FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): January 11, 1994
Zenith Electronics Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-4115 36-1996520
(State of jurisdiction (Commission File (IRS Employer
of incorporation) Number) identification No.)
1000 Milwaukee Avenue
Glenview, Illinois 60025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (708) 391-7000
Not applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
Zenith Electronics Corporation (the "Company") has agreed to
sell to an institutional investor $12 million principal
amount of 8.5% Senior Subordinated Convertible Debentures
due January 18, 2001, convertible into shares of Common Stock
of the Company at an initial conversion price of $10.00 per
share of common stock (the "Debentures"). The $12 million
principal amount of Debentures sold is in addition to $55
million principal amount of similar convertible debentures
previously sold by the Company. The sale of Debentures
was made pursuant to a Debenture Purchase Agreement dated
January 11, 1994. The proceeds of the sale of the $12 million
principal amount of Debentures will be used to repay
borrowings, if any, under the Company's Credit Agreement with
General Electric Capital Corporation, as agent and lender,
and the other lenders (the "Credit Agreement"). The Credit
Agreement was amended on January 7, 1994 to accommodate
the sale of these Debentures.
Item 7. Financial Statements, Pro-forma Financial Information
and Exhibits.
(c) The exhibits accompanying this report are listed in the
accompanying Exhibit Index
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ZENITH ELECTRONICS CORPORATION
By: /s/ David S. Levin
David S. Levin, Secretary
Date: January 11, 1994
<PAGE>
Exhibit Index
Exhibit
Number Exhibit Description
4 (a) Debenture Purchase Agreement dated as of January 11, 1994
4 (b) Amendment No.3 dated January 7, 1994 to the Credit
Agreement dated May 21, 1993, between Zenith Electronics
Corporation, as Borrower, General Electric Capital
Corporation, as Agent and Lender, The Bank of New York
Commercial Corporation, as Lender, and Congress Financial
Corporation, as Lender
4 (c) Amendment No.2 to the Debenture Purchase Agreement dated
as of November 19, 1993
ZENITH ELECTRONICS CORPORATION
$20,000,000
8.5% Senior Subordinated Convertible
Debentures due January 18, 2001
DEBENTURE PURCHASE AGREEMENT
Dated as of January 11, 1994
TABLE OF CONTENTS
Heading Page
DESCRIPTION OF PARTIES .................................. 1
ARTICLE I
AUTHORIZATION AND ISSUANCE OF DEBENTURES
1.1 Authorization of Issue ....................... 1
1.2 Issuance of Debentures ....................... 1
(a) Purchase of Debentures .................. 1
(b) Closing Date; Delivery of Debentures .... 1
1.3 Securities Laws .............................. 2
(a) The Company's Representations and
Agreements .............................. 2
(b) Each Purchaser's Representation ......... 2
ARTICLE II
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
2.1 Financial Information ........................ 3
(a) Statements .............................. 3
(b) Class of Securities...................... 4
(c) Forms.................................... 4
(d) Debt .................................... 4
(e) No Material Adverse Change .............. 4
2.2 Organization, Standing and Qualification
of the Company .......................... 4
2.3 Organization, Standing and Qualification
of the Subsidiaries ..................... 5
2.4 Capitalization ............................... 5
2.5 Authorization ................................ 6
2.6 Franchises, Licenses, Trademarks and
Other Rights ............................ 6
2.7 Litigation ................................... 6
2.8 Title and Liens .............................. 7
2.9 Leases ....................................... 7
2.10 Burdensome and Conflicting Agreements and
Violations of Charter Provisions ........ 7
2.11 Consents and Approvals ....................... 8
2.12 Status Under Certain Statutes ................ 8
2.13 Compliance with ERISA;
Multiemployer Plans ..................... 8
(i)
Heading Page
2.14 Compliance with Environmental Laws ........... 9
2.15 Reservation of Shares ........................ 9
2.16 Disclosure ................................... 9
2.17 Broker's or Finder's Commissions ............. 10
ARTICLE III
CLOSING CONDITIONS
3.1 Opinion of Purchasers' Counsel ............... 10
3.2 Opinion of Company's Counsel ................. 10
3.3 Representations and Warranties ............... 10
3.4 Consents and Approvals ....................... 10
3.5 Closing Fee .................................. 11
3.6 Proceedings and Documents .................... 11
3.7 Legality of Investment ....................... 11
3.8 Private Placement Numbers .................... 11
ARTICLE IV
USE OF PROCEEDS
4.1 Actual Use ................................... 11
4.2 Prohibited Uses .............................. 11
ARTICLE V
REGISTRATION, EXCHANGE AND TRANSFER OF DEBENTURES
5.1 Authorized Denominations ..................... 12
5.2 The Debenture Register; Persons
Deemed Owners ........................... 12
5.3 Issuance of New Debentures Upon Exchange
or Transfer ............................. 13
5.4 Lost, Stolen, Damaged and Destroyed
Debentures .............................. 13
ARTICLE VI
PAYMENT OF DEBENTURES
6.1 Regular Method of Payment .................... 13
6.2 Home Office Payment .......................... 14
6.3 Limitation on Interest ....................... 14
(ii)
Heading Page
ARTICLE VII
AFFIRMATIVE COVENANTS
7.1 Preservation of Franchises and Existence ..... 15
7.2 Insurance .................................... 15
7.3 Payment of Taxes and Other Charges ........... 15
7.4 Commission and Stock Exchange Filings ........ 15
7.5 Compliance Certificates ...................... 15
7.6 Inspection and Other Information ............. 16
7.7 Cost of This Financing ....................... 17
(a) Payment of Fees and Expenses ............ 17
(b) Reimbursement ........................... 18
(c) Indemnification ......................... 18
7.8 Compliance with Laws ......................... 18
7.9 Financial Reports and Books and Records....... 19
(a) Interim Statements....................... 19
(b) Annual Statements ....................... 19
(c) Financial Reports ....................... 19
7.10 Rule 144A Information ........................ 20
7.11 ERISA Reports ................................ 20
7.12 Office and Paying Agent....................... 20
ARTICLE VIII
NEGATIVE COVENANTS
8.1 Limitation on Debt ........................... 21
8.2 Limitations on Liens ......................... 23
8.3 Limitation on Restricted Payments ............ 24
8.4 Change of Control ............................ 25
8.5 Asset Sale ................................... 27
8.6 Transactions with Affiliates ................. 29
8.7 Repurchase of Debentures ..................... 30
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
9.1 Event of Default ............................. 30
9.2 Other Remedies ............................... 33
9.3 Conduct No Waiver; Collection Expenses ....... 33
9.4 Remedies Cumulative .......................... 33
9.5 Cooperation by the Company ................... 33
(iii)
Heading Page
ARTICLE X
DEFINITIONS
10.1 Previous Definitions ......................... 34
10.2 Additional Definitions ....................... 34
10.3 Accounting Principles ........................ 47
10.4 Directly or Indirectly ....................... 48
ARTICLE XI
CONVERSION OF DEBENTURES
11.1 Conversion Privilege and Conversion
Price ...................................... 48
11.2 Exercise of Conversion Privilege ............. 49
11.3 Fractions of Shares .......................... 50
11.4 Adjustment of Conversion Price ............... 50
11.5 Notice of Adjustments of Conversion Price .... 54
11.6 Notice of Certain Corporate Actions .......... 55
11.7 Company to Reserve Common Stock; Listing...... 56
11.8 Taxes on Conversions ......................... 56
11.9 Covenant as to Common Stock .................. 56
11.10 Cancellation of Converted Debentures ......... 57
11.11 Provisions in Case of Reclassification,
Consolidation, Merger or Sale of
Assets ..................................... 57
ARTICLE XII
REGISTRATION AND TRANSFER OF RESTRICTED SHARES
12.1 Shelf Registration ........................... 58
(a) Timing of Filing, Effectiveness
and Period of Usability ............... 58
(b) Subsequent Shelf Registrations .......... 59
(c) Additional Interest for Liquidity........ 59
(d) Expenses ................................ 60
12.2 Registration Procedures ...................... 60
12.3 Indemnification .............................. 64
(a) Indemnification by the Company .......... 64
(b) Indemnification by the Sellers .......... 65
(c) Notices of Claims ....................... 66
(d) Contribution ............................ 67
(iv)
Heading Page
(e) Rule 144 and Rule 144A Information ...... 68
(f) Other Indemnification ................... 69
12.4 Underwritten Registrations ................... 69
ARTICLE XIII
SUBORDINATION OF DEBENTURES
13.1 Debentures Subordinate to Senior
Indebtedness ............................... 70
13.2 Payment Over of Proceeds Upon
Dissolution, Etc. .......................... 70
13.3 Suspension of Payment When Senior
Indebtedness in Default .................... 72
13.4 Subrogation to Rights of Holders of
Senior Indebtedness ........................ 74
13.5 Provisions Solely to Define Relative Rights .. 74
13.6 No Waiver of Subordination Provisions ........ 75
13.7 Notices ...................................... 75
13.8 Reliance on Judicial Orders or Certificates .. 76
13.9 No Suspension of Remedies .................... 76
13.10 Reinstatement ................................ 76
13.11 Amendments to Article XIII ................... 76
ARTICLE XIV
REDEMPTION OF DEBENTURES
14.1 Right of Redemption .......................... 76
14.2 Applicability of Article ..................... 77
14.3 Election to Redeem; Notice to Holders ........ 77
14.4 Selection by the Company of Debentures
to Be Redeemed ............................. 77
14.5 Notice of Redemption ......................... 78
14.6 Deposit of Redemption Price .................. 78
14.7 Debentures Payable on Redemption Date ........ 79
14.8 Debentures Redeemed in Part .................. 79
ARTICLE XV
SATISFACTION AND DISCHARGE
15.1 Company's Option to Effect Defeasance
or Covenant Defeasance...................... 79
15.2 Defeasance and Discharge...................... 79
(v)
Heading Page
15.3 Covenant Defeasance........................... 80
15.4 Conditions to Defeasance or Covenant
Defeasance.................................. 81
15.5 Application of Trust Money.................... 84
15.6 Reinstatement................................. 84
ARTICLE XVI
CONSOLIDATION, MERGER, CONVEYANCE,
SALE, TRANSFER OR LEASE
16.1 Company May Consolidate, Etc., Only on
Certain Terms .............................. 85
16.2 Successor Substituted ........................ 86
ARTICLE XVII
MISCELLANEOUS
17.1 Amendments and Waivers ....................... 86
17.2 Copies to Regulatory Bodies .................. 87
17.3 Integration and Severability ................. 87
17.4 Successors and Assigns ....................... 87
17.5 Reliance on and Survival of Various
Provisions ................................. 88
17.6 Verification ................................. 88
17.7 Notices and Other Communications ............. 88
17.8 Governing Law ................................ 89
17.9 Restricted Share Legend....................... 89
17.10 Reproduction of Documents .................... 89
17.11 Table of Contents and Headings ............... 90
17.12 Counterparts ................................. 90
EXECUTION BY PARTIES .................................... 90
SCHEDULE 1 Payment Information
EXHIBIT A 8.5% Senior Subordinated Convertible Debenture
EXHIBIT B Form of Opinion of Purchasers' Counsel
EXHIBIT C-1 Form of Opinion of Company's General Counsel
EXHIBIT C-2 Form of Opinion of Company's Special Counsel
(vi)
DEBENTURE PURCHASE AGREEMENT
DEBENTURE PURCHASE AGREEMENT, dated as of January 11,
1994 (this "Agreement"), between ZENITH ELECTRONICS CORPORATION, a
Delaware corporation (the "Company"), and the Purchasers listed
on Schedule 1 hereto (the "Purchasers").
The Company and each Purchaser agree as follows:
ARTICLE I
AUTHORIZATION AND ISSUANCE OF DEBENTURES
1.1 AUTHORIZATION OF ISSUE. The Company will duly
authorize the issuance of its 8.5% Senior Subordinated
Convertible Debentures due January 18, 2001, in the aggregate
principal amount of $20,000,000. Each Debenture shall be
substantially in the form of Exhibit A hereto.
1.2 ISSUANCE OF DEBENTURES. (a) Purchase of
Debentures. Subject to the terms hereof, the Company agrees to
sell, and each Purchaser agrees to purchase, on the Closing Date
hereinafter referred to, Debentures in the aggregate principal
amount of Debentures set forth opposite such Purchaser's name in
Schedule 1 hereto at a price equal to 100% of the principal
amount thereof, payable in immediately available funds. The
obligations of the Purchasers hereunder are several and not joint
and the Purchasers shall not have any obligation or liability for
the obligations or liabilities of any other Purchaser hereunder.
(b) Closing Date; Delivery of Debentures. The
date for the purchase and sale of Debentures hereunder (the
"Closing Date") shall be January 18, 1994. Purchase and sale of
the Debentures hereunder shall take place at 10:00 A.M., New York
City time, on the Closing Date, at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New
York, or such other place as the parties hereto may designate.
On the Closing Date, the Company will deliver to each Purchaser
against payment of the purchase price therefor, one or more
Debentures in the aggregate principal amount of Debentures then
to be purchased by such Purchaser, dated the Closing Date and
registered in such Purchaser's name or in the name of its
nominee.
