement to which such Person is a party or
beneficiary.
"Issue Date" means the date of first issuance of the Securities under this
----------
Indenture.
"Junior Securities" means any Qualified Capital Stock and any Indebtedness
-----------------
of the Company that is fully subordinated in right of payment to the Securities
and has no scheduled installment of principal due, by redemption, sinking fund
payment or otherwise, on or prior to the Stated Maturity of the Securities.
"Last Sale Price" shall have the meaning specified in Section 13.3.
---------------
"Legal Holiday" shall have the meaning specified in Section 14.7.
-------------
"Lien" means any mortgage, lien, pledge, charge, security interest or other
----
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any option
or other agreement to give any security interest).
"Liquidated Damages" shall have the meaning specified in the Registration
------------------
Rights Agreement.
"non-electing share" shall have the meaning specified in Section 13.6.
------------------
"Non-Payment Default" shall have the meaning specified in Section 12.2(b).
-------------------
"Notice of Default" shall have the meaning specified in Section 6.1(3), (4)
-----------------
or (5).
"Offer" shall have the meaning specified in Section 13.5(f).
-----
"Officer" means, with respect to the Company, the Chief Executive Officer,
-------
the President, any Vice President, the Chief Financial Officer, the Treasurer,
the Controller, or the Secretary or the Assistant Secretary of the Company.
"Officers' Certificate" means, with respect to the Company, a certificate
---------------------
signed by two Officers of the Company and otherwise complying with the
requirements of Section 2.2, if applicable, and Sections 14.4 and 14.5.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
reasonably acceptable to the Trustee and which complies with the requirements of
Sections 14.4 and 14.5.
"Paying Agent" shall have the meaning specified in Section 2.3.
------------
5
<PAGE>
"Payment Blockage Period" shall have the meaning specified in Section
-----------------------
12.2(b).
"Payment Default" shall have the meaning specified in Section 12.2(a).
---------------
"Payment Notice" shall have the meaning specified in Section 12.2(b).
--------------
"Person" or "person" means any corporation, individual, limited liability
------ ------
company, joint stock company, joint venture, partnership, unincorporated
association, governmental regulatory entity, country, state or political
subdivision thereof, trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such Indebtedness
---------
plus, without duplication, any applicable premium, if any, on such Indebtedness.
"property" means any right or interest in or to property or assets of any
--------
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" means that certain Purchase Agreement, dated September
------------------
9, 1997, by and among the Company and the Initial Purchasers, as such agreement
may be amended, modified or supplemented from time to time in accordance with
the terms thereof.
"Purchased Shares" shall have the meaning specified in Section 13.5(f).
----------------
"Qualified Capital Stock" means any Capital Stock of the Company that is
-----------------------
not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities whether or
-----------
not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be redeemed,
---------------
means the date fixed for such redemption pursuant to Article III of this
Indenture and Paragraph 5 in the form of Security attached hereto as Exhibit A.
"Redemption Price," when used with respect to any Security to be redeemed,
----------------
means the redemption price for such redemption pursuant to Paragraph 5 in the
form of Security attached hereto as Exhibit A, which shall include, without
duplication, in each case, accrued and unpaid interest and Liquidated Damages,
if any, to and including the Redemption Date.
"Registrar" shall have the meaning specified in Section 2.3.
---------
"Registration Rights Agreement" means the Registration Rights Agreement,
-----------------------------
dated the date hereof, by and among the Initial Purchasers and the Company, as
such agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Repurchase Date" shall have the meaning specified in Section 11.1(a).
---------------
6
<PAGE>
"Repurchase Offer" shall have the meaning specified in Section 11.1(b).
----------------
"Repurchase Offer Period" shall have the meaning specified in Section
---------------- ------
11.1(b).
"Repurchase Price" shall have the meaning specified in Section 11.1(a).
----------------
"Repurchase Put Date" shall have the meaning specified in Section 11.1(b).
-------------------
"Restricted Security" means a Security, unless or until it has been (i)
-------------------
disposed of in a transaction effectively registered under the Securities Act or
(ii) distributed to the public pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act.
"SEC" means the Securities and Exchange Commission.
---
"Securities" means, collectively, the 4 1/2% Convertible Subordinated Notes
----------
due 2004, as supplemented from time to time in accordance with the terms hereof,
issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Trustee, as custodian with respect to the
--------------------
Securities in global form, or any successor entity thereto.
"Senior Indebtedness" means all obligations of the Company to pay the
-------------------
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all fees, costs,
expenses and other amounts accrued or due on or in connection with, any
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed, guaranteed or in effect guaranteed by the
Company, unless the instrument creating or evidencing such Indebtedness provides
that such Indebtedness is not senior or superior in right of payment to the
Securities or is pari passu with, or subordinated to, the Securities; provided
that in no event shall Senior Indebtedness include (a) Indebtedness of the
Company owed or owing to any Subsidiary of the Company or any officer, director
or employee of the Company or any Subsidiary of the Company, (b) Indebtedness
representing or with respect to any account payable or other accrued current
liability or obligation incurred in the ordinary course of business in
connection with the obtaining of materials or services or (c) any liability for
taxes owed or owing by the Company or any Subsidiary of the Company.
"Shelf Registration Statement" shall have the meaning specified in the
----------------------------
Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary which is a "significant
----------------------
subsidiary" of the Company within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect as of the date of the Indenture.
7
<PAGE>
"Special Record Date" for payment of any Defaulted Interest means a date
-------------------
fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security, means September
---------------
15, 2004.
"Subsidiary" with respect to any Person, means (i) a corporation a majority
----------
of whose Capital Stock with voting power normally entitled to vote in the
election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person, or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
---
77bbbb) as in effect on the date of the execution of this Indenture.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and Friday,
-----------
other than any day on which securities are not traded on the American Stock
Exchange (or, if the Common Stock is not listed thereon, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading).
"Transfer Restricted Securities" means Securities that bear or are required
------------------------------
to bear the legend set forth in Section 2.6 hereof
"Trustee" means the party named as such in this Indenture until a successor
-------
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"Trust Officer" means any officer within the corporate trust division (or
-------------
any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"U.S. Government Obligations" means direct noncallable obligations of, or
---------------------------
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"Voting Stock" means the combined voting power of the then outstanding
------------
securities entitled to vote generally in elections of directors, managers or
trustees, as applicable, of the Company or any successor entity.
8
<PAGE>
SECTION 1.2. Incorporation by Reference of TIA.
----------------------------------
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
----------
"Indenture securities" means the Securities.
--------------------
"Indenture securityholder" means a Holder or a Securityholder.
------------------------
"Indenture to be qualified" means this Indenture.
-------------------------
"Indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"Obligor" on the indenture securities means the Company and any other
-------
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3. Rules of Construction.
----------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
(7) references to Sections or Articles means reference to such Section
or Article in this Indenture, unless stated otherwise.
9
<PAGE>
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form and Dating.
----------------
The Securities and the Trustee's certificate of authentication, in respect
thereof, shall be substantially in the form of Exhibit A hereto, which Exhibit
is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. If any term or provision of a Security limits, qualifies, or conflicts
with the terms of this Indenture, the terms of this Indenture shall control.
SECTION 2.2. Execution and Authentication.
-----------------------------
Two Officers shall sign, or one Officer shall sign and one Officer shall
attest to, the Security for the Company by manual or facsimile signature. The
Company's seal may be, but is not required to be, impressed, affixed, imprinted
or reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the time
of such execution but no longer holds that or any office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security but such
signature shall be conclusive evidence that the Security has been authenticated
pursuant to the terms of this Indenture.
The Trustee shall authenticate the Securities for original issue in the
aggregate principal amount of up to $185,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify (i) the amount of Securities to be authenticated and (ii) the date
on which the Securities are to be authenticated. The aggregate principal amount
of Securities outstanding at any time may not exceed $185,000,000 except as
provided in Section 2.7; provided, that Securities in excess of $160,000,000
--------
shall not be issued other than pursuant to the over-allotment option granted by
the Company to the Initial Purchasers as provided in the Purchase Agreement.
Upon the written order of the Company in the form of an Officers' Certificate,
the
10
<PAGE>
Trustee shall authenticate Securities in substitution of Securities originally
issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Securities. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Affiliate of the Company, or any of their
respective Subsidiaries, and has the same protections under the Indenture.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.3. Registrar and Paying Agent.
---------------------------
The Company shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where Securities may be presented for registration of
transfer or for exchange ("Registrar") and an office or agency where Securities
may be presented for payment ("Paying Agent") and where notices and demands to
or upon the Company in respect of the Securities may be served. The Company may
act as Registrar or Paying Agent, except that, for the purposes of Articles III,
VIII and XI and as otherwise specified in the Indenture, neither the Company nor
any Affiliate of the Company shall act as Paying Agent. The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. The
Company hereby initially appoints the Trustee as Registrar and Paying Agent, and
the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency agreement with
any Agent not a party to this Indenture, which agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities Custodian
with respect to the Global Securities.
SECTION 2.4. Paying Agent to Hold Assets in Trust.
-------------------------------------
The Company shall require each Paying Agent other than the Trustee to agree
in writing that each Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all assets held by the Paying Agent for the payment of principal
of, premium, if any, interest on or Liquidated Damages with respect to, the
Securities (whether such assets have been distributed to it by the Company or
any
11
<PAGE>
other obligor on the Securities), and shall notify the Trustee in writing of any
Default in making any such payment. If either of the Company or a Subsidiary of
the Company acts as Paying Agent, it shall segregate such assets and hold them
as a separate trust fund for the benefit of the Holders or the Trustee. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any Payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent (if other than the Company or an Affiliate of the
Company) shall have no further liability for such assets.
SECTION 2.5. Securityholder Lists.
---------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee reasonably may require of the names and
addresses of Holders.
SECTION 2.6. Transfer and Exchange.
----------------------
(a) Transfer and Exchange of Definitive Securities. When Definitive
----------------------------------------------
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations;
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
- -------- -------
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of a Definitive Security that is a Transfer
Restricted Security, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Definitive Security is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
12
<PAGE>
(B) if such Definitive Security is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act,
a certification to that effect (in substantially the form set forth on
the reverse of the Security); or
(C) if such Definitive Security is being transferred to an
institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, a
certification to that effect (in substantially the form set forth on
the Security) accompanied by a certificate in the form of Exhibit B to
the Indenture to the Trustee and if either the Trustee or the Company
so requests, an Opinion of Counsel satisfactory to the Company to the
effect that such transfer is in compliance with the Securities Act;
(D) if such Definitive Security is being transferred in
accordance with Regulation S under the Securities Act, a certification
to that effect (in substantially the form set forth on the Security)
and if either the Trustee or the Company so requests, an Opinion of
Counsel satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(E) if such Definitive Security is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (in substantially
the form set forth on the Security) and if either the Trustee or the
Company so requests, an Opinion of Counsel satisfactory to the Company
to the effect that such transfer is in compliance with the Securities
Act.
(b) Restrictions on Transfer of a Definitive Security for a
-------------------------------------------------------
Beneficial Interest in a Global Security. A Definitive Security may not be
- ----------------------------------------
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer in form reasonably satisfactory to the Company and the Registrar or
Co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing, together with:
(i) if such Definitive Security is a Transfer Restricted Security,
certification, substantially in the form set forth on the Security, that
such Definitive Security is being transferred (x) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act or (y) in accordance
with Regulation S under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer Restricted
Security, written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security to
reflect an increase in the aggregate principal amount of the Securities
represented by the applicable Global Security;
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary
13
<PAGE>
and the Securities Custodian, the aggregate principal amount of Securities
represented by the appropriate Global Security to be increased accordingly. If
no Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate an appropriate new Global Security in the appropriate
principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
------------------------------------------
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
------------------------------------------------------------
Definitive Security.
- -------------------
(i) Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Security and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the Depositary
or the Person designated by the Depositary as having such a beneficial
interest in a Transfer Restricted Security only, the following additional
information and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the
form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act,
a certification to that effect from the transferor (in substantially
the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred to an
institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act, a
certification to that effect (in substantially the form set forth on
the reverse of the Security) accompanied by a certificate in the form
of Exhibit B to the Indenture to the Trustee and if either the Trustee
or the Company so requests, an Opinion of Counsel satisfactory to the
Company to the effect that such transfer is in compliance with the
Securities Act;
(D) if such beneficial interest is being transferred in
accordance with Regulation S under the Securities Act, a certification
to that effect (in substantially the form set forth on the reverse of
the Security) and if either the Trustee or the Company so requests, an
Opinion of Counsel satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to
14
<PAGE>
that effect from the transferee or transferor (in substantially the
form set forth on the reverse of the Security) and if either the
Trustee or the Company so requests, an Opinion of Counsel satisfactory
to the Company to the effect that such transfer is in compliance with
the Securities Act;
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Custodian, the aggregate principal
amount of the applicable Global Security to be reduced and, following such
reduction, the Company will execute and, upon receipt of an authentication order
in the form of an Officers' Certificate, the Trustee will authenticate and
deliver to the transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
make such Definitive Securities available for delivery to the persons in
whose names such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
----------------------------------------------------------
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except (i) by the Depositary to a nominee of
the Depositary, (ii) by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or (iii) by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of
-----------------------------------------------------
Depositary. If at any time:
- ----------
(i) the Depositary for the Securities notifies the Company and the
Company notifies the Trustee in writing that the Depositary is no longer
willing or able to continue as Depositary for the Global Securities and a
successor Depositary for the Global Securities is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Securities under
this Indenture;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and make available for delivery Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Legends.
-------
15
<PAGE>
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT
OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT (AN "IAI"), OR (C) IT IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHO THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (C) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF THE
COMPANY SO REQUESTS, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT, (E) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE
16
<PAGE>
902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
SECURITY IN VIOLATION OF THE FOREGOING."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security or that is represented by a Global Security, the
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security for a Definitive Security that does not bear the
legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security (1) in the case of a sale or
transfer pursuant to Rule 144 under the Securities Act, after delivery
of a customary Opinion of Counsel satisfactory to the Company to the
effect that such transfer is in compliance with the Securities Act or
(2) in the case of a sale or transfer pursuant to an effective
registration statement under the Securities Act; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sales or transfers being subject only to the
provisions of Section 2.6(c) hereof).
(h) Cancellation and/or Adjustment of Global Security. At such time
-------------------------------------------------
as all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or canceled, such Global Security
shall be returned to or retained and canceled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the written direction of the Trustee, to reflect
such reduction.
(i) Obligations with respect to Transfers and Exchanges of
------------------------------------------------------
Definitive Securities.
- ---------------------
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's or co-Registrar's written request.
(ii) No service charge shall be made for any registration of transfer
or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable
in connection therewith (other than any such transfer taxes, assessments,
or similar governmental charge payable upon exchanges or transfers pursuant
to Section 2.2 (fourth paragraph), 2.10, 3.7, 9.5, or 11.1 (final
paragraph)).
17
<PAGE>
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III, except
the unredeemed portion of any Definitive Security being redeemed in part,
or (b) any Security for a period beginning 15 days before the mailing of a
notice of an offer to repurchase pursuant to Article XI hereof or the
mailing of a notice of redemption of Securities pursuant to Article III
hereof and ending at the close of business on the day of such mailing.
SECTION 2.7. Replacement Securities.
-----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder of a
Security claims and submits an affidavit or other evidence, satisfactory to the
Trustee, to the Trustee to the effect that the Security has been lost, destroyed
or wrongfully taken, the Company shall issue and the Trustee shall authenticate
a replacement Security if the Trustee's requirements are met. If required by
the Trustee or the Company, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both the Company and the Trustee, to
protect the Company, the Trustee or any Agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge such Holder for
its reasonable, out-of-pocket expenses in replacing a Security.
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, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.
Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies of any Holder with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8. Outstanding Securities.
-----------------------
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee (including any Security represented by a Global
Security) except those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Security effected by the Trustee
hereunder and those described in this Section 2.8 as not outstanding. A
Security does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Security, except as provided in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a mutilated
Security surrendered for replacement), the replaced Security ceases to be
outstanding unless the Trustee receives proof
18
<PAGE>
satisfactory to it that the replaced Security is held by a bona fide purchaser.
---- ----
A mutilated Security ceases to be outstanding upon surrender of such Security
and replacement thereof pursuant to Section 2.7.
If on a Redemption Date the Paying Agent (other than the Company or an
Affiliate of the Company) holds Cash or U.S. Government Obligations sufficient
to pay all of the principal and interest due on the Securities payable on that
date in accordance with Section 3.6 hereof and payment of the Securities called
for redemption is not otherwise prohibited pursuant to Article XII hereof or
otherwise, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue.
SECTION 2.9. Treasury Securities.
--------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company or an Affiliate of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment, supplement,
waiver or consent, only Securities that the Trustee knows are so owned shall be
disregarded.
SECTION 2.10. Temporary Securities.
---------------------
Until Definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of Definitive Securities but may have
variations that the Company reasonably and in good faith considers appropriate
for temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as permanent
Securities authenticated and delivered hereunder.
SECTION 2.11. Cancellation.
-------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and return all Securities surrendered for transfer, exchange, payment or
cancellation to the Company. Subject to Section 2.7, the Company may not issue
new Securities to replace Securities that have been paid or delivered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section 2.11, except as
expressly permitted in the form of Securities and as permitted by this
Indenture.
SECTION 2.12. Defaulted Interest.
-------------------
19
<PAGE>
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 Record Date for such interest.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date plus, to the extent lawful,
any interest payable on the defaulted interest (collectively, herein called
"Defaulted Interest") shall forthwith cease to be payable to the registered
holder on the relevant Record Date, and such Defaulted Interest may be paid by
the Company, at its election in each case, as provided in clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities (or their respective
predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of Cash 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 Cash when deposited to be
held in trust for the benefit of the persons entitled to such Defaulted
Interest as provided in this clause (1). Thereupon the Trustee shall fix a
special record date for the payment of such Defaulted Interest which shall
be not more than 15 Business Days and not less than 10 Business Days prior
to the date of the proposed payment and not less than 10 Business Days
after the receipt by the Trustee of the notice of the proposed payment
("Special Record Date"). The Trustee shall promptly notify the Company in
writing 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 at his address as it appears in the
Security register not less than 10 Business Days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the persons in whose names the
Securities (or their respective predecessor Securities) are registered on
such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after written notice given
by the Company to the Trustee of the proposed payment pursuant to this
clause, such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each Security
delivered under this Indenture upon 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.
20
<PAGE>
ARTICLE III.
REDEMPTION
SECTION 3.1. Right of Redemption.
--------------------
Redemption of Securities, as permitted by any provision of this Indenture,
shall be made in accordance with Paragraph 5 of the Securities and this Article
III. The Company will not have the right to redeem any Securities prior to
September 15, 2000. On or after September 15, 2000, the Company will have the
right to redeem all or any part of the Securities at the Redemption Prices
specified in Paragraph 5 therein under the caption "Redemption," in each case
including accrued and unpaid interest and Liquidated Damages, if any, to, but
excluding, the Redemption Date.
SECTION 3.2. Notices to Trustee.
-------------------
If the Company elects to redeem Securities pursuant to Paragraph 5 of the
Securities, it shall notify the Trustee in writing of the Redemption Date, the
principal amount of Securities to be redeemed, the Redemption Price and whether
it wants the Trustee to give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to be
redeemed pursuant to Paragraph 5 of the Securities by crediting against any such
redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee in writing of the amount of the
reduction and deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 45 days but not more than 60 days before the Redemption
Date (unless a shorter notice period shall be satisfactory to the Trustee). Any
such notice may be canceled at any time prior to notice of such redemption being
mailed to any Holder and shall thereby be void and of no effect.
SECTION 3.3. Selection of Securities to Be Redeemed.
---------------------------------------
If less than all of the Securities are to be redeemed pursuant to Paragraph
5 thereof, the Trustee shall select the Securities to be redeemed on a pro rata
basis, by lot or by such other method as the Trustee shall determine to be fair
and appropriate and in such manner as complies with any applicable depositary,
legal and stock exchange or automated quotation system requirements..
The Trustee shall make the selection from the Securities outstanding and
not previously called for redemption and shall promptly notify the Company in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
21
<PAGE>
SECTION 3.4. Notice of Redemption.
---------------------
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail a notice of redemption by first-class mail, postage prepaid,
to the Trustee and each Holder whose Securities are to be redeemed at such
Holder's address as it appears on the security register maintained by the
Registrar. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice of
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date, and that the Securities called for
redemption may not be converted after the Business Day immediately prior to
the Redemption Date;
(2) the Redemption Price, including the amount of accrued and unpaid
interest and Liquidated Damages, if any, to be paid upon such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Company defaults in its obligation to
deposit Cash with the Paying Agent in accordance with Section 3.6 hereof or
(b) such redemption payment is prohibited pursuant to Article XII hereof or
otherwise, interest on, and Liquidated Damages with respect to, Securities
called for redemption ceases to accrue on and after the Redemption Date and
the only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding the Redemption Date, upon
surrender to the Paying Agent of the Securities called for redemption and
to be redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, on or after the Redemption Date, upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to
be redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption;
(8) the CUSIP number of the Securities to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.4 and
pursuant to the redemption provisions of Paragraph 5 of the Securities.
SECTION 3.5. Effect of Notice of Redemption.
-------------------------------
22
<PAGE>
Once notice of redemption is mailed in accordance with Section 3.4,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date. Upon surrender to the
Trustee or Paying Agent, such Securities called for redemption shall be paid at
the Redemption Price, including accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date; provided that if the Redemption Date is
--------
after a regular Record Date and on or prior to the corresponding Interest
Payment Date, the accrued interest and Liquidated Damages, if any, shall be
payable to the Holder of the redeemed Securities registered on the relevant
Record Date; and provided, further, that if a Redemption Date is a Legal
-------- -------
Holiday, payment shall be made on the next succeeding Business Day and no
interest or Liquidated Damages shall accrue for the period from such Redemption
Date to such succeeding Business Day.
SECTION 3.6. Deposit of Redemption Price.
----------------------------
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) Cash
sufficient to pay the Redemption Price of, including accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to, all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Company any Cash so deposited which is not required for that purpose upon the
written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prohibited under Article XII or otherwise, interest and
Liquidated Damages, if any, on the Securities to be redeemed will cease to
accrue on and after the applicable Redemption Date, whether or not such
Securities are presented for payment. Notwithstanding anything herein to the
contrary, if any Security surrendered for redemption in the manner provided in
the Securities shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, Liquidated
Damages shall continue to accrue and be paid from the Redemption Date if so
required pursuant to Section 3 of the Registration Rights Agreement and interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Security.
SECTION 3.7. Securities Redeemed in Part.
----------------------------
Upon surrender of a Security that is to be redeemed in part, the Company
shall execute and the Trustee shall thereafter authenticate and make available
for delivery to the Holder, without service charge to the Holder, a new Security
or Securities equal in principal amount to the unredeemed portion of the
Security surrendered.
ARTICLE IV.
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<PAGE>
COVENANTS
SECTION 4.1. Payment of Securities.
----------------------
The Company shall pay the principal of, interest on, and Liquidated Damages
with respect to, the Securities on the dates and in the manner provided in the
Securities and the Registration Rights Agreement, as applicable. An installment
of principal of, interest on, or Liquidated Damages with respect to, the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 10:00 a.m. New York City time on that
date, Cash deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.2. Maintenance of Office or Agency.
--------------------------------
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange and for conversion and where notices and demands to or upon the Company
in respect of the Securities and this Indenture may be served. The Company
shall give prompt written notice to the Trustee of the location, and any change
in the location, of such office or agency. If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
14.2.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; 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 the Borough of
Manhattan, The City of New York, for such purposes. The Company shall give
prior written notice to the Trustee of any such designation or rescission and of
any change in the location of any such other office or agency. The Company
hereby initially designates the New York office of United States Trust Company,
an Affiliate of the Trustee, as such office.
SECTION 4.3. Corporate Existence.
--------------------
Subject to Article V, the Company shall do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate or other existence of each of its Subsidiaries in accordance
with the respective organizational documents of each of them and the rights
(charter and statutory) and corporate franchises of the Company and each of its
Subsidiaries; provided, however, that the Company shall not be required to
-------- -------
preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if (a) the
Company shall, in good faith, reasonably determine that the preservation thereof
24
<PAGE>
is no longer desirable in the conduct of the business of such entity and (b) the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 4.4. Payment of Taxes and Other Claims.
----------------------------------
Except with respect to immaterial items, the Company shall, and shall cause
each of its Subsidiaries to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any of its
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become a
Lien upon the property and assets of the Company or any of its Subsidiaries;
provided, however, that neither the Company nor any Subsidiary shall be required
- -------- -------
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 4.5. Maintenance of Properties and Insurance.
----------------------------------------
The Company shall cause all material properties used or useful to the
conduct of its business and the business of each of its Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and supplied with all necessary equipment and shall cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its reasonable judgment may be necessary, so
that the business carried on in connection therewith may be properly conducted
at all times; provided, however, that nothing in this Section 4.5 shall prevent
-------- -------
the Company or any Subsidiary from discontinuing any operation or maintenance of
any of such properties, or disposing of any of them, if such discontinuance or
disposal is (a), in the judgment of the Company, desirable in the conduct of the
business of such entity and (b) not disadvantageous in any material respect to
the Holders.
The Company shall provide, or cause to be provided, for itself and each of
its Subsidiaries, insurance (including appropriate self-insurance) against loss
or damage of the kinds that, in the reasonable, good faith opinion of the
Company is adequate and appropriate for the conduct of the business of the
Company and such Subsidiaries in a prudent manner, with (except for self-
insurance) reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the reasonable, good
faith opinion of the Company and adequate and appropriate for the conduct of the
business of the Company and such Subsidiaries in a prudent manner for entities
similarly situated in the industry, unless failure to provide such insurance
(together with all other such failures) would not have a material adverse effect
on the financial condition or results of operations of the Company or such
Subsidiary.
SECTION 4.6. Compliance Certificate; Notice of Default.
------------------------------------------
25
<PAGE>
(a) The Company shall deliver to the Trustee within 120 days after
the end of its fiscal year an Officers' Certificate complying with Section
314(a)(4) of the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled its obligations under
this Indenture and further stating, as to each such Officer signing such
certificate, whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or covenants in this
Indenture and, if such signor does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware of any
Default, Event of Default or fact which would prohibit the making of any payment
to or by the Trustee in respect of the Securities, an Officers' Certificate
specifying such Default, Event of Default or fact and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be
deemed to have knowledge of any Default, any Event of Default or any such fact
unless one of its Trust Officers receives notice thereof from the Company or any
of the Holders.