1.3 SECURITIES LAWS. (a) The Company's
Representations and Agreements. The Company represents and
warrants to the Purchasers that the Company has not, directly or
through any agent, offered any of the Debentures or any similar
security for sale to, or solicited any offers to buy any thereof
from, or otherwise approached or negotiated in respect thereof
with, any Person other than the Purchasers and not more than
twenty other institutional investors each of whom was offered a
portion of the Debentures or the Pari Passu Debentures in a
private sale for investment, and the Company agrees that neither
the Company nor any agent acting on the Company's behalf has done
or caused to be done or will do or cause to be done or omit to do
or cause to be done anything which would result in bringing the
issuance or sale of the Debentures within the registration
requirements of Section 5 of the Securities Act.
(b) Each Purchaser's Representation. Each
Purchaser represents and warrants, and in entering into this
Agreement the Company understands, and acknowledges that (1) such
Purchaser is an "accredited investor" within the meaning of
Rule 501(a) promulgated under the Securities Act and (2) it is
acquiring the Debentures for its own account and not with a view
to distribution (as such term is used under Section 2(11) of the
Securities Act) thereof; provided that the disposition of each
Purchaser's property shall at all times be and remain within such
Purchaser's control. Without limiting the foregoing, each
Purchaser acknowledges and agrees that the Debentures have not
and will not be registered under the Securities Act and it agrees
that it will reoffer or resell the Debentures or the Restricted
Shares purchased by it under this Agreement (i) only (A) to the
Company, (B) pursuant to any transaction under and meeting the
requirements of Rule 144A, as amended from time to time,
promulgated under the Securities Act, (C) pursuant to an
exemption from registration under the Securities Act in
accordance with Rule 144, as amended from time to time,
promulgated under the Securities Act or (D) in accordance with
any other available exemption from the requirements of Section 5
of the Securities Act, (ii) in accordance with any applicable
federal and state securities laws and (iii) in the case of
resales pursuant to subclauses (B), (C) or (D) of clause (i)
above, after delivering to the Company a completed and signed
Assignment Form attached to the Debenture (or equivalent form in
the case of Restricted Shares) or other documentation that
demonstrates to the reasonable satisfaction of the Company that
such transaction is exempt from the registration requirements of
the Securities Act. Each Purchaser agrees that it will, and each
subsequent Holder, by its acceptance of a Debenture, will be
deemed to have agreed that it will, comply with, and notify any
purchaser of any
Debenture or Restricted Share from you or such subsequent Holder,
as the case may be, of the resale restrictions referred to in
this Section 1.3(b). In addition, each Purchaser represents and
warrants, and each subsequent Holder by its acceptance of a
Debenture will be deemed to have represented and warranted, that
the acquisition of the Debenture or Debentures by such Person
does not constitute a "prohibited transaction" within the meaning
of Section 4975 of the Code or Section 406 of ERISA. Each
Purchaser further represents and warrants, and each subsequent
Holder by its acceptance of a Debenture will be deemed to have
represented and warranted, that it will not have, immediately
after the acquisition of any Debentures, Beneficial Ownership,
directly or indirectly, of Common Stock of the Company
representing more than 5% of the outstanding Common Stock of the
Company. For purposes of calculating such 5% ownership, (i) any
options, rights, stock subscription warrants or debt securities
convertible into or exchangeable or exercisable for shares of
Common Stock of the Company owned or held by such Purchaser or
Holder shall be deemed to be that number of outstanding shares of
Common Stock for which they are convertible, exchangeable or
exercisable, but (ii) no shares of Common Stock issuable with
respect to outstanding options, rights, stock subscription
warrants or debt securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company shall be
counted in calculating the total number of shares of outstanding
Common Stock.
ARTICLE II
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants as follows:
2.1 FINANCIAL INFORMATION. (a) Statements. The
Company has heretofore filed all reports, statements and
schedules with the Commission required to be filed pursuant to
the Exchange Act since January 1, 1988 (the "SEC Reports") and
has delivered to the Purchasers copies of all SEC Reports. The
SEC Reports did not (as of their respective filing dates) contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The
audited and unaudited consolidated financial statements of the
Company included in the SEC Reports have been prepared in
accordance with GAAP applied on a consistent basis
(except as stated in such financial statements) and fairly
present the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results
of their operations and consolidated cash flows for the periods
then ended, subject, in the case of the unaudited financial
statements, to normal year-end audit adjustments which were not
materially adverse to the Company and the Subsidiaries taken as a
whole. The Company and the Subsidiaries have no material
liabilities, fixed or contingent, other than (i) liabilities
fully reflected in said financial statements and (ii) liabilities
incurred since December 31, 1992 in the ordinary course of
business which in the aggregate have no material adverse effect
on the financial condition of the Company and the Subsidiaries on
a consolidated basis or on the conduct of their businesses.
(b) Class of Securities. When the Debentures are
issued pursuant to this Agreement, such Debentures will satisfy
the requirements set forth in Rule 144A(d)(3) promulgated under
the Securities Act.
(c) Forms. The Company agrees that it will file
with the Commission a Notice on Form D in the form and at the
time required under Regulation D under the Securities Act in
respect of the transactions contemplated by this Agreement; and
to furnish promptly to the Purchasers evidence of each such
required timely filing.
(d) Debt. The Company has furnished to each
Purchaser true, correct and complete copies of each instrument
which evidences, or will evidence on the Closing Date, any Debt
in excess of $5,000,000 of the Company or any Subsidiary and each
instrument under which any Debt in excess of $5,000,000 of the
Company or any Subsidiary is or will be issued or by which it is
or may be secured.
(e) No Material Adverse Change. Other than
changes reflected in the SEC Reports, there has been no material
adverse change in the business, properties, operations or
condition, financial or otherwise, of the Company since
December 31, 1992, whether or not covered by insurance and
whether or not arising from transactions in the ordinary course
of business.
2.2 ORGANIZATION, STANDING AND QUALIFICATION OF THE
COMPANY. The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power to own
its properties and to carry on its business as now being
conducted and as proposed to be conducted. The Company is
qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which failure to so qualify
would materially and adversely affect the business, properties,
operations or condition, financial or otherwise, of the Company
and the Subsidiaries on a consolidated basis.
2.3 ORGANIZATION, STANDING AND QUALIFICATION OF THE
SUBSIDIARIES. Each Subsidiary is a corporation duly organized
and validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all requisite corporate power
to own its properties and to carry on its business as now being
conducted and as proposed to be conducted, and is qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which failure to so qualify would materially and
adversely affect the business, properties, operations or
condition, financial or otherwise, of the Company and the
Subsidiaries on a consolidated basis. All of the outstanding
shares of the Capital Stock of each class of each Subsidiary have
been validly issued and are fully paid and nonassessable and,
except for directors' qualifying shares required by law, are
owned, beneficially and of record, by the Company or another
Subsidiary free and clear of any Liens.
2.4 CAPITALIZATION. The authorized Capital Stock of
the Company consists solely of 100,000,000 shares of Common
Stock, par value $1.00 per share, of which 34,771,558 shares of
Common Stock are outstanding as of January 1, 1994, all of which
have been duly authorized and validly issued by the Company and
are fully paid, nonassessable and free of preemptive rights, and
8,000,000 shares of Preferred Stock, $l.00 par value, none of
which are outstanding as of the date hereof. There are 21,000
shares of Common Stock held on the date hereof in the treasury of
the Company. The issuance and sale of all outstanding shares
have been in full compliance with all applicable federal and
state securities laws. Except (i) pursuant to the Debentures,
(ii) pursuant to the Pari Passu Debentures, (iii) as otherwise
disclosed in the SEC Reports, (iv) options granted under the 1987
Zenith Stock Incentive Plan, (v) 96,552 shares of Common Stock
issuable by the Company in a private placement in settlement of a
patent infringement action and (vi) any shares of Common Stock
which may be issued and contributed to the Zenith Hourly and
Salaried Employees Profit Sharing Retirement Plans, there are no
subscriptions, options, warrants or calls relating to the
issuance by the Company of any shares of its Capital Stock,
including any right of conversion or exchange under any
outstanding security or other instrument. Other than pursuant to
the 6-1/4 Debentures, the Pari Passu Debentures, certain
agreements with employees which are disclosed in the SEC Reports
and certain other agreements with employees involving not more
than 100,000 shares of Common Stock, the Company is not subject
to any
obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its Capital Stock or any security
convertible into or exchangeable for any of its Capital Stock.
There are no voting trusts or other agreements or understandings
with respect to the voting of the Capital Stock of the Company to
which the Company is a party. The Common Stock is vested with
all the voting rights in the Company.
2.5 AUTHORIZATION. The Company has full power and
authority to execute and deliver this Agreement and the
Debentures, to perform its obligations hereunder and thereunder
and to engage in the transactions contemplated hereby and
thereby. This Agreement has been duly authorized, executed and
delivered and constitutes, and the Debentures will, upon their
issuance, execution and delivery, constitute, the legal, valid
and binding obligations of the Company.
2.6 FRANCHISES, LICENSES, TRADEMARKS AND OTHER RIGHTS.
The Company and the Subsidiaries have all franchises, permits,
licenses and other authority as are necessary to enable them to
conduct the business of the Company and the Subsidiaries on a
consolidated basis, except for such franchises, permits, licenses
or authorities which the failure to have do not, individually or
in the aggregate, materially and adversely affect the business,
properties, operations or condition, financial or otherwise, of
the Company and the Subsidiaries on a consolidated basis, and the
Company and the Subsidiaries are not in default under any of such
franchises, permits, licenses or other authority, except for such
defaults which do not, individually or in the aggregate,
materially and adversely affect the business, properties,
operations or condition, financial or otherwise, of the Company
and the Subsidiaries, taken as a whole. The Company and the
Subsidiaries possess all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights and copyrights
necessary to conduct the business of the Company and the
Subsidiaries on a consolidated basis, without conflict with any
valid rights of others, except for such conflicts which do not,
individually or in the aggregate, materially and adversely affect
the business, properties, operations or condition, financial or
otherwise, of the Company and the Subsidiaries on a consolidated
basis.
2.7 LITIGATION. There is no action, suit or proceeding
pending against or, to the best of the Company's knowledge,
threatened against the Company or any Subsidiary before or by any
court, governmental authority or arbitrator, which (i) questions,
either individually or collectively, the validity of this
Agreement, the Debentures or the consummation
of the transactions herein and therein contemplated, (ii) would
reasonably be expected to result, either individually or
collectively, in any material adverse change in the business,
properties, operations or condition, financial or otherwise, of
the Company and the Subsidiaries on a consolidated basis or
(iii) would reasonably be expected to impair, individually or
collectively, in any material respect the ability of the Company
to perform its obligations under this Agreement or the
Debentures.
2.8 TITLE AND LIENS. Except as otherwise disclosed in
the SEC Reports, the Company or one or more of the Subsidiaries
have good and marketable fee simple title to all the real
property, and a valid and indefeasible ownership interest in all
the other assets, reflected in the financial statements included
in the SEC Reports or subsequently acquired by the Company or any
Subsidiary other than that subsequently sold or otherwise
disposed of in the ordinary course of business, subject in each
case only to Liens permitted by Section 8.2.
2.9 LEASES. The Company and Subsidiaries enjoy
peaceful and undisturbed possession under all of the leases for
the use of personal property and real property under which the
Company or any Subsidiary is a lessee or is operating. All of
such leases are valid and subsisting, subject only to Liens
permitted by Section 8.2, and none of them is in default, except
for such defaults which do not, individually or in the aggregate,
materially and adversely affect the business, properties,
operations or condition, financial or otherwise, of the Company
and the Subsidiaries on a consolidated basis.
2.10 BURDENSOME AND CONFLICTING AGREEMENTS AND
VIOLATIONS OF CHARTER PROVISIONS. Neither the Company nor any
Subsidiary is bound by any agreement or instrument or subject to
any charter or other corporate restriction which materially and
adversely affects the business, properties, operations or
condition, financial or otherwise, of the Company or the
Subsidiaries. Neither the Company nor any Subsidiary is (i) in
violation of its charter or by-laws or (ii) in default under or
in violation of any agreement or instrument by which it is bound,
or of any statute, law, rule or regulation, or of any judgment,
decree, writ, injunction, order or award of any arbitrator, court
or governmental authority applicable to it which, in any case
under clause (ii) would result, individually or collectively, in
any material adverse change in the business, properties,
operations or condition, financial or otherwise, of the Company
and the Subsidiaries on a consolidated basis (other than the
effect under the Credit Agreement in connection with the
Company's fourth quarter
special charge disclosed in the Company's Current Report on Form
8-K dated December 15, 1993). Neither the authorization,
execution and delivery of this Agreement, the Debentures, the
consummation of the transactions herein and therein contemplated,
nor the fulfillment of or compliance with the terms hereof and
thereof, will conflict with or result in a breach of any of the
terms of the charter or by-laws or any other corporate
restriction, or of any statute, law, rule or regulation, or of
any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of any agreement
or instrument, which is applicable to the Company or any
Subsidiary or by which the Company or any Subsidiary is bound, or
constitute a default thereunder, or result in the imposition of
any Lien upon any of the properties or assets of the Company or
any Subsidiary.
2.11 CONSENTS AND APPROVALS. The Company has obtained
or made all necessary (i) governmental consents, approvals and
authorizations, and registrations and filings with governmental
authorities and (ii) consents, approvals, waivers and
notifications of stockholders, creditors, lessors and other
non-governmental persons, in each case, in connection with the
execution and delivery of this Agreement and the Debentures and
the consummation of the transactions herein and therein
contemplated.
2.12 STATUS UNDER CERTAIN STATUTES. Neither the
Company nor any Subsidiary is: (i) a "public utility company" or
a "holding company", or an "affiliate" or a "subsidiary company"
of a "holding company", or an "affiliate" of such a "subsidiary
company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended, or (ii) a "public utility" as
defined in the Federal Power Act, as amended, or (iii) an
"investment company" or an "affiliated person" thereof or an
"affiliated person" of any such "affiliated person", as such
terms are defined in the Investment Company Act of 1940, as
amended.
2.13 COMPLIANCE WITH ERISA; MULTIEMPLOYER PLANS.
Neither the acquisition of the Debentures by any Purchaser nor
the consummation of any of the other transactions contemplated by
this Agreement is or will constitute a "prohibited transaction"
within the meaning of Section 4975 of the Code or Section 406 of
ERISA. Neither the Company nor any ERISA Affiliate maintains,
contributes to or is obligated to contribute to (or has in the
past maintained, contributed to or been required to contribute
to) any Plan subject to Title IV of ERISA for which the Company
or any ERISA Affiliate has, or may have any liability, contingent
or otherwise, other than a "multiemployer plan" (as defined in
Section 4001 of ERISA).
Neither the Company nor any ERISA Affiliate has incurred any
withdrawal liability (within the meaning of Section 4201 of
ERISA) to any "multiemployer plan" as that term is defined in
Section 4001 of ERISA, which liability has not been fully paid as
of the date hereof and neither the Company nor any ERISA
Affiliate shall incur any withdrawal liability prior to the
Closing Date. If the Company and each ERISA Affiliate were to
incur a complete withdrawal (as described in Section 4203 of
ERISA) from all multiemployer plans as of the Closing Date, the
aggregate withdrawal liability, as determined under Section 4201
of ERISA, with respect to all such multiemployer plans would not
exceed $1,000,000.
2.14 COMPLIANCE WITH ENVIRONMENTAL LAWS. The Company
and the Subsidiaries are in compliance with all applicable
statutes, rules, regulations and orders of all governmental
authorities relating to environmental protection and pollution
control, with respect to the conduct of their respective
businesses and the ownership of their respective properties,
except where such failure to comply will not individually or in
the aggregate have a material adverse effect on the condition,
financial or otherwise, of the Company and the Subsidiaries on a
consolidated basis.
2.15 RESERVATION OF SHARES. The shares of Common Stock
issuable upon conversion of the Debentures have been duly
authorized and reserved for issuance upon such conversion free
from preemptive rights in favor of the holders of shares of
Capital Stock or other securities of the Company.
2.16 DISCLOSURE. This Agreement, the Debentures and
all other documents, certificates, instruments, reports and
statements furnished to the Purchasers by or on behalf of the
Company in connection with the transactions contemplated hereby
and thereby (including any placement memorandum or offering
circular), taken as a whole, do not contain any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements contained herein and therein not
misleading. Other than facts relating to pending legislation or
general economic conditions, there is no fact known to the
executive officers of the Company which materially and adversely
affects, or which is reasonably likely to materially and
adversely affect during the six month period commencing on the
date hereof, the business, properties, operations or condition,
financial or otherwise, of the Company and the Subsidiaries on a
consolidated basis, which has not been set forth in this
Agreement, the Debentures or in the other documents, instruments,
certificates and statements previously furnished in writing to
each Purchaser or Purchasers' counsel by or on behalf of the
Company in connection with the transactions contemplated hereby.
2.17 BROKER'S OR FINDER'S COMMISSIONS. No broker's or
finder's placement fee or commission will be payable by the
Company with respect to the issue of the Debentures or any of the
transactions contemplated hereby. The Company will hold the
Purchasers harmless from any claim, demand or liability for
broker's or finder's placement fees or commissions whether or not
payable by the Company alleged to have been incurred in
connection with this transaction.
ARTICLE III
CLOSING CONDITIONS
Each Purchaser's obligation to purchase and pay for the
Debentures on the Closing Date is subject to the complete
satisfaction of such Purchaser, on or before the Closing Date, of
the conditions set forth in this Article.
3.1 OPINION OF PURCHASERS' COUNSEL. Such Purchaser
shall have received from Fried, Frank, Harris, Shriver &
Jacobson, counsel for the Purchasers, an opinion, dated the
Closing Date, substantially in the form set forth in Exhibit B
hereto.
3.2 OPINION OF COMPANY'S COUNSEL. Such Purchaser shall
each have received from John Borst, Jr., Vice President and
General Counsel of the Company, and Sidley & Austin, special
counsel for the Company, an opinion, dated the Closing Date,
substantially in the form set forth in Exhibits C-1 and C-2
hereto, respectively.
3.3 REPRESENTATIONS AND WARRANTIES. The Company's
representations and warranties contained in Section 1.3(a) and in
Articles II and IV shall be true on and as of the Closing Date
with the same effect as if made on and as of the Closing Date.
There shall exist on the Closing Date no Event of Default and no
condition or event which, with notice or lapse of time, would
constitute an Event of Default if the Debentures had been
outstanding at all times from and after the date hereof, and all
agreements and conditions to be performed or satisfied by the
Company hereunder on or before the Closing Date shall have been
duly performed or satisfied. The Company shall have delivered to
such Purchaser a certificate, dated the Closing Date and signed
by its President or one of its Vice Presidents, to each such
effect.
3.4 CONSENTS AND APPROVALS. The Company shall have
delivered to such Purchaser a certificate, dated the Closing Date
and signed by its President or one of its Vice Presidents,
listing any consents, waivers, approvals, authorizations,
registrations, filings and notifications of the character
referred to in Section 2.11 which are necessary, to which shall
be attached evidence, satisfactory to such Purchaser, that the
same have been obtained or made and are in full force and effect,
or stating that none is necessary.
3.5 CLOSING FEE. Each Purchaser shall have received,
in immediately available funds, the closing fee set forth
opposite such Purchaser's name in Schedule 1 hereto.
3.6 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings and all documents incident to the transactions
contemplated by this Agreement shall be reasonably satisfactory
in form and substance to such Purchaser, and such Purchaser shall
have received copies of all documents and records relating
thereto which such Purchaser may reasonably request.
3.7 LEGALITY OF INVESTMENT. Each Purchaser's
acquisition of the Debentures shall be permitted as of the
Closing Date under the provisions of all applicable laws or
governmental regulations, and such acquisition shall not subject
such Purchaser to any penalty or other onerous condition in or
pursuant to any such law or regulation; and each Purchaser shall
have received such certificates or other evidence as such
Purchaser may reasonably request to establish compliance with
this condition.
3.8 PRIVATE PLACEMENT NUMBERS. The Company shall have
applied to Standard and Poor's Corporation for assignment of, and
shall have received prior to the Closing Date, a Private
Placement Number or Cusip Number for the Debentures.
ARTICLE IV
USE OF PROCEEDS
4.1 ACTUAL USE. The Company represents, warrants,
covenants and agrees that the proceeds of the sale of the
Debentures will be used by the Company first to repay any
borrowings under the Credit Agreement outstanding on the Closing
Date and then for working capital purposes and capital
expenditures.
4.2 PROHIBITED USES. The Company also represents,
warrants, covenants and agree that:
(a) the Company does not intend to acquire,
directly or indirectly, any "margin stock", as defined in
Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR Part 207) or Regulation U of said Board (12 CFR
221); and the Company will not use any proceeds from the sale of
the Debentures to purchase or carry any "security", as defined in
Section 3(a)(10) of the Exchange Act, or for any other purpose
which would result in any transaction contemplated by this
Agreement constituting a "purpose credit" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR Part 207), or which would involve a violation of
Section 7 of the Exchange Act or Regulation T, U or X of said
Board of Governors (12 CFR Parts 220, 221 and 224, respectively);
and
(b) The Company does not intend to apply and will
not apply any part of the proceeds of the sale of the Debentures
in any manner which is unlawful or which would involve a
violation of Executive Orders 12775 and 12779 (56 Fed. Reg. 50641
and 55975) Prohibiting Certain Transactions with respect to Haiti
or any of the following regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended): the
Foreign Assets Control Regulations, the Transactions Control
Regulations, the Cuban Assets Control Regulations, the Foreign
Funds Control Regulations, the Iranian Assets Control
Regulations, the Iraqi Transactions Regulations, the Nicaraguan
Trade Control Regulations, the South African Transactions
Regulations and the Libyan Sanctions Regulations.
ARTICLE V
REGISTRATION, EXCHANGE AND TRANSFER OF DEBENTURES
5.1 AUTHORIZED DENOMINATIONS. The Debentures are
issuable only in denominations of at least $100,000 (or, in the
case of any Debenture, the remaining balance thereof, if less
than $100,000).
5.2 THE DEBENTURE REGISTER; PERSONS DEEMED OWNERS. The
Company shall maintain, at its office designated for notices in
accordance with Section 7.12, a register for the Debentures (the
"Debenture Register"), in which the Company shall record the name
and address of the Person in whose name each Debenture has been
issued and the name and address of each transferee and prior
owner of each Debenture. The Company may deem and treat the
Person in whose name a Debenture is so registered as the holder
and owner thereof for all purposes and shall not be affected by
any notice to the contrary, until due
presentment of such Debenture for registration of transfer as
provided in this Article V.
5.3 ISSUANCE OF NEW DEBENTURES UPON EXCHANGE OR
TRANSFER. Upon registration of transfer of any Debenture at the
office of the Company designated for notices in accordance with
Section 7.12, the Company shall execute and deliver, at its
expense, one or more new Debentures of the same class of any
authorized denominations requested by the Holder of the
surrendered Debenture, each dated the date to which interest has
been paid on the Debenture so surrendered (or, if no interest has
been paid, the date of such surrendered Debenture), but in the
same aggregate unpaid principal amount as such surrendered
Debenture, and registered in the name of such Person or Persons
as shall be designated in writing by such Holder. Every
Debenture surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer
duly executed, by the Holder of such Debenture or by its attorney
duly authorized in writing. The Company may condition the
issuance of any new Debenture or Debentures in connection with a
transfer by any Person other than a Purchaser on the payment of a
sum sufficient to cover any stamp tax or other governmental
charge imposed in respect of such transfer.
5.4 LOST, STOLEN, DAMAGED AND DESTROYED DEBENTURES. At
the request of any Holder, the Company will issue, at its
expense, in replacement of any Debenture or Debentures lost,
stolen, damaged or destroyed, upon surrender of the mutilated
portions thereof, if any, a new Debenture or Debentures of the
same denominations, of the same unpaid principal amounts and
otherwise of the same class and tenor as, the Debenture or
Debentures so lost, stolen, damaged or destroyed. The Company
may condition the replacement of a Debenture reported by a Holder
as lost, stolen, damaged or destroyed upon the receipt from such
Holder of an indemnity or security reasonably satisfactory to the
Company, provided that if such Holder shall be any Purchaser or
its nominee or an institutional investor having assets in excess
of $100,000,000 or its nominee, such Purchaser's or such
institutional investor's agreement of indemnity shall be
sufficient for purposes of this Section 5.4.
ARTICLE VI
PAYMENT OF DEBENTURES
6.1 REGULAR METHOD OF PAYMENT. Except as provided in
Section 6.2, the principal of, and the premium, if any, and
interest on, each Debenture shall be payable at the office or
agency of the Company maintained pursuant to Section 7.12, in
lawful money of the United States of America, against presentment
of such Debenture for notation of payment or, in the case of a
payment in full of such Debenture, against surrender thereof, at
the respective times and in the manner provided herein and in the
Debentures.
6.2 HOME OFFICE PAYMENT. So long as any Purchaser or
its nominee shall be a Holder, the Company will pay all sums
becoming due on each Debenture held by such Purchaser or such
nominee at the address of such Purchaser specified for such
purpose in Schedule 1 hereto, by wire transfer of immediately
available funds, or at such other address or by such other method
as such Purchaser shall have designated by notice to the Company,
without presentment and without notations being made thereon,
except that any such Debenture so paid or prepaid in full shall
be surrendered to the Company for cancellation upon written
request by the Company therefor. Before selling or otherwise
transferring any such Debenture, such Purchaser will make a
notation thereon of the aggregate amount of all payments of
principal theretofore made, and of the date to which interest has
been paid. If the transferee of any Debenture is an
institutional investor having assets in excess of $100,000,000 or
its nominee and is the Holder of at least $5,000,000 principal
amount of Debentures, and shall request the Company to make all
payment on account of such Debenture either by check or by wire
transfer of immediately available funds, as specified in such
request, at an address specified in such request, the Company
will make such payments in compliance with such request, provided
that said institutional investor undertakes in said request the
same obligations in respect of such Debenture as those undertaken
by such Purchaser in the immediately preceding sentence.
6.3 LIMITATION ON INTEREST. No provision of this
Agreement or of any Debenture shall require the payment or permit
the collection of interest in excess of the maximum which is
permitted by law. If any such excess interest is provided for
herein or in any Debenture, or shall be adjudicated to be so
provided for, then the Company shall not be obligated to pay such
interest in excess of the maximum permitted by law, and the right
to demand payment of any such excess interest is hereby waived,
any other provisions in this Agreement or in any Debenture to the
contrary notwithstanding.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from the date
hereof until the Debentures have been paid in full in
accordance with the terms thereof (and thereafter to the extent
provided in Section 7.7):
7.1 PRESERVATION OF FRANCHISES AND EXISTENCE. Except
as otherwise permitted by this Agreement, the Company will
(i) maintain its corporate existence, rights and franchises in
full force and effect, and (ii) cause the Subsidiaries to
maintain their respective corporate existences, rights and
franchises in full force and effect, provided that nothing in
this Section 7.1 shall prevent (x) any merger of a Subsidiary
into the Company or another Subsidiary or (y) the Company or any
Subsidiary from discontinuing any material operations in any
particular state or jurisdiction or at any particular location or
locations within the state or jurisdiction, or prevent the
corporate existence, rights and franchises of any Subsidiary from
being terminated if, in the opinion of the Board of Directors of
the Company, such discontinuance or termination will not
adversely affect the Holders or the business, properties,
operation or condition, financial or otherwise, of the Company
and the Subsidiaries on a consolidated basis.