SECTION 4.7. Reports.
--------
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee and to each Holder and to prospective purchasers of Securities
identified to the Company by an Initial Purchaser, within 15 days after it is or
would have been required to file such with the SEC, annual and quarterly
consolidated financial statements substantially equivalent to financial
statements that would have been included in reports filed with the SEC if the
Company were subject to the requirements of Section 13 or 15(d) of the Exchange
Act, including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the SEC and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required.
SECTION 4.8. Limitation on Status as Investment Company.
-------------------------------------------
Neither the Company nor any of its Subsidiaries shall become an "investment
company" (as that term is defined in the Investment Company Act of 1940, as
amended), or otherwise become subject to regulation under the Investment Company
Act.
SECTION 4.9. Waiver of Stay, Extension or Usury Laws.
----------------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law which would prohibit or forgive the Company from paying all or any
portion of the principal of, premium of, interest on, or Liquidated Damages with
respect to, the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in
26
<PAGE>
force, or which may affect the covenants or the performance of this Indenture;
and (to the extent that it may lawfully do so) the Company hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 4.10. Rule 144A Information Requirement.
----------------------------------
If at any time there are Transfer Restricted Securities outstanding and the
Company shall cease to have a class of equity securities registered under
Section 12(b) of the Exchange Act or shall cease to be subject to Section 15(d)
of the Exchange Act, the Company shall furnish, within a reasonable period of
time, to the Holders or beneficial holders of the Securities or the underlying
Common Stock and prospective purchasers of Securities or the underlying Common
Stock designated by the Holders of Transfer Restricted Securities, upon their
written request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act until such time as the Shelf Registration
Statement has become effective under the Securities Act. The Company shall also
furnish such information during the pendency of any suspension of effectiveness
of the Shelf Registration Statement.
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation.
--------------------------------------------
(a) The Company shall not, directly or indirectly, consolidate with
or merge with or into another Person or sell, lease, convey or transfer all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another Person or
group of affiliated Persons (other than to its wholly owned Subsidiaries),
unless (i) either (a) in the case of a merger or consolidation, the Company is
the surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Securities and the
Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately before or after giving effect to such transaction; and (iii) the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and, if a
supplemental indenture is required, such supplemental indenture comply with the
Indenture and that all conditions precedent relating to such transactions have
been satisfied.
(b) For purposes of clause (a) of this Section 5.1 and Section
13.6, the sale, lease, conveyance, assignment, transfer, or other disposition of
all or substantially all of the properties and assets of one or more
Subsidiaries of the Company, which properties and assets, if held by the Company
instead of such Subsidiaries, would constitute all or substantially all of the
properties and assets of the Company on a consolidated basis, shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
27
<PAGE>
SECTION 5.2. Successor Corporation Substituted.
----------------------------------
Upon any permitted consolidation or merger or any permitted sale, lease,
conveyance or transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such sale, lease,
conveyance or transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under the Indenture with the
same effect as if such successor corporation had been named therein as the
Company, and when a successor corporation duly assumes all of the obligations of
the Company pursuant hereto and pursuant to the Securities, the predecessor
shall be released from such obligations (except with respect to any obligations
that arise from or as a result of such transaction).
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
------------------
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, 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):
(1) failure to pay any installment of interest on, or Liquidated
Damages with respect to, the Securities as and when the same becomes due
and payable, or to perform any conversion of the Securities required under
this Indenture, and the continuance of such failure for a period of 30
days, whether or not such payment is prohibited by Article XII;
(2) failure to pay all or any part of the principal of, or premium, if
any on the Securities when and as the same become due and payable at
maturity, redemption, by acceleration or otherwise, including, without
limitation, failure to pay all or any part of the Repurchase Price on the
Repurchase Date in accordance with Article XI, whether or not such payment
is prohibited by Article XII;
(3) failure by the Company to observe or perform any covenant or
agreement contained in the Securities or this Indenture (other than a
default in the performance of any covenant or agreement which is
specifically dealt with elsewhere in this Section 6.1), and continuance of
such failure 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 Holders of at least 25% in aggregate principal
amount of the then outstanding Securities, a written notice specifying such
failure, requesting it to be remedied and stating that such notice is a
"Notice of Default" hereunder;
28
<PAGE>
(4) failure by the Company or any Significant Subsidiary to pay
principal, premium or interest when due (after giving effect to any
applicable period of grace) at maturity of any Indebtedness (other than
non-recourse obligations), in an amount in excess of $15,000,000 and the
continuance of such failure for 30 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 aggregate
principal amount of the then outstanding Securities, a written notice
specifying such default, requesting that it be remedied and stating that
such notice is a "Notice of Default" hereunder;
(5) default by the Company or any Significant Subsidiary with respect
to any Indebtedness (other than non-recourse obligations), which default
results in the acceleration of Indebtedness having a principal amount in
excess of $15,000,000 without such Indebtedness having been discharged or
such acceleration having been rescinded or annulled for 30 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
aggregate principal amount of the then outstanding Securities, a written
notice specifying such default, requesting that it be remedied and stating
that such notice is a "Notice of Default" hereunder;
(6) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Subsidiaries as bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order
shall have continued undischarged and unstayed for a period of 60 days; or
a decree or order of a court of competent jurisdiction over the appointment
of a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency
of the Company, any of its Significant Subsidiaries, or of the property of
any such Person, or for the winding up or liquidation of the affairs of any
such Person, shall have been entered, and such decree, judgment, or order
shall have remained in force undischarged and unstayed for a period of 60
days;
(7) the Company or any of its Significant Subsidiaries shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar
law or similar statute, or shall consent to the filing of any such
petition, or shall consent to the appointment of a Custodian, receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency of it or any
of its assets or property, or shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay its
debts generally as they become due, or shall, within the meaning of any
Bankruptcy Law, become insolvent, fail generally to pay its debts as they
become due, or take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or
(8) final unsatisfied judgments not covered by insurance, or the
issuance of any warrant of attachment against any portion of the property
or assets of the Company or any of its Significant Subsidiaries,
aggregating in excess of $20,000,000 at any one time shall have been
rendered against the Company or any of its Significant Subsidiaries and not
have been stayed, bonded or discharged for a period (during which execution
shall not be effectively
29
<PAGE>
stayed) of 60 days (or, in the case of any such final judgment which
provides for payment over time, which shall so remain unstayed, unbonded or
undischarged beyond any applicable payment date provided therein).
Notwithstanding the 60-day period and notice requirement contained in
Section 6.1(3) above, with respect to a default under Article XI the 60-day
period referred to in Section 6.1(3) shall be deemed to have begun as of the
date the Change of Control notice is required to be sent in the event that the
Company has not complied with the provisions of Section 11.1 and the Trustee or
Holders of at least 25% in principal amount of the outstanding Securities
thereafter give the Notice of Default referred to in Section 6.1(3) to the
Company and, if applicable, the Trustee; provided, however, that if the breach
-------- -------
or default is a result of a default in the payment when due of the Repurchase
Price on the Repurchase Date, such Event of Default shall be deemed, for
purposes of this Section 6.1, to arise no later than on the final Repurchase
Date.
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment.
--------------------------------------------------------
If an Event of Default (other than an Event of Default specified in Section
6.1(6) or (7) relating to the Company) occurs and is continuing, then in every
such case, unless the principal of all of the Securities shall have already
become due and payable, either the Trustee or the Holders of not less than 25%
in aggregate principal amount of then outstanding Securities, by a notice in
writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all of the principal of the Securities (or
the Repurchase Price if the Event of Default includes failure to pay the
Repurchase Price, determined as set forth below), including in each case
premium, if any, accrued interest and Liquidated Damages on or with respect
thereto, to be due and payable immediately. If an Event of Default specified in
Section 6.1(6) or (7) relating to the Company occurs, all principal, premium, if
any, accrued interest and Liquidated Damages on or with respect thereto will be
immediately due and payable on all outstanding Securities without any
declaration or other act on the part of Trustee or the Holders.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of no less
than a majority in aggregate principal amount of then outstanding Securities, by
written notice to the Company and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee Cash sufficient
to pay
(A) all overdue interest on, and overdue Liquidated Damages with
respect to, all Securities,
(B) the principal of (and premium, if any, applicable to) any
Securities which would then be due otherwise than by such declaration
of acceleration, and interest thereon at the rate borne by the
Securities,
30
<PAGE>
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest and Liquidated Damages at the rate
borne by the Securities,
(D) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and
(2) all Events of Default, other than the non-payment of the principal
of, premium, if any, interest on and Liquidated Damages with respect to
Securities that have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 6.12, including, if
applicable, any Event of Default relating to the covenants contained in
Section 11.1.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent Default or Event of
Default or impair any right consequent thereon.
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
----------------------------------------------------------------
The Company covenants that if an Event of Default in payment of principal,
premium, interest or Liquidated Damages specified in clause (1) or (2) of
Section 6.1 occurs and is continuing, the Company shall, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Securities, the whole
amount then due and payable on such Securities for principal, premium (if any),
interest, Liquidated Damages and, to the extent that payment of such interest
shall be legally enforceable, interest on any overdue principal (and premium, if
any), Liquidated Damages and on any overdue interest, at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs, fees and expenses of collection, including compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
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
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective 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.
31
<PAGE>
SECTION 6.4. Trustee May File Proofs of Claim.
---------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (which term as used in this Section shall include any
predecessor Trustee) (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal, interest or Liquidated
Damages) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal (and
premium, if any), interest and Liquidated Damages owing and unpaid in
respect of the Securities and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim under Section 7.7 for the compensation, fees,
expenses, disbursements and advances of the Trustee, its agent and counsel)
and of the Holders allowed in such judicial proceeding, and
(2) To collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same in accordance
with Section 6.6;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each 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 Holders, to
pay to the Trustee any amount due it for the compensation, expenses, fees,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7. To the extent that the payment of
such compensation, expenses, fees, disbursements and advances of Trustee, its
agents and counsel and any other amounts due to the Trustee under Section 7.7
hereof out of the estate in any such judicial proceeding shall be denied for any
reason, payment of the same shall be secured by a perfected first priority
security interest in and lien on, and shall be paid out of, any and all
distributions, dividends, money securities and other properties that the Holders
may be entitled to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise, and any such security
interest and lien in favor of any predecessor Trustee shall be senior to the
security interest and lien in favor of the current Trustee.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.5. Trustee May Enforce Claims Without Possession of Securities.
------------------------------------------------------------
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All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
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 in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, fees, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
SECTION 6.6. Priorities.
-----------
Any money collected by the Trustee pursuant to this Article VI 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, premium (if
any), interest or Liquidated Damages, upon presentation of the Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the Trustee (including any predecessor Trustee) in payment of
all amounts due pursuant to Section 7.7;
SECOND: To the holders of Senior Indebtedness of the Company to the extent
provided in Article XII;
THIRD: To the Holders in payment of the amounts then due and unpaid for
principal of, premium (if any), interest on and Liquidated Damages with respect
to, the Securities in respect 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 such Securities for principal, premium (if any),
interest and Liquidated Damages, respectively; and
FOURTH: To whomsoever may be lawfully entitled thereto, the remainder, if
any.
SECTION 6.7. Limitation on Suits.
--------------------
No Holder of any Security shall have any right to order or direct the
Trustee 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
(A) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of then
outstanding Securities 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;
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(C) such Holder or Holders have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities to be incurred or
reasonably probable 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 then outstanding Securities;
it being understood and intended that no one or more 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 Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.8. Unconditional Right of Holders to Receive Principal, Premium,
-------------------------------------------------------------
Interest and Liquidated Damages.
- --------------------------------
Notwithstanding any other provision of 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), interest on and Liquidated
Damages with respect to, such Security when due (including, in the case of
redemption, the Redemption Price on the applicable Redemption Date, and in the
case of the Repurchase Price, on the applicable Repurchase Date), to convert
such Security in accordance with Article XIII, and to institute suit for the
enforcement of any such payment and right to convert after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
SECTION 6.9. Rights and Remedies Cumulative.
-------------------------------
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in Section 2.7, no right or
remedy herein conferred upon 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 6.10. Delay or Omission Not Waiver.
-----------------------------
No delay or omission by the Trustee or by any Holder of any Security to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article VI 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.
34
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SECTION 6.11. Control by Holders.
-------------------
The Holder or Holders of no less than a majority in aggregate principal
amount of then outstanding Securities 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 upon the Trustee, provided,
--------
that
(1) such direction shall be made in writing to the Trustee and shall
not be in conflict with any rule of law or with this Indenture,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction,
and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 6.12. Waiver of Past Default.
-----------------------
Holder or Holders of not less than a majority in aggregate principal amount
of then outstanding Securities may, on behalf of all Holders, prior to the
declaration of acceleration of the maturity of the Securities, waive any past
default hereunder and its consequences, except a default
(A) in the payment of the principal of, premium, if any, interest
on, or Liquidated Damages with respect to, any Security not yet cured
as specified in clauses (1) and (2) of Section 6.1, 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.
Upon any such waiver, such 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 the exercise of any right arising therefrom.
SECTION 6.13. 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,
suffered or omitted to be taken 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
35
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provisions of this Section 6.13 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 aggregate
principal amount of then outstanding Securities, or to any suit instituted by
any Holder for enforcement of the payment of principal of, premium (if any),
interest on or Liquidated Damages with respect to, any Security on or after the
respective Stated Maturity of such Security (including, in the case of
redemption, on or after the Redemption Date).
SECTION 6.14. Restoration of Rights and Remedies.
-----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed.
SECTION 7.1. Duties of Trustee.
------------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their exercise
as a prudent Person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically set
forth in this Indenture and no others, and no covenants or obligations
shall be implied in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they substantially conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
36
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(1) This paragraph does not limit the effect of paragraph (b) of this
Section 7.1.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a written direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not provided.
(e) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.2. Rights of Trustee.
------------------
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document, 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.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel of its selection and may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Sections 14.4 and 14.5. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.
37
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(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
discretion, rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, 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.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance of
the Company's covenants in Article IV hereof. In addition, the Trustee shall
not be deemed to have knowledge of any Default or Event of Default except (i)
any Event of Default occurring pursuant to Sections 6.1(1), 6.1(2) or 5. 1, or
(ii) any Default or Event of Default of which the Trustee shall have received
written notification or obtained actual knowledge.
(i) No permissive right of the Trustee to act hereunder shall be
construed as a duty.
(j) Whenever in the administration of this Indenture the Trustee deems
it desirable that a matter be proved or established prior to taking, suffering
or omitting to take any action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate, an Opinion of Counsel, or both.
(k) The Trustee shall not be deemed to have notice or knowledge
(including actual knowledge) of any matter unless a Trust Officer has actual
knowledge thereof or unless written notice thereof is received by the Trustee at
the office specified in Section 14.2 and such notice references the Securities
generally, the Company or this Indenture.
SECTION 7.3. Individual Rights of Trustee.
-----------------------------
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company, any of its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11.
38
<PAGE>
SECTION 7.4. Trustee's Disclaimer.
---------------------
The Trustee makes no representation as to the validity or adequacy of this
Indenture, the Registration Rights Agreement, the Offering Memorandum or the
Securities and it shall not be accountable for the Company's use of the proceeds
from the Securities, and it shall not be responsible for any statement in the
Securities, other than the Trustee's certificate of authentication, or the use
or application of any funds received by a Paying Agent other than the Trustee.
SECTION 7.5. Notice of Default.
------------------
If a Default or an Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to each Securityholder
notice of the uncured Default or Event of Default within 90 days after the later
to occur of (i) the occurrence of such Default or Event of Default or (ii) the
date the Trustee becomes aware of such Default or Event of Default. Except in
the case of a Default or an Event of Default in payment of principal (or
premium, if any) of, interest on or Liquidated Damages with respect to, any
Security (including the payment of the Repurchase Price on the Repurchase Date
and the payment of the Redemption Price on the Redemption Date), the Trustee may
withhold the notice if and so long as a Trust Officer in good faith determines
that withholding the notice is in the interest of the Securityholders.
SECTION 7.6. Reports by Trustee to Holders.
------------------------------
Within 60 days after each April 15 beginning with the April 15 following
the date of this Indenture, the Trustee shall, if required by law, mail to each
Securityholder a brief report dated as of such April 15 that complies with TIA
(S) 313(a). The Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Securities
become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and, if required, filed with the SEC and each stock
exchange, if any, on which the Securities are listed.
SECTION 7.7. Compensation and Indemnity.
---------------------------
The Company agrees to pay to the Trustee from time to time such
compensation for its services as the parties shall agree from time to time and,
in the absence of such agreement, reasonable compensation for its acceptance of
this Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses, fees and advances incurred or made by it. Such
expenses shall include the reasonable compensation, disbursements, fees and
expenses of the Trustee's agents, accountants, experts and counsel.
39
<PAGE>
The Company agrees to indemnify the Trustee (in its capacity as Trustee)
and each of its officers, directors, attorneys-in-fact and agents for, and hold
them harmless against, any claim, demand, expense (including but not limited to
reasonable compensation, fees, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence, bad
faith or willful misconduct on its part, arising out of, related to, or in
connection with the administration of this trust and its rights or duties
hereunder including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity. The Company shall defend the claim and the Trustee shall provide
reasonable cooperation at the Company's expense in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel; provided, that the Company will not be required to pay such
--------
fees and expenses if it assumes the Trustee's defense and there is no conflict
of interest between the Company and the Trustee in connection with such defense.
The Company need not pay for any settlement made without its written consent.
The Company need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee and each predecessor Trustee shall have a perfected lien prior to the
Securities on all assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust to pay principal and premium, if any, of or
interest or Liquidated Damages on particular Securities. Any lien in favor of a
predecessor Trustee shall be senior to any lien in favor of the current Trustee.
When the Trustee incurs expenses or fees or renders services after an Event
of Default specified in Section 6.1(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive indefinitely, including upon the resignation or removal
of the Trustee, the discharge of the Company's obligations pursuant to Article
VIII of this Indenture and any rejection or termination of this Indenture under
any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee.
-----------------------
The Trustee may resign by so notifying the Company in writing. The Holder
or Holders of a majority in principal amount of then outstanding Securities may
remove the Trustee by so notifying the Company and the Trustee in writing. The
Company, by Board of Directors resolution, may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
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(c) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of this Section 7.8.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of then outstanding Securities may,
with the Company's consent, appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately upon delivery of such
notice and provided that all sums owing to the retiring Trustee provided for in
Section 7.7 have been paid, the retiring Trustee shall transfer all property
held by it as trustee to the successor Trustee, subject to the lien provided in
Section 7.7, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of then outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any bona fide Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 shall continue indefinitely for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
------------------------------
The Trustee shall at all times satisfy the requirements of TIA (S)
310(a)(1), (2) and (5). The Trustee and its direct parent or, in the case of a
corporation included in a bank holding company
41
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system, the related bank holding company, shall have a combined capital and
surplus of at least $100,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA (S)310(b).
SECTION 7.11. Preferential Collection of Claims Against Company.
--------------------------------------------------
The Trustee shall comply with TIA (S)311(a), excluding any creditor
relationship listed in TIA (S)311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S)311(a) to the extent indicated.
SECTION 7.12. Other Capacities.
-----------------
All references in this Indenture to the Trustee shall be deemed to refer to
the Trustee in its capacity as Trustee and in its capacities as any Agent, to
the extent acting in such capacities, and every provision of this Indenture
relating to the conduct or affecting the liability or offering protection,
immunity or indemnity to the Trustee shall be deemed to apply with the same
force and effect to the Trustee acting in its capacity as any Agent.
ARTICLE VIII.
SATISFACTION AND DISCHARGE
SECTION 8.1. Satisfaction and Discharge of Indenture.
----------------------------------------
The Company may terminate its obligations under this Indenture (subject to
the provisions of this Article VIII and Section 7.7) when it shall have
delivered to the Trustee for cancellation all Securities theretofore
authenticated (other than any Securities which shall have been destroyed, lost
or stolen and which shall have been replaced or paid as provided in Article II
hereof) and the following conditions shall be satisfied:
(1) The Company has paid all sums payable under the Indenture; and
(2) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating that
all conditions precedent have been complied with as contemplated by this Section
8.1.
SECTION 8.2. Repayment to the Company.
-------------------------
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, for the payment of the principal of, premium, if any, interest on
or Liquidated Damages with respect to any Security and remaining unclaimed for
two years after such principal, premium, if any, interest or Liquidated Damages
has become due and payable shall be paid to the Company on its written request;
and the Holder of such Security shall thereafter look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease.
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ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
---------------------------------------------------
Without the consent of any Holder, the Company, when authorized by Board
Resolutions, 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:
(1) to cure any ambiguity, defect, or inconsistency, 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 (1) does not adversely affect the
interests of any Holder in any respect;
(2) to create additional covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company or
to make any other change that does not adversely affect the rights of any
Holder, provided, that the Company has delivered to the Trustee an Opinion of
--------
Counsel stating that such change pursuant to this clause (2) does not adversely
affect the rights of any Holder;
(3) to provide for collateral for or guarantors of the Securities;
(4) to evidence the succession of another Person to the Company and the
assumption by any such successor of the obligations of the Company herein and in
the Securities in accordance with Article V; or
(5) to comply with the TIA.
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with Consent
------------------------------------------------------------
of Holders.
- -----------
Subject to the last sentence of this paragraph, with the consent of the
Holders of not less than a majority in aggregate principal amount of then
outstanding Securities, by written act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by Board Resolutions, and the
Trustee may amend or supplement this Indenture or the Securities or 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 the Securities or of modifying in any manner the rights of the
Holders under this Indenture or the Securities. Subject to the last sentence of
this paragraph, the Holder or Holders of not less than a majority in aggregate
principal amount of then outstanding Securities may, in writing, waive
compliance by the Company with any provision of this Indenture or the
Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
43
<PAGE>
(1) change the Stated Maturity of any Security or reduce the principal
amount thereof or the rate (or extend the time for payment) of interest thereon
or any premium payable upon the redemption thereof, or change the place of
payment where, or the coin or currency in which, any Security or any premium or
the interest thereon or Liquidated Damages with respect thereto is payable, or
impair the right to institute suit for the conversion of any Security or the
enforcement of any such payment on or after the due date thereof (including, in
the case of redemption, on or after the Redemption Date), or reduce the
Repurchase Price, or alter the Repurchase Offer or redemption provisions in a
manner adverse to the Holders;
(2) reduce the percentage in principal amount of the outstanding
Securities, the consent of whose Holders is required for any such amendment,
supplemental indenture or waiver provided for in the Indenture;
(3) adversely affect the right of such Holder to convert Securities; or
(4) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the Indenture cannot
be modified or waived without the consent of the Holder of each outstanding
Security affected thereby.
It shall not be necessary for the consent of the Holders under this Section
9.2 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 or Section
9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this Article
IX, the Company may, but shall not be obligated to, offer to any Holder who
consents to such amendment, supplement or waiver, or (at the option of the
Company) to all Holders, consideration for consent to such amendment, supplement
or waiver.
SECTION 9.3. Compliance with TIA.
--------------------
Every amendment, waiver or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
----------------------------------
Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security
44
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that evidences the same debt as the consenting Holder's Security, even if
notation of the consent is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to his Security or portion of his
Security by written notice to the Company, the Trustee or the Person designated
by the Company as the Person to whom consents should be sent if such revocation
is received by the Company or such Person before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Securities have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (1)
through (4) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security; provided, that any such waiver shall
--------
not impair or affect the right of any Holder to receive payment of principal and
premium of and interest on and Liquidated Damages with respect to a Security, on
or after the respective dates set for such amounts to become due and payable as
then expressed in such Security, or to bring suit for the enforcement of any
such payment on or after such respective dates.
SECTION 9.5. Notation on or Exchange of Securities.
--------------------------------------
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Security. The Trustee
may place an appropriate notation on the Security about the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Security shall issue and the Trustee
shall authenticate a new Security that reflects the changed terms. Any failure
to make the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
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SECTION 9.6. Trustee to Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article IX; provided, that the Trustee may, but shall not be
--------
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture.
ARTICLE X.
MEETINGS OF SECURITYHOLDERS
SECTION 10.1. Purposes for Which Meetings May Be Called.
------------------------------------------
A meeting of Securityholders may be called at any time and from time to
time pursuant to the provisions of this Article X for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to waive or to consent to the waiving of any
Default or Event of Default hereunder and its consequences, or to take any other
action authorized to be taken by Securityholders pursuant to any of the
provisions of Article VI;
(b) to remove the Trustee or appoint a successor Trustee pursuant to
the provisions of Article VII;
(c) to consent to an amendment, supplement or waiver pursuant to
provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holder or Holders of any specified aggregate principal amount of
the Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
SECTION 10.2. Manner of Calling Meetings.
---------------------------
The Trustee may at any time call a meeting of Securityholders to take any
action specified in Section 10.1, to be held at such time and at such place in
the City of New York, New York or elsewhere as the Trustee shall determine.
Notice of every meeting of Securityholders, setting forth the time and place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed at the Company's expense by the Trustee, first-class
postage prepaid, to the Company and to the Holders at their last addresses as
they shall appear on the registration books of the Registrar, not less than 10
nor more than 60 days prior to the date fixed for a meeting.
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Any meeting of Securityholders shall be valid without notice if the Holders
of all Securities then outstanding are present in Person or by proxy, or if
notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 10.3. Calling of Meetings by the Company or Holders.
----------------------------------------------
In case at any time the Company or the Holders of not less than 10% in
aggregate principal amount of the Securities then outstanding, shall have
requested the Trustee to call a meeting of Securityholders to take any action
specified in Section 10.1, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such written
request, then the Company or the Holders of Securities in the amount above
specified may determine the time and place in the City of New York, New York or
elsewhere for such meeting and may call such meeting for the purpose of taking
such action, by mailing or causing to be mailed notice thereof as provided in
Section 10.2, or by causing notice thereof to be published at least once in each
of two successive calendar weeks (on any Business Day during such week) in a
newspaper or newspapers printed in the English language, customarily published
at least five days a week of a general circulation in the City of New York,
State of New York, the first such publication to be not less than 10 nor more
than 60 days prior to the date fixed for the meeting.
SECTION 10.4. Who May Attend and Vote at Meetings.
------------------------------------
To be entitled to vote at any meeting of Securityholders, a Person shall
(a) be a registered Holder of one or more Securities, or (b) be a Person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only Persons who shall be entitled to be present or
to speak at any meeting of Securityholders shall be the Persons entitled to vote
at such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company, and its counsel.
SECTION 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting;
-----------------------------------------------------------
Voting Rights; Adjournment.