7.2 INSURANCE. The Company will maintain or cause to
be maintained with respect to its properties and business and the
properties and businesses of the Subsidiaries, with financially
sound and reputable insurers, insurance against such casualties
and contingencies of such types and in such amounts as is
consistent with sound business practice.
7.3 PAYMENT OF TAXES AND OTHER CHARGES. The Company
will pay, and will cause each of the Subsidiaries to pay, when
due, (i) all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties or income, and
(ii) all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, if unpaid,
might result in the creation of a Lien upon any of its
properties, subject, in the case of any of the foregoing or any
Lien in respect thereof, to clause (a) of Section 8.2.
7.4 COMMISSION AND STOCK EXCHANGE FILINGS. Promptly
upon their becoming available, the Company will deliver to each
Holder a copy of (i) all regular or periodic reports, if any,
which the Company or any Subsidiary shall file with the
Commission or any national securities exchange, and (ii) all
reports, proxy statements and financial statements delivered or
sent by the Company to its stockholders or by any Subsidiary to
its stockholders other than the Company.
7.5 COMPLIANCE CERTIFICATES. Within 50 days after the
close of each of the first three quarters of each fiscal
year of the Company, and within 100 days after the close of each
fiscal year of the Company, the Company will deliver to each
Holder a certificate, signed by the Chairman, the President, a
Vice President, the Treasurer or an Assistant Treasurer of the
Company, stating that a review of the activities of the Company
and the Subsidiaries during such quarter or such fiscal year, as
the case may be, has been made under such officer's supervision
and that no Event of Default or condition or event which, with
notice or lapse of time, would constitute an Event of Default has
occurred, or, if such has occurred, specifying the nature and
status thereof, and containing, as long as any Debenture remains
outstanding, a computation (in reasonable detail) demonstrating
compliance with the provisions of Article VIII. Within 15 days
after the Holder of at least $10,000,000 principal amount of
Debentures shall so request, the Company will execute and deliver
to such Holder a certificate, signed by the Chairman, the
President, a Vice President, the Treasurer or an Assistant
Treasurer of the Company, stating that this Agreement and every
Debenture held by or registered in the name of such Holder are
unmodified and in full effect (or, if there has been any
modification, that this Agreement and every such Debenture are in
full effect as modified, and setting forth such modifications),
and either stating that to the knowledge of the signer of such
certificate no default exists hereunder, or specifying each such
default of which the signer may have knowledge.
7.6 INSPECTION AND OTHER INFORMATION. Each Holder of
at least $10,000,000 principal amount of Debentures, and such
Persons as it may designate, may visit and inspect any of the
properties of the Company or any Subsidiaries, examine their
books of account, take extracts therefrom and discuss the
affairs, finances and accounts of the Company or such Subsidiary
with its officers and public accountants (and by this provision
the Company and each Subsidiary hereby authorize said accountants
to discuss with each Holder and such Persons its finances and
accounts), at such reasonable times during business hours and
with prior notice and as often as such Holder may reasonably
desire. The Company will furnish to each Holder such other
financial information as it from time to time may reasonably
request. Notwithstanding the foregoing, the Company shall not be
required to disclose to any Holder any information pursuant to
this Section 7.6 if such disclosure would result in a material
breach of a confidentiality agreement to which the Company or a
Subsidiary is a party.
Any information which is furnished pursuant to this
Section 7.6 and is designated in writing by the Company as
confidential shall be treated as confidential by each Holder in
accordance with such procedures as such Holder applies
generally to information of this kind; provided, however, that
each such Holder may disclose any such information (a) as has
become generally available to the public (other than by an act of
a Holder in violation of this Agreement), (b) as may be required
in any report, statement or testimony required to be submitted to
any municipal, state or Federal regulatory body having or
claiming to have jurisdiction over any such Holder or to the
National Association of Insurance Commissioners or similar
organization or their successors, (c) as may be required in
response to any summons or subpoena or in connection with any
litigation, (d) to the extent that any such Holder believes it
appropriate in order to comply with any law, order, regulation or
ruling applicable to such Holder and (e) to the prospective
transferee in connection with any contemplated transfer of any of
the Debentures by such Holder. Prior to any disclosure by a
Holder to a prospective transferee pursuant to clause (e) above
(which is not an affiliate of such Holder) of any such
information designated in writing by the Company as confidential
which information has not become generally available to the
public through a disclosure by a Holder pursuant to clauses (a),
(b), (c) or (d) above, such Holder will cause such prospective
transferee to enter into an undertaking pursuant to which such
prospective transferee will agree to be bound by the
confidentiality provisions of this Section 7.6.
7.7 COST OF THIS FINANCING. Whether or not the
transactions contemplated by this Agreement shall be consummated:
(a) Payment of Fees and Expenses. The Company
will pay all costs and expenses of each Purchaser in connection
with this Agreement and the consummation of all transactions
contemplated hereby, all printing or reproduction expenses
relating to transactions contemplated by this Agreement, and the
cost of transmitting the Debentures to such address as may be
requested by the Purchaser, and will pay (on the Closing Date)
the reasonable fees, expenses, and disbursements of Fried, Frank,
Harris, Shriver & Jacobson, counsel to the Purchasers for their
services in connection therewith. Without limiting the
foregoing, the Company agrees to pay the cost of obtaining a
private placement number for the Debentures and authorizes the
submission of such information as may be required by Standard and
Poor's Corporation for the purpose of obtaining such number.
The Company will also pay all costs and expenses of the
Purchasers and each other Holder relating to any future amendment
or supplement to this Agreement or any of the Debentures (or any
proposal for such amendment or supplement)
requested by the Company whether or not consummated or any waiver
or consent with respect thereto (or any proposal for such waiver
or consent) whether or not consummated, including but not limited
to out-of-pocket expenses, the cost of all accounting services
required thereby, all printing or reproduction expenses relating
to transactions contemplated thereby, and the cost of
transmitting the Debentures to such address as may be requested
by the Purchasers or Holders, and will pay the reasonable fees,
expenses, and disbursements of counsel to the Purchasers and
Holders for their services in connection therewith; provided,
however, that the Company shall not, in connection with any one
such amendment, supplement, waiver or consent, be required to pay
the reasonable fees, expenses, and disbursements of more than one
separate firm of attorneys (together with appropriate local
counsel) at any one time for such Purchasers or Holders, which
firm shall be designated by the Holders of a majority in
aggregate principal amount of Debentures.
(b) Reimbursement. The Company will reimburse all
costs and expenses of the character referred to in clause (a) of
this Section 7.7 which shall have been paid by any Purchaser or
any Holder.
(c) Indemnification. The Company will pay and
indemnify each Purchaser and every other Holder of any of the
Debentures against all liability and loss with respect to (i) all
claims for fees or commissions of brokers or finders retained by
the Company, if any, with respect to the execution and delivery
of this Agreement, any transactions contemplated by this
Agreement, or the original issuance of the Debentures and
(ii) all taxes (other than transfer taxes) and other public
charges payable in connection with the issuance of any of the
Debentures, or the execution, delivery and enforcement of this
Agreement or amendment or supplement to this Agreement.
The obligations of the Company under this Section 7.7
shall survive the payment, transfer or conversion of the
Debentures.
7.8 COMPLIANCE WITH LAWS. The Company will, and will
cause each Subsidiary to, comply with all applicable statutes,
rules, regulations and orders of all governmental authorities,
with respect to the conduct of its business and the ownership of
its properties, including without limitation (i) all applicable
statutes, rules, regulations and orders relating to environmental
protection and pollution control, (ii) the Occupational Safety
and Health Act of 1970, as amended, and (iii) ERISA, if failure
to so comply, individually or in the aggregate, may have a
material adverse effect on the condition,
financial or otherwise, of the Company and the Subsidiaries on a
consolidated basis.
7.9 FINANCIAL REPORTS AND BOOKS AND RECORDS. The
Company will keep proper books of record and account with respect
to all dealings or transactions of the business and affairs of
the Company, in accordance with GAAP, and will furnish to each
Holder:
(a) Interim Statements. As soon as available and
in any event within 60 days after the end of each quarterly
fiscal period (except the last) of each fiscal year of the
Company, copies of the unaudited financial statements of the
Company and its subsidiaries that are customarily provided by the
Company for reporting purposes, all in reasonable detail and
certified by an executive officer of the Company as presenting
fairly the financial position of the Company; provided that so
long as the Company is subject to the reporting requirements of
the Exchange Act, the Company may satisfy this requirement by
delivery of the Form 10-Q filed by it with the Commission.
(b) Annual Statements. As soon as available and
in any event within 120 days after the close of each fiscal year
of the Company, copies of consolidated financial statements of
the Company and its subsidiaries setting forth in comparative
form the consolidated figures for the preceding fiscal year, all
in reasonable detail and accompanied by a report thereon of a
firm of independent public accountants selected by the Company,
to the effect that the consolidated financial statements present
fairly, in all material respects, the consolidated financial
position of the Company and its subsidiaries as of the end of the
fiscal year being reported on in conformity with GAAP and that
the examination of such accountants in connection with such
financial statements has been conducted in accordance with
generally accepted auditing standards and included such tests of
the accounting records and such other auditing procedures as said
accountants deemed necessary in the circumstances; provided that
so long as the Company is subject to the reporting requirements
of the Exchange Act, the Company may satisfy this requirement by
delivery of the Form 10-K filed by it with the Commission.
(c) Financial Reports. The provisions of
paragraphs (a) and (b) notwithstanding, promptly after the same
are available, copies of all financial statements and reports as
the Company shall send or make available generally to its
stockholders, including without limitation, periodic reports
containing unaudited interim statements of results to the extent
such reports are prepared by the Company.
7.10 RULE 144A INFORMATION. The Company will furnish
to each holder of Debentures or Restricted Shares and any
prospective purchaser designated by such holder, except at such
times as the Company is a reporting company under Section 13 or
15(d) of the Exchange Act, all information described in Rule
144A(d)(4) promulgated under the Securities Act, including such
financial or other information as any holder of the Debentures or
Restricted Shares or any Person designated by such holder may
reasonably determine is required to permit such holder to comply
with the requirements of Rule 144A promulgated under the
Securities Act in connection with the resale by it of the
Debentures or Restricted Shares, in any such case promptly after
the same is requested.
7.11 ERISA REPORTS. The Company shall notify each
Holder in a statement of an authorized officer of the Company
setting forth in reasonable detail the circumstances surrounding
such event within 30 days after the Company has knowledge of, or
is notified of, the occurrence of (i) a reportable event (within
the meaning of Section 4043 of ERISA) with respect to any Plan;
(ii) the institution of any steps by the Company, any ERISA
Affiliate, the PBGC or any other Person to terminate or
reorganize any Plan; (iii) the institution of any steps by the
Company or any ERISA Affiliate to withdraw from any Plan; (iv) a
non-exempt "prohibited transaction" within the meaning of Section
406 of ERISA in connection with any Plan; (v) any material
increase in the contingent liability of the Company with respect
to any post-retirement welfare liability; (vi) any failure to
make a required installment or other payment with respect to a
Plan, on or prior to the applicable date, pursuant to Section
412(m) of the Code or (vii) the taking of any action by, or the
threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any
of the foregoing.
7.12 OFFICE AND PAYING AGENT. The Company shall
designate an office in the United States where notices,
presentations and demands to or upon the Company in respect of
this Agreement and the Debentures may be given or made. As of
the date of this Agreement, such office is located at the
Company's address set forth in Section 17.7. The Company will
give written notice to each Holder of the Debentures of any
change in location of such office within 15 days after the date
of any such change. Notwithstanding the foregoing, in lieu of
maintaining an office as herein contemplated, the Company may
appoint and maintain a Paying Agent in the Borough of Manhattan,
the City of New York for the purposes of receiving all notices,
presentations and demands to or upon the Company in respect of
this Agreement and the Debentures and, in such
event, the Paying Agent shall maintain the Debenture Register
provided for in Section 5.2. Whether or not the Company appoints
a Paying Agent for the aforesaid purposes, the Company shall
appoint a Paying Agent for the purposes specified in Sections
8.4, 8.5, 14.6 and 15.1 hereof. On or prior to the dates on
which the Company shall appoint any Paying Agent, the Company
shall give written notice to the Holders of the Notes.
ARTICLE VIII
NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any of
the Debentures shall be outstanding:
8.1 LIMITATION ON DEBT. The Company will not, and will
not permit any Subsidiary to, create, incur, assume, suffer to
exist or otherwise become liable for, any Debt, except:
(a) Debt of the Company or any Subsidiary
outstanding on October 2, 1993;
(b) Debt under the Credit Agreement or under any
one or more extensions, renewals, replacements or refinancings
thereof; provided, that the aggregate principal amount of Debt
(or if any Debt is issued at a price less than the principal
amount thereof, the original issue price thereof) outstanding
pursuant to this clause (b) at any time shall not exceed
$110,000,000;
(c) Debt, not to exceed $55,000,000 in aggregate
principal amount, evidenced by the Pari Passu Debentures;
(d) Debt, not to exceed $20,000,000 in aggregate
principal amount, evidenced by Debentures delivered under this
Agreement;
(e) Debt which either (i) ranks subordinate in
right of payment to the Debentures (to at least the same extent
as the Debentures are subordinated to Senior Indebtedness) and
which by its terms, upon the happening of any event, or otherwise
(other than as a result of a default or event of default), does
not mature and is not required to be redeemed, and is not
redeemable at the option of the holder, in whole or in part,
prior to the first anniversary of the Stated Maturity of the
Debentures, or (ii) is secured by a Lien permitted by Section
8.2; provided, however, that the aggregate principal amount of
Debt (or if any Debt is issued at a price less than the principal
amount thereof, the original issue price thereof)
outstanding pursuant to this clause (e) at any time shall not
exceed $170,000,000, less the sum of (i) the amount by which the
aggregate principal amount of Debt outstanding pursuant to clause
(b) of this Section 8.1 (computed as provided in such clause)
exceeds $90,000,000 and (ii) the aggregate principal amount of
Debt outstanding pursuant to clause (d) of this Section 8.1;
provided, further, that up to $20,000,000 (less the aggregate
principal amount of Debt outstanding pursuant to clause (d) of
this Section 8.1) of the Debt outstanding pursuant to this clause
(e) may rank pari passu in right of payment with the Debentures
if, by its terms, upon the happening of an event, or otherwise
(other than as a result of a default or event of default), it
does not mature and is not required to be redeemed, and is not
redeemable at the option of the holder, in whole or in part,
prior to the Stated Maturity of the Debentures (other than
pursuant to provisions which are substantially similar to
Sections 8.4 and 8.5 hereof); and
(f) Debt of any Subsidiary to the Company or another
Subsidiary or Debt of the Company to any Subsidiary.
For purposes of this Section 8.1, (x) Debt of a Person
existing at the time such Person becomes a Subsidiary shall be
deemed to be Debt incurred by a Subsidiary and (y) Debt assumed
by the Company or a Subsidiary in connection with the acquisition
of assets from a Person shall be deemed to be Debt incurred by
the Company or the Subsidiary, as the case may be.
Notwithstanding the foregoing, the Company may exchange
any Debt of the Company that by its terms ranks subordinate in
right of payment to the Debentures for securities which (i) by
their terms rank subordinate in right of payment to the
Debentures (to at least the same extent as the Debentures rank
subordinate to Senior Indebtedness), (ii) by their terms, upon
the happening of any event, or otherwise (other than as a result
of a default or event of default), do not mature and are not
required to be redeemed, in whole or in part, or are not
redeemable at the option of the holder thereof, in whole or in
part, prior to the first anniversary of the Stated Maturity of
the Debentures, and (iii) are issued in an aggregate principal
amount which does not exceed, at any one time outstanding,
$115,000,000; provided, however, that the Company and its
Subsidiaries may not otherwise make any principal payment on or
redeem, repurchase, defease or otherwise acquire or retire for
value, prior to any scheduled principal payment, scheduled
sinking fund payment or maturity, any Debt of the Company that by
its terms ranks subordinate in right of payment to the Debentures
or has a final maturity debt subsequent to the first anniversary
of the Stated Maturity of the Debentures.
8.2 LIMITATIONS ON LIENS. The Company will not, and
will not permit any Subsidiary to, create, incur, assume or
suffer to exist any Lien of any kind upon any of their property
or assets, now owned or hereafter acquired, or any income on
profits therefrom, excluding, however, from the operation of the
foregoing:
(a) any Lien arising by reason of (1) any
judgment, decree or order of any court, so long as such Lien is
adequately bonded or the execution or other enforcement thereof
is effectively stayed, any appropriate legal proceedings which
may have been duly initiated for the review of such judgment,
decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not
have expired; (2) taxes, assessments and charges not yet
delinquent or which are being contested in good faith by
appropriate proceedings, provided, that adequate reserves with
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be; (3) security for payment of
workmen's compensation, unemployment insurance, old age
pensions or social security benefits or other insurance; (4) good
faith deposits in connection with bids, tenders, contracts (other
than contracts for the payment of money) or leases; (5) deposits
to secure public or statutory obligations, or in lieu of surety
or appeal reservations of, or rights of others for rights of way,
sewers, electric lines, telegraph and telephone lines and other
similar purposes or zoning or other restrictions as to the use of
real property; or (6) operation of law in favor of mechanics,
materialmen, laborers, carriers, lessors, landlords, employees or
suppliers or similar Persons, incurred in the ordinary course of
business for sums which are not yet delinquent or are being
contested in good faith by negotiations or by appropriate
proceedings which suspend the collection thereof;
(b) any Lien on accounts receivable and/or
inventory, and the related general intangibles, created to secure
financing obtained by the Company or any Subsidiary for working
capital purposes;
(c) any Liens outstanding on the date hereof, and
Liens granted after the date hereof, by the Company and any
Subsidiary pursuant to the terms and provisions of the Credit
Agreement and one or more extensions, renewals, replacements or
refinancings thereof; and
(d) additional Liens which do not, individually or
in the aggregate, secure Debt which exceeds 25% of the Company's
GAAP Consolidated Adjusted Net Worth (measured at the time of
incurrence of any such Liens).
8.3 LIMITATION ON RESTRICTED PAYMENTS. The Company
will not, and will not permit any of its Subsidiaries to,
directly or indirectly:
(a) declare or pay any dividend on, or make any
distribution in respect of, any shares of Capital Stock
(excluding dividends or distributions payable in shares of
Capital Stock, but including dividends or distributions payable
in Redeemable Stock or in options, warrants or other rights to
purchase Redeemable Stock (other than dividends on such
Redeemable Stock payable in shares of such Redeemable Stock)), or
(b) purchase, redeem, prepay or acquire or retire
for value, any Capital Stock (such payments or any other actions
described in clauses (a) and (b) above being collectively
referred to as "Restricted Payments"), unless at the time of and
after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, shall
be as determined by the Company's Board of Directors, whose
determination shall be conclusive and evidenced by a resolution
of the Board of Directors) (i) no Default or Event of Default
shall have occurred and be continuing and (ii) the aggregate
amount of Restricted Payments made from and after the date hereof
does not exceed the sum of (a) 80% of the Company's cumulative
Consolidated Operating Net Income (or if such cumulative
Consolidated Operating Net Income shall be a loss, minus 100% of
such loss) for the period commencing on the first day of the
fiscal quarter immediately subsequent to the fiscal quarter in
which the date of this Agreement occurs through and including the
last day of the last fiscal quarter immediately preceding the
date of the proposed Restricted Payment plus (b) the aggregate
net proceeds (including the value of any property other than
cash, as determined by the Company's Board of Directors, whose
determination shall be conclusive and evidenced by a resolution
of the Board of Directors) received by the Company from the
issuance of any Capital Stock (other than Redeemable Stock or
Capital Stock issued to its Subsidiaries) during such period,
less the aggregate amount of proceeds used to prepay, defease,
purchase, redeem, retire or otherwise acquire any securities
which by their terms rank subordinate in right of payment to the
Debentures.
Notwithstanding the foregoing, (i) any Subsidiary may
declare and pay dividends or make distributions to the Company,
(ii) the Company may redeem any rights (which by their terms are
not separately transferable until the happening of an event)
attached to shares of its Capital Stock in a total aggregate
amount not to exceed $5,000,000, (iii) the Company
may redeem or repurchase shares of its Capital Stock issued by
the Company to its employees pursuant to restricted stock
agreements in an aggregate amount not to exceed $1,000,000 during
each calendar year, (iv) the Company may repurchase, redeem,
acquire or retire shares of its Preferred Stock in exchange for
securities which by their terms rank subordinate in right of
payment to the Debentures and by their terms, upon the happening
of any event, or otherwise (other than as a result of a default
or an event of default), do not mature, are not required to be
redeemed, and are not redeemable at the option of the holder, in
whole or in part, prior to the first anniversary of the Stated
Maturity of the Debentures and (v) the Company may declare and
pay dividends on shares of its Preferred Stock which have been
exchanged for 6-1/4 Debentures in an aggregate annual amount
which does not exceed the aggregate annual amount of interest
that would have been payable on the 6-1/4 Debentures so
exchanged.
8.4 CHANGE OF CONTROL. (a) Upon a Change of Control,
each Holder shall have the right (the "Change in Control Right")
to require that the Company repurchase any or all of such
Holder's Debentures at a purchase price in cash equal to 100% of
the principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase, in accordance with the procedures
set forth in paragraphs (b) through (f) of this Section 8.4.
(b) Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder with a
copy to the Paying Agent stating:
(1) that a Change of Control has occurred and that
such Holder has the right to require the Company to
repurchase such Holder's Debentures, in whole or in
part, in integral multiples of $1,000 of principal
amount, at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase;
(2) the circumstances and relevant facts regarding
such Change of Control (including information with
respect to pro forma historical income, cash flow and
capitalization after giving effect to such Change of
Control);
(3) the date on which the Change in Control Right
expires (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed)
(the "Change in Control Expiration Date") and a date for
the repurchase of Debentures within 7 days after the
Change in Control Expiration Date;
(4) the procedures determined by the Company,
consistent with this Section 8.4, that a Holder must
follow in order to have its Debentures repurchased; and
(5) the Conversion Price then in effect and the
conversion rights of the Holders.
The notice shall also contain information concerning the business
of the Company which the Company in good faith believes will
enable such Holders to make an informed decision.
(c) Not later than the close of business on the
Change in Control Expiration Date, the Company shall (i) accept
for payment Debentures or portions thereof tendered pursuant to
the Change in Control Right, (ii) deposit with the Paying Agent
(which for purposes of this Section 8.4 shall not be the Company)
money sufficient in immediately available funds to pay the
purchase price of all the Debentures or portions thereof so
tendered and (iii) deliver to the Paying Agent the Debentures or
portions thereof which have been properly tendered to and are
accepted by the Company. The Paying Agent shall, on the
repurchase date, mail or deliver payment to each tendering holder
in the amount of the purchase price with respect to the
Debentures tendered by such holder and accepted by the Company
from the funds provided by the Company for such payment, and the
Company shall execute and the Paying Agent shall mail and deliver
to such Holder a new Debenture equal in amount to any unpurchased
portion of the Debenture surrendered.
(d) Holders electing to have a Debenture
repurchased will be required to surrender the Debenture, with an
appropriate form duly completed, to the Company at the address
specified in the notice on or prior to the Change in Control
Expiration Date. Holders will be entitled to withdraw their
election if the Paying Agent or the Company receives on or prior
to the Change in Control Expiration Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Debenture which was delivered
for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Debenture repurchased.
(e) At the time the Company delivers Debentures to
the Paying Agent which are to be accepted for purchase, the
Company will also deliver an Officers' Certificate stating that
such Debentures are to be accepted by the Company pursuant to and
in accordance with the terms of this Section 8.4.
(f) The Company shall comply, to the extent
applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations in
connection with the repurchase of Debentures pursuant to this
Section. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section,
the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
(g) Prior to complying with any provision of this
Section 8.4, the Company shall either repay in full, in cash or,
as acceptable to each holder of Senior Indebtedness, in any other
manner, all of the Senior Indebtedness or obtain the requisite
consents, if any, under all agreements governing the Senior
Indebtedness to permit the repurchase of the Debentures as
described in this Section 8.4.
8.5 ASSET SALE. (a) The Company will not, and will
not permit any of its Subsidiaries to, participate in an Asset
Sale unless (i) such Asset Sale is for not less than the Fair
Market Value of the assets sold (as determined by the Board of
Directors whose determination shall be conclusive and evidenced
by a Board Resolution), (ii) the Company repays, from the
proceeds of such Asset Sale, all Senior Indebtedness to the
extent the terms of the governing documents therefor require such
repayment or prohibit the purchase of the Debentures, and (iii)
the Net Available Proceeds of such Asset Sale include an amount
of cash or Cash-Equivalents sufficient to satisfy, in full, the
Company's obligations under this Section.
(b) In the event of an Asset Sale, the Company
shall make an offer to purchase Debentures (the "Offer to
Purchase") at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase, in accordance with the procedures
set forth in paragraphs (b) through (i) of this Section 8.5.
(c) Within 30 days following any Asset Sale, the
Company shall mail a notice to each Holder with a copy to the
Paying Agent stating:
(1) that an Asset Sale has occurred and that such
Holder has the right to require the Company to
repurchase such Holder's Debentures in whole or in part
in integral multiples of $1,000 of principal amount, at a
purchase price in cash equal to 100% of the principal
amount thereof plus accrued and unpaid interest, if any,
to the date of repurchase;
(2) the circumstances and relevant facts regarding
such Asset Sale (including information with respect to
pro forma historical income, cash flow and
capitalization after giving effect to such Asset Sale);
(3) the expiration date (which shall be at least
90 days from the date such notice is mailed) (the
"Expiration Date") and a date for the repurchase of
Debentures within 7 days after the Expiration Date;
(4) the procedures determined by the Company,
consistent with this Section 8.5, that a Holder must
follow in order to have its Debentures repurchased; and
(5) the Conversion Price then in effect and the
conversion rights of the Holders.
The notice shall also contain information concerning the business
of the Company which the Company in good faith believes will
enable each Holder to make an informed decision.