- ---------------------------
Notwithstanding any other provision of this Indenture, the Trustee may make
such reasonable regulations as it may deem advisable for any action by or any
meeting of Securityholders, in regard to proof of the holding of Securities and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Securities
entitled to vote at such meeting, in which case those and only those Persons who
are Holders of Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
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 Securityholders as provided in
47
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Section 10.3, in which case the Company or the Securityholders calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Holders of a majority in principal amount of the Securities
represented at the meeting and entitled to vote.
At any meeting each Securityholder or proxy shall be entitled to one vote
for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not then outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the proxy to vote on
behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 10.2 or Section 10.3 may be adjourned from
time to time by vote of the Holder or Holders of a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
vote, and the meeting may be held as so adjourned without further notice.
SECTION 10.6. Voting at the Meeting and Record to Be Kept.
--------------------------------------------
The vote upon any resolution submitted to any meeting of Securityholders
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities or of their representatives by proxy and the principal
amount of the Securities voted by the ballot. 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 in duplicate of the proceedings of each
meeting of Securityholders 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 mailed as provided in Section 10.2 or published
as provided in Section 10.3. The record shall be signed and verified by the
affidavits of the permanent chairman and the secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other 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.
SECTION 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered
------------------------------------------------------------
or Delayed by Call of Meeting.
- ------------------------------
Nothing contained in this Article X shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
48
<PAGE>
ARTICLE XI.
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
SECTION 11.1. Repurchase of Securities at Option of the Holder Upon a
-------------------------------------------------------
Change of Control.
- ------------------
(a) Subject to Section 11.2, in the event that a Change of Control
occurs, the Company shall offer, subject to the terms and conditions of this
Indenture, to purchase all or any part of each Holder's Securities (provided,
--------
that the principal amount of such Securities must be $1,000 or an integral
multiple thereof) on the date (the "Repurchase Date") that is no later than 45
Business Days (except as hereinafter provided) after the occurrence of such
Change of Control, at a cash price (the "Repurchase Price") equal to 100% of the
principal amount thereof, together with accrued and unpaid interest and
Liquidated Damages, if any, to (but excluding) the Repurchase Date.
(b) In the event that, pursuant to this Section 11.1, the Company
shall be required to commence an offer to purchase Securities (a "Repurchase
Offer"), the Company shall follow the procedures set forth in this Section 11.1
as follows:
(1) the Repurchase Offer shall commence within 25 Business Days
following a Change of Control;
(2) the Repurchase Offer shall remain open for 20 Business Days
following its commencement, except to the extent that a longer period is
required by applicable law, but in any case not more than 60 Business Days
following the Change of Control (the "Repurchase Offer Period");
(3) upon the expiration of a Repurchase Offer, the Company shall
purchase all Securities tendered in response to the Repurchase Offer;
(4) if the Repurchase Date is on or after an interest payment
record date and on or before the related Interest Payment Date and Damage
Payment Date, any accrued interest and Liquidated Damages will be paid to the
Person in whose name a Security is registered at the close of business on such
record date, and no additional interest or Liquidated Damages will be payable to
Securityholders who tender Securities pursuant to the Repurchase Offer;
(5) the Company shall provide the Trustee with written notice of
the Repurchase Offer at least 5 Business Days before the commencement of any
Repurchase Offer (or such shorter period that is satisfactory to the Trustee);
and
(6) on or before the commencement of any Repurchase Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice to each of the Securityholders, which
(to the extent consistent with this Indenture) shall govern the terms of the
Repurchase Offer and shall state:
49
<PAGE>
(i) that the Repurchase Offer is being made pursuant to such notice
and this Section 11.1 and that all Securities, or portions thereof,
tendered will be accepted for payment;
(ii) the Repurchase Price (including the amount of accrued and unpaid
interest and Liquidated Damages, if any), the Repurchase Date and the
Repurchase Put Date;
(iii) that any Security, or portion thereof, not tendered and
accepted for payment will continue to accrue interest and Liquidated
Damages, if any;
(iv) that, unless the Company defaults in depositing Cash with the
Paying Agent in accordance with the last paragraph of this clause (b) or
such payment is prevented pursuant to Article XII, any Security, or portion
thereof, accepted for payment pursuant to the Repurchase Offer shall cease
to accrue interest and Liquidated Damages after the Repurchase Date;
(v) that Holders electing to have a Security, or portion thereof,
purchased pursuant to a Repurchase Offer will be required to surrender the
Security, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Security completed, to the Paying Agent (which may not
for purposes of this Section 11.1, notwithstanding anything in this
Indenture to the contrary, be the Company or any Affiliate of the Company)
at the address specified in the notice prior to the close of business on
the earlier of (a) the third Business Day prior to the Repurchase Date and
(b) the third Business Day following the expiration of the Repurchase Offer
(such earlier date being the "Repurchase Put Date");
(vi) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent (which may not for purposes of this
Section 11.1, notwithstanding anything in this Indenture to the contrary,
be the Company or any Affiliate of the Company) receives, up to the close
of business on the Repurchase Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and a statement that
such Holder is withdrawing his election to have such principal amount of
Securities purchased; and
(vii) a brief description of the events resulting in such Change of
Control.
Any such Repurchase Offer shall comply with all applicable provisions of
federal and state laws, including those regulating tender offers, if applicable,
and any provisions of this Indenture which conflict with such laws shall be
deemed to be superseded by the provisions of such laws.
On or before the Repurchase Date, the Company shall (i) accept for payment
Securities or portions thereof properly tendered pursuant to the Repurchase
Offer on or before the Repurchase Put Date, (ii) deposit with the Paying Agent
Cash sufficient to pay the Repurchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any) of all Securities or portions thereof
so tendered and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent shall
50
<PAGE>
promptly mail to Holders of Securities so accepted payment in an amount equal to
the Repurchase Price (together with accrued and unpaid interest and Liquidated
Damages, if any), and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security or Securities equal in principal amount
to any unpurchased portion of the Securities surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Repurchase Offer
on or as soon as practicable after the Repurchase Date.
SECTION 11.2. Rescission of Change of Control Determination.
---------------------------------------------
At any time prior to the close of business on the Business day immediately
preceding the Repurchase Date, the Holders of more than 66-2/3% in aggregate
principal amount of the then outstanding Securities, by written act of said
Holders delivered to the Company and the Trustee, may determine that the event
giving rise to the Change of Control shall not be treated as a Change of Control
for purposes of Section 11.1, in which event:
(1) the provisions of Section 11.1(a) shall not apply;
(2) if a Repurchase Offer has been made by the Company pursuant to Section
11.1(b), such Repurchase Offer shall be deemed revoked; and
(3) if any Securities have been tendered in response to the revoked
Repurchase Offer, such tenders shall be deemed rescinded and the Securities
promptly returned to the Holders thereof.
Following a determination by the Holders pursuant to this Section 11.2, the
Company shall mail to all Holders a notice briefly describing such
determination. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such determination. An effective determination under this Section 11.2 shall be
binding on all holders
51
<PAGE>
ARTICLE XII.
SUBORDINATION
SECTION 12.1. Securities Subordinated to Senior Indebtedness.
-----------------------------------------------
The Company and each Holder, by its acceptance of Securities, agree that
(a) the payment of the principal of and interest on the Securities and (b) any
other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company and any premium and
Liquidated Damages (including, without limitation, pursuant to Article XI (but
specifically excluding payments to the Trustee for its own benefit), is
subordinated, to the extent and in the manner provided in this Article XII, to
the prior payment in full of all Senior Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter created, incurred,
assumed or guaranteed, and that these subordination provisions are for the
benefit of the holders of Senior Indebtedness.
This Article XII shall constitute a continuing offer to all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
SECTION 12.2. No Payment on Securities in Certain Circumstances.
--------------------------------------------------
(a) No payment may be made by the Company on account of the principal
of, premium, if any, interest on, or Liquidated Damages with respect to, the
Securities, or to acquire any of the Securities (including repurchases of
Securities at the option of the Holder pursuant to a Repurchase Offer) for cash
or property (other than Junior Securities), or on account of the redemption
provisions of the Securities, (i) upon the maturity of any Senior Indebtedness
by lapse of time, acceleration (unless waived) or otherwise, unless and until
all principal of, premium, if any, and interest on such Senior Indebtedness are
first paid in full (or the prompt payment thereof is duly provided for in cash),
or (ii) in the event of default in the payment of any principal of, premium, if
any, or interest on any Senior Indebtedness when it becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise (collectively, a "Payment Default"), unless and until such Payment
Default has been cured or waived or otherwise has ceased to exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits, or would permit, with (w) the passage of time,
(x) the giving of notice, (y) the making of any payment of the Securities then
required to be made, or (z) any combination thereof (collectively, a "Non-
Payment Default"), the holders of Senior Indebtedness having a principal amount
then outstanding in excess of $10,000,000 (or with respect to which Senior
Indebtedness the holders are obligated to lend the Company in excess of
$10,000,000 principal amount) or their representative immediately to accelerate
its maturity and (ii) written notice of such Non-Payment Default given to the
Company and the Trustee by the holders of an aggregate of at least $10,000,000
principal amount outstanding of such Senior Indebtedness (or holders of
commitments to lend an aggregate of at least $10,000,000 principal amount of
Senior Indebtedness) or their representative (a
52
<PAGE>
"Payment Notice"), then, unless and until such Non-Payment Default has been
cured or waived or otherwise has ceased to exist, no payment (by set-off or
otherwise) may be made by or on behalf of the Company on account of the
principal of, premium, if any, interest on, or Liquidated Damages with respect
to, the Securities, or to acquire or repurchase any of the Securities for cash
or property, or on account of the redemption provisions of the Securities, in
any such case other than payments made with Junior Securities. Notwithstanding
the foregoing, unless (i) the Senior Indebtedness in respect of which such Non-
Payment Default exists has been declared due and payable in its entirety within
179 days after the Payment Notice is delivered as set forth above (the "Payment
Blockage Period"), and (ii) such declaration has not been rescinded or waived,
at the end of the Payment Blockage Period, the Company shall be required to pay
all sums not paid to the Holders of the Securities during the Payment Blockage
Period due to the foregoing prohibitions and to resume all other payments as and
when due on the Securities. Not more than one Payment Notice may be given in any
consecutive 365-day period, irrespective of the number of defaults with respect
to Senior Indebtedness during such period. In no event, however, may the total
number of days during which any Payment Blockage Period is or Payment Blockage
Periods are in effect exceed 179 days in the aggregate during any consecutive
365-day period.
(c) In furtherance of the provisions of Section 12.1, in the event
that, notwithstanding the foregoing provisions of this Section 12.2, any payment
or distribution of assets of the Company (other than Junior Securities) shall be
received by the Trustee for the benefit of the Holders or the Holders or any
Paying Agent for the benefit of the Holders at a time when such payment or
distribution is prohibited by the provisions of this Section 12.2, then such
payment or distribution (subject to the provisions of Article VII and Sections
12.6, 12.7 and 12.12) shall be received and held in trust by the Trustee or such
Holder or Paying Agent for the benefit of the holders of Senior Indebtedness of
the Company, and shall be paid or delivered by the Trustee or such Holders or
such Paying Agent, as the case may be, to the holders of Senior Indebtedness of
the Company remaining unpaid or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness of the Company may have been issued,
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness of the Company held or represented by each, for application
to the payment of all Senior Indebtedness of the Company in full after giving
effect to any concurrent payment and distribution to the holders of such Senior
Indebtedness.
SECTION 12.3. Securities Subordinated to Prior Payment of All Senior
------------------------------------------------------
Indebtedness on Dissolution, Liquidation or Reorganization.
- -----------------------------------------------------------
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company shall first
be entitled to receive payments in full (or have the prompt payment thereof duly
provided for in cash) before the Holders are entitled to receive any payment on
account of the principal of, premium, if any, interest on, and Liquidated
Damages with respect to, the Securities (other than Junior Securities);
53
<PAGE>
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than Junior
Securities) to which the Holders or the Trustee on behalf of the Holders would
be entitled (by setoff or otherwise), except for the provisions of this Article
XII, shall be paid by the liquidating trustee or agent or other Person making
such a payment or distribution directly to the holders of Senior Indebtedness or
their representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness (but this
Section 12.3(b) shall not apply to payments or distributions to the Trustee for
its own benefit); and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (other than Junior Securities), shall be received by the
Trustee for the benefit of the Holders or the Holders or any Paying Agent for
the benefit of the Holders (or, if the Company or any Affiliate of the Company
is acting as its own Paying Agent, money for any such payment or distribution
shall be segregated or held in trust) on account of the principal of, premium,
if any, interest on or Liquidated Damages with respect to, the Securities before
all Senior Indebtedness is paid in full, such payment or distribution (subject
to the provisions of Article VII and Sections 12.6, 12.7 and 12.12) shall be
received and held in trust by the Trustee or such Holder or Paying Agent for the
benefit of the holders of such Senior Indebtedness, or their respective
representative, ratably according to the respective amounts of such Senior
Indebtedness held or represented by each, to the extent necessary to make
payment as provided herein of all such Senior Indebtedness remaining unpaid
after giving effect to all concurrent payments and distributions to or for the
holders of such Senior Indebtedness, but only to the extent that as to any
holder of such Senior Indebtedness, as promptly as practical following notice
from the Trustee to the holders of such Senior Indebtedness that such prohibited
payment has been received by the Trustee, Holder(s) or Paying Agent (or has been
segregated as provided above), such holder (or a representative therefor)
notifies the Trustee of the amounts then due and owing on such Senior
Indebtedness, if any, held by such holder and only the amounts specified in such
notices to the Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 12.4. Securityholders to Be Subrogated to Rights of Holders of
--------------------------------------------------------
Senior Indebtedness.
- --------------------
Subject to the payment in full of all Senior Indebtedness of the Company as
provided herein, the Holders of Securities shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of this
Article XII, which otherwise would have been made to the Holders shall, as
between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Article XII are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
54
<PAGE>
If any payment or distribution to which the Holders would otherwise have
been entitled but for the provisions of this Article XII shall have been
applied, pursuant to the provisions of this Article XII, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full.
SECTION 12.5. Obligations of the Company Unconditional.
-----------------------------------------
Nothing contained in this Article XII or elsewhere in this Indenture or in
the Securities is intended to or shall impair as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, interest
on, and Liquidated Damages with respect to, the Securities as and when the same
shall become due and payable in accordance with their terms, or is intended to
or shall affect the relative rights of the Holders and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article XII, of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy. Notwithstanding anything to the contrary in this
Article XII or elsewhere in this Indenture or in the Securities, upon any
distribution of assets of the Company referred to in this Article XII, the
Trustee, subject to the provisions of Sections 7.1 and 7.2, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or to
the Holders for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of 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 so long as such court has been apprised of the provisions
of, or the order, decree or certificate makes reference to, the provisions of
this Article XII. Nothing in this Section 12.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7 or otherwise for its
own benefit.
SECTION 12.6. Trustee and Other Agents Entitled to Assume Payments Not
--------------------------------------------------------
Prohibited in Absence of Notice.
- --------------------------------
The Trustee and all other Agents shall not at any time be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee unless and until a Trust Officer of the Trustee or
any Paying Agent shall have actually received, no later than one Business Day
prior to such payment, written notice thereof in compliance with Section 14.2
from the Company or from one or more holders 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 Sections 7.1 and 7.2, shall be
entitled in all respects conclusively to assume that no such fact exists.
SECTION 12.7. Application by Trustee of Assets Deposited with It.
---------------------------------------------------
55
<PAGE>
Amounts deposited in trust with the Trustee pursuant to and in accordance
with this Indenture shall be, subject to Section 7.7, for the sole benefit of
Securityholders and, to the extent allocated for the payment of Securities,
shall not be subject to the subordination provisions of this Article XII.
Otherwise, any deposit of assets with the Trustee or any other Agent (whether or
not in trust) for the payment of principal of or interest on any Securities
shall be subject to the provisions of Sections 12.1, 12.2, 12.3 and 12.4;
provided that, if prior to one Business Day preceding the date on which by the
- -------- ----
terms of this Indenture any such assets may become distributable for any purpose
(including, without limitation, the payment of either principal of or interest
on any Security) the Trustee or such Paying Agent shall not have received with
respect to such assets the written notice provided for in Section 12.6, then the
Trustee or such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were received,
without liability, and shall not be affected by any notice to the contrary which
may be received by it on or after such date.
SECTION 12.8. Subordination Rights Not Impaired by Acts or Omissions of the
-------------------------------------------------------------
Company or Holders of Senior Indebtedness.
- ------------------------------------------
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article XII shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
56
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SECTION 12.9. Securityholders Authorize Trustee to Effectuate Subordination
-------------------------------------------------------------
of Securities.
- --------------
Each Holder of the Securities by his acceptance thereof authorizes the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provisions contained in this Article XII and to
protect the rights of the Holders pursuant to this Indenture, and appoints the
Trustee his attorney-in-fact for such purpose, including, in the event of any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors of the Company), the immediate filing of a claim for
the unpaid balance of his Securities in the form required in said proceedings
and cause said claim to be approved. If the Trustee does not file a proper
claim or proof of debt in the form required in such proceeding prior to 30 days
before the expiration of the time to file such claim or claims, then the holders
of the Senior Indebtedness or their representative are or is hereby authorized
to have the right to file and are or is hereby authorized to file an appropriate
claim for and on behalf of the Holders of said Securities. Nothing herein
contained shall be deemed to authorize the Trustee or the holders of Senior
Indebtedness or their representative to authorize or consent to or accept or
adopt on behalf of any Securityholder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee or the holders of Senior Indebtedness or
their representative to vote in respect of the claim of any Securityholder in
any such proceeding.
SECTION 12.10. Right of Trustee to Hold Senior Indebtedness.
---------------------------------------------
The Trustee shall be entitled to all of the rights set forth in this
Article XII in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 12.11. Article XII Not to Prevent Events of Default.
---------------------------------------------
The failure to make a payment on account of principal of, premium, if any,
interest on, or Liquidated Damages with respect to, the Securities by reason of
any provision of this Article XII shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.1 or in any way
prevent the Holders from exercising any right hereunder other than the right to
receive payment on the Securities.
SECTION 12.12. No Duty of Trustee and Other Agents to Holders of Senior
--------------------------------------------------------
Indebtedness.
- -------------
The Trustee and the other Agents shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness, and shall not be liable to any such
holders (other than for its willful misconduct or negligence) if it shall in
good faith mistakenly pay over or distribute to the Holders of Securities or the
Company or any other Person, cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article XII or
otherwise. Nothing in this Section 12.12 shall affect the obligation of any
other such Person receiving such payment or
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distribution from the Trustee or any other Agent to hold such payment for the
benefit of, and to pay such payment over to, the holders of Senior Indebtedness
or their representative.
ARTICLE XIII.
CONVERSION OF SECURITIES
SECTION 13.1. Conversion Privilege.
---------------------
Subject to and upon compliance with the provisions of this Article XIII, at
the option of the Holder thereof, any Security may at any time, be converted, in
whole, or in part in multiples of $1,000 principal amount, into fully paid and
non-assessable shares of Common Stock issuable upon conversion of the
Securities, at the conversion price in effect at the Date of Conversion, until
and including, but not after the close of business on the Stated Maturity,
unless such Security or some portion thereof shall have been called for
redemption or delivered for repurchase prior to such date and no default is made
in making due provision for the payment of the Redemption Price in accordance
with the terms of this Indenture, in which case, with respect to such Security
or portion thereof as has been so called for redemption or delivered for
repurchase, such Security or portion thereof may be so converted until and
including, but not after, the close of business on the Business Day immediately
prior to the Redemption Date or Repurchase Date, as applicable, for such
Security, unless the Company subsequently fails to pay the applicable Redemption
Price or Repurchase Price, as the case may be.
SECTION 13.2. Exercise of Conversion Privilege.
---------------------------------
In order to exercise the conversion privilege, the Holder of any Security
to be converted shall surrender such Security to the Company at any time during
usual business hours at its office or agency maintained for the purpose as
provided in this Indenture, accompanied by a fully executed written notice, in
substantially the form set forth on the reverse of the Security, that the Holder
elects to convert such Security or a stated portion thereof constituting a
multiple of $1,000 principal amount, and, if such Security is surrendered for
conversion during the period between the close of business on any Record Date
and the opening of business on the next following Interest Payment Date and has
not been called for redemption on a Redemption Date which occurs within such
period, accompanied (except in the case of the Interest Payment Date occurring
on September 15, 2000) also by payment of an amount equal to the interest
payable on such Interest Payment Date on the principal amount of the Security
being surrendered for conversion, notwithstanding such conversion. Such notice
of conversion shall also state the name or names (with address) in which the
certificate or certificates for shares of Common Stock shall be issued.
Securities surrendered for conversion shall (if reasonably required by the
Company or the Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company duly
executed by, the Holder or his attorney duly authorized in writing. As promptly
as practicable after the receipt of such notice and the surrender of such
Security as aforesaid, the Company shall, subject to the provisions of Section
13.8 hereof, issue and deliver at such office or agency to such Holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable on
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such conversion of Securities in accordance with the provisions of this Article
XIII and Cash, as provided in Section 13.3 hereof, in respect of any fraction of
a share of Common Stock otherwise issuable upon such conversion. Such conversion
shall be deemed to have been effected immediately prior to the close of business
on the date (herein called the "Date of Conversion") on which such Security
shall have been surrendered as aforesaid, and the person or persons in whose
name or names any certificate or certificates for shares of Common Stock shall
be issuable upon such conversion shall be deemed to have become on the Date of
Conversion the holder or holders of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
- -------- -------
books of the Company shall be closed shall cause the person or persons in whose
name or names the certificate or certificates for such shares are to be issued
to be deemed to have become the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open but such conversion shall nevertheless be at the
conversion price in effect at the close of business on the date when such
Security shall have been so surrendered with the conversion notice. In the case
of conversion of a portion, but less than all, of a Security, the Company shall
as promptly as practicable execute, and the Trustee shall thereafter
authenticate and deliver to the Holder thereof, at the expense of the Company, a
Security or Securities in the aggregate principal amount of the unconverted
portion of the Security surrendered. Except as otherwise expressly provided in
this Indenture, no payment or adjustment shall be made for interest accrued on
any Security (or portion thereof) converted or for dividends or distributions on
any Common Stock issued upon conversion of any Security.
SECTION 13.3. Fractional Interests.
---------------------
No fractions of shares or scrip representing fractions of shares shall be
issued upon conversion of Securities. If more than one Security shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Securities so surrendered. If
any fraction of a share of Common Stock would, except for the foregoing
provisions of this Section 13.3, be issuable on the conversion of any Security
or Securities, the Company shall make payment in lieu thereof in an amount of
Cash equal to the value of such fraction computed on the basis of the last sale
price of the Common Stock as reported on the American Stock Exchange (or if not
listed for trading thereon, then on the principal national securities exchange
or on the principal automated quotation system on which the Common Stock is
listed or admitted to trading) at the close of business on the Date of
Conversion or if no such sale takes place on such day, the last sale price for
such day shall be the average of the closing bid and asked prices regular way on
the American Stock Exchange (or if not listed for trading thereon, on the
principal national securities exchange or on the principal automated quotation
system on which the Common Stock is listed or admitted to trading) for such day
(any such last sale price being hereinafter referred to as the "Last Sale
Price"). If on such Trading Day the Common Stock is not quoted by any such
organization, the fair value of such Common Stock on such day, as reasonably
determined in good faith by the Board of Directors of the Company, shall be
used.
SECTION 13.4. Conversion Price.
-----------------
The conversion price per share of Common Stock issuable upon conversion of
the Securities (as such price may be adjusted, herein called the "Conversion
Price") shall initially be $47.25 (which
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reflects a conversion rate of 21.164 shares of Common Stock per $1,000 in
principal amount of Securities).
SECTION 13.5. Adjustment of Conversion Price.
-------------------------------
The Conversion Price shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall make or pay a dividend or make a
distribution in shares of Common Stock on any class of Capital Stock of the
Company, the Conversion Price in effect immediately following the record date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such 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 such date and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution. An adjustment made pursuant to this
subsection (a) shall become effective immediately, except as provided in
subsection (i) and (j) below, after such record date.
(b) In case the Company shall (1) subdivide its outstanding shares of
Common Stock into a greater number of shares or (2) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately following the effectiveness of such
action shall be adjusted by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and the denominator shall
be the number of shares outstanding immediately after giving effect to such
subdivision or combination. An adjustment made pursuant to this subsection (b)
shall become effective immediately, except as provided in subsection (i) and (j)
below, after the effective date of a subdivision or combination.
(c) In case the Company shall issue rights, options or warrants to
all or substantially all holders of Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the then
current market price per share of the Common Stock (as determined pursuant to
subsection (g) below) on the record date fixed for determination of the
stockholders entitled to receive such rights, option or warrants, the Conversion
Price in effect immediately following such record date shall be adjusted to a
price, computed to the nearest cent, so that the same shall equal the price
determined by multiplying:
(i) such Conversion Price by a fraction, of which
(ii) the numerator shall be (A) the number of shares of Common Stock
outstanding on such record date plus (B) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise
price of such rights, options or warrants and dividing the product so
obtained by such current market price), and of which
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(iii) the denominator shall be (A) the number of shares of Common
Stock outstanding on such record date plus (B) the number of additional
shares of Common Stock which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as provided in
subsection (i) and (j) below, after the record date for the determination of
holders entitled to receive such rights, options or warrants; provided, however,
-------- -------
that if any such rights, options or warrants issued by the Company as described
in this subsection (c) are only exercisable upon the occurrence of certain
triggering events, then the Conversion Price will not be adjusted as provided in
this subsection (c) until such triggering events occur. Upon the expiration or
termination of any rights, options or warrants without the exercise of such
rights, options or warrants, the Conversion Price then in effect shall be
adjusted immediately to the Conversion Price which would have been in effect at
the time of such expiration or termination had such rights, options or warrants,
to the extent outstanding immediately prior to such expiration or termination,
never been issued.
(d) In case the Company or any Subsidiary of the Company shall
distribute to all or substantially all holders of Common Stock, any of its
assets, evidences of indebtedness, cash or securities (other than (x) dividends
or distributions exclusively in cash, (y) any dividend or distribution for which
an adjustment is required to be made in accordance with subsection (a) or (c)
above and in mergers and consolidations to which Section 13.6 applies, or (z)
any distribution of rights or warrants subject to subsection (l) below) then in
each such case the Conversion Price in effect immediately following the record
date fixed for the determination of the stockholders entitled to such
distribution shall be adjusted so that the same shall equal the price determined
by multiplying such Conversion Price by a fraction of which the numerator shall
be the then current market price per share of the Common Stock (determined as
provided in subsection (g) below) on such record date less the then fair market
value (as reasonably determined in good faith by the Board of Directors of the
Company) of the portion of the assets so distributed applicable to one share of
Common Stock, and of which the denominator shall be such current market price
per share of the Common Stock. Such adjustment shall become effective
immediately, except as provided in subsection (i) and (j) below, after the
record date for the determination of stockholders entitled to receive such
distribution.