(d) Upon the occurrence of an Asset Sale, the
Company shall, within five Business Days thereafter, irrevocably
deposit with the Paying Agent (which for the purpose of this
Section 8.5 shall not be the Company) money in immediately
available funds in an amount sufficient to repay the Debentures,
if all then outstanding Debentures were tendered pursuant to the
Offer to Purchase, to be held for payment in accordance herewith.
The proceeds may be invested in any Temporary Cash Investment the
maturity date of which shall not be later than the Expiration
Date. The Company shall be entitled to any interest or dividends
accrued, earned or paid on such Temporary Cash Investments,
unless an Event of Default shall have occurred and be continuing
(in which case, such amounts shall be held for application in
accordance with Article IX hereof). To the extent that the
aggregate amount of funds deposited by the Company with the
Paying Agent exceeds the aggregate amount required to repurchase
the Debentures, or portions thereof, to be repurchased pursuant
to the Offer to Purchase, the Paying Agent shall promptly after
the Business Day following the repurchase date, return such
excess to the Company.
(e) Upon the Expiration Date, the Company shall
deliver to the Paying Agent the Debentures or portions thereof
which have been properly tendered to and are to be accepted by
the Company. The Paying Agent shall, on the repurchase date,
mail or deliver payment to each tendering holder in the amount of
the purchase price with respect to the Debentures tendered by
such holder and accepted by the Company from the funds
provided by the Company for such payment, and the Company shall
execute and the Paying Agent shall mail and deliver to such
Holder a new Debenture equal in amount to any unpurchased portion
of the Debenture surrendered.
(f) Holders electing to have a Debenture
repurchased will be required to surrender the Debenture, with an
appropriate form duly completed, to the Company at the address
specified in the notice on or prior to the Expiration Date.
Holders will be entitled to withdraw their election if the Paying
Agent or the Company receives on or prior to the Expiration Date,
a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Debenture
which was delivered for purchase by the Holder and a statement
that such Holder is withdrawing his election to have such
Debenture repurchased.
(g) At the time the Company delivers Debentures to
the Paying Agent which are to be accepted for purchase, the
Company will also deliver an Officers' Certificate stating that
such Debentures are to be accepted by the Company pursuant to and
in accordance with the terms of this Section 8.5. A Debenture
shall be deemed to have been accepted for purchase at the time
the Paying Agent, directly or through an agent, mails or delivers
payment therefor to the surrendering Holder.
(h) The Company shall comply, to the extent
applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations in
connection with the repurchase of Debentures pursuant to this
Section. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section,
the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations under this Section by virtue thereof.
(i) The Company will not, and will not permit any
Subsidiary to, create or permit to exist or become effective any
restriction (other than restrictions (i) in existence on the date
hereof created pursuant to the Company's 12-1/8% Notes due 1995
or (ii) created pursuant to the Credit Agreement, and any one or
subsequent renewals, extensions, refinancings or replacements of
the Credit Agreement) that would materially impair the ability of
the Company to make an Offer to Purchase or, if such offer is
made, to pay for Debentures tendered for purchase.
8.6 TRANSACTIONS WITH AFFILIATES. The Company will
not, and will not permit any Subsidiary to, enter into any
transaction or series of similar transactions (including,
without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or make any
payment or transfer to, any Affiliate (other than the Company or
wholly-owned Subsidiary), unless:
(a) such transaction (or series of related
transactions) is entered into in the ordinary course of business
and pursuant to the reasonable requirements of the Company's or
such Subsidiary's business; and
(b) such transaction or series of related
transactions are upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than the Company or such
Subsidiary would obtain in a comparable arm's-length transaction
from a Person who is not an Affiliate.
8.7 REPURCHASE OF DEBENTURES. Neither the Company nor
any Subsidiary thereof, directly or indirectly, shall repurchase
or make any offer to repurchase any Debenture unless the offer
has been made to repurchase Debentures, pro rata, from all
Holders of the Debentures at the same time and upon the same
terms. In case the Company or any Subsidiary thereof repurchases
any Debentures, such Debentures shall thereafter be cancelled and
no Debentures shall be issued in substitution therefor.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
9.1 EVENT OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
(a) The Company defaults in the payment of any
installment of interest upon any of the Debentures as and when
the same shall become due and payable, and continuance of such
default for a period of fifteen days; or
(b) The Company defaults in the payment of the
principal of, or premium, if any, on any of the Debentures as and
when the same shall become due and payable either at maturity or
in connection with any redemption, by declaration or otherwise;
or
(c) Any representation or warranty made by the
Company in this Agreement shall prove to have been untrue in any
material respect as of the date of this Agreement or the Company
fails duly to observe or perform any covenant contained in
Section 8.4 or 8.5; or
(d) The Company fails duly to observe or perform
any other of the covenants or agreements on the part of the
Company in the Debentures or in this Agreement (other than a
covenant or agreement a default in whose performance or whose
breach is elsewhere in this Section 9.1 specifically dealt with)
continuing for a period of 30 days after the date on which the
Company obtains knowledge of such failure irrespective of the
source; or
(e) An event of default, as defined in any
mortgage, indenture or instrument under which there may be
issued, or by which there may be secured or evidenced, any Debt
of the Company or a Subsidiary (whether such Debt now exists or
shall hereafter be created or incurred) shall occur and shall (i)
consist of default in the payment of such Debt at the maturity
thereof or (ii) shall result in such Debt being declared due and
payable prior to the date on which it would otherwise become due
and payable, and such default in payment is not cured or such
acceleration shall not be rescinded or annulled prior to any
period of grace provided with respect thereto; provided that it
shall not be an Event of Default if the principal amount of Debt
which is not paid at maturity or the maturity of which is
accelerated is less than $5,000,000; and provided, further, that
if, prior to a declaration of acceleration of the maturity of the
Debentures or the entry of judgment in favor of the Holders in a
suit, such default shall be remedied or cured by the Company or
waived by the holders of such Debt, then the Event of Default
hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without further action upon
the part of any of the holders of the Debentures; or
(f) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of the
Company in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or of
substantially all of its property or winding-up or liquidation of
its affairs, and such decree or order shall remain unstayed and
in effect for a period of ninety consecutive days; or
(g) The Company shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect or shall consent to the entry of an
order for relief in an involuntary case under any such law, or
shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of the Company or of substantially all of
its property, or shall make any general assignment for the
benefit of creditors; or
(h) A final judgment or judgments (after the
expiration of all times to appeal therefrom) for the payment of
money in excess of $5,000,000 in the aggregate during any
calendar year shall be rendered against the Company or any
Subsidiary of the Company unless the same shall be (i) fully
covered by insurance and the insurer shall have accepted
liability therefor in writing or (ii) vacated, stayed, bonded,
paid or discharged within a period of 15 days from the date of
such judgment.
If an Event of Default shall be continuing, then and in
each and every such case, unless the principal of all of the
Debentures shall have already become due and payable, the Holders
of not less than a majority in aggregate principal amount of the
Debentures then outstanding hereunder, by notice in writing to
the Company, may declare the principal, and all accrued and
unpaid interest thereon, of all the Debentures to be due and
payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this
Agreement or in the Debentures contained to the contrary
notwithstanding; provided, however, that if an Event of Default
under clause (f) or (g) above shall have occurred, the
outstanding principal of all of the Debentures, and all accrued
and unpaid interest thereon, shall immediately become due and
payable, anything in this Agreement or in the Debentures
contained to the contrary notwithstanding. This provision,
however, is subject to the condition that if, at any time after
the principal of the Debentures shall have been so declared due
and payable, and before any judgment or decree for the payment of
the monies due shall have been obtained or entered as hereinafter
provided, the Company shall pay or shall deposit with the Paying
Agent a sum sufficient to pay all accrued and unpaid installments
of interest upon all of the Debentures and the principal of and
premium, if any, on any and all Debentures which shall have
become due otherwise than by acceleration (with interest on
overdue installments of interest and premium, if any (to the
extent that payment of such interest is enforceable under
applicable law) and on such principal, to the date of such
payment or deposit), and any and all defaults under this
Agreement, other than the nonpayment of principal of and accrued
interest on Debentures which shall have become due by
acceleration, shall have been remedied -- then and in every such
case the Holders of a majority in aggregate principal amount of
the Debentures then outstanding, by written notice to the
Company, may waive all defaults and rescind and annul such
declaration and its consequences; but no such waiver of
rescission and annulment shall extend to or shall affect any
subsequent default, or shall impair any right consequent thereon.
The foregoing is subject in its entirety to the subordination
provisions contained in Article XIII of this Agreement.
In case the Holders shall have proceeded to enforce any
right under this Agreement and such proceedings shall have been
discontinued or abandoned because of such rescission or annulment
or for any other reason or shall have been determined adversely
to the Holders, then and in every such case the Company and the
Holders shall be restored respectively to their several positions
and rights hereunder, and all rights, remedies and powers of the
Company and the Holders shall continue as though no such
proceeding had been taken.
9.2 OTHER REMEDIES. If any Event of Default shall be
continuing, any Holder may enforce its rights by suit in equity,
by action at law, or by any other appropriate proceedings,
whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Agreement or
in the Debentures or in aid of the exercise of any power granted
in this Agreement or in any of the Debentures, and may enforce
the payment of any Debenture held by such Holder and any of its
other legal or equitable rights.
9.3 CONDUCT NO WAIVER; COLLECTION EXPENSES. No course
of dealing on the part of any Holder, nor any delay or failure on
the part of any Holder to exercise any of its rights, shall
operate as a waiver of such right or otherwise prejudice such
Holder's rights, powers and remedies. If the Company fails to
pay, when due, the principal of, the premium, if any, or the
interest on any Debenture, or if the Company fails to comply with
any other provision of this Agreement, the Company will pay to
the Holders, to the extent permitted by law, on demand, such
further amounts as shall be sufficient to cover the cost and
expenses, including but not limited to reasonable attorneys'
fees, incurred by such Holders in collecting any sums due on the
Debentures or in otherwise enforcing any of their rights.
9.4 REMEDIES CUMULATIVE. No right or remedy conferred
upon or reserved to the Purchasers or any Holder under this
Agreement is intended to be exclusive of any other right or
remedy, and every right and remedy shall be cumulative and in
addition to every other right and remedy given hereunder or now
or hereafter existing under applicable law. Every right and
remedy given by this Agreement or by applicable law to the
Purchasers or any Holder may be exercised from time to time and
as often as may be deemed expedient by the Purchasers or such
Holder, as the case may be.
9.5 COOPERATION BY THE COMPANY. To the extent that it
lawfully may, the Company agrees that it will not at any time
insist upon or plead, or in any manner whatever claim or
take any benefit or advantage of any applicable present or future
stay, extension or moratorium law, which may affect observance or
performance of the provisions of this Agreement or of any
Debenture; nor will it claim, take or insist upon any benefit or
advantage of any present or future law providing for the
valuation or appraisal of any security for the Debentures prior
to any sale or sales thereof which may be made under or by virtue
of any instrument governing the same; nor will it, after any such
sale or sales, claim or exercise any right, under any applicable
law, to redeem any portion of such security so sold.
ARTICLE X
DEFINITIONS
10.1 PREVIOUS DEFINITIONS. The following terms have
been elsewhere defined in this Agreement and have the respective
meanings assigned to them in the indicated sections, and such
terms, together with the other terms defined in Section 10.2,
shall include the singular as well as the plural: "Agreement,"
"Company" and "Purchasers," defined in the introductory
paragraph; "Closing Date," defined in Section 1.2(b); "SEC
Reports," defined in Section 2.1; "Restricted Payments," defined
in Section 8.3; "Change in Control Right" and "Change in Control
Expiration Date," defined in Section 8.3; "Offer to Purchase" and
"Expiration Date," defined in Section 8.5; "NASDAQ," defined in
Section 10.2; "Rights Agreement" and "Distribution Date", defined
in Section 11.2; "Trading Days" and "Current Market Price,"
defined in Section 11.4; "Constituent Person" and "non-electing
share," defined in Section 11.11; and "Shelf Registration,"
"Initial Shelf Registration," "Subsequent Shelf Registrations,"
"Effectiveness Period," "Filing Date," "Event Date" and "Delay
Rate", defined in Section 12.1; "Senior Representative," "Payment
Blockage Period" and "Initial Blockage Period," defined in
Section 13.3; "Defeased Debentures," defined in Section 15.1;
"Defeasance," defined in Section 15.2; "Covenant Defeasance,"
defined in Section 15.3; and "U.S. Government Obligation" and
"applicable preference period," defined in Section 15.4.
10.2 ADDITIONAL DEFINITIONS. Except as otherwise
specified or as the context may otherwise require, the following
terms shall have the respective meanings set forth below whenever
used in this Agreement:
The term "Affiliate" shall mean, any Person, directly or
indirectly, controlling, controlled by or under direct or
indirect common control with the Company or a Subsidiary. For
purposes of this definition, a Person shall be deemed to control
another Person if the controlling Person owns 10% or more of any
class of voting securities of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
The term "Asset Sale" shall mean, if the Company and/or
its Subsidiaries sell, lease, convey, transfer or otherwise
dispose of (including, without limitation, by sale-leaseback,
merger or consolidation, and whether by operation of law or
otherwise) all or substantially all of the assets of the Company
and its Subsidiaries, taken as a whole. An Asset Sale shall not
include a sale, lease, conveyance, transfer or other disposition
by the Company or any of its Subsidiaries to any wholly-owned
Subsidiary of the Company or by any Subsidiaries to the Company.