(e) In case the Company or any Subsidiary of the Company shall make
any distribution consisting exclusively of cash (excluding any cash portion of
distributions for which an adjustment is required to be made in accordance with
subsection (d) above, or cash distributed upon a merger or consolidation to
which Section 13.6 applies) to all or substantially all holders of Common Stock
in an aggregate amount that, combined together with (i) all other such all-cash
distributions made within the then preceding 12 months in respect of which no
adjustment pursuant to this subsection (e) has been made and (ii) any cash and
the fair market value of other consideration paid or payable in respect of any
tender or exchange offer by the Company or any of its Subsidiaries for Common
Stock concluded within the preceding 12 months in respect of which no adjustment
has been made, exceeds 15% of the Company's market capitalization (defined as
being the product of the then current market price of the Common Stock
(determined as provided in subsection (g) below) times the number of shares of
Common Stock then outstanding) on the record date fixed for the determination of
the stockholders entitled to such distribution, in each such case the Conversion
Price immediately following such record date shall be adjusted so that the same
shall equal the price
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determined by multiplying such Conversion Price by a fraction of which the
numerator shall be the then current market price per share of the Common Stock
on such record date less the amount of the cash and/or fair market value (as
reasonably determined in good faith by the Board of Directors of the Company) of
other consideration so distributed applicable to one share of Common Stock, and
of which the denominator shall be such current market price per share of the
Common Stock. Such adjustment shall become effective immediately, except as
provided in subsection (i) and (j) below, after the record date for the
determination of stockholders entitled to receive such distribution.
(f) In case the Company or any Subsidiary of the Company shall
complete a tender or exchange offer for all or any portion of the Common Stock
(any such tender or exchange offer being referred to as an "Offer") that
involves an aggregate consideration having a fair market value as of the
expiration of such Offer (the "Expiration Time") that, together with (i) any
cash and the fair market value of any other consideration payable in respect of
any other tender or exchange offer, as of the expiration of such other tender or
exchange offer, expiring within the 12 months preceding the expiration of such
Offer and in respect of which no Conversion Price adjustment pursuant to this
subsection (f) has been made and (ii) the aggregate amount of any all-cash
distributions referred to in subsection (e) of this Section 13.5 to all holders
of Common Stock within the 12 months preceding the expiration of such Offer for
which no conversion price adjustment pursuant to such subsection (e) has been
made, exceeds 15% of the product of the then current market price per share
(determined as provided in subsection (g) below) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, the Conversion Price in
effect immediately following such Expiration Time shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator shall be
(i) the product of the then current market price per share (determined as
provided in subsection (g) below) of the Common Stock on the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time minus (ii) the fair market value of the aggregate
consideration payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the Offer) of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed so accepted being
referred to as the "Purchased Shares") and the denominator shall be the product
of (i) such current market price per share on the Expiration Time times (ii)
such number of outstanding shares on the Expiration Time less the number of
Purchased Shares, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.
For purposes of this subsection (f), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.
(g) For the purpose of any computation under subsections (c), (d), (e)
and (f) above, the current market price per share of Common Stock on any date
shall be deemed to be the average of the Last Sale Prices of a share of Common
Stock for the five consecutive Trading Days selected by the Company commencing
not more than 20 Trading Days before, and ending not later than, the earlier of
the date in question and the date before the "'ex' date," with respect to the
issuance, distribution or Offer requiring such computation. If on any such
Trading Day the Common Stock is not quoted by any organization referred to in
the definition of Last Sale Price in Section 13.3 hereof,
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the fair value of the Common Stock on such day, as reasonably determined in good
faith by the Board of Directors of the Company, shall be used. For purposes of
this paragraph, the term "'ex' date," when used with respect to any issuance,
distribution or payments with respect to an Offer, means the first date on which
the Common Stock trades regular way on the American Stock Exchange (or if not
listed or admitted to trading thereon, then on the principal national securities
exchange or the Nasdaq Stock Market's National Market if the Common Stock is
listed or admitted to trading thereon) without the right to receive such
issuance, distribution or Offer.
(h) In addition to the foregoing adjustments in subsections (a), (b),
(c), (d), (e) and (f) above, the Company, from time to time and to the extent
permitted by law, may reduce the Conversion Price by any amount for at least 20
Business Days, if the Board of Directors has made a determination, which
determination shall be conclusive, that such reduction would be in the best
interests of the Company. The Company shall cause notice of such reduction to
be mailed to each Holder of Securities, in the manner specified in Section 13.7,
at least 15 days prior to the date on which such reduction commences. The
Company may, at its option, also make such reductions in the Conversion Price in
addition to those set forth above, as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of shares of Common Stock resulting
from any dividend or distribution of stock (or rights to acquire stock) or from
any event treated as such for United States federal income tax purposes.
(i) In any case in which this Section 13.5 shall require that an
adjustment be made immediately following a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Security converted after such record
date and on and before such adjustment shall have become effective (i) defer
paying any Cash payment pursuant to Section 13.3 hereof or issuing to the Holder
of such Security the number of shares of Common Stock and other capital stock of
the Company (or other assets or securities) issuable upon such conversion in
excess of the number of shares of Common Stock and other Capital Stock of the
Company issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (ii) not later than five Business Days after such adjustment
shall have become effective, pay to such Holder the appropriate Cash payment
pursuant to Section 13.3 hereof and issue to such Holder the additional shares
of Common Stock and other Capital Stock of the Company issuable on such
conversion.
(j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1.0% of the
Conversion Price; provided, that any adjustments which by reason of this
--------
subsection (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
XIII shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(k) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly (i) file with the Trustee and each conversion agent an
Officers' Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment,
which certificate shall be conclusive evidence of the correctness of such
adjustment,
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and (ii) mail or cause to be mailed a notice of such adjustment to each holder
of Securities at his address as the same appears on the registry books of the
Company.
(l) In the event that the Company distributes rights or warrants
(other than those referred to in subsection (c) above) pro rata to holders of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Company shall make proper provision so that the
Holder of any Note surrendered for conversion will be entitled to receive upon
such conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of rights or warrants to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same number of
rights or warrants to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the rights or
warrants, and (ii) if such conversion occurs after such Distribution Date, the
same number of rights or warrants to which a holder of the number of shares of
Common Stock into which the principal amount of such Note so converted was
convertible immediately prior to such Distribution Date would have been entitled
on such Distribution Date in accordance with the terms and provisions of and
applicable to the rights or warrants.
SECTION 13.6. Continuation of Conversion Privilege in Case of
-----------------------------------------------
Reclassification, Change, Merger, Consolidation or Sale of Assets.
- -----------------------------------------------------------------
If any of the following shall occur, namely: (a) any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of the
Securities (other than a change in par value, or from par value to no par value,
or from no par value, to par value, or as a result of a subdivision or
combination), (b) any consolidation or merger of the Company with or into any
other Person, or the merger of any other Person with or into the Company (other
than a merger which does not result in any reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock) or (c) any sale,
transfer or conveyance of all or substantially all of the assets of the Company
(computed on a consolidated basis), then the Company, or such successor or
purchasing entity, as the case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale or conveyance, execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then outstanding shall have the right to convert such Security
only into the kind and amount of shares of stock and other securities and
property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale, transfer or conveyance by a holder of the number of
shares of Common Stock issuable upon conversion of such Security immediately
prior to such reclassification, change, consolidation, merger, sale, transfer or
conveyance assuming such holder of Common Stock of the Company failed to
exercise his rights of an election, if any, as to the kind or amount of
securities, cash and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance (provided that if
--------
the kind or amount of securities, cash, and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance is
not the same for each share of Common Stock of the Company held immediately
prior to such reclassification, change, consolidation, merger, sale, transfer or
conveyance in respect of which such rights of election shall not have been
exercised ("non-electing share"), then for the purpose of this Section 13.6 the
kind and amount of securities, cash and
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other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance by each non-electing share shall be deemed
to be the kind and amount so receivable per share by a plurality of the non-
electing shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article III. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of shares of Common Stock
includes shares of stock or other securities and property (including cash) of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders of the
Securities as the Board of Directors of the Company shall reasonably consider
necessary by reason of the foregoing. The provisions of this Section 13.6 shall
similarly apply to successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be mailed
to each Holder of Securities at his address as the same appears on the registry
books of the Company.
Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by Holders of
Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or conveyance or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Article VIII hereof, may accept as conclusive evidence of the correctness of any
such provisions, and shall be protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee prior
to the execution of any such supplemental indenture) with respect thereto.
SECTION 13.7. Notice of Certain Events.
------------------------
In case:
(a) the Company shall declare a dividend (or any other
distribution) payable to the holders of Common Stock (other than cash
dividends);
(b) the Company shall authorize the granting to the holders of
Common Stock of rights, warrants or options to subscribe for or purchase any
shares of stock of any class or of any other rights;
(c) the Company shall authorize any reclassification or change of
the Common Stock (including a subdivision or combination of its outstanding
shares of Common Stock), or any consolidation or merger to which the Company is
a party and for which approval of any stockholders of the Company is required,
or the sale or conveyance of all or substantially all the property or business
of the Company;
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(d) there shall be proposed any voluntary or involuntary
dissolution, liquidation or winding-up of the Company; or
(e) the Company or any of its Subsidiaries shall complete an Offer;
then, the Company shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Securities as provided in Section 13.2 hereof,
and shall cause to be mailed to each Holder of Securities, at his address as it
shall appear on the registry books of the Company, at least 20 days before the
date hereinafter specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice stating the date on
which (1) a record is expected to be taken for the purpose of such dividend,
distribution, rights, warrants or options or Offer, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights, warrants or options or to participate in
such Offer are to be determined, or (2) such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up
is expected to become effective and the date, if any is to be fixed, 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 or other property
deliverable upon such reclassification, change, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding-up.
SECTION 13.8. Taxes on Conversion.
-------------------
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant thereto; provided, however,
-------- -------
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the Holder of the Securities to be converted
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery 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. The Company extends no protection with respect to any other taxes
imposed in connection with conversion of Securities.
SECTION 13.9. Company to Provide Stock.
------------------------
The Company shall reserve, free from pre-emptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Securities from time to time as such Securities are presented for
conversion, provided, that nothing contained herein shall be construed to
--------
preclude the Company from satisfying its obligations in respect of the
conversion of Securities by delivery of repurchased shares of Common Stock which
are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the purpose of conversion
of Securities hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible use its best efforts to
secure such
66
<PAGE>
registration or approval, as the case may be, provided, however, that nothing in
-------- -------
this Section 13.9 shall be deemed to limit in any way the obligations of the
Company provided in this Article XIII.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be issued
upon conversion of Securities will upon issue be fully paid and non-assessable
by the Company and free of preemptive rights.
SECTION 13.10. Disclaimer of Responsibility for Certain Matters.
------------------------------------------------
Neither the Trustee nor any agent of the Trustee shall at any time be under
any duty or responsibility to any Holder of Securities to determine whether any
facts exist which may require any adjustment of the Conversion Price, or with
respect to the Officers' Certificate referred to in Section 13.5 hereof, or with
respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. Neither the Trustee nor any agent
of the Trustee shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities or
property (including cash), which may at any time be issued or delivered upon the
conversion of any Security; and neither the Trustee nor any conversion agent
makes any representation with respect thereto. Neither the Trustee nor any
agent of the Trustee shall be responsible for any failure of the Company to
issue, register the transfer of or deliver any shares of Common Stock or stock
certificates or other securities or property (including cash) upon the surrender
of any Security for the purpose of conversion or, subject to Article VIII
hereof, to comply with any of the covenants of the Company contained in this
Article XIII.
SECTION 13.11. Return of Funds Deposited for Redemption of Converted
-----------------------------------------------------
Securities.
- ----------
Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other Paying Agent for the purpose of paying
the principal of and interest on any of the Securities and which shall not be
required for such purposes because of the conversion of such Securities, as
provided in this Article XIII, shall after such conversion be repaid to the
Company by the Trustee or such other Paying Agent.
ARTICLE XIV.
MISCELLANEOUS
SECTION 14.1. TIA Controls.
------------
67
<PAGE>
If any provision of this Indenture limits, qualifies, or conflicts with the
duties imposed by operation of the TIA, the imposed duties, whether or not this
Indenture has been qualified under the TIA, shall control.
SECTION 14.2. Notices.
-------
Any notices or other communications to the Company or the Trustee required
or permitted hereunder shall be in writing, and shall be sufficiently given if
made by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: John Dane III
Telecopy: (601) 897-4866
if to the Trustee:
U. S. Trust Company of Texas, N.A.
2001 Ross Avenue
Suite 2100
Dallas, Texas 75201
Attention: Corporate Trust Division
Telecopy: (214) 754-1303
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it except for notices and
communications to the Trustee which shall be effective only upon actual receipt
thereof.
SECTION 14.3. Communications by Holders with Other Holders.
--------------------------------------------
68
<PAGE>
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA (S) 312(c).
SECTION 14.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) An Officers' Certificate (in form and substance reasonably satisfactory
to the Trustee) stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably satisfactory to
the Trustee) stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 14.5. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided, however,
-------- -------
that with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 14.6. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
SECTION 14.7. Legal Holidays.
---------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York or Dallas, Texas are authorized or obligated
by law or executive order to close. If
69
<PAGE>
a payment date is a Legal Holiday at such place, payment may be made at such
place on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
SECTION 14.8. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
SECTION 14.9. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 14.10. No Recourse Against Others.
--------------------------
No direct or indirect partner, employee, stockholder, director or officer,
as such, past, present or future of the Company or any successor corporation,
shall have any personal liability in respect of the obligations of the Company
under the Securities or this Indenture by reason of his, her or its status as
such partner, stockholder, employee, director or officer. Each Securityholder
by accepting a Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 14.11. Successors.
----------
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
70
<PAGE>
SECTION 14.12. Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 14.13. Severability.
------------
In case any one or more of the provisions in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 14.14. Table of Contents, Headings, Etc.
--------------------------------
The Table of Contents, Cross-Reference Table and headings of the Articles
and the Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 14.15. Qualification of Indenture.
--------------------------
The Company shall qualify this Indenture under the TIA in accordance with
the terms and conditions of the Registration Rights Agreement and shall pay all
costs, fees and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith, including, but not limited to, costs,
fees and expenses of qualification of the Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 14.16. Registration Rights.
-------------------
Certain Holders of the Securities are entitled to certain registration
rights with respect to such Securities pursuant to, and subject to the terms of,
the Registration Rights Agreement.
71
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
HALTER MARINE GROUP, INC, a Delaware
corporation
By: /s/ Keith L. Voigts
--------------------------------------
Name: Keith L. Voigts
Title: Senior Vice President
U. S. TRUST COMPANY OF TEXAS, N.A., as
Trustee
By: /s/ Bill Barber
--------------------------------------
Name: Bill Barber
Title: Vice President
72
<PAGE>
EXHIBIT A
---------
[FORM OF SECURITY]
HALTER MARINE GROUP, INC.
4 1/2% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
No. __ CUSIP No.
--------------
$
-------------
Halter Marine Group, Inc., a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
___________________________________________________, or registered assigns, the
principal sum of ___________ Dollars, on September 15, 2004.
Interest Payment Dates: March 15 and September 15; commencing March 15,
1998.
Record Dates: March 1 and September 1.
Reference is made to the further provisions of this Security hereinafter
set forth, which will, for all purposes, have the same effect as if set forth at
this place.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed under its corporate seal.
HALTER MARINE GROUP, INC., a Delaware
corporation
[Seal]
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
Attest:
---------------------
Assistant Secretary
A-2
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned Indenture.
U.S. TRUST COMPANY OF TEXAS, N.A., as
Trustee
By:
--------------------------------------
Authorized Signatory
Dated: September 15, 1997
A-3
<PAGE>
HALTER MARINE GROUP, INC.
4 1/2% Convertible Subordinated Note
due 2004
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by The
Depository Trust Company, a New York Corporation ("Depositary"), to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Unless this
certificate is presented by an authorized representative of the Depository to
the Company or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of the Depositary (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein./1/
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) (A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT (AN "IAI"), OR (C) IT IS ACQUIRING THIS SECURITY
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHO THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (C) TO AN IAI THAT,
PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS
SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF THE
COMPANY SO REQUESTS, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S
UNDER THE SECURITIES ACT, (E) IN A
- ------------------------------
/1/ This paragraph should only be added if the Security is issued in global
form.
A-4
<PAGE>
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO
THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING./2/
1. Interest.
--------
Halter Marine Group, Inc., a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Security
at the rate of 4 1/2% per annum. To the extent it is lawful, the Company
promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of 4 1/2% per annum compounded semi-annually.
The Company will pay interest semi-annually in cash in arrears on March 15
and September 15 of each year (each, an "Interest Payment Date"), commencing
March 15, 1998. Interest on the Securities will accrue from the most recent
date to which interest has been paid or, if no interest has been paid on the
Securities, from September 15, 1997. Interest will be computed on the basis of
a 360-day year consisting of twelve 30-day months.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders
must surrender Securities to a Paying Agent to collect principal payments. Any
such interest not so punctually paid, and defaulted interest relating thereto,
may be paid to the Persons who are registered Holders at the close of business
on a Special Record Date for the payment of such defaulted interest, as more
fully provided in the Indenture referred to below. Except as provided below, the
Company shall pay principal and interest in such coin or currency of the United
States of America as at the time of payment shall be legal tender for payment of
public and private debts ("U.S. Legal Tender"). The Securities will be payable
as to principal, premium, interest and Liquidated Damages at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or at the option of the Company, payment of principal,
premium, interest and Liquidated Damages may be made by check mailed to the
Holders at their
- ---------------------
/2/ This paragraph should be included only for the Transfer Restricted
Securities.
A-5
<PAGE>
addresses set forth in the registry of Holders, and provided that, upon the
request of The Depository Trust Company, a New York corporation (the
"Depositary"), payment by wire transfer of immediately available funds will be
required with respect to principal of, premium and interest on and Liquidated
Damages with respect to Global Securities and all other Securities held of
record by the Depositary, or its nominee, if the Depositary shall have provided
wire transfer instructions to the Company or the Paying Agent.
3. Paying Agent and Registrar.
--------------------------
U.S. Trust Company of Texas, N.A. (the "Trustee") will act as Paying Agent
and Registrar. The Company may change any Paying Agent, Registrar or co-
Registrar without notice to the Holders. The Company or any of its Subsidiaries
may, subject to certain exceptions, act as Paying Agent, Registrar or co-
Registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated as of September
15, 1997 (as amended or supplemented from time to time the "Indenture"), between
the Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act, as in effect on the date of the Indenture. The
Securities are subject to all such terms, and Holders of Securities are referred
to the Indenture and said Act for a statement of them. The Securities are
general unsecured obligations of the Company limited in aggregate principal
amount to $185,000,000.
5. Redemption.
----------
The Securities may be redeemed in whole or from time to time in part at any
time on and after September 15, 2000, at the option of the Company, at the
Redemption Price (expressed as a percentage of principal amount) set forth below
with respect to the indicated Redemption Date, in each case, plus any accrued
but unpaid interest and Liquidated Damages to the Redemption Date. The
Securities may not be so redeemed prior to September 15, 2000.
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning on September 15 Redemption Price
------------------------- ----------------
<S> <C>
2000............................. 102.57%
2001............................. 101.93%
2002............................. 101.28%
2003............................. 100.64%
2004............................. 100.00%
</TABLE>
Any such redemption will comply with Article III of the Indenture.
A-6
<PAGE>
6. Notice of Redemption.
--------------------
Notice of redemption will be sent by first class mail, at least 30
days and not more than 60 days prior to the Redemption Date to the Holder of
each Security to be redeemed at such Holder's last address as then shown upon
the registry books of the Registrar. Securities may be redeemed in part in
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent on such Redemption Date and payment of
the Securities called for redemption is not prohibited under Article XII of the
Indenture, the Securities called for redemption will cease to bear interest and
the only right of the Holders of such Securities will be to receive payment of
the Redemption Price, plus any accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date.
7. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
---------------------
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal, interest or Liquidated Damages
remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay
the money back to the Company at its written request. After that, all liability
of the Trustee and such Paying Agent(s) with respect to such money shall cease.
10. Amendment; Supplement; Waiver.
-----------------------------
Subject to specified exceptions, the Indenture or the Securities may
be amended or supplemented, and any existing Default or Event of Default or
compliance with any provision may be waived, with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding. Without notice to or consent of any Holder, the parties thereto
may amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, or make any other change that does
not adversely affect the rights of any Holder of a Security.
A-7
<PAGE>
11. Conversion Rights.
-----------------
Subject to the provisions of the Indenture, the Holders have the right
to convert the principal amount of the Securities into fully paid and
nonassessable shares of Common Stock of the Company at the initial conversion
price per share of Common Stock of $47.25 (which reflects a conversion rate of
21.164 shares of Common Stock per $1,000 in principal amount of Securities ), or
at the adjusted conversion price then in effect, if adjustment has been made as
provided in the Indenture, upon surrender of the Security to the Company,
together with a fully executed notice in substantially the form attached hereto
and, if required by the Indenture, an amount equal to accrued interest payable
on such Security.
12. Ranking.
-------
Payment of principal, premium, if any, interest on and Liquidated
Damages with respect to the Securities is subordinated, in the manner and to the
extent set forth in the Indenture, to the prior payment in full of all Senior
Indebtedness.
13. Repurchase at Option of Holder Upon a Change of Control.
-------------------------------------------------------
If there is a Change of Control, the Company shall be required,
subject to the provisions of the Indenture, to offer to purchase on the
Repurchase Date all outstanding Securities at a purchase price equal to 100% of
the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the Repurchase Date. Holders of Securities will receive a
Repurchase Offer from the Company prior to any related Repurchase Date and may
elect to have such Securities purchased by completing the form entitled "Option
of Holder to Elect Purchase" appearing below.
14. Successors.
----------
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
15. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing (other than as Event
of Default relating to certain events of bankruptcy, insolvency or
reorganization), then in every such case, unless the principal of all of the
securities shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of Securities then outstanding may
declare all the Securities to be due and payable immediately in the manner and
with the effect provided in the Indenture. Holders of Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of a
majority in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event of
Default
A-8
<PAGE>
(except a Default in payment of principal, interest or Liquidated Damages), if
it determines that withholding notice is in their interest.
16. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
17. No Recourse Against Others.
--------------------------
No stockholder, director, officer or employee, as such, past, present
or future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the Securities or
the Indenture by reason of his, her or its status as such stockholder, director,
officer or employee. Each Holder of a Security by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
18. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.
19. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with right of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gifts
to Minors Act).
20. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
21. Additional Rights of Holders of Transfer Restricted Securities.
--------------------------------------------------------------
In addition to the rights provided to Holders of Securities under the
Indenture, Holders of Securities shall have all the rights set forth in the
Registration Rights Agreement.
A-9
<PAGE>
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Request may be made to:
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Attention: Secretary
A-10
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
- -----------------------------
and irrevocably appoint _______________ agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Dated: Signed:
------------------------- -----------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guaranty:
-----------------------------
Signatures must be guarantied by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guaranty program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Article XI of the Indenture, check the box: [_]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Article XI of the Indenture, state the amount you want to be
purchased: $__________
Date: Signature:
----------------------- -----------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guaranty:
--------------------------------
Signatures must be guarantied by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guaranty program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES/3/
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized officer
Principal Amount Principal Amount Security following of Trustee or
Date of of this Global of this Global such decrease (or Securities
Exchange Security Security increase) Custodian
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------------------------
/3/ This schedule should only be added if the Security is issued in global
form.
A-13
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2004 OF HALTER MARINE GROUP, INC.
This Certificate relates to $______ principal amount of Securities held in
*_______ book-entry or * __________ definitive form by _________ (the
"Transferor").
1. The Transferor:*
[_] (a) has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
[_] (b) has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
2. In connection with any such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act because:*
[_] (a) Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or
Section 2.6(d)(i)(A) of the Indenture).
[_] (b) Such Security is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) purchasing for its own account or for the
account of a qualified institutional buyer over which it exercises sole
investment discretion that is aware that the transfer is being made in reliance
on Rule 144A (in satisfaction of Section 2.6(a)(ii)(B), Section 2.6(b)(i)(x) or
Section 2.6(d)(i)(B) of the Indenture).
[_] (c) Such Security is being transferred in accordance with Regulation S
under the Securities Act (in satisfaction of Section 2.6(a)(ii)(D), Section
2.6(b)(i)(y) or Section 2.6(d)(i)(D) of the Indenture). If requested by either
the Company or the Trustee, an Opinion of Counsel to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate (in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of
the Indenture).
- -----------------------------
* Check applicable box.
A-14
<PAGE>
[_] (d) Such Security is being transferred to an institutional investor that
is an "accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7)
under the Securities Act which delivers a certificate in the form of Exhibit B
to the Indenture to the Trustee (in satisfaction of Section 2.6(a)(ii)(C) or
Section 2.6(d)(i)(C) of the Indenture), and an opinion of counsel, if the
Company or the Trustee so requests.
[_] (e) Such Security is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the Securities Act.
If requested by either the Company or the Trustee, an Opinion of Counsel to the
effect that such transfer does not require registration under the Securities Act
accompanies this Certificate (in satisfaction of Section 2.6(a)(ii)(E) or
Section 2.6(d)(i)(E) of the Indenture).
---------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------------------------
Date:
-----------------------------
3. Affiliation with the Company [check if applicable]
[_] (a) The undersigned represents and warrants that it is, or at some time
during which it held this Security was, an Affiliate of the Company.
(b) If 3(a) above is checked and if the undersigned was not an Affiliate
---
of the Company at all times during which it held this Security,
indicate the periods during which the undersigned was an Affiliate of
the Company:
.
------------------------------------------
(c) If 3(a) above is checked and if the Transferee will not pay the full
---
purchase price for the transfer of this Security on or prior to the
date of transfer indicate when such purchase price will be paid:
.
------------------------------------------
A-15
<PAGE>
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:
------------------------- ----------------------------------------
NOTICE: To be executed by an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is not a "U.S. Person" (as
defined in Regulation S under the Securities Act of 1933, as amended).
Dated:
------------------------- ----------------------------------------
NOTICE: To be executed by an officer.
If none of the boxes under Section 2 of this certificate is checked or if any of
the above representations required to be made by the Transferee is not made, the
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:
------------------------- ----------------------------------------
NOTICE: The signature of the Holder to
this assignment must correspond
with the name as written upon
the face of this Security
particular, without alteration
or enlargement or any change
whatsoever.
A-16
<PAGE>
EXHIBIT B
---------
Accredited Investor Letter
Halter Marine Group, Inc.
c/o the Trustee
Ladies and Gentlemen:
This letter is delivered by the undersigned to request a transfer of
$________ principal amount of the 4 1/2% Convertible Subordinated Notes due 2004
(the "Notes") of Halter Marine Group, Inc. (the "Company"). The Notes are
described in that certain Offering Memorandum (the "Offering Memorandum") dated
September 9, 1997 relating to the offering of the Notes. We acknowledge receipt
of the Offering Memorandum and acknowledge that we have read the Offering
Memorandum, have had access to such financial and other information and have
been afforded the opportunity to ask such questions of representatives of the
Company and receive answers thereto, as we deem necessary in connection with our
decision to purchase the Notes.
Upon transfer the Notes would be registered in the name of the undersigned:
Name:
----------------------------------------------------------------------
Address:
-------------------------------------------------------------------
Taxpayer ID Number:
--------------------------------------------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the Notes for
investment purposes and not with a view to, or for offer or sale in connection
with any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risk of our investment in the Notes and invest in or
purchase securities similar to the Notes in the normal course of our business,
and we, and any account for which we are acting, are each able to bear the
economic risk of our or its investment. We confirm that neither the Company nor
any person acting on its behalf has offered to sell the Notes by, and that we
have not been made aware of the offering of the Notes by, any form
B-1
<PAGE>
of general solicitation or general advertising, including, but not limited to,
any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio.
2. We understand that the Notes and the Common Stock issuable upon
conversion of the Notes (the Notes and such Common Stock are collectively
referred to herein as the "Restricted Securities") have not been registered
under the Securities Act, or any state securities laws, and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Notes that such Restricted Securities are "restricted securities"
within the meaning of Rule 144 under the Securities Act and to offer, sell or
otherwise transfer such Restricted Securities prior to the date which is two
years after the date of original issue (the "Resale Restriction Termination
Date") only (a) to the Company or any of its subsidiaries, (b) so long as the
Restricted Securities are eligible for resale pursuant to Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A under the Securities Act (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (c) to an institutional
"accredited investor," within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, that is purchasing for its own account or for the
account of an institutional "accredited investor," (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) in a transaction meeting the requirements of
Rule 144 under the Securities Act, (f) pursuant to any other available exemption
from the registration requirements of the Securities Act, or (g) pursuant to a
registration statement that has been declared effective under the Securities
Act, subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Restricted Securities is proposed to be made pursuant to
clause (c) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the trustee (the "Trustee") under the
indenture, dated as of September 15, 1997 between the Company and the Trustee
relating to the Notes, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Restricted Securities for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer,
prior to the Resale Restriction Termination Date, of the Restricted Securities
pursuant to clause (c), (d) or (f) above to require the delivery of an opinion
of counsel, certifications and/or other information satisfactory to the Company
and the Trustee.
3. We understand that the Notes will be in the form of definitive
physical certificates bearing the legend set forth in clause (5) in the "Notice
to Investors" section of the Offering Memorandum.
B-2
<PAGE>
We acknowledge that you, the Initial Purchasers and others will rely upon
our confirmations, acknowledgments and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations and warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
------------------------------------------
By:
---------------------------------------
B-3
<PAGE>
EXHIBIT C
---------
FORM OF CONVERSION NOTICE
-------------------------
TO: Halter Marine Group, Inc.
The undersigned owner of this Security hereby: (i) irrevocably exercises
the option to convert this Security, or the portion hereof below designated, for
shares of Common Stock of Halter Marine Group, Inc. in accordance with the terms
of this Indenture referred to in this Security and (ii) directs that such shares
of Common Stock deliverable upon the conversion, together with any check in
payment for fractional shares and any Security(ies) representing any unconverted
principal amount hereof, be issued and delivered to the registered holder hereof
unless a different name has been indicated below. If shares are to be delivered
registered in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto. Any amount required to
be paid by the undersigned on account of interest accompanies this Security.
Dated:
---------------------
------------------------------------------
Signature
Fill in for registration of shares if to be delivered, and of Securities if
to be issued, otherwise than to and in the name of the registered holder.
------------------------------------------
Social Security or other
Taxpayer Identifying Number
- -------------------------------------
(Name)
- -------------------------------------
(Street Address)
- -------------------------------------
(City, State and Zip Code)
(Please print name and address)
Principal amount to be converted:
(if less than all)
$
------------------------------------------
<PAGE>
EXHIBIT 4.2
4 1/2% CONVERTIBLE SUBORDINATED NOTES DUE 2004
REGISTRATION RIGHTS AGREEMENT
Dated as of September 15, 1997
by and among
HALTER MARINE GROUP, INC.
as the Company
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
and
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
as Purchasers
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of
September 15, 1997, by and among Halter Marine Group, Inc., a Delaware
corporation (the "Company"), and Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
September 9, 1997, among the Company and the Purchasers (the "Purchase
Agreement"). In order to induce the Purchasers to enter into the Purchase
Agreement, the Company has agreed to provide the registration rights provided
for in this Agreement to the Purchasers and their respective direct and indirect
transferees. The execution of this Agreement is a condition to the closing of
the transactions contemplated by the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the
following meanings:
Affiliate: of any specified person shall mean any other person
---------
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified person. For the purposes of this definition,
"control," when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
Agreement: This Registration Rights Agreement, as the same may be
---------
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday
------------
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
Closing Date: The Closing Date as defined in the Purchase Agreement.
------------
Common Stock: Common Stock, $.01 par value per share, of the Company.
------------
Company: Halter Marine Group, Inc., a Delaware corporation, and any
-------
successor corporation thereto.
controlling person: As defined in Section 6(a) hereof.
------------------
Damage Payment Date: Each of the semi-annual interest payment dates
-------------------
provided in the Indenture.
Effectiveness Period: As defined in Section 2(a) hereof.
--------------------
Effectiveness Target Date: The 180th day following the Closing Date.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated by the SEC thereunder.
Filing Date: The 90th day after the Closing Date.
-----------
Holder: Each registered holder of any Transfer Restricted Securities.
------
<PAGE>
Indemnified Person: As defined in Section 6(a) hereof.
------------------
Indenture: The Indenture, dated the date hereof, between the Company
---------
and the Trustee thereunder, pursuant to which the Notes are being issued, as
amended, modified or supplemented from time to time in accordance with the terms
thereof.
Liquidated Damages: As defined in Section 3(a) hereof.
------------------
Notes: The 4 1/2% Convertible Subordinated Notes due 2004 of the
-----
Company issued pursuant to the Indenture (including any such Notes issued
pursuant to the exercise of the over-allotment option provided in the Purchase
Agreement).
Proceeding: An action, claim, suit or proceeding (including, without
----------
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Transfer Restricted Securities
covered by such Registration Statement, and all other amendments and supplements
to any such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.
Purchasers: As defined in the preamble hereof.
----------
Registration Default: As defined in Section 3(a) hereof.
--------------------
Registration Statement: Any registration statement of the Company
----------------------
that covers any of the Transfer Restricted Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to
such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
---------
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 174: Rule 174 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
-2-
<PAGE>
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
--------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules
--------------
and regulations promulgated by the SEC thereunder.
Shelf Registration: As defined in Section 2 hereof.
------------------
Special Counsel: Any special counsel to the holders of Transfer
---------------
Restricted Securities, for which holders of Transfer Restricted Securities will
be reimbursed pursuant to Section 5(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
---
Transfer Restricted Securities: The Notes and the shares of Common
------------------------------
Stock into which the Notes are convertible, upon original issuance thereof, and
at all times subsequent thereto, until, in the case of any such Note or share,
(i) the date on which it has been registered effectively pursuant to the
Securities Act and disposed of in accordance with the Registration Statement
relating to it, (ii) the date on which either such Note or the shares of Common
Stock issued upon conversion of such Note are distributed to the public pursuant
to Rule 144 or are saleable pursuant to Rule 144(k) or (iii) the date on which
it ceases to be outstanding.
Trustee: U.S. Trust Company of Texas, N.A., the trustee under the
-------
Indenture.
underwritten registration or underwritten offering: A registration in
--------------------------------------------------
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
2. Shelf Registration
------------------
(a) The Company agrees to file with the SEC as soon as practicable
after the Closing Date, but in no event later than the Filing Date, a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Transfer Restricted Securities (the "Shelf
Registration"). The Shelf Registration shall be on Form S-3 under the
Securities Act or another appropriate form permitting registration of such
Transfer Restricted Securities for resale by the Holders in the manner or
manners reasonably designated by them (including, without limitation, one or
more underwritten offerings). The Company shall use all reasonable efforts, as
described in Section 4, to cause the Shelf Registration to be declared effective
pursuant to the Securities Act as promptly as practicable following the filing
thereof, but in no event later than the Effectiveness Target Date, and to keep
the Shelf Registration continuously effective under the Securities Act for 24
months after the latest date of initial issuance of the Notes (the
"Effectiveness Period"), or such shorter period ending when either (1) all
Transfer Restricted Securities covered by the Shelf Registration have been sold
in the manner set forth and as contemplated in the Shelf Registration or (2)
there cease to be outstanding any Transfer Restricted Securities.
(b) The Company shall use all reasonable efforts to keep the Shelf
Registration continuously effective, for the period described in Section 2(a)
hereof, by supplementing and amending the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration,
-3-
<PAGE>
if required by the Securities Act or if reasonably requested by the holders of a
majority in amount of the Transfer Restricted Securities (determined on a fully
converted basis) covered by such Registration Statement or by any under writer
of such Transfer Restricted Securities.
(c) Notwithstanding anything to the contrary in this Section 2, but
subject to compliance with Section 3, the Company may, by delivering written
notice to the Holders, prohibit offers and sales of Transfer Restricted
Securities pursuant to the Shelf Registration at any time if (A)(i) the Company
is in possession of material non-public information relating to the Company,
(ii) the Company determines (based on advice of counsel) that such prohibition
is necessary in order to avoid a requirement to disclose such material non-
public information to the public and (iii) the Company determines in good faith
that public disclosure of such material non-public information would not be in
the best interests of the Company and its stockholders or (B)(i) the Company has
made a public announcement relating to an acquisition or business combination
transaction including the Company and/or one or more of its subsidiaries that is
material to the Company and its subsidiaries taken as a whole and (ii) the
Company determines in good faith that (x) offers and sales of Transfer
Restricted Securities pursuant to the Shelf Registration prior to the
consummation of such transaction (or such earlier date as the Company shall
determine) is not in the best interests of the Company and its stockholders or
(y) it would be impracticable at the time to obtain any financial statements
relating to such acquisition or business combination transaction that would be
required to be set forth in the Shelf Registration; provided, however, that upon
-------- -------
(i) the public disclosure by the Company of the material non-public information
described in clause (A) of this paragraph or (ii) the consummation, abandonment
or termination of, or the availability of the required financial statements with
respect to, a transaction described in clause (B) of this paragraph, the
suspension of the use of the Shelf Registration pursuant to this Section 2(c)
shall cease and the Company shall promptly comply with Section 4(b) hereof and
notify Holders that dispositions of Transfer Restricted Securities may be
resumed.
3. Liquidated Damages
------------------
(a) The Company and the Purchasers agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Sections 2 and 4(b) hereof and that it would
not be possible to ascertain the extent of such damages. Accordingly, in the
event of such failure by the Company to fulfill such obligations, the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below.
If (i) the Shelf Registration has not been filed with the SEC on or
prior to the Filing Date; or (ii) the Shelf Registration is not declared
effective by the SEC on or prior to the Effectiveness Target Date; or (iii) the
Shelf Registration has been declared effective by the SEC and such Shelf
Registration ceases to be effective or the Prospectus contained therein ceases
to be usable (including as a result of a prohibition against sales of Transfer
Restricted Securities pursuant to Section 2(c) hereof or a suspension of the use
of the Prospectus as described in the last paragraph of Section 4 hereof) at any
time during the Effectiveness Period for a period of time which shall exceed 90
days in the aggregate during any 365-day period (any of the foregoing, a
"Registration Default"), then the Company shall pay Liquidated Damages in cash
to each Holder of Transfer Restricted Securities following the occurrence of
such Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Notes and, if applicable, $.0024 per week per share (subject
to adjustment in the event of stock splits, stock recombinations, stock
dividends and the like) of Common Stock, constituting Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of such Liquidated Damages will
increase by an additional $.05 per week per $1,000 principal amount of Notes
and, if applicable, $.0024 per week per share (subject to adjustment as set
forth above) of Common Stock constituting Transfer Restricted Securities for
each subsequent 90-day period until all Registration Defaults have been cured;
provided, however, that Liquidated Damages shall not at any time exceed $.25 per
- -------- -------
week per $1,000 principal amount of Notes or $.0118 per week per share (subject
to adjustment as set forth above) of Common Stock constituting Transfer
Restricted Securities. Following the cure of all Registration Defaults relating
to any Transfer Restricted Securities, the accrual of Liquidated
-4-
<PAGE>
Damages with respect to such Transfer Restricted Securities will cease. A
Registration Default under clause (i) above shall be cured on the date that the
Shelf Registration is filed with the SEC; a Registration Default under clause
(ii) above shall be cured on the date that the Shelf Registration is declared
effective by the SEC; and a Registration Default under clause (iii) above shall
be cured on the date the Shelf Registration is declared effective or the
Prospectus contained therein again becomes usable.
(b) The Company shall notify the Trustee within one Business Day
after each and every date on which a Registration Default occurs. Liquidated
Damages shall be paid on each Payment Date by the Company to the Holders of
Transfer Restricted Securities as of the immediately preceding Record Date (as
defined in the Indenture) in the same manner interest is paid to Holders of
Notes pursuant to the Indenture. Each obligation to pay Liquidated Damages shall
be deemed to commence accruing on the date of the applicable Registration
Default and to cease accruing when all Registration Defaults have been cured. In
no event shall the Company pay Liquidated Damages in excess of the applicable
maximum weekly amount set forth above, regardless of whether one or multiple
Registration Defaults exist (e.g., subject to increase as set forth above for
each subsequent 90-day period, Liquidated Damages shall equal $.05 per week per
$1,000 principal amount of Notes during the first 90-day period immediately
following the occurrence of the first Registration Default regardless of whether
additional Registration Defaults occur during such 90-day period).
4. Registration Procedures
-----------------------
In connection with the Company's registration obligations hereunder,
the Company shall effect such registrations on the appropriate form available
for the sale of the Transfer Restricted Securities to permit the sale of
Transfer Restricted Securities in accordance with the method or methods of
disposition thereof specified by the holders of a majority in amount of Transfer
Restricted Securities (determined on a fully converted basis), and pursuant
thereto the Company shall as expeditiously as possible:
(a) No fewer than five Business Days prior to the initial filing of
a Registration Statement or Prospectus and no fewer than two Business Days prior
to the filing of any amendment or supplement thereto (other than any document
that would be incorporated or deemed to be incorporated therein by reference),
furnish to the Holders of the Transfer Restricted Securities, their Special
Counsel and the managing underwriters, if any, copies of all such documents
proposed to be filed, which documents (other than those incorporated or deemed
to be incorporated by reference) will be subject to the review of such Holders,
their SpecialCounsel and such underwriters, if any, and cause the officers and
directors of the Company, counsel to the Company and independent certified
public accountants to the Company to respond to such inquiries as shall be
necessary in connection with such Registration Statement, in the opinion of
respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file any such Registration Statement or related Prospectus or any
amendments or supplements thereto (other than any document that would be
incorporated or deemed to be incorporated in the Registration Statement by
reference) to which the Holders of a majority of the Transfer Restricted
Securities (determined on a fully converted basis), their Special Counsel, or
the managing underwriters, if any, shall reasonably object on a timely basis;
provided, that the Company may assume, for the purposes of this subparagraph
(a), that objections to the inclusion of information specifically requested to
be included in the Registration Statement by the staff of the SEC, or in the
opinion of counsel to the Company required to be in the Registration Statement,
or specifically required by the Securities Act or other applicable law, shall
not be deemed to be reasonable;
(b) Prepare and file with the SEC such amendments, including post-
effective amendments, to each Registration Statement as may be necessary to keep
such Registration Statement continuously effective for the applicable time
period; cause, subject to Section 2(c) hereof, the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424; and comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all securities covered
by such
-5-
<PAGE>
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented;
(c) Notify the Holders of Transfer Restricted Securities to be sold
or their Special Counsel and the managing underwriters, if any, promptly (and in
the case of an event specified by clause (i)(A) of this paragraph, in no event
fewer than two Business Days prior to such filing), and (if requested by any
such person) confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed, and
(B) with respect to a Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information, (iii) of the
issuance by the SEC, any state securities commission, any other governmental
agency or any court of any stop order, order or injunction suspending or
enjoining the use or the effectiveness of a Registration Statement or the
initiation of any Proceeding for that purpose, (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated by Section 4(m) hereof cease
to be true and correct in all material respects, (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Transfer Restricted Securities for
sale in any jurisdiction, or the initiation or threatening of any Proceeding for
such purpose, and (vi) of the happening of any event that makes any statement
made in such Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes in such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, not misleading, and that, in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(d) Use all reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of any order enjoining or suspending the use or
effectiveness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Transfer
Restricted Securities for sale in any jurisdiction, at the earliest practicable
moment;
(e) If requested by the managing underwriters, if any, or the
Holders of a majority in amount of the Transfer Restricted Securities
(determined on a fully converted basis) being sold in connection with such
offering, (i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters, if any, and such
Holders agree should be included therein relating to the terms of the sale of
the Transfer Restricted Securities of such Holder in the Prospectus, and
(ii) make all required filings of such Prospectus supplement or such post-
effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
-------- -------
required to take any action pursuant to this Section 4(e) that would, in the
opinion of counsel for the Company, violate applicable law;
(f) Furnish to each Holder of Transfer Restricted Securities, their
Special Counsel and each managing underwriter, if any, without charge, at least
one conformed copy of each Registration Statement and each amendment thereto,
including financial statements (but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits,
unless requested in writing by such Holder, counsel or managing underwriter);
(g) Deliver to each Holder of Transfer Restricted Securities, their
Special Counsel, and the underwriters, if any, without charge, as many copies of
the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such persons reasonably request; and the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of
-6-
<PAGE>
Transfer Restricted Securities and the underwriters, if any, in connection with
the offering and sale of the Transfer Restricted Securities covered by such
Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Transfer Restricted Securities,
use all reasonable efforts to register or qualify or cooperate with the Holders
of Transfer Restricted Securities to be sold, the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Transfer
Restricted Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder or underwriter
reasonably requests in writing; use all reasonable efforts to keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and use all
reasonable efforts to do any and all other acts or things necessary or advisable
to enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Registration Statement; provided, however, that the
-------- -------
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it is
not then so subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which certificates shall
not bear any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company and to enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may request at least two Business Days
prior to any sale of Transfer Restricted Securities;
(j) Use all reasonable efforts to cause the offering of the Transfer
Restricted Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States as may require such registration or approval, except as may be
required as a consequence of the nature of such selling Holder's business, in
which case the Company will cooperate in all reasonable respects with the filing
of such Registration Statement and the granting of such approvals as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Transfer Restricted Securities; provided,
--------
however, that the Company shall not be required to register the Transfer
- -------
Restricted Securities in any jurisdiction that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject or to require the Company to qualify to do business in any jurisdiction
where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by Section
4(c)(vi) hereof, as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities, to provide a CUSIP number for
the Transfer Restricted Securities;
(m) Enter into such agreements (including an underwriting agreement
in form, scope and substance as is customary in underwritten offerings) and take
all such other reasonable actions in connection therewith (including those
reasonably requested by the managing underwriters, if any, or the Holders of a
majority in amount of the Transfer Restricted Securities being sold (determined
on a fully converted basis)) in order to expedite or
-7-
<PAGE>
facilitate the disposition of such Transfer Restricted Securities, and, in such
connection, if an underwriting agreement is entered into (i) make such
representations and warranties to the underwriters with respect to the business
of the Company and its subsidiaries (including with respect to businesses or
assets acquired or to be acquired by any of them), and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, in form, substance and scope as
are customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) use all reasonable efforts to
obtain opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters, if any), addressed to each of the underwriters, covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by the underwriters;
(iii) use all reasonable efforts to obtain customary "cold comfort" letters and
updates thereof from the independent certified public accountants of the Company
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data is, or is required to be, included in
the Registration Statement), addressed (where reasonably possible) to each
selling Holder of Transfer Restricted Securities and each of the underwriters,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) the underwriting agreement shall contain indemnification
provisions and procedures no less favorable to the selling Holders of Transfer
Restricted Securities and the underwriters than those set forth in Section 6
hereof (or such other provisions and procedures acceptable to Holders of a
majority in amount of the Transfer Restricted Securities (determined on a fully
converted basis) covered by such Registration Statement and the managing
underwriters); and (v) deliver such documents and certificates as may be
reasonably requested by the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant to clause
(i) of this Section 4(m) and to evidence compliance with any customary
conditions contained in the underwriting agreement;
(n) Make available for inspection by a representative of the Holders
of not less than 50% of the Transfer Restricted Securities (determined on a
fully converted basis) being sold, any underwriter participating in any such
disposition of Transfer Restricted Securities, if any, and any Special Counsel,
consultant or accountant retained by such selling Holders or underwriter, at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries as they may reasonably request (including with respect to
businesses and assets acquired or to be acquired to the extent that such
information is available to the Company), and cause the officers, directors,
agents and employees of the Company and its subsidiaries (including with respect
to businesses and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Registration Statement,
provided, however, that such persons shall first agree in writing with the
- -------- -------
Company that any information that is reasonably and in good faith designated by
the Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons, unless (i) disclosure of
such information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to Federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement),
(iii) such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
Company and such source is not bound by a confidentiality agreement;
(o) Cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement relating to the Transfer
Restricted Securities; and in connection therewith, cooperate with the trustee
under the Indenture and the holders of the Transfer Restricted Securities to
effect such changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA; and execute, and use its
reasonable best efforts to cause such trustee to execute, all customary
documents as may be
-8-
<PAGE>
required to effect such changes, and all other forms and documents required to
be filed with the SEC to enable the Indenture to be so qualified in a timely
manner;
(p) Comply with applicable rules and regulations of the SEC and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158, no later than 45
days after the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to underwriters
in a firm commitment or reasonable efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter after the effective date of a Registration Statement, which
statement shall cover said period, consistent with the requirements of Rule 158;
and
(q) Use all reasonable efforts to (i) cause the Notes to be listed
on any securities exchange on which the Common Stock is then listed or
(ii) cause the Notes to be authorized for quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or the National
Market System of NASDAQ if the Common Stock is then so authorized for quotation,
in each case concurrently with the effectiveness of the first Registration
Statement relating to the Transfer Restricted Securities.
The Company may require each seller of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Securities as
is required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Transfer Restricted
Securities of any seller who unreasonably fails to furnish such information
within a reasonable time after receiving such request. Each such Holder agrees,
by the acquisition of Transfer Restricted Securities, and agrees to confirm such
agreement in writing upon request of the Company, to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Holder to the Company or of the occurrence of any event as a
result of which any Prospectus relating to such registration contains or would
contain an untrue statement of a material fact regarding such Holder or such
Holder's intended method of distribution of such Transfer Restricted Securities,
or omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of such Transfer Restricted Securities,
necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly to furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with respect to such
Holder or the distribution of such Transfer Restricted Securities, an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances then existing, not
misleading.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such Holder by name or otherwise is not required by the
Securities Act or any similar Federal statute then in force, the deletion of the
reference to such Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases to
be required.
Each Holder of Transfer Restricted Securities agrees by acquisition of
such Transfer Restricted Securities that, upon receipt of any notice from the
Company pursuant to Section 2(c) hereof or of the happening of any event of the
kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(v) or 4(c)(vi) hereof, such
Holder will forthwith discontinue disposition of such Transfer Restricted
Securities covered by such Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(k) hereof, or until it is advised in writing by the
Company that the use of the applicable Prospectus may be resumed, and,
-9-
<PAGE>
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus, and, if so directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession of the Prospectus covering such Transfer
Restricted Securities at the time of receipt of such notice.
5. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by it whether or
not any Registration Statement is filed or becomes effective and whether or not
any securities are issued or sold pursuant to any Registration Statement. The
fees and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (B) in compliance with
securities or Blue Sky laws (including, without limitation and in addition to
that provided for in (b) below, fees and disbursements of counsel for the
underwriters or Special Counsel for the Holders in connection with Blue Sky
qualifications of the Transfer Restricted Securities and determination of the
eligibility of the Transfer Restricted Securities for investment under the laws
of such jurisdictions as the managing underwriters, if any, or Holders of a
majority in amount (determined on a fully converted basis) of Transfer
Restricted Securities may designate)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Transfer Restricted
Securities in a form eligible for deposit with The Depository Trust Company and
of printing Prospectuses if the printing of Prospectuses is requested by the
managing underwriters, if any), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company and Special
Counsel for the Holders (plus any local counsel deemed appropriate by the
Holders of a majority in amount of the Transfer Restricted Securities
(determined on a fully converted basis)), in accordance with the provisions of
Section 5(b) hereof, (v) fees and disbursements of all independent certified
public accountants referred to in Section 4(m)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Company so desires such insurance, and (vii) fees and expenses
of all other persons retained by the Company. In addition, the Company shall pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit, and the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
or on NASDAQ. Notwithstanding the foregoing or anything in this Agreement to the
contrary, each Holder of the Transfer Restricted Securities being registered
shall pay all commissions, placement agent fees and underwriting discounts and
commissions with respect to any Transfer Restricted Securities sold by it and
the fees and disbursements of any counsel or other advisors or experts retained
by such Holders (severally or jointly), other than Special Counsel and local
counsel referred to in clause (iv) above.
(b) In connection with any registration hereunder, the Company shall
reimburse the Holders of the Transfer Restricted Securities being registered in
such registration for the reasonable fees and disbursements of not more than one
firm of attorneys representing the selling Holders (in addition to any local
counsel), which firm shall be chosen by the Holders of a majority in amount of
the Transfer Restricted Securities (determined on a fully converted basis).
6. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless (i) each of
the Purchasers, (ii) each Holder of Transfer Restricted Securities, (iii) each
person, if any, who controls (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) any of the foregoing (any of the persons
referred to in this clause (iii) being hereinafter referred to as a "controlling
person"), and (iv) the respective officers, directors, partners, employees,
representatives and agents of the Purchasers, each Holder of Transfer Restricted
Securities, or any controlling person (any person referred to in clause (i),
(ii), (iii) or (iv) may hereinafter be referred to as an "Indemnified Person"),
------------------
from and against any and all losses, claims, damages, liabilities and judgments
caused by any
-10-
<PAGE>
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary Prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to any Indemnified Person furnished in writing to the
Company by or on behalf of such Indemnified Person expressly for use therein;
provided that the foregoing indemnity with respect to any preliminary Prospectus
- --------
shall not inure to the benefit of any Indemnified Person from whom the person
asserting such losses, claims, damages, liabilities and judgments purchased
securities if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary Prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus shall not have been furnished to such
person in a timely manner due to the wrongful action or wrongful inaction of
such Indemnified Person (provided that the Company has delivered the Prospectus
--------
to such Indemnified Person in requisite quantity on a timely basis to permit
such delivery or sending).
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company, such Indemnified Person shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless (i) the employment of such counsel shall have
been specifically authorized in writing by the Company, (ii) the Company shall
have failed to assume the defense and employ counsel or (iii) the named parties
to any such action (including any impleaded parties) include both such
Indemnified Person and the Company and such Indemnified Person shall have been
advised in writing by counsel that the representation of such Indemnified Person
and the Company by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to an actual or reasonably anticipated
material conflict of interest between them (in which case the Company shall not
have the right to assume the defense of such action on behalf of such
Indemnified Person, it being understood, however, that the Company shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Persons, which firm shall be designated in writing by such
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred). The Company shall not be liable for any settlement of any
such action effected without its written consent but if settled with the written
consent of the Company, the Company agrees to indemnify and hold harmless any
Indemnified Person from and against any loss or liability by reason of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement (i) includes an unconditional release of such indemnified
party from all liability on claims that are or could have been the subject
matter of such proceeding and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(c) In connection with any Registration Statement in which a Holder
of Transfer Restricted Securities is participating, such Holder of Transfer
Restricted Securities agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers and any person controlling the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Indemnified Person but only with reference to information relating to such
Indemnified Person furnished in writing by or on behalf of such Indemnified
Person expressly for use in such Registration Statement. In case any action
shall be brought against the Company, any of its directors, any such officer or
any person controlling
-11-
<PAGE>
the Company based on such Registration Statement and in respect of which
indemnity may be sought against any Indemnified Person, the Indemnified Person
shall have the rights and duties given to the Company (except that if the
Company shall have assumed the defense thereof, such Indemnified Person shall
not be required to do so, but may employ separate counsel therein and
participate in defense thereof but the fees and expenses of such counsel shall
be at the expense of such Indemnified Person), and the Company, its directors,
any such officers and any person controlling the Company shall have the rights
and duties given to the Indemnified Person, by Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
Indemnified Person on the other hand from the offering of the Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
each such Indemnified Person in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative fault of the
Company and each such Indemnified Person shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied by
the Company or such Indemnified Person and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
---
rata allocation (even if the Indemnified Persons were treated as one entity for
- ----
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 6, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the proceeds received by it in connection with the sale of the
Transfer Restricted Securities pursuant to this Agreement exceeds the amount of
any damages which such Indemnified Person has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Indemnified Persons' obligations to contribute pursuant to this Section 6(d) are
several in proportion to the respective amount of Notes included in any such
Registration Statement by each Indemnified Person and not joint.
7. Rules 144 and 144A
------------------
The Company shall use all reasonable efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but in
the past had been required to or did file such reports, it will, upon the
request of any holder of Transfer Restricted Securities, make available other
information as required by, and so long as necessary to permit, sales of its
Transfer Restricted Securities pursuant to Rule 144 and Rule 144A.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
8. Underwritten Registrations
--------------------------
(a) If any of the Transfer Restricted Securities covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will
-12-
<PAGE>
administer the offering will be selected by the Holders of a majority in amount
of such Transfer Restricted Securities (determined on a fully converted basis)
included in such offering, subject to the consent of the Company (which will not
be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if
requested (pursuant to a timely written notice) by the managing underwriters in
an underwritten offering, not to effect any private sale or distribution
(including a sale pursuant to Rule 144(k) and Rule 144A, but excluding
non-public sales to any of its affiliates, officers, directors, employees and
controlling persons) of any of the Notes, in the case of an offering of the
Company's debt securities, or the Common Stock, in the case of an offering of
the Company's equity securities, during the period beginning 10 days prior to,
and ending 90 days after, the closing date of the underwritten offering.
The foregoing provisions of this Section 8(b) shall not apply to any
Holder of Transfer Restricted Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement.
(c) The Initial Purchasers and all Holders of Transfer Restricted
Securities agree that, notwithstanding any other term or provision hereof, the
Company shall not be required to enter into any agreements (including
underwriting agreements) or take any other actions contemplated by Section 4(m)
hereof unless requested in writing by the holders of at least 50% of the
Transfer Restricted Securities (determined on a fully converted basis) sold to
the Initial Purchasers pursuant to the Purchase Agreement.
9. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company, or by a
--------
holder of Transfer Restricted Securities, of any of their obligations under this
Agreement, each holder of Transfer Restricted Securities or the Company, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and each holder of Transfer Restricted
Securities agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company shall not enter into any
--------------------------
agreement with respect to its securities that is inconsistent with the rights
granted to the holders of Transfer Restricted Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(c) No Piggyback on Registrations. The Company shall not grant to
-----------------------------
any of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity) the right to include any of its securities in any
Shelf Registration other than Transfer Restricted Securities.
(d) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, without the written consent of the Holders of a majority of
the then outstanding Transfer Restricted Securities (determined on a fully
converted basis); provided, however, that, for the purposes of this Agreement,
-------- -------
Transfer Restricted Securities that are owned, directly or indirectly, by either
the Company or an
-13-
<PAGE>
Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders of Transfer Restricted Securities may be given by Holders of a majority
of the Transfer Restricted Securities (determined on a fully converted basis)
being sold by such Holders pursuant to such Registration Statement; provided,
--------
however, that the provisions of this sentence may not be amended, modified, or
- -------
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(e) Notices. All notices and other communications provided for
-------
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopy:
(i) if to the Company, as provided in the Purchase Agreement,
(ii) if to the Purchasers, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then the registered Holder of
any Transfer Restricted Securities, to the address of such Holder as it appears
in the Note or Common Stock register of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder of Transfer Restricted
Securities. The Company may not assign its rights or obligations hereunder
without the prior written consent of each Holder of Transfer Restricted
Securities. Notwithstanding the foregoing, no transferee shall have any of the
rights granted under this Agreement until such transferee shall acknowledge its
rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Governing Law; Submission to Jurisdiction.
-----------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(i) Severability. The remedies provided herein are cumulative and
------------
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
-14-
<PAGE>
(j) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, shall
be entitled to recover its reasonable attorneys' fees in addition to any other
available remedy.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
HALTER MARINE GROUP, INC.
By: /s/ Keith L. Voigts
------------------------------------------
Name: Keith L. Voigts
Title: Senior Vice President
The foregoing Registration Rights
Agreement is hereby confirmed
and accepted as of the date
first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ Michael L. Crow
-----------------------------
Name: Michael L. Crow
Title: Sr. Vice President
-16-
<PAGE>
Exhibit 5.1
[LETTERHEAD OF BAKER & BOTTS, L.L.P.]
October 21, 1997
Halter Marine Group, Inc.
13085 Industrial Seaway Road
Gulfport, Mississippi 39503
Ladies and Gentlemen:
We have acted as counsel for Halter Marine Group, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933 (the "Securities Act") on a Registration Statement on
Form S-3 (the "Registration Statement") of the resales of $185,000,000 aggregate
principal amount of the Company's 4 1/2% Convertible Subordinated Notes due 2004
(the "Notes") and the 5,873,016 shares (as such number may be adjusted as set
forth in the Indenture, dated as of September 15, 1997 (the "Indenture"),
between the Company and U.S. Trust Company of Texas, N.A., as trustee (the
"Trustee")) of Common Stock, par value $.01 per share, of the Company (the
"Common Stock") as shall be issuable upon conversion of the Notes in accordance
with the Indenture.
In reaching the opinions set forth in this letter, we have reviewed
originals or copies of the Registration Statement, the Indenture, the Notes and
such other agreements, certificates of public officials, certificates of
officers of the Company, records, documents and matters of law as we deemed
relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions and qualifications hereinafter stated, we are of the
opinion that:
(i) The Notes constitute legally binding obligations of the Company;
and
(ii) The shares of Common Stock issuable upon conversion of the Notes
will be, when issued in accordance with their terms, legally
issued, fully paid and non-assessable.
The opinions expressed above are subject to the following assumptions,
exceptions and qualifications:
<PAGE>
Halter Marine Group, Inc. -2- October 21, 1997
A. We have assumed that (i) all information contained in all
documents reviewed by us is true and correct, (ii) all signatures on all
documents reviewed by us are genuine, (iii) all documents submitted to us as
originals are true and complete, (iv) all documents submitted to us as copies
are true and complete copies of the originals thereof, (v) each natural person
signing any document reviewed by us had the legal capacity to do so, (vi) each
natural person signing in a representative capacity any document reviewed by us
had authority to sign in such capacity and (vii) the Indenture is a valid and
binding agreement of the Trustee.
B. The opinions expressed in this letter are limited to the Delaware
General Corporation Law, the federal laws of the United States of America and
the laws of the State of Texas. We express no opinion about the effect of
federal or state securities laws or the laws of any other jurisdiction.
This opinion may be filed as an exhibit to the Registration Statement.
Consent is also given to the reference to this firm under the caption "Legal
Matters" in the Prospectus included in the Registration Statement as having
passed on certain legal matters in connection with the Notes and the Common
Stock. In giving this consent, we do not admit that we come within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
This opinion speaks as of the date hereof, and we disclaim any duty to
advise you regarding any changes subsequent to the date hereof in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
/s/ Baker & Botts, L.L.P.
Baker & Botts, L.L.P.
<PAGE>
Exhibit 12.1
Statement of Computation of Ratios
Halter Marine Group, Inc.
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Three Months Ended
Years Ended March 31, June 30,
------------------------------------------------- ---------------------
Pro forma Pro forma
1993 1994 1995 1996 1997 1997 1996 1997 1997
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes 30,290 31,734 25,878 20,567 27,003 21,501 5,561 8,769 7,972
Add Fixed charges 1,937 1,902 3,844 3,268 3,283 9,407 896 1,436 2,233
--------------------------------------------------- --------------------------
Earnings as adjusted 32,227 33,636 29,722 23,835 30,286 30,908 6,457 10,205 10,205
Fixed charges
Interest expense 1,937 1,902 3,844 3,268 3,232 8,485 896 1,436 2,015
Amortization of debt
expense 51 922 218
--------------------------------------------------- --------------------------
Total fixed charges 1,937 1,902 3,844 3,268 3,283 9,407 896 1,436 2,233
Ratio of earnings to fixed
charges 16.6 17.7 7.7 7.3 9.2 3.3 7.2 7.1 4.6
</TABLE>
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Halter Marine Group,
Inc. for the registration of $185,000,000 4 1/2% Convertible Subordinated Notes
due 2004 and 5,873,016 shares of common stock issuable upon conversion thereof
and to the incorporation by reference therein of our report dated May 8, 1997
(except Note 15, as to which the date is May 16, 1997), with respect to the
consolidated financial statements of Halter Marine Group, Inc. included in its
Annual Report (Form 10-K) for the year ended March 31, 1997, filed with the
Securities and Exchange Commission.
/s/ERNST & YOUNG LLP
New Orleans, Louisiana
October 17, 1997
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
The Board of Directors
Halter Marine Group, Inc.
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Form S-3 Registration
Statement.
New Orleans, Louisiana
October 17, 1997
<PAGE>
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)______________
---------------
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Ave, Suite 2700 75201
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Ave, Suite 2700
Dallas, Texas 75201
(214) 754-1200
(Name, address and telephone number of agent for service)
----------------
Halter Marine Group, Inc.
(Exact name of obligor as specified in its charter)
Delaware 75-2656828
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
13085 Industrial Seaway Rd.
Gulfport, Mississippi 39503
(Address of principal executive offices) (Zip Code)
---------------
4.5% Convertible Subordinated Notes Due 2004
(Title of the indenture securities)
- --------------------------------------------------------------------------------
<PAGE>
GENERAL
1. General Information.
--------------------
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of Dallas (11th District), Dallas, Texas
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Dallas, Texas
The Office of the Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
-------------------------------------------
If the obligor or any underwriter for the obligor is an affiliate of the
Trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
---------------------------------
Furnish the following information as to each class of voting securities of
the Trustee:
As of October 15,1997
- --------------------------------------------------------------------------------
Col A. Col B.
-------------------------------------------------------------------------------
Title of Class Amount Outstanding
-------------------------------------------------------------------------------
Capital Stock - par value $100 per share 5,000 shares
4. Trusteeships under Other Indentures.
------------------------------------
Not Applicable
5. Interlocking Directorates and Similar Relationships with the Obligor or
-----------------------------------------------------------------------
Underwriters.
-------------
Not Applicable
<PAGE>
6. Voting Securities of the Trustee Owned by the Obligor or its Officials.
-----------------------------------------------------------------------
Not Applicable
7. Voting Securities of the Trustee Owned by Underwriters or their Officials.
--------------------------------------------------------------------------
Not Applicable
8. Securities of the Obligor Owned or Held by the Trustee.
-------------------------------------------------------
Not Applicable
9. Securities of Underwriters Owned or Held by the Trustee.
--------------------------------------------------------
Not Applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
--------------------------------------------------------------------
Affiliates or Security Holders of the Obligor.
----------------------------------------------
Not Applicable
11. Ownership or Holdings by the Trustee of any Securities of a Person Owning
-------------------------------------------------------------------------
50 Percent or More of the Voting Securities of the Obligor.
-----------------------------------------------------------
Not Applicable
12. Indebtedness of the Obligor to the Trustee.
-------------------------------------------
Not Applicable
13. Defaults by the Obligor.
------------------------
Not Applicable
14. Affiliations with the Underwriters.
-----------------------------------
Not Applicable
15. Foreign Trustee.
----------------
Not Applicable
16. List of Exhibits.
-----------------
T-1.1 - A copy of the Articles of Association of U.S. Trust Company of
Texas, N.A.; incorporated herein by reference to Exhibit T-1.1
filed with Form T-1 Statement, Registration No. 22-21897.
<PAGE>
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee to commence
business; incorporated herein by reference to Exhibit T-1.2 filed
with Form T-1 Statement, Registration No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise corporate
trust powers; incorporated herein by reference to Exhibit T-1.3
filed with Form T-1 Statement, Registration No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas, N.A.,
as amended to date; incorporated herein by reference to Exhibit
T-1.4 filed with Form T-1 Statement, Registration No. 22-21897.
T-1.6 - The consent of the Trustee required by Section 321(b) of the
Trust Indenture Act of 1939.
T-1.7 - A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of October 15,1997 the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp. As of October 15,1997 U.S.
T.L.P.O. Corp. had 35 shares of Capital Stock outstanding, all of which are
owned by U.S. Trust Corporation. U.S. Trust Corporation had outstanding
19,185,828 shares of $5 par value Common Stock as of October 15,1997.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of
all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10 and
11, the answers to said Items are based upon incomplete information. Items 2,
5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by an
amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the Trustee
disclaims responsibility for the accuracy or completeness of such information.
---------------
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, U.S
Trust Company of Texas, N.A., a national banking association organized under the
laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
15th day of October, 1997.
U.S. Trust Company
of Texas, N.A., Trustee
By: /s/ BILL BARBER
---------------------
Bill Barber
Vice President
<PAGE>
Exhibit T-1.6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of Halter Marine Group,
Inc 4.5% Convertible Subordinated Notes Due 2004, we hereby consent that reports
of examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefore.
U.S. Trust Company of Texas, N.A.
By: /s/ BILL BARBER
--------------------------
Bill Barber
Vice President
<PAGE>
EXHIBIT T-1.7
<TABLE>
<CAPTION>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council OMB Number: 1557-0081
Expires March 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Please Refer to Page i, (1)
(LOGO) Table of Contents, for
the required disclosure
of estimated burden
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK
WITH DOMESTIC OFFICES ONLY AND TOTAL ASSETS OF LESS THAN
$100 MILLION - - FFIEC 034 (970331)
--------
REPORT AT THE CLOSE OF BUSINESS September 30,1997 (RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State This report form is to be filed by banks with domestic
member banks); 12 U.S. c. Section 1817 (State nonmember offices only. Banks with branches and consolidated
banks); and 12 U.S. C. Section 161 (National banks). subsidiaries in U.S. territories and possessions, Edge or
Agreement subsidiaries, foreign branches, consolidated
foreign subsidiaries, or International Banking Facilities must
file FFIEC 031.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be prepared in
an authorized officer and the Report of Condition must be accordance with Federal regulatory authority instructions.
attested to by not less than two directors (trustees) for State NOTE: these instructions may in some cases differ from
nonmember banks and three directors for State member and generally accepted accounting principles.
National Banks.
I, Alfred B. Childs, SVP & Cashier We, the undersigned directors (trustees), attest to the
---------------------------------- correctness of this Report of Condition (including the
Name and Title of Officer Authorized to Sign Report supporting schedules) and declare that it has been examined by
us and to the best of our knowledge and belief has been
of the named bank do hereby declare that these Reports of prepared in conformance with the instructions issued by the
Condition and Income (including the supporting schedules) appropriate Federal regulatory authority and is true and
have been prepared in conformance with the instructions correct.
issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and belief. /s/ Stuart M. Pearman
--------------------------------
/s/ Alfred B. Childs Director (Trustee)
- -------------------------------------
Signature of Officer Authorized to Sign Report /s/ J.T. Moore
--------------------------------
10/15/97 Director (Trustee)
- -------------------------------------
Date of Signature /s/ Peter J. Denker
--------------------------------
Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the NATIONAL BANKS: Return the original only in the special
appropriate Federal Reserve District Bank. return address envelope provided. If express mail is used in
lieu of the special return address envelope, return the
STATE NONMEMBER BANKS: Return the original only in the original only to the FDIC, c/o Quality Data Systems, 2127
special return address envelope provided. If express mail Espey Court, Suite 204, Crofton, MD 21114.
is used in lieu of the special return address envelope,
return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number ____________ 09-30-97
(RCRI 9050) Banks should affix the address label in this space.
U. S. Trust Company of Texas, National Association
--------------------------------------------------------------
Legal Title of Bank (TEXT 9010)
2001 Ross Avenue, Suite 2700
--------------------------------------------------------------
City (TEXT 9130)
Dallas, TX 75201
--------------------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 09/30/97 State #: 6797 FFIEC 034
2100 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 Page RC-2
DALLAS, TX 75201 Transit #: 11101765
------------
9
------------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30,1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
<TABLE>
<CAPTION>
SCHEDULE RC - BALANCE SHEET
C100
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions: RCON
----
a. Noninterest-bearing balances and currency and coin (1,2)__________________ ___ _____ 0081 882 1.a
b. Interest bearing balances (3)_____________________________________________ ___ _____ 0071 916 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)________________ ___ _____ 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)______________ ___ _____ 1773 128,787 2.b
3. Federal funds sold (4) and securities purchased under agreements to resell: 1350 6,000 3
4. Loans and lease financing receivables: RCON
----
a. Loans and leases, net of unearned income (from Schedule RC-C)_____________ 2122 12,545 4.a
b. LESS: Allowance for loan and lease losses________________________________ 3123 200 4.b
c. LESS: Allocated transfer risk reserve____________________________________ 3128 0 RCON 4.c
d. Loans and leases, net of unearned income, allowance, and reserve ----
(item 4.a minus 4.b and 4.c)______________________________________________ ___ _____ 2125 12,345 4.d
5. Trading assets________________________________________________________________ ___ _____ 3545 0 5.
6. Premises and fixed assets (including capitalized leases)______________________ ___ _____ 2145 694 6.
7. Other real estate owned (from Schedule RC-M)__________________________________ ___ _____ 2150 0 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)__________________________________________________________ ___ _____ 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding__________________ ___ _____ 2155 0 9.
10. Intangible assets (from Schedule RC-M)________________________________________ ___ _____ 2143 0 10.
11. Other assets (from Schedule RC-F)_____________________________________________ ___ _____ 2160 2,070 11.
12. a. Total assets (sum of items 1 through 11)__________________________________ ___ _____ 2170 151,694 12.a
b. Losses deferred pursuant to U.S.C. 1823(j)________________________________ ___ _____ 0306 0 12.b
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823(j)
(sum of items 12.a and 12.b)______________________________________________ ___ _____ 0307 151,694 12.c
</TABLE>
(1) Includes cash items in process of collection and unposed debits.
(2) The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 3.a and 3.b.
(3) Includes time certificates of deposit not held for trading.
(4) Report 'term federal funds sold' in Schedule RC, item 4.a, 'Loans and
leases, net of unearned income,' and in Schedule RC-C, part 1.
(5) Report securities purchased under agreements to resell that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 3.a, 'Federal
funds sold.'
<PAGE>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 09/30/97 State #: 6797 FFIEC 034
2100 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 Page RC-2
DALLAS, TX 75201 Transit #: 11101765
------------
10
------------
<TABLE>
<CAPTION>
SCHEDULE RC - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C> <C> <C> <C>
13. Deposits: RCON
a. In domestic offices (sum of totals of RCON ----
columns A and C from Schedule RC-E)______________________________________ ---- 2200 116,013 13.a
(1) Noninterest-bearing (1)_____________________________________________ 6631 8,660 13.a.1
(2) Interest-bearing ___________________________________________________ 6636 107,353
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1) Noninterest-bearing_________________________________________________
(2) Interest-bearing____________________________________________________
RCON
----
14. Federal funds purchased(2) and securities sold under agreements to repurchase: 2800 0 14
15. a. Demand notes issued to the U.S. Treasury_________________________________ ___ _____ 2840 0 15.a
b. Trading liabilities______________________________________________________ ___ _____ 3548 0 15.b
16. Other borrowed money:
A. WITH A REMAINING MATURITY OF ONE YEAR OR LESS____________________________ ___ _____ 2332 7,000 16.a
B. WITH A REMAINING MATURITY OF MORE THAN ONE YEAR THROUGH THREE YEARS______ ___ _____ A547 1,000 16.b
C. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS_______________________ ___ _____ A548 3,000 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding_____________________ ___ _____ 2920 0 18.
19. Subordinated notes and debentures____________________________________________ ___ _____ 3200 0 19.
20. Other liabilities (from Schedule RC-G)_______________________________________ ___ _____ 2930 1,990 20.
21. Total liabilities (sum of items 13 through 20)_______________________________ ___ _____ 2948 129,003 21.
22. Not applicable
EQUITY CAPITAL
RCON
----
23. Perpetual preferred stock and related surplus_______________________________ ___ _____ 3838 7,000 23.
24. Common stock________________________________________________________________ ___ _____ 3230 500 24.
25. Surplus (exclude all surplus related to preferred stock)____________________ ___ _____ 3839 8,384 25.
26. a. Undivided profits and capital reserves__________________________________ ___ _____ 3632 6,512 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities__ ___ _____ 8434 295 26.b
27. Cumulative foreign currency translation adjustments_________________________
28. a. Total equity capital (sum of items 23 through 27)_______________________ ___ _____ 3210 22,691 28.a
b. Losses deferred pursuant to 12 U.S.C. 1823(j)___________________________ ___ _____ 0306 0 28.b
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823(j)
(sum of items 28.a and 28.b)____________________________________________ ___ _____ 3559 22,691 28.c
29. Total liabilities, limited-life preferred stock, equity capital, and losses
deferred pursuant to 12 U.S.C. 1823(j) (sum of items 21, 22, and 28.c)______ ___ _____ 2257 151,694 29.
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that RCON
best describes the most comprehensive level of auditing work performed ----
for the bank by independent external auditors as of any date during 1995___________________ 6724 N/A M.1
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other external
with generally accepted auditing standards by certified auditors (may be required by state chartering authority)
public accounting firm which submits a report on the bank 5 = Review of the bank's financial statements by external auditors
2 = Independent audit of the bank's parent holding company 6 = Compilation of the bank's financial statements by
conducted in accordance with generally accepted auditing external auditors
standards by a certified public accounting firm which 7 = Other audit procedures (excluding tax preparation work)
submits a report on the consolidated holding company (but 8 = No external audit work
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
</TABLE>
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Report "term federal funds purchased" in Schedule RC, item 16, 'Other
borrowed money.'
(3) Report securities sold under agreements to repurchase that involve the
receipt of immediately available funds and mature in one business day or
roll over under a continuing contract in Schedule RC, item 14.a, 'Federal
funds purchased.'
<PAGE>
Exhibit 99.1
------------
HALTER MARINE GROUP, INC.
$160,000,000
4 1/2% Convertible Subordinated Notes due 2004
Purchase Agreement
September 9, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
<PAGE>
$160,000,000
4 1/2% Convertible Subordinated Notes due 2004
of
Halter Marine Group, Inc.
PURCHASE AGREEMENT
September 9, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10005
Dear Sirs:
Halter Marine Group, Inc., a Delaware corporation (the "Company"),
-------
proposes to issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") and Merrill Lynch, Pierce, Fenner & Smith Incorporated
---
(each, an "Initial Purchaser" and, collectively, the "Initial Purchasers") an
----------------- ------------------
aggregate of $160,000,000 in principal amount of its 4 1/2% Convertible
Subordinated Notes due 2004 (the "Firm Notes"), subject to the terms and
----------
conditions set forth herein. The Company also proposes to issue and sell to the
Initial Purchasers, from time to time as set forth below, an aggregate of not
more than an additional $25,000,000 in principal amount of its 4 1/2%
Convertible Subordinated Notes due 2004 (the "Additional Notes"), if requested
----------------
by the Initial Purchasers as provided in Section 2 hereof. The Firm Notes and
the Additional Notes are herein collectively referred to as the "Notes". The
-----
Notes are to be issued pursuant to the provisions of an indenture (the
"Indenture"), to be dated as of the Closing Date (as defined below), between the
---------
Company and U.S. Trust Company of Texas, N.A., as trustee (the "Trustee"),
-------
pursuant to which the Notes, as provided therein, will be convertible at the
option of the holders thereof into shares of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"). The Notes and the Common Stock
------------
issuable upon conversion thereof are herein collectively referred to as the
"Securities".