The term "Bankruptcy Law" shall mean Title 11, United
States Bankruptcy Code of 1978, as amended, or any similar United
States Federal or state law relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief
of debtors or any amendment to, succession to or change in any
such law.
The term "Beneficial Ownership" with respect to any
securities shall mean "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 of the Exchange Act),
including pursuant to any agreement, arrangement or
understanding, whether or not in writing.
The term "Board of Directors" shall mean the board of
directors of the Company or any duly authorized committee
thereof.
The term "Board Resolution" shall mean a copy of a
resolution certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such
certification.
The term "Business Day" shall mean any day other than a
Saturday, a Sunday or other day on which banking institutions or
trust companies in the State of New York are not required to be
open.
The term "Capital Stock" of any Person shall mean any
and all shares, interests (including partnership interests),
rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of
such Person, including any Preferred Stock, but excluding any
debt securities convertible into or exchangeable for such equity.
The term "Cash Equivalents" shall mean (A) any security,
maturing not more than six months after the date of acquisition,
issued by the United States of America, or an instrumentality or
agency thereof and guaranteed fully as to principal, premium, if
any, and interest by the United States of America, (B) any
certificate of deposit, time deposit, Eurodollar time deposit or
bankers' acceptance, maturing not more than six months after the
date of acquisition, issued by any lender who was an original
signatory to the Credit Agreement or a commercial banking
institution that is a member of the Federal Reserve System and
that has combined capital and surplus and undivided profits of
not less than $100,000,000, whose debt has a rating, at the time
as of which any investment therein is made, of "P-1" (or higher)
according to Moody's Investors Service, Inc. or any successor
rating agency, or "A-1" (or higher) according to Standard &
Poor's Corporation or any successor rating agency, (C) commercial
paper, maturing not more than three months after the date of
acquisition, issued by any lender who was an original signatory
to the Credit Agreement or a corporation (other than an Affiliate
or Subsidiary of the Company) organized and existing under the
laws of the United States of America with a rating, at the time
as of which any investment therein is made, of "P-1" (or higher)
according to Moody's Investors Service, Inc. or any successor
rating agency, or "A-1" (or higher) according to Standard &
Poor's Corporation or any successor rating agency, and (D) any
security, on the date of acquisition by any Person, that is
listed for trading on any national securities exchange or trades
of which are reported on the National Association of Securities
Dealers Automated Quotations System ("NASDAQ").
The term "Change of Control" shall mean an event or
series of events by which (i) any "person" (as such term is used
in sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, 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), directly or indirectly, of a
majority of the aggregate voting power of all the Capital Stock
of the Company normally entitled to vote in the election of
directors; or (ii) individuals who
on the date of this Agreement constituted the Board of Directors
of the Company (together with any new or replacement directors
whose election by such Board or whose nomination for election by
the stockholders was approved by a vote of a majority of the
directors then still in office who were either directors on the
date of this Agreement or whose election or nomination was
previously so approved) shall cease for any reason to constitute a
majority of the Board of Directors then in office.
The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
The term "Commission" shall mean the Securities and
Exchange Commission and any other similar or successor agency of
the federal government administering the Securities Act or the
Exchange Act.
The term "Common Stock" shall mean, when used with
reference to the Capital Stock of the Company, the class of stock
which, on the date of this Agreement, is designated as common
stock of the Company and stock of any class or classes into which
such common stock or any such other class may thereafter be
changed or reclassified. In case by reason of the operation of
Article XI the Debentures shall be convertible into any other
shares or other securities or property of the Company or any
other corporation, any reference in this Agreement to the
conversion of Debentures pursuant to Article XI shall be deemed
to refer to and include conversion of Debentures into such other
shares or other securities or property.
The term "Company" shall mean Zenith Electronics
Corporation, a Delaware corporation and its permitted successors
and assigns.
The term "Consolidated" or "consolidated," when used
with reference to any financial term in this Agreement (but not
when used with respect to any tax return or tax liability), shall
mean the aggregate for two or more Persons of the amounts
signified by such term for all such Persons, with inter-company
items eliminated and, with respect to earnings, after eliminating
the portion of earnings properly attributable to minority
interests, if any, in the capital stock of any such Person or
attributable to shares of Preferred Stock of any such Person not
owned by any other such Person.
The term "Conversion Price" shall have the meaning
specified in Section 11.1.
The term "Conversion Shares" shall have the meaning
specified in Section 11.2.
The term "Credit Agreement" shall mean that certain
Credit Agreement, dated as of May 21, 1993, between the Company,
as borrower, General Electric Capital Corporation, as agent and
lender, The Bank of New York Commercial Corporation, as lender,
and Congress Financial Corporation, as lender, as the same may be
amended, restated, supplemented or otherwise modified from time
to time.
The term "Debenture or Debentures; Outstanding" shall
mean any Debenture or Debentures, as the case may be, delivered
under this Agreement.
The term "outstanding," when used with reference to
Debentures, shall mean, as of any particular time, all Debentures
delivered under this Agreement, except
(a) Debentures theretofore cancelled by the Company
or delivered to the Company for cancellation;
(b) Debentures, or portions thereof, for the
payment or redemption of which monies in the necessary amount
shall have been deposited in trust with the Paying Agent or shall
have been set aside and segregated in trust by the Company (if
the Company shall act as its own paying agent), provided that if
such Debentures are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as in Article XIV
provided;
(c) Debentures in lieu of or in substitution for
which other Debentures shall have been delivered pursuant to the
terms of Section 5.4, unless proof satisfactory to the Company is
presented that any such Debentures are held by bona fide holders
in due course; and
(d) Debentures converted into Common Stock pursuant
to Article XI hereof.
The term "Debenture Register" shall have the respective
meaning specified in Section 5.2.
The term "Debt" of any Person shall mean at any date,
without duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes, letters of credit or other similar
instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, or arising under
any conditional sales or title retention agreement with
respect to property acquired by such Person, except accounts
payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under capital leases (in the
amount reflected on the balance sheet of such Person, prepared in
accordance with GAAP), (v) all Debt of others Guaranteed by such
Person, (vi) all obligations, contingent or otherwise, in
connection with letters of credit, acceptance facilities or
similar facilities, and (vii) to the extent not otherwise
included, obligations under (x) any interest rate protection
agreement, interest rate swap, interest rate cap or other
interest rate hedge arrangement, to or under which such Person is
a party (but only to the extent of any net credit exposure
thereunder) or (y) any forward foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect such Person against fluctuations in currency
values (but only to the extent of any net credit exposure
thereunder).
The term "Effective Date" shall mean the date the Shelf
Registration is declared effective by the Commission.
The term "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
The term "ERISA Affiliate" shall mean any corporation,
trade or business that is under common control with the Company
or is a member of a controlled group of corporations or an
affiliated service group or a controlled group of trades or
businesses, as described in Sections 414(b), 414(c) or 414(m) of
the Code or Section 4001(a)(14) of ERISA.
The term "Event of Default" shall mean any event
specified in Section 9.1, continued for the period of time, if
any, and after the giving of the notice, if any, therein
designated.
The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
The term "Exchangeable Stock" shall mean any Capital
Stock of a Person which is exchangeable or convertible into
another security (other than Capital Stock of such Person which
is neither Exchangeable Stock nor Redeemable Stock).
The term "Fair Market Value" shall mean, with respect to
any asset or property, the sale value that would be obtained in
an arm's length transaction between an informed and willing
seller under no compulsion to sell and an informed and willing
buyer under no compulsion to buy.
The term "GAAP" shall mean generally accepted accounting
principles in the United States in effect from time to time,
consistently applied.
The term "GAAP Consolidated Adjusted Net Worth" of any
Person shall mean, at any date, all amounts which would, in
conformity with GAAP, be included under shareholders' equity on a
consolidated balance sheet of such Person as at such date, after
deducting therefrom goodwill, including any amounts (however
designated on the balance sheet) representing the cost of
acquisitions of Subsidiaries in excess of underlying tangible
assets; provided, that in the event the Company believes that
there has been a change in GAAP from that utilized in preparing
the Company's fiscal 1992 audited financial statement which will
materially affect (whether favorably or adversely) such amount,
such amount shall be computed in accordance with GAAP as followed
by the Company in the preparation of its 1992 audited financial
statements, unless the Company and the Holders of not less than
51% in aggregate principal amount of the Debentures then
outstanding shall otherwise agree.
The term "Guarantee" by any Person shall mean, without
duplication, any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of payment of) such
Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
The term "Holder" of Debentures, or other similar terms,
shall mean any Person in whose name at the time a particular
Debenture is registered on the books of the Company kept for that
purpose in accordance with the terms hereof.
The term "incur" (including the correlative terms
"incurred", "incurring", "incurs", and "incurrence"), when used
with respect to any Debt, shall mean create, incur, assume,
guarantee or in any manner become liable in respect of
(including, without limitation, by operation of law) such Debt.
The term "Lien" shall mean any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement,
lien, charge, claim, security interest, easement or encumbrance,
or preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever
(including any conditional sale or title retention agreement, any
financing lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give,
any financing statement perfecting a security interest under the
Uniform Commercial Code of any jurisdiction, other than a
protective filing filed in connection with a true lease or a
filing in connection with a financing lease which is not required
to be capitalized on a balance sheet in accordance with GAAP on
the basis of immateriality) with respect to any property of any
kind, real or personal, movable or immovable, now owned or
hereinafter acquired.
The term "Net Available Proceeds" from any Asset Sale
shall mean cash or Cash Equivalents received therefrom by the
Company and/or its Subsidiaries, net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses
incurred and all Federal, state, foreign and local taxes required
to be accrued as a liability as a consequence of such Asset Sale,
(ii) all payments made by the Company or its Subsidiaries to pay
or repay Debt of the Company or any Subsidiary to the extent the
terms of the governing documents therefor require such repayment
or prohibit the purchase of the Debentures, (iii) all payments
made by the Company or its Subsidiaries on any Debt which is
secured by such assets in accordance with the terms of any Lien
upon or with respect to such assets or which must by the terms of
such Lien, in order to obtain a necessary consent to such Asset
Sale or by applicable law, be repaid out of the proceeds from
such Asset Sale, (iv) all distributions and other payments made
to minority interest holders in subsidiaries of the Company or
joint ventures as a result of such Asset Sale and (v) appropriate
amounts to be provided by the Company or any Subsidiary thereof,
as the case may be, as a reserve in accordance with GAAP against
any liabilities associated with such assets and retained by the
Company or any Subsidiary thereof, as the case may be, after such
Asset Sale, including, without limitation, liabilities under any
indemnification obligations and severance and other employee
termination costs associated with such Asset Sale, in each case
as determined by the Board of Directors of the Company or
Subsidiary, in its reasonable good faith judgment evidenced by a
resolution of such Board of Directors.
The term "Non-payment Default" shall mean any event
(other than a Payment Default) the occurrence of which entitles
one or more Persons to accelerate the maturity of any Senior
Indebtedness.
The term "Officers' Certificate" when used with respect
to the Company, shall mean a certificate signed by the Chairman,
the President or any Vice President and by the Controller, any
Assistant Controller, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company.
The term "Operating Net Income" shall mean, with respect
to any Person for any period, the consolidated net income (or
loss) of such Person and its Subsidiaries (determined in
accordance with GAAP) for such period, adjusted to exclude (only
to the extent included in computing such net income (or loss) and
without duplication): (a) all gains or losses which are either
extraordinary (as determined in accordance with GAAP) or related
to the sale of assets (other than the sale of inventory in the
ordinary course of business), other than gains or losses on asset
sales which gains or losses individually or in the aggregate do
not exceed $1,000,000 in any calendar year; (b) the net income of
any Person, other than a Subsidiary, in which such Person or any
of its Subsidiaries has an interest, except to the extent of the
amount of any dividends or distributions actually paid in U.S.
legal tender to such Person or a Subsidiary of such Person during
such period, but not in excess of such Person's pro rata share of
such Person's net income subsequent to the date of this Agreement
and (c) the net income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such
acquisition.
The term "Opinion of Counsel" shall mean a written
opinion of counsel, who may be counsel for the Company, and who
shall be acceptable to the Holders of not less than 51% in
aggregate principal amount of the Debentures then outstanding.
The term, "Pari Passu Debentures" shall mean Debt of the
Company under that certain Debenture Purchase Agreement, dated as
of November 19, 1993, as amended by Amendment No. 1, dated as of
November 24, 1993, and as further amended by Amendment No. 2,
dated as of January 11, 1994, for 8.5% Senior Subordinated
Convertible Debentures due November 19, 2000, by and between the
Company and the purchasers listed therein, as the same may be
amended, restated, supplemented or otherwise modified from time
to time.
The term "PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor thereto.
The term "Paying Agent" shall mean any state or national
bank or trust company organized under the laws of the United
States or any state thereof or the District of Columbia and
having capital, surplus and undivided profits aggregating at
least $100,000,000 which has been appointed by the Company as
paying agent under this Agreement (subject to the provisions of
Sections 8.4, 8.5, 14.6 and 15.1).
The term "Payment Default" shall mean any default in the
payment of any amount of Senior Indebtedness as and when due
whether at maturity, by acceleration, upon a date set for
prepayment or otherwise, including principal, premium, if any,
interest, commitment fees, letter of credit fees or reimbursement
obligations in respect of letters of credit under Senior
Indebtedness.