----------
<PAGE>
1. Offering Memorandum. The Notes will be offered and sold to the
-------------------
Initial Purchasers pursuant to one or more exemptions from the registration
requirements of the Securities Act of 1933, as amended (the "Act"). The Company
---
has prepared a preliminary offering memorandum, dated August 25, 1997 (the
"Preliminary Offering Memorandum") and a final offering memorandum, dated
-------------------------------
September 9, 1997 (the "Offering Memorandum"), relating to the offer and sale of
-------------------
the Notes. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Notes (and all securities issued
in exchange therefor, in substitution thereof or upon conversion thereof) shall
bear the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF OR OF A
BENEFICIAL INTEREST HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT)(A "QIB"), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "IAI"), OR (C) IT IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHO
THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A UNDER THE SECURITIES ACT, (C) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF THE COMPANY SO REQUESTS, AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES
ACT, (E) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER
2
<PAGE>
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING."
2. Agreements to Sell and Purchase.
-------------------------------
(a) On the basis of the representations, warranties and
covenants contained in this Agreement, and subject to the terms and conditions
contained herein, (i) the Company agrees to issue and sell to the Initial
Purchasers, and the Initial Purchasers agree, severally and not jointly, to
purchase from the Company, the principal amounts of Firm Notes set forth
opposite the name of each such Initial Purchaser on Schedule A hereto at a
purchase price equal to 97.25% of the principal amount thereof (the "Purchase
--------
Price"), and (ii) the Company agrees to issue and sell to the Initial Purchasers
- -----
the Additional Notes, and the Initial Purchasers shall have the right to
purchase, severally and not jointly, from the Company, from time to time, up to
$25,000,000 in principal amount of Additional Notes at the Purchase Price.
Additional Notes may be purchased solely for the purpose of covering over-
allotments made in connection with the offering of the Firm Notes. The Purchase
Price payable by the Initial Purchasers for the Notes shall not include any
accrued interest on the Notes.
(b) The Initial Purchasers may exercise their right to purchase
Additional Notes in whole or in part from time to time by giving written notice
thereof to the Company at any time within 30 days after the date of this
Agreement. DLJ shall give any such notice on behalf of the Initial Purchasers
and such notice shall specify the aggregate principal amount of Additional Notes
to be purchased pursuant to such exercise and the date of payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date, (ii) no later than ten business days after such
notice has been given and (iii) no earlier than two business days after such
notice has been given. If any Additional Notes are to be purchased, each Initial
Purchaser, severally and not jointly, agrees to purchase from the Company the
principal amount of Additional Notes which bears the same proportion to the
total principal amount of Additional Notes to be purchased from the Company as
the principal amount of Firm Notes set forth opposite the name of such Initial
Purchaser on Schedule A hereto bears to the total principal amount of the Firm
Notes.
3
<PAGE>
(c) The Company hereby agrees (and the Company shall,
concurrently with the execution of this Agreement, deliver letter agreements
executed by each of the directors and executive officers of the Company,
pursuant to which each such person agrees) not to offer, sell, grant any option
to purchase or otherwise dispose of any Common Stock or any securities
convertible into or exercisable or exchangeable for, or any warrants, options or
rights to purchase or acquire, Common Stock or in any other manner transfer all
or a portion of the economic consequences associated with the ownership of any
Common Stock, or enter into any agreement to do any of the foregoing, for a
period of 90 days after the date of the Offering Memorandum, other than (i) as a
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by such letter agreement, (ii) transfers to a transferor's affiliates, as such
term is defined in Rule 405 promulgated under the Act, provided the transferee
agrees in writing to be bound by such letter agreement, or (iii) with the prior
written consent of DLJ. Notwithstanding the foregoing, during such 90-day
period, the Company (i) may grant stock options, and may issue shares of Common
Stock upon exercise of stock options granted, pursuant to the Company's 1996
Stock Option and Incentive Plan and (ii) may offer, sell, grant any option to
purchase or otherwise dispose of any Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or in any manner transfer
all or a portion of the economic consequences associated with the ownership of
Common Stock, in connection with the Company's acquisition (directly or
indirectly) of assets of, or an ownership interest in, another business or
entity, provided, however, that, without the prior written consent of DLJ, the
Company may not (iii) register the shares of Common Stock referred to in clause
(ii) of this sentence under the Act for such 90-day period or (iv) grant any
registration rights with respect to the shares of Common Stock referred to in
clause (ii) of this sentence that are exercisable within such 90-day period.
3. Terms of Offering.
-----------------
(a) The Initial Purchasers have advised the Company that the
Initial Purchasers will make offers (the "Exempt Resales") of the Notes
--------------
purchased hereunder on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to (i) persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBs"), (ii) not more than 10 institutional "accredited
----
investors", as defined in Rule 501(a) (1), (2), (3) or (7) under the Act, who,
prior to their purchase of Notes, deliver to the Initial Purchasers a letter in
the form attached to the Offering Memorandum as Annex A (each, an "Accredited
----------
Institution") and (iii) persons permitted to purchase the Notes in offshore
- -----------
transactions in reliance upon Regulation S under the Act (each, a "Regulation S
------------
Purchaser") (such persons specified in clauses (i), (ii) and (iii) above being
- ---------
referred to herein as the "Eligible Purchasers"). The Initial Purchasers will
-------------------
offer the Notes to Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof (plus accrued interest, if any, from the Closing Date).
Such price may be changed at any time without notice.
(b) Holders (including subsequent transferees) of the Securities
will have the registration rights set forth in the registration rights agreement
(the "Registration
4
<PAGE>
Rights Agreement"), to be dated the Closing Date, in substantially the form of
- ----------------
Exhibit A hereto, for so long as such Securities constitute "Transfer Restricted
Securities" (as defined in the Registration Rights Agreement). Pursuant to the
Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission"), under the circumstances
----------
set forth therein, a shelf registration statement pursuant to Rule 415 under the
Act (the "Registration Statement") relating to the resale of the Securities and
----------------------
to use all reasonable efforts to cause the Registration Statement to be declared
effective and remain effective and usable for the period specified in the
Registration Rights Agreement. This Agreement, the Indenture, the Notes and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "Operative Documents".
-------------------
4. Delivery and Payment.
--------------------
(a) Delivery to the Initial Purchasers of, and payment of the
Purchase Price for, the Firm Notes shall be made at the offices of Baker &
Botts, L.L.P. in Dallas, Texas, or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m., New York City
time, on September 15, 1997 or at such other time as shall be agreed upon by the
Initial Purchasers and the Company. The time and date of such delivery and
payment are herein called the "Closing Date".
------------
(b) Delivery to the Initial Purchasers of, and payment of the
Purchase Price for, any Additional Notes to be purchased by the Initial
Purchasers shall be made at the offices of Baker & Botts, L.L.P. in Dallas,
Texas, at 9:00 a.m., New York City time, on such date or dates (individually, an
"Option Closing Date"), which may be the same as the Closing Date but shall in
-------------------
no event be earlier than the Closing Date, as the Initial Purchasers shall
designate pursuant to the exercise notice given by DLJ on behalf of the Initial
Purchasers pursuant to Section 2(b) hereof. Any Option Closing Date and the
location of delivery of and payment for the Additional Notes may be varied by
agreement between the Initial Purchasers and the Company.
(c) Notes sold by the Initial Purchasers to QIBs and pursuant to
Regulation S under the Act ("Regulation S") will be represented by one or more
------------
Notes in definitive global form, registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC"), having an aggregate principal
---
amount corresponding to the aggregate principal amount of the Notes sold to QIBs
and pursuant to Regulation S (collectively, the "Global Note"). Notes sold by
-----------
the Initial Purchasers to Accredited Institutions will be represented by one or
more Notes in definitive form, registered in the names of such Accredited
Institutions (as provided by the Initial Purchasers to the Company at least two
business days prior to the Closing Date or the Option Closing Date, as
applicable), having an aggregate principal amount corresponding to the aggregate
principal amount of the Notes sold to Accredited Institutions (collectively, the
"Accredited Institution Note"). On the Closing Date and each Option Closing
---------------------------
Date, if any, the Global Note and the Accredited Institution Note shall be
delivered by the Company to the Initial Purchasers (or as the Initial Purchasers
direct) in each case with any transfer taxes thereon duly paid by the Company
5
<PAGE>
against payment by the Initial Purchasers of the Purchase Price thereof by wire
transfer in same day funds to an account designated by the Company. The Global
Note and the Accredited Institution Note shall be made available to the Initial
Purchasers for inspection not later than 9:30 a.m., New York City time, on the
business day immediately preceding the Closing Date or the Option Closing Date,
as the case may be.
5. Agreements of the Company. The Company hereby agrees with the
-------------------------
Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested
by the Initial Purchasers, confirm such advice in writing, (i) of the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Securities for offering or
sale in any jurisdiction designated by the Initial Purchasers pursuant to
Section 5(d) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose,
and (ii) of the happening of any event during the period referred to in Section
5(c) hereof that makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires any
additions to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein not misleading leading in any
material respect. The Company shall use commercially reasonable efforts to
prevent the issuance of any stop order suspending the qualification or exemption
from qualification of any Securities under any state securities or Blue Sky laws
and, if at any time any state securities commission or other federal or state
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of any Securities under any state securities or
Blue Sky laws, the Company shall use commercially reasonable efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and counsel for the
Initial Purchasers as many copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments or supplements thereto, as the Initial
Purchasers may reasonably request. Subject to the Initial Purchasers' compliance
with their representations, warranties and agreements set forth in Section 7
hereof, the Company consents to the use of the Offering Memorandum, and any
amendments and supplements thereto required pursuant hereto, by the Initial
Purchasers in connection with Exempt Resales.
(c) During the period prior to the earlier of the expiration of
nine months after the date of the Offering Memorandum and the date of completion
of the sale of the Notes by the Initial Purchasers, (i) not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object within two business days after being so
advised and (ii) if any event shall occur or condition shall exist as a result
of which, in the opinion of counsel to the Initial Purchasers, it becomes
necessary to amend or supplement the Offering Memorandum in order to make the
statements therein, in the light of the circumstances when the Offering
Memorandum is delivered to a purchaser, not misleading in
6
<PAGE>
any material respect, or if it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to the Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading in any material respect, or
so that the Offering Memorandum will comply with applicable law, and to furnish
to the Initial Purchasers and such other persons as the Initial Purchasers may
designate such number of copies thereof as the Initial Purchasers may reasonably
request.
(d) Prior to the sale of all Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the registration or qualification of the
Securities for offer and sale to the Initial Purchasers and pursuant to Exempt
Resales under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may reasonably designate in writing prior to the date of this
Agreement, and to continue such qualification in effect so long as reasonably
required for the distribution of the Securities and to file such consents to
service of process or other documents as may be reasonably necessary in order to
effect such registration or qualification; provided, however, that the Company
shall not be required in connection therewith to register or qualify as a
foreign corporation in any jurisdiction in which it is not now so qualified or
to take any action that would subject it to general consent to service of
process or taxation, other than as to matters and transactions relating to the
Preliminary Offering Memorandum, the Offering Memorandum or Exempt Resales, in
any jurisdiction in which it is not now so subject.
(e) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
------------
available to any holder of Securities in connection with any sale thereof and
any prospective purchaser of such Securities from such holder, the information
("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
---------------------
(f) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Company
under this Agreement, including: (i) the fees, disbursements and expenses of
counsel to the Company and accountants of the Company in connection with the
sale and delivery of the Notes to the Initial Purchasers and pursuant to Exempt
Resales and the issuance and delivery of Common Stock upon conversion of the
Notes, and all other fees or expenses of the Company in connection with the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum, the Offering Memorandum and all amendments and supplements to any of
the foregoing (including financial statements) specified in Sections 5(b) and
5(c) hereof prior to or during the period specified in Section 5(c) hereof,
including the mailing and delivering of copies thereof to the Initial Purchasers
and persons designated by them in the quantities specified herein, (ii) all
costs and expenses of the Company related to the transfer and delivery of the
Notes to the Initial Purchasers and pursuant to Exempt Resales and the issuance
and
7
<PAGE>
delivery of the Common Stock issuable upon conversion of the Notes, and any
transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or delivery of the
Securities, (iv) all expenses in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and reasonable fees and disbursements of counsel for
the Initial Purchasers in connection with such registration or qualification and
memoranda relating thereto), (v) the cost of printing certificates representing
the Securities, (vi) all expenses and listing fees in connection with the
application for quotation of the Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL market ("PORTAL") and
---- ------
the application for listing of the underlying Common Stock on the American Stock
Exchange, (vii) the fees and expenses of the Trustee and the Trustee's counsel
in connection with the Indenture and the Notes, (viii) the costs and charges of
any transfer agent, registrar and/or depositary (including DTC), (ix) any fees
charged by rating agencies for the rating of the Notes, (x) all costs and
expenses of the Registration Statement, as set forth in the Registration Rights
Agreement, and (xi) all other costs and expenses of the Company incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section.
(g) To use commercially reasonable efforts to effect the
inclusion of the Notes on PORTAL.
(h) To use commercially reasonable efforts to obtain the
approval of DTC for "book-entry" transfer of the Securities, and to comply with
all of its agreements set forth in the representation letter of the Company to
DTC relating to the approval of the Securities by DTC for "book-entry" transfer.
(i) To use commercially reasonable efforts to cause the Common
Stock issuable upon conversion of the Notes to be listed on the American Stock
Exchange prior to the Closing Date.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) the
offering or sale of which would be integrated with the sale of the Notes to the
Initial Purchasers or pursuant to Exempt Resales or the issuance of the Common
Stock upon conversion of the Notes, in a manner that would require the
registration of any such sale or issuance of the Securities under the Act.
(k) To the extent lawful, not to voluntarily claim, and to
actively resist any attempts to claim, the benefit of any usury laws against the
holders of any Notes.
(l) To comply with all of its agreements set forth in the
Registration Rights Agreement.
8
<PAGE>
(m) To use commercially reasonable efforts to do and perform all
things required or necessary to be done and performed under this Agreement by it
prior to the Closing Date and any Option Closing Date and to satisfy all
conditions precedent to the delivery of the Securities.
6. Representations, Warranties and Agreements of the Company. As of
---------------------------------------------------------
the date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, as of the
respective dates thereof, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or omissions
from the Preliminary Offering Memorandum or the Offering Memorandum (or any
supplement or amendment thereto) based upon information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use therein. The Company acknowledges for all purposes of this
Agreement (including Section 8 hereof) that the last paragraph on the cover page
of the Offering Memorandum and the fourth, eleventh and twelfth paragraphs under
the caption "Plan of Distribution" in the Offering Memorandum constitute the
only written information furnished to the Company by or on behalf of the Initial
Purchasers expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum (or any amendment or supplement to either of them) and that
the Initial Purchasers shall not be deemed to have provided any other
information (and therefore are not responsible for any such statements or
omissions). No stop order preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any amendment or supplement thereto,
or any order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has been
issued.
(b) Each of the Company and its Material Subsidiaries (as
defined herein) has been duly incorporated, is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as it is currently being
conducted and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole (a "Material Adverse Effect"). As
-----------------------
used in this Agreement, "Material Subsidiaries" means the following subsidiaries
---------------------
of the Company: Halter Marine, Inc., a Nevada corporation, Gulf Coast
Fabrication, Inc., a Mississippi corporation, Halter Marine Gulfport, Inc., a
Nevada corporation, TDI-Halter, Inc., a Texas corporation, and Maritime
Holdings, Inc., a Delaware corporation.
9
<PAGE>
(c) All the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, nonassessable
and not subject to any preemptive or similar rights. The authorized capital
stock of the Company, including the Common Stock, conforms as to legal matters
to the description thereof in the Offering Memorandum. The Company has the
authorized and outstanding capital stock as set forth in the Offering
Memorandum.
(d) All of the outstanding shares of capital stock of each of
the Company's Material Subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature (each, a
"Lien").
----
(e) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) rights to indemnity and contribution hereunder may be limited by federal
or state securities laws.
(f) The Indenture has been duly authorized by the Company and,
on the Closing Date, will have been validly executed and delivered by the
Company. When the Indenture has been validly executed and delivered by the
Company and the Trustee, the Indenture will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date and each
Option Closing Date, the Indenture will conform as to legal matters to the
description thereof in the Offering Memorandum.
(g) The Notes have been duly authorized by the Company and, on
the Closing Date and each Option Closing Date, as applicable, will have been
validly issued, executed and delivered by the Company. When the Notes have been
issued, executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in accordance
with the terms of this Agreement, the Notes will be entitled to the benefits of
the Indenture and will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date and each Option Closing Date, as
applicable, the Notes will conform as to legal matters to the description
thereof in the Offering Memorandum.
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<PAGE>
(h) The Notes are convertible into Common Stock in accordance
with the terms of the Indenture. The shares of Common Stock issuable upon
conversion of the Notes have been duly authorized and reserved for issuance and,
when issued and delivered by the Company upon conversion of the Notes, will be
validly issued, fully paid and nonassessable and will conform as to legal
matters to the description thereof in the Offering Memorandum.
(i) The issuance of the Securities will not be subject to any
preemptive or similar rights.
(j) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or Liens issued or
created by the Company or any subsidiary thereof entitling any person to
purchase or otherwise acquire any shares of capital stock of, or other ownership
interests in, the Company or any subsidiary thereof, except as otherwise
disclosed in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized
by the Company and, on the Closing Date, will have been validly executed and
delivered by the Company. When the Registration Rights Agreement has been
validly executed and delivered by the Company and the Initial Purchasers, the
Registration Rights Agreement will be a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (ii) rights of acceleration
and the availability of equitable remedies may be limited by equitable
principles of general applicability and (iii) rights to indemnity and
contribution thereunder may be limited by federal or state securities laws. On
the Closing Date, the Registration Rights Agreement will conform as to legal
matters to the description thereof in the Offering Memorandum.
(l) Neither the Company nor any of its Material Subsidiaries is
(i) in violation of its respective charter or by-laws or (ii) in default in the
performance of any obligation, agreement, covenant or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any indenture,
loan agreement, mortgage, lease or other agreement or instrument to which the
Company or any of its Material Subsidiaries is a party or by which the Company
or any of its Material Subsidiaries or their respective property is bound,
except for any such default that would not have a Material Adverse Effect.
(m) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Company, compliance by the Company with
all the provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or regulatory
body, administrative agency or other governmental body (except such as may be
required under the Act (in the case of the Registration Statement) and under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the
11
<PAGE>
Company or any of its Material Subsidiaries or any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the Company or any of
its Material Subsidiaries is a party or by which the Company or any of its
Material Subsidiaries or their respective property is bound, or (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its Material Subsidiaries or their respective property.
(n) Except as otherwise set forth in the Offering Memorandum,
there are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or to which any of their respective property
is subject, and to the best of the Company's knowledge, no such proceedings are
threatened or contemplated, which, in either case, would result, singly or in
the aggregate, in a Material Adverse Effect.
(o) Neither the Company nor any of its subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), any
------------------
federal or state law relating to discrimination in the hiring, promotion or pay
of employees or any applicable federal or state wages and hours laws, or any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations promulgated thereunder, except for such violations
which, singly or in the aggregate, would not have a Material Adverse Effect.
(p) Based on the prior experience of the Company and its
subsidiaries with respect to compliance with Environmental Laws, the Company has
reasonably concluded that the costs and liabilities associated with compliance
by the Company and its subsidiaries with Environmental Laws are not likely to
have, singly or in the aggregate, a Material Adverse Effect.
(q) Each of the Company and its subsidiaries has such permits,
licenses, franchises and authorizations of all governmental or regulatory
authorities (each, an "Authorization"), including, without limitation, under any
-------------
applicable Environmental Laws, as are necessary to own, lease, license and
operate its properties and to conduct its business, except where the failure to
have any such Authorization would not, singly or in the aggregate, have a
Material Adverse Effect. Each of the Company and its subsidiaries is in
compliance with all material obligations with respect to such Authorizations;
and no event has occurred which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results in any other material impairment of the rights of the
holder of any such Authorization; and, except as disclosed in the Offering
Memorandum, such Authorizations contain no restrictions that are materially
burdensome to the Company or any of its Material Subsidiaries; except, in each
case described in this sentence, as would not, singly or in the aggregate, have
a Material Adverse Effect.
(r) The accountants, Ernst & Young LLP, that have certified the
financial statements of the Company included in the Preliminary Offering
Memorandum and
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<PAGE>
the Offering Memorandum are independent public accountants with respect to the
Company, as required by the Act and the Exchange Act. The historical financial
statements, together with the notes thereto, set forth in the Preliminary
Offering Memorandum and the Offering Memorandum comply as to form in all
material respects with the requirements applicable to prospectuses included in
registration statements on Form S-1 under the Act.
(s) The historical financial statements, together with the notes
thereto, forming part of the Preliminary Offering Memorandum and the Offering
Memorandum (and any amendment or supplement thereto), present fairly, in all
material respects, the consolidated financial position, results of operations
and changes in financial position of the Company and its subsidiaries on the
basis stated in the Preliminary Offering Memorandum and the Offering Memorandum
at the respective dates or for the respective periods to which they apply; such
statements and related notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; and the other financial and statistical
information and data set forth in the Preliminary Offering Memorandum and the
Offering Memorandum (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company.
(t) The pro forma financial statements included in the
Preliminary Offering Memorandum and the Offering Memorandum (and any amendment
or supplement thereto) have been prepared on a basis consistent with the
historical financial statements of the Company and its subsidiaries (except for
the pro forma adjustments specified therein) and give effect to assumptions used
in the preparation thereof on a reasonable basis and in good faith and present
fairly in all material respects the historical and proposed transactions
described therein; and such pro forma financial statements comply as to form in
all material respects with the requirements applicable to pro forma financial
statements included in prospectuses included in registration statements on Form
S-1 under the Act.
(u) The Company is not and, immediately after giving effect to
the offering and sale of the Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(v) Except as described in the Offering Memorandum, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company or to
require the Company to include such securities with the Securities registered
pursuant to the Registration Statement.
(w) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that
13
<PAGE>
might cause this Agreement or the issuance or sale of the Notes to violate
Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation
U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System.
(x) Assuming the Initial Purchasers comply with their
representations, warranties and agreements set forth in Section 7 hereof, the
Company is not required to deliver the information specified in Rule 144A(d) in
connection with the resale by the Initial Purchasers of the Securities as set
forth in Section 3(a) hereof.
(y) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated inter-dealer quotation system.
(z) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company or any of its
affiliates or representatives (other than the Initial Purchasers, as to whom the
Company makes no representation) in connection with the offer and sale of the
Securities contemplated hereby, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising. No
securities of the same class as the Notes have been issued and sold by the
Company within the six-month period immediately prior to the date hereof.
(aa) Prior to the effectiveness of the Registration Statement,
the Indenture is not required to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA").
(bb) None of the Company, any of its affiliates nor any person
acting on behalf of any of them (other than the Initial Purchasers, as to whom
the Company makes no representation) has engaged or will engage in any directed
selling efforts within the meaning of Regulation S with respect to the
Securities. The Company and its affiliates and all persons acting on behalf of
any of them (other than the Initial Purchasers, as to whom the Company makes no
representation) have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of the
Securities outside the United States.
(cc) No registration under the Act of the Notes is required for
the sale of the Notes to the Initial Purchasers as contemplated hereby or for
the Exempt Resales or for the issuance and delivery of the Common Stock issuable
upon conversion of the Notes, assuming the accuracy of the Initial Purchasers'
representations, warranties and agreements set forth in Section 7 hereof.
14
<PAGE>
(dd) All indebtedness of the Company and its subsidiaries that
will be repaid with the proceeds of the issuance and sale of the Notes was
incurred, and the indebtedness represented by the Notes is being incurred, for
proper purposes and in good faith, and each of the Company and its subsidiaries
(i) was at the time of the incurrence of such indebtedness that will be repaid
with the proceeds of the issuance and sale of the Notes and will be on the
Closing Date and each Option Closing Date (after giving effect to the
application of the proceeds from the issuance of the Notes sold on such date)
solvent, (ii) had at the time of the incurrence of such indebtedness that will
be repaid with the proceeds of the issuance and sale of the Notes and will have
on the Closing Date and each Option Closing Date (after giving effect to the
application of the proceeds from the issuance of the Notes sold on such date)
sufficient capital for carrying on their respective business and (iii) were at
the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Notes and will be on the Closing Date
and each Option Closing Date (after giving effect to the application of the
proceeds from the issuance of the Notes sold on such date) able to pay their
respective debts as they mature.
(ee) To the Company's knowledge, no action has been taken and no
law, statute, rule or regulation or order has been enacted, adopted or issued by
any governmental agency or body which prevents the execution, delivery and
performance of any of the Operative Documents, prevents the issuance or sale of
the Securities or suspends the issuance or sale of the Securities; and no
injunction, restraining order or other order or relief of any nature by a
federal or state court or other tribunal of competent jurisdiction has been
issued with respect to the Company or any of its subsidiaries which would
prevent or suspend the issuance or sale of the Securities.
(ff) The Company and its subsidiaries have filed all applicable
federal, state and local tax returns on a timely basis and paid all such
applicable taxes that are shown to be due thereon.
(gg) Except as otherwise set forth in the Offering Memorandum or
such as are not material to the business, prospects, financial condition or
results of operation of the Company and its subsidiaries taken as a whole, each
of the Company and its subsidiaries has good and defensible title, free and
clear of all liens, claims, encumbrances and restrictions (except (i) liens for
taxes not yet due and payable, (ii) liens existing or arising under law or
contract in favor of surety companies or Trinity and providing security in
connection with obligations of such parties under surety arrangements or under
bid or performance guarantees relating to contractual obligations of the Company
or a subsidiary thereof in the ordinary course of business or (iii) other liens
existing or arising in the ordinary course of business that are not material to
the Company and its subsidiaries, taken as a whole), to all property and assets
described in the Offering Memorandum as being owned by it. All leases to which
the Company or any of its Material Subsidiaries is a party are valid and binding
and no default has occurred or is continuing thereunder, which would result in
any Material Adverse Effect, and the Company and its Material Subsidiaries enjoy
peaceful and undisturbed possession under all
15
<PAGE>
such leases to which any of them is a party as lessee with such exceptions as do
not materially interfere with the use made by the Company or such Material
Subsidiary.
(hh) Each of the Company and its subsidiaries maintains
reasonably adequate insurance.
(ii) The offer, issuance and sale by the Company of the
Securities will not adversely affect the tax-free status of the Trinity
Distribution, and the Company has received a written opinion of KPMG Peat
Marwick LLP to that effect (the "Tax Opinion"), an accurate and complete copy of
-----------
which has been furnished to the Initial Purchasers.
(jj) The Company is subject to and in material compliance with
the reporting requirements of Section 13 of the Exchange Act.
(kk) No bid or purchase by the Company, and no bid or purchase
that may be attributed to the Company (as a result of bids or purchases by an
"affiliated purchaser" within the meaning of Rule 100 of Regulation M under the
Exchange Act), for or of the Common Stock, any securities of the same class or
series as the Common Stock or any securities immediately convertible into or
exchangeable for or that represent any right to acquire Common Stock, is now
pending or in progress or will have commenced at any time prior to the
completion of the resale of the Notes by the Initial Purchasers.
(ll) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of the
--------------------------------------------------
Initial Purchasers, severally and not jointly, represents and warrants to, and
agrees with, the Company that:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Notes.
(b) Such Initial Purchaser (i) is not acquiring the Notes with a
view to any distribution thereof or with any present intention of offering or
selling any of the Notes in a transaction that would violate the Act or the
securities laws of any state of the United States or any other applicable
jurisdiction and (ii) will be reoffering and reselling the Notes
16
<PAGE>
only (x) to QIBs in reliance on the exemption from the registration requirements
of the Act provided by Rule 144A, (y) to not more than 10 Accredited
Institutions that execute and deliver a letter containing certain
representations and agreements in the form attached as Annex A to the Offering
Memorandum and (z) to non-U.S. persons in offshore transactions in reliance upon
Regulation S.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Notes pursuant
hereto, including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt
Resales, such Initial Purchaser will solicit offers to buy the Notes only from,
and will offer to sell the Notes only to, Eligible Purchasers. Each Initial
Purchaser further agrees that it will offer to sell the Notes only to, and will
solicit offers to buy the Notes only from (A) Eligible Purchasers that the
Initial Purchaser reasonably believes are QIBs, (B) not more than 10 Accredited
Institutions who make the representations contained in, and execute and return
to the Initial Purchaser, a certificate in the form of Annex A attached to the
Offering Memorandum and (C) Regulation S Purchasers, in each case, that agree
that (x) the Notes purchased by them may be resold, pledged or otherwise
transferred within the time period referred to under Rule 144(k) (taking into
account the provisions of Rule 144(d) under the Act, if applicable) under the
Act, as in effect on the date of the transfer of such Notes, only (I) to the
Company or any of its subsidiaries, (II) to a person whom the seller reasonably
believes is a QIB purchasing for its own account or for the account of a QIB in
a transaction meeting the requirements of Rule 144A under the Act, (III) in an
offshore transaction (as defined in Rule 902 under the Act) meeting the
requirements of Rule 904 under the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an Accredited Institution that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Note (the form of which is substantially the same as Annex A to the Offering
Memorandum) and, if requested by the Company, an opinion of counsel acceptable
to the Company that such transfer is in compliance with the Act, (VI) in
accordance with another exemption from the registration requirements of the Act
(and based upon an opinion of counsel acceptable to the Company) or (VII)
pursuant to an effective registration statement under the Act and, in each case,
in accordance with the applicable securities laws of any state of the United
States or any other applicable jurisdiction and (y) they will deliver to each
person to whom such Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) None of such Initial Purchaser nor any of its affiliates or any
person acting on its or their behalf has engaged or will engage in any directed
selling efforts within the meaning of Regulation S with respect to the Notes.
17
<PAGE>
(f) The Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold only
in offshore transactions.
(g) The sale of the Notes offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S is not part of a plan or scheme to
evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has offered the Notes and
will offer and sell the Notes (i) as part of its distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering
of the Notes pursuant hereto and the Closing Date, only in accordance with Rule
903 of Regulation S or another exemption from the registration requirements of
the Act. Such Initial Purchaser agrees that, during such 40-day restricted
period, it will not cause any advertisement with respect to the Notes (including
any "tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Notes, except such advertisements as are permitted by and include the statements
required by Regulation S.
(i) Such Initial Purchaser agrees that it has not offered or sold and
will not offer or sell the Notes sold pursuant hereto in reliance on Regulation
S (i) as part of its distribution at any time and (ii) otherwise until 40 days
after the later of the commencement of the offering of the Notes pursuant hereto
and the Closing Date, to a U.S. person (as defined in Rule 902 under the Act) or
for the account or benefit of a U.S. person (other than a distributor (as
defined in Rule 902 under the Act)).
(j) Such Initial Purchaser agrees that, at or prior to confirmation
of a sale of Notes by it in reliance on Regulation S to any distributor, dealer
or person receiving a selling concession, fee or other remuneration during the
40-day restricted period referred to in Rule 903(c)(3) under the Act, it will
send to such distributor, dealer or person receiving a selling concession, fee
or other remuneration a confirmation or notice to substantially the following
effect:
"The Notes covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of your distribution at any time or
(ii) otherwise until 40 days after the later of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S under the Securities Act (or pursuant to another available
exemption from the registration requirements under the Securities Act), and
in connection with any subsequent sale by you of the Notes covered hereby
in reliance on Regulation S during the period referred to above to any
distributor, dealer or person receiving a selling concession, fee or other
remuneration, you must deliver a notice to substantially
18
<PAGE>
the foregoing effect. Terms used above have the meanings assigned to them
in Regulation S."
(k) Such Initial Purchaser further represents and agrees that (i) it
has not offered or sold and will not offer or sell any Notes to persons in the
United Kingdom prior to the expiration of the period of six months from the
issue date of the Notes, except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their business or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995,
(ii) it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United Kingdom and (iii) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the Notes to a
person who is of a kind described in Article 11(3) of the Financial Services Act
of 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom the document may otherwise lawfully be issued or passed on.
(l) Such Initial Purchaser agrees that it will not offer, sell or
deliver any of the Notes in any jurisdiction outside the United States except
under circumstances that will result in compliance with the applicable laws
thereof, and that it will take at its own expense whatever action is required to
permit its purchase and resale of the Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
The Initial Purchasers acknowledge that the Company and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchasers hereby consent to such reliance.
8. Indemnification.
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(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser, each person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act) such Initial Purchaser,
and the respective officers, directors, partners, employees, representatives and
agents of such Initial Purchaser or any such controlling person, from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by, arising out of or based upon any untrue statement, or
alleged untrue statement, of a material fact contained in the Offering
Memorandum (or any amendment or supplement thereto), the Preliminary Offering
Memorandum or any Rule 144A Information provided by the Company to any holder or
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<PAGE>
prospective purchaser of Securities pursuant to Section 5(e) hereof or caused
by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by, arise out of or are based upon
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to such Initial Purchaser furnished in writing
to the Company by or on behalf of such Initial Purchaser expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to the Preliminary Offering Memorandum shall not inure to the benefit of any
Initial Purchaser from whom the person asserting any such losses, claims,
damages, liabilities and judgments purchased Notes, or any person controlling
such Initial Purchaser, if a copy of the Offering Memorandum (or any supplements
or amendments) was not sent or given by or on behalf of such Initial Purchaser,
if required by law so to have been delivered, at or prior to the sale of such
Notes to such person, and if the Offering Memorandum (or any supplement or
amendment) would have cured the defect giving rise to such loss, claim, damage,
liability or judgment.
(b) Each of the Initial Purchasers, severally and not jointly, agrees
to indemnify and hold harmless the Company, each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company and the respective officers, directors, partners, employees,
representatives and agents of the Company or any such controlling person, to the
same extent as the foregoing indemnity from the Company to such Initial
Purchaser but only with reference to information relating to such Initial
Purchaser furnished in writing to the Company by or on behalf of such Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum (and not with respect to information furnished by any other
Initial Purchaser).
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) hereof
(the "indemnified party"), the indemnified party shall promptly notify the
----------- -----
person against whom such indemnity may be sought (the "indemnifying party") in
------------ -----
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses, as incurred (except that in the
case of any action in respect of which indemnity may be sought pursuant to both
Sections 8(a) and 8(b) hereof, the Initial Purchasers shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchasers). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
20
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advised in writing by such counsel that representation of such indemnified party
and the indemnifying party by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to an actual or reasonably
anticipated material conflict of interest between them (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such separate firm of attorneys shall be
designated in writing by DLJ, in the case of the parties indemnified pursuant to
Section 8(a) hereof, and by the Company, in the case of parties indemnified
pursuant to Section 8(b) hereof. The indemnifying party shall not be liable for
any settlement of any such action effected without its written consent but if
settled with its written consent, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any and all losses or
liability by reason of such settlement. If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for reasonable fees and expenses of counsel as contemplated by the second
sentence of this paragraph and such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request within 30 business days
after receipt by such indemnifying party of the aforesaid request, the
indemnifying party agrees that it shall pay interest on such unreimbursed
amounts from the date of such request at the indemnifying party's borrowing rate
for funds borrowed from its principal lender plus 2% per annum. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement or compromise of, or consent to the entry of judgment with
respect to, any pending or threatened action in respect of which the indemnified
party is or could have been a party and indemnity or contribution may be or
could have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are or could have been the
subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchasers, on the other hand, from
the offering of the Notes or (ii) if the allocation provided by clause 8(d)(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant
21
<PAGE>
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Initial Purchasers, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the Notes
(before deducting expenses) received by the Company, and the total discounts and
commissions received by the Initial Purchasers, bear to the total price to
investors of the Notes, in each case as set forth in the table on the cover page
of the Offering Memorandum. The relative fault of the Company, on the one hand,
and the Initial Purchasers, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand, or the Initial
Purchasers, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Initial Purchasers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, an Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the Notes purchased by
it were sold to investors in Exempt Resales exceeds the amount of any damages
which such Initial Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations
to contribute pursuant to this Section 8(d) are several in proportion to the
respective principal amount of Notes purchased by each of the Initial Purchasers
hereunder and not joint.
9. Conditions of Initial Purchasers' Obligations. The several
---------------------------------------------
obligations of the Initial Purchasers to purchase the Firm Notes under this
Agreement on the Closing Date and to purchase Additional Notes under this
Agreement on any Option Closing Date are subject to the satisfaction of each of
the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing Date or the
Option Closing Date, as the case may be, with the same force and effect as if
made on and as of the Closing Date or the Option Closing Date.
22
<PAGE>
(b) On or after the date hereof, (i) there shall not have occurred
any downgrading, suspension or withdrawal of any rating of the Company or the
Notes by any "nationally recognized statistical rating organization", as such
term is defined for purposes of Rule 436(g)(2) under the Act, and (ii) no such
rating organization shall have given notice that it has assigned a lower rating
to the Notes than that on which the Notes were marketed (other than, in each
such case, a downgrading of any rating of the Company or the Notes that has
occurred solely as a result of the increase in the aggregate principal amount of
the Notes being sold to the Initial Purchasers from the amount reflected in the
Preliminary Offering Memorandum).
(c) Since the respective dates as of which information is given in
the Offering Memorandum, other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii) there
shall not have been any change or any development involving a prospective
material adverse change, in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(c)(i),
9(c)(ii) or 9(c)(iii), is material and adverse and, in the judgment of the
Initial Purchasers, makes it impracticable to market the Notes on the terms and
in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, a certificate dated the Closing
Date or the Option Closing Date, as the case may be, signed by the President and
the Chief Financial Officer of the Company, confirming the matters set forth in
Sections 9(a), 9(b) and 9(c) hereof.
(e) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion (satisfactory to the
Initial Purchasers and counsel for the Initial Purchasers), dated the Closing
Date or the Option Closing Date, as the case may be, of Baker & Botts, L.L.P.,
counsel for the Company, to the effect that:
(i) each of the Company and its Material Subsidiaries has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to carry on its business
and to own, lease and operate its properties as described in the
Offering Memorandum;
(ii) all the outstanding shares of capital stock of the Company
have been duly authorized by all necessary corporate action on behalf
of the Company and are validly issued, fully paid and nonassessable,
and to
23
<PAGE>
such counsel's knowledge, none of the outstanding shares of capital
stock of the Company were issued in violation of or subject to any
preemptive rights or other similar rights to subscribe for or purchase
the same arising under the Certificate of Incorporation or Bylaws of
the Company or the General Corporation Law of the State of Delaware;
the shares of Common Stock initially issuable upon conversion of the
Notes have been duly authorized by all necessary corporate action on
behalf of the Company, have been reserved for issuance upon conversion
and, when issued and delivered by the Company upon conversion of the
Notes, will be validly issued, fully paid and nonassessable; and to
such counsel's knowledge, there are no preemptive rights or other
similar rights to subscribe for or purchase the Securities arising
under the Certificate of Incorporation or Bylaws of the Company or the
General Corporation Law of the State of Delaware;
(ii) all the outstanding shares of capital stock of each of the
Company's Material Subsidiaries are owned of record and, to such
counsel's knowledge, beneficially by the Company or a subsidiary
thereof, free and clear, to such counsel's knowledge, of any Lien,
except for such Liens as are described in the Offering Memorandum;
(iv) the Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Operative Documents;
(v) the Notes have been duly authorized by all necessary
corporate action on the part of the Company and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms except
as (x) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights and remedies generally and
(y) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
(vi) the Indenture has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed
and delivered by the Company and is a valid and binding agreement of
the Company, enforceable against the Company in accordance with its
terms except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or
24
<PAGE>
similar laws affecting creditors' rights and remedies generally and
(y) rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
(vi) this Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been duly executed
and delivered by the Company;
(vi) the Registration Rights Agreement has been duly authorized
by all necessary corporate action on the part of the Company, has been
duly executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as (x) the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting creditors' rights and
remedies generally and (y) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of
general applicability;
(ix) the Notes, the Indenture and the Registration Rights
Agreement conform as to legal matters in all material respects to the
descriptions thereof contained in the Offering Memorandum;
(x) the statements under the caption "Description of Capital
Stock" in the Offering Memorandum, insofar as such statements
constitute a summary of the Certificate of Incorporation and Bylaws of
the Company and of the General Corporation Law of the State of
Delaware which relate to the Common Stock, fairly present in all
material respects the information called for therein;
(xi) the statements under the caption "Plan of Distribution" in
the Offering Memorandum, insofar as such statements constitute a
summary of the legal matters, documents or proceedings referred to
therein, fairly present in all material respects such legal matters,
documents and proceedings; and
(xi) the execution, delivery and performance of this Agreement
and the other Operative Documents by the Company will not (A) result
in a violation of the charter or by-laws of the Company, (B) to such
counsel's knowledge, result in a breach or violation of or constitute
(either alone or with notice or the passage of time, or both) a
default under, any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the
Company or any of its
25
<PAGE>
subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound that is
filed as an exhibit to the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 1997, (C) result in a violation of any
existing statute, rule or regulation of any governmental body of the
United States of America or the State of Texas or (solely with respect
to the General Corporation Law of the State of Delaware) the State of
Delaware or (D) to such counsel's knowledge, result in a violation of
any existing judgment, order, writ, injunction or decree of any court
or governmental body of the United States of America or the State of
Texas or (solely with respect to the General Corporation Law of the
State of Delaware) the State of Delaware that specifically names the
Company or any of its subsidiaries or is directed at any of their
respective properties (provided, however, that such counsel need
express no opinion with respect to compliance with any federal or
state securities or antifraud law, rule or regulation except as
otherwise specifically stated in the opinion of such counsel), except
for any such violation, breach or default referred to in clause (A),
(B), (C) or (D) above which would not prevent or adversely affect in
any material respect the performance of this Agreement or any of the
other Operative Documents or have a Material Adverse Effect;
(xi) to such counsel's knowledge, relying solely on
certificates of officers of the Company, (A) there are no legal or
governmental proceedings pending or threatened to which the Company or
any of its subsidiaries is or could be a party or to which any of
their respective property is or could be subject, which are required
to be described in the Offering Memorandum and are not so described,
and (B) there are no contracts or other documents which are required
to be described in the Offering Memorandum and which are not so
described (assuming for purposes of clauses (A) and (B) above that the
disclosure requirements applicable to prospectuses contained in
registration statements on Form S-1 under the Act apply to the
Offering Memorandum);
(xi) the Company is not and, after giving effect to the
offering and sale of the Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(xv) as of the date of such opinion, it is not necessary in
connection with the offer, sale and delivery of the Notes to the
Initial Purchasers in the manner contemplated by this Agreement or in
26
<PAGE>
connection with the Exempt Resales to qualify the Indenture under
the TIA; and
(xv) no registration under the Act of the Notes is
required for the sale of the Notes to the Initial Purchasers as
contemplated by this Agreement or for the Exempt Resales assuming
(A) that the Initial Purchasers are QIBs, (B) that the purchasers
who buy the Notes in the Exempt Resales are either QIBs, a
limited number of Accredited Institutions or Regulation S
Purchasers, (C) the accuracy of the Initial Purchasers'
representations contained in this Agreement, (D) the accuracy of
the Company's representations in this Agreement, (E) with respect
to Accredited Institutions or Regulation Purchasers, the accuracy
of the representations made by each Accredited Institution as set
forth in the letter of representation executed by such Accredited
Institution in the form of Annex A to the Offering Memorandum,
(F) that the certificates representing the Notes bear the legends
contemplated by the Indenture and (G) receipt by the purchasers
to whom the Initial Purchasers initially resell the Notes of a
copy of the Offering Memorandum at or prior to the delivery of
confirmation of sale.
Such counsel shall also include, in a separate paragraph of its
opinion, statements to the following effect: Such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company and
representatives of the Initial Purchasers at which the contents of the Offering
Memorandum and related matters were discussed. Although such counsel did not
independently verify such information and is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness (except to
the extent stated in subparagraphs (ix), (x) and (xi) of this paragraph (e)) of
the statements contained in the Offering Memorandum, such counsel advises the
Initial Purchasers that, on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Offering Memorandum, as amended or supplemented, if applicable (other than (i)
the financial statements (including the notes thereto and the auditors' reports
thereon) included therein and (ii) the other financial and statistical
information included therein, as to which such counsel has not been asked to
comment), as of the issue date thereof or at the Closing Date or any Option
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
on certificates of officers of the Company and its subsidiaries and of
governmental officials, in which case their opinion is to state that they are so
doing. Such counsel shall also be entitled to state that its opinion is limited
to the laws of the United States of America, the State of Texas and (with
respect to the enforceability of the Notes, the Indenture and the Registration
27
<PAGE>
Rights Agreement) the State of New York and the General Corporation Law of the
State of Delaware; provided, however, that (i) for purposes of the opinions
described in Sections 9(e)(i) and 9(e)(iii) as such opinions relate to the
Company's Material Subsidiaries, such counsel may assume that the laws of the
respective states of incorporation of such Material Subsidiaries are identical
in all substantive respects to the General Corporation Law of the State of
Delaware and (ii) for purposes of the opinions described in Section 9(e)(i) as
to due incorporation, valid existence and good standing, such counsel may base
such opinions exclusively on certificates of appropriate governmental
authorities. The opinion of Baker & Botts, L.L.P. described in this Section
9(e) shall be rendered to the Initial Purchasers at the request of the Company
and shall so state therein.
(f) The Initial Purchasers shall have received on the Closing Date or
the Option Closing Date, as the case may be, an opinion, dated the Closing Date
or the Option Closing Date, as the case may be, of Thompson & Knight, P.C.,
counsel for the Initial Purchasers, in form and substance reasonably
satisfactory to the Initial Purchasers, with respect to the sufficiency of all
such corporate proceedings and other legal matters relating to this Agreement
and the transactions contemplated hereby as the Initial Purchasers may
reasonably require.
(g) The Initial Purchasers shall have received, at the Closing Date
and each Option Closing Date, if any, in form and substance reasonably
satisfactory to the Initial Purchasers, letters dated the Closing Date or the
Option Closing Date, as appropriate, in substantially the form and substance of
the letters delivered to the Initial Purchasers by Ernst & Young LLP,
independent public accountants, and KPMG Peat Marwick LLP, independent public
accountants, on the date of this Agreement.
(h) The Notes shall have been approved by the NASD for trading and
duly listed in PORTAL. DTC shall have approved the Securities for "book-entry"
transfer. The Common Stock issuable upon conversion of the Notes shall have
been approved for listing on the American Stock Exchange, subject to official
notice of issuance.
(i) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company and the Trustee.
(j) The Company shall have executed the Registration Rights Agreement
and the Initial Purchasers shall have received an original copy thereof, duly
executed by the Company.
(k) The Initial Purchasers shall have received a letter, dated the
Closing Date and each Option Closing Date, from KPMG Peat Marwick LLP confirming
that the Tax Opinion has not been withdrawn or modified in any material respect
and that no facts have come to its attention that might cause such a withdrawal
or modification.
28
<PAGE>
(l) The banks under the Existing Credit Facility shall have
executed and delivered to the Company the waiver agreement described in the
letter dated September 9, 1997 from Whitney National Bank to the Initial
Purchasers, as required by the terms of such letter.
(m) The Initial Purchasers shall have received certificates of
officers of the Company and of governmental officials as to such other matters
as the Initial Purchasers may reasonably request.
(n) The Company shall not have failed at or prior to the Closing
Date or the Option Closing Date, as the case may be, to perform or comply with
any of the agreements herein contained and required to be performed or complied
with by it at or prior to the Closing Date or the Option Closing Date.
10. Effectiveness of Agreement and Termination. This Agreement shall
------------------------------------------
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time prior to the Closing Date
by the Initial Purchasers by written notice to the Company if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Offering Memorandum, unless such change or development has been
expressly disclosed in the Offering Memorandum, any material adverse change or
development involving a prospective material adverse change in the condition,
financial or otherwise, of the Company and its subsidiaries, taken as a whole,
or the earnings, affairs or business prospects of the Company or any of its
subsidiaries, taken as a whole, whether or not arising in the ordinary course of
business, which would, in the judgment of the Initial Purchasers, make it
impracticable to market the Notes on the terms and in the manner contemplated in
the Offering Memorandum, (ii) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchasers' judgment, is material and adverse and, in the Initial Purchasers'
judgment, makes it impracticable to market the Notes on the terms and in the
manner contemplated in the Offering Memorandum, (iii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq National Market or
limitation on prices for securities or other instruments on any such exchange or
the Nasdaq National Market, (iv) the suspension of trading of any securities of
the Company on any exchange or in the over-the-counter market, (v) the
enactment, publication, decree or other promulgation of any federal or state
statute, regulation, or rule or order of any court or other governmental
authority which in the opinion of the Initial Purchasers materially and
adversely affects, or will materially and adversely affect, the business or
operations of the Company and its subsidiaries, taken as a whole, (vi) the
declaration of a banking moratorium by either federal or New York State
authorities, or (vii) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in the
opinion of the Initial Purchasers has a material adverse effect on the financial
markets in the United States.
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<PAGE>
If on the Closing Date or an Option Closing Date, as the case may be,
any one or more of the Initial Purchasers shall fail or refuse to purchase the
Firm Notes or Additional Notes, as the case may be, which it or they have agreed
to purchase hereunder on such date and the aggregate principal amount of the
Firm Notes or Additional Notes, as the case may be, which such defaulting
Initial Purchaser or Initial Purchasers, as the case may be, agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Notes to be purchased on such date by all Initial Purchasers, each
non-defaulting Initial Purchaser shall be obligated severally, in the proportion
which the principal amount of the Firm Notes set forth opposite its name on
Schedule A hereto bears to the aggregate principal amount of the Firm Notes
which all the non-defaulting Initial Purchasers, as the case may be, have agreed
to purchase, or in such other proportion as such non-defaulting Initial
Purchasers may specify, to purchase the Firm Notes or Additional Notes, as the
case may be, which such defaulting Initial Purchaser or Initial Purchasers, as
the case may be, agreed but failed or refused to purchase on such date; provided
that in no event shall the aggregate principal amount of the Firm Notes or
Additional Notes, as the case may be, which any Initial Purchaser has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such principal amount of the Firm Notes
or Additional Notes, as the case may be, without the written consent of such
Initial Purchaser. If on the Closing Date or an Option Closing Date, as the
case may be, any Initial Purchaser or Initial Purchasers shall fail or refuse to
purchase the Firm Notes or Additional Notes, as the case may be, and the
aggregate principal amount of the Firm Notes or Additional Notes, as the case
may be, with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Notes to be purchased on such date by all
Initial Purchasers and arrangements satisfactory to the Initial Purchasers and
the Company for purchase of such Notes are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any non-
defaulting Initial Purchaser and the Company. In any such case which does not
result in termination of this Agreement, either the Initial Purchasers or the
Company shall have the right to postpone the Closing Date or the applicable
Option Closing Date, but in no event for longer than seven days, in order that
the required changes, if any, in the Offering Memorandum or any other documents
or arrangements may be effected. Any action taken under this paragraph shall
not relieve any defaulting Initial Purchaser from liability in respect of any
default of any such Initial Purchaser under this Agreement.
11. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (i) if to the Company, to 13085
Industrial Seaway Road, Gulfport, Mississippi 39503, Attention: John Dane III,
and (ii) if to any Initial Purchaser, c/o Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172, Attention:
Syndicate Department, or in any case to such other address as the person to be
notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the Initial Purchasers set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Notes,
regardless of (i) any investigation, or statement as to the results
30
<PAGE>
thereof, made by or on behalf of the Initial Purchasers, the respective officers
or directors of the Initial Purchasers, any person controlling an Initial
Purchaser, the Company, the officers or directors of the Company, or any person
controlling the Company, (ii) acceptance of the Notes and payment for them
hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchasers
because of any failure or refusal on the part of the Company to comply with the
terms or to fulfill any of the conditions of this Agreement, the Company agrees
to reimburse the Initial Purchasers for all out-of-pocket expenses (including
the fees and disbursements of counsel) reasonably incurred by them in connection
with the proposed offering of the Notes. Notwithstanding any termination of
this Agreement, the Company shall be liable for all expenses which it has agreed
to pay pursuant to Section 5(f) hereof.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Initial
Purchasers, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Notes from the Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York without giving effect to the choice of law
provisions thereof.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
31
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
Very truly yours,
HALTER MARINE GROUP, INC.
By: /s/ John Dane III
-------------------------------------------
Name: John Dane III
Title: Chairman, President and
Chief Executive Officer
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
Acting severally on behalf of themselves:
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By: /s/ Michael L. Crow
--------------------------------
Name: Michael L. Crow
Title: Sr. Vice President
32
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Firm Notes
----------------- ----------------
<S> <C>
Donaldson, Lufkin & Jenrette
Securities Corporation.............................. $ 80,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated........ $ 80,000,000
Total......................................... $160,000,000
</TABLE>