The term "Permitted Junior Securities" shall mean (so
long as the effect of any exclusion employing this definition is
not to cause or permit the Debentures (or any securities proposed
to be issued as "Permitted Junior Securities") to be treated in
any case or proceeding or similar event described in clause (a),
(b) or (c) of Section 13.2 as part of the same class of claims as
the Senior Indebtedness or any class of claims pari passu with,
or senior to, the Senior Indebtedness, for any payment or
distribution) debt or equity securities of the Company (or any
successor corporation) that are provided for by a plan of
reorganization or readjustment and that are subordinated to the
Debentures to at least to the same extent that the Debentures are
subordinated to the payment of all Senior Indebtedness then
outstanding; provided that (1) if a new corporation results from
such reorganization or readjustment, such corporation assumes any
Senior Indebtedness not paid in full in cash or, as acceptable to
the holders of Senior Indebtedness, in any other manner in
connection with such reorganization or readjustment and (2) the
rights of the holders of such Senior Indebtedness are not,
without the consent of such holders, altered by such
reorganization or readjustment.
The term "Person" shall mean any natural person,
corporation, partnership, trust, association, governmental
authority or unit, or any other entity, whether acting in an
individual, fiduciary or other capacity.
The term "Plan" shall mean any multiemployer plan or
single employer plan, as defined in Section 4001 of ERISA that is
subject to Title IV of ERISA, that the Company or any
Subsidiary maintains, contributes to or is obligated to
contribute to (or has in the past maintained, contributed to or
been obligated to contribute to) for the benefit of any current
or former employees, directors or consultants of the Company or
any Subsidiary.
The term "Preferred Stock," as applied to the Capital
Stock of any corporation, shall mean Capital Stock of any class
or classes (however designated) which is preferred as to the
payment of dividends, or as to the distribution of assets upon
any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of
such corporation.
The term "Prospectus" shall mean the prospectus included
in any Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering
of any portion of the Restricted Shares, pursuant to any
registration, as the case may be, covered by the Registration
Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material
incorporated by reference in such prospectus.
The term "Redeemable Stock" shall mean any Capital Stock
that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), upon the
happening of any event or otherwise matures or is required to be
redeemed, in whole or in part, on or prior to the first
anniversary of the Stated Maturity of the Debentures or is
redeemable at the option of the holder thereof, in whole or in
part, at any time on or prior to the first anniversary of the
Stated Maturity of the Debentures.
The term "Redemption Date", when used with respect to
any Debenture to be redeemed, shall mean the date fixed for such
redemption by or pursuant to this Agreement.
The term "Redemption Price", when used with respect to
any Debenture to be redeemed, shall mean the price at which it is
to be redeemed pursuant to this Agreement.
The term "Registration Expenses" shall mean any and all
expenses incident to performance of or compliance with Article
XII, including, without limitation, (i) all Commission and stock
exchange or National Association of Securities Dealers, Inc.
registration, filing fees and listing expenses, (ii) all fees and
expenses of complying with securities or blue sky laws (including
reasonable fees and disbursements of counsel for any underwriters
in connection with blue sky
qualifications of any Conversion Shares), (iii) all printing,
messenger and delivery expenses, (iv) the reasonable fees and
disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits
and/or "cold comfort" letters required by or incident to such
performance and compliance, (v) the reasonable fees and
disbursements of one counsel retained in connection with such
registration by the holders of a majority (by number of shares)
of Conversion Shares being registered, and (vi) any fees and
disbursements of underwriters customarily paid by issuers or
sellers of securities, including the fees and expenses of any
special experts retained in connection with the requested
registration, but excluding underwriting discounts, commissions,
insurance charges and transfer taxes, if any, and the fees and
expenses of counsel for the underwriters.
The term "Registration Statement" shall mean any
registration statement of the Company which covers any of the
Restricted Shares pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, and
all exhibits and all material incorporated by reference in such
Registration Statement.
The term "Restricted Shares" shall mean any Common Stock
issued or issuable upon conversion of the Debentures. As to any
particular Restricted Shares once issued, such securities shall
cease to be Restricted Shares when (i) a registration statement
with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have
been disposed of in accordance with such registration statement,
(ii) such securities shall have been distributed to the public
pursuant to Rule l44 (or any successor provision) under the
Securities Act, (iii) such securities shall have been otherwise
transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the
Company and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act,
or (iv) such securities shall have ceased to be outstanding.
The term "Securities Act" shall mean the Securities Act
of 1933, as amended.
The term "Senior Indebtedness" shall mean the principal
of, premium, if any, and interest (including interest accruing
after the filing of a petition initiating any proceeding under
any state, federal or foreign bankruptcy laws whether or not
allowable in such proceeding) on any Debt of the Company (other
than as otherwise provided in this definition),
whether outstanding on the date of this Agreement or thereafter
created, incurred or assumed, and whether at any time owing,
actually or contingent, unless, in the case of any particular
Debt, the instrument creating or evidencing the same or pursuant
to which the same is outstanding expressly provides that such
Debt shall not be senior in right of payment to the Debentures.
Without limiting the generality of the foregoing, "Senior
Indebtedness" shall include the principal of, premium, if any,
and interest (including interest accruing after the filing of a
petition initiating any proceeding under any state, federal or
foreign bankruptcy laws whether or not allowable in such
proceeding) on (i) all monetary obligations of every kind and
nature of the Company from time to time owed under the Credit
Agreement, including, without limitation, fees, reimbursement
obligations in respect of letters of credit (or guarantees
thereof) and indemnity and expense reimbursement obligations and
(ii) the Company's 12-1/8% Notes due 1995; provided, however,
that any Debt under any refinancing, refunding, or replacement of
the Credit Agreement or the 12-1/8% Notes due 1995 shall not
constitute Senior Indebtedness to the extent that the Debt
thereunder is by its express terms subordinate to the Debentures.
Notwithstanding the foregoing, "Senior Indebtedness" shall not
include (i) Debt evidenced by the Debentures, the Pari Passu
Debentures or the 6-1/4 Debentures, (ii) Debt that is subordinate
or junior in right of payment to the Debentures, (iii) any
liability for foreign, federal, state, local or other taxes owed
or owing by the Company, (iv) Debt of the Company to a Subsidiary
or any other Affiliate of the Company or any of such Affiliate's
subsidiaries (other than Debt in respect of the Credit Agreement
or any refinancing, refunding or replacement thereof) and (v)
that portion of any Debt which at the time of incurrence is
issued in violation of this Agreement.
The term "6-1/4 Debentures" shall mean Debt of the
Company under that certain Indenture, dated as of April 1, 1986,
for 6-1/4% Convertible Subordinated Debentures due 2011, by and
between the Company and The First National Bank of Boston,
trustee.
The term "Stated Maturity" shall mean, with respect to
any security, the date specified in such security as the fixed
date on which the principal of such security is due and payable,
including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening
of any contingency).
The term "Subordinated Indebtedness" shall mean (i) the
6-1/4 Debentures and (ii) any other Debt which is
subordinate in right of payment and on liquidation to the
Debentures.
The term "Subsidiary" shall mean, with respect to any
Person, any corporation or entity of which a majority of the
Capital Stock or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other
Persons performing similar functions is at the time directly or
indirectly owned by such Person and/or by one or more other
Subsidiaries. Unless the context otherwise requires, the term
"Subsidiary" as used herein, means a Subsidiary of the Company.
The term "Temporary Cash Investment" shall mean (A) any
evidence of Debt, maturing not more than one year after the date
of acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of
America, (B) any certificate of deposit, maturing not more than
one year after the date of acquisition, issued by, or time
deposit of, any lender who was an original signatory to the
Credit Agreement or a commercial banking institution that is a
member of the Federal Reserve System and that has combined
capital and surplus and undivided profits of not less than
$100,000,000, whose debt has a rating, at the time as of which
any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. or any successor rating agency,
or "A-1" (or higher) according to Standard & Poor's Corporation
or any successor rating agency, (C) commercial paper, maturing
not more than one year after the date of acquisition, issued by
any lender who was an original signatory to the Credit Agreement
or a corporation (other than an Affiliate or Subsidiary of the
Company) organized and existing under the laws of the United
States of America with a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. or any successor rating agency,
or "A-1" (or higher) according to Standard & Poor's Corporation
or any successor rating agency, and (D) any money market deposit
accounts issued or offered by any lender who was an original
signatory to the Credit Agreement or a domestic commercial bank
having capital and surplus in excess of $100,000,000.
The term "Trust Indenture Act" shall mean the Trust
Indenture Act of 1939, and any similar or successor federal
statute, and the rules and regulations of the Commission
thereunder, all as the same may be in effect at the time.
10.3 ACCOUNTING PRINCIPLES. The character or amount of
any asset, liability, capital account or reserve and of any
item of income or expense required to be determined pursuant to
this Agreement, and any consolidation or other accounting
computation required to be made pursuant to this Agreement, and
the construction of any definition in this Agreement containing a
financial term, shall be determined or made, as the case may be,
in accordance with GAAP, to the extent applicable, unless such
principles are inconsistent with the express requirements of this
Agreement.
l0.4 DIRECTLY OR INDIRECTLY. If any provision in this
Agreement refers to any action taken or to be taken by any
Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken
directly or indirectly by such Person, whether or not expressly
specified in such provision.
ARTICLE XI
CONVERSION OF DEBENTURES
11.1 CONVERSION PRIVILEGE AND CONVERSION PRICE.
Subject to and upon compliance with the provisions of this
Article, at the option of the Holder thereof, any Debenture or
any portion of the principal amount of any Debenture which is
payable at Stated Maturity or any portion thereof which equals
$1,000 or any integral multiple thereof may be converted at the
principal amount thereof, or of such portion thereof, into fully
paid and non-assessable shares (calculated as to each conversion
to the nearest 1/100 of a share) of Common Stock, at the
Conversion Price, determined as hereinafter provided, in effect
at the time of conversion by surrender of such Debenture, with
the notice of conversion affixed thereto, duly executed by such
Holder (specifying the portion of the principal amount thereof to
be converted in the case of a partial conversion), to the Company
at the office or agency of the Company maintained pursuant to
Section 7.12 (or at such other office or agency as the Company
shall designate to the Holders from time to time). Such
conversion right shall expire at the close of business on January
17, 2001. In case a Debenture or portion thereof is called for
redemption, such conversion right in respect of the Debenture or
portion so called shall expire at the close of business on the
Redemption Date, unless the Company defaults in making the
payment due upon redemption.
The price at which shares of Common Stock shall be
delivered upon conversion (herein called the "Conversion Price")
shall be initially $10.00 in principal amount per share of Common
Stock. The Conversion Price shall be adjusted in certain
instances as provided in Section 11.4.
11.2 EXERCISE OF CONVERSION PRIVILEGE. In order to
exercise the conversion privilege, the Holder of any Debenture to
be converted shall surrender such Debenture, duly endorsed or
assigned to the Company or in blank, at any office or agency of
the Company maintained pursuant to Section 7.12, accompanied by
written notice to the Company in the form provided in the
Debenture (or such other notice as is acceptable to the Company)
at such office or agency that the Holder elects to convert such
Debenture or, if less than the entire principal amount thereof is
to be converted, the portion thereof to be converted.
Within five days after the conversion of all or any part
of the unpaid principal amount of any Debenture, the Company will
pay to the Holder converting such Debenture all interest accrued
on such converted amount to and including the date of conversion,
without any adjustment of such interest in respect of any
dividend or other distribution payable on Common Stock issued
upon such conversion.
Debentures shall be deemed to have been converted
immediately prior to the close of business on the day of
surrender of such Debentures for conversion in accordance with
the foregoing provisions, and at such time the rights of the
Holders of such Debentures as Holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the Holder or
Holders of such Common Stock as and after such time. As promptly
as practicable on or after the conversion date, the Company shall
issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock
issuable upon conversion, together with payment in lieu of any
fraction of a share, as provided in Section 11.3.
In the case of any Debenture which is converted in part
only, upon such conversion the Company shall execute and and
deliver to the Holder thereof, at the expense of the Company, a
new Debenture or Debentures of authorized denominations in
aggregate principal amount equal to the unconverted portion of
the principal amount of such Debenture.
So long as any rights pursuant to the Company's Rights
Agreement (the "Rights Agreement"), dated as of October 3, 1986,
between the Company and the First National Bank of Boston, as
amended, have not expired, been redeemed or otherwise terminated,
the Holder of any Debenture surrendered for conversion will be
entitled to receive, in addition to the shares of Common Stock
issuable upon such conversion (the "Conversion Shares"), a number
of rights to be determined as follows: (i) if such conversion
occurs on or prior to the
Distribution Date (as referred to in the Rights Agreement
pursuant to which the rights were issued), the same number of
rights to which a holder of a number of shares of Common Stock
equal to the number of Conversion Shares is entitled at the time
of such conversion in accordance with the terms and provisions of
the Rights Agreement and applicable to the rights; and (ii) if
such conversion occurs after the Distribution Date, the same
number of rights to which a holder of the number of shares of
Common Stock into which the principal amount of the Debenture so
converted was convertible immediately prior to the Distribution
Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of the Rights Agreement
and applicable to the rights. The Conversion Price of the
Debentures will not be subject to adjustment on account of the
declaration, distribution or exercise of the rights. If the
Rights Agreement shall terminate in accordance with its terms and
the Company shall adopt a successor plan with substantially
similar terms which provide that the Common Stock issuable
hereunder is entitled to the benefits of such plan, the
provisions of this paragraph shall apply to such successor plan
as if it were the Rights Agreement.
11.3. FRACTIONS OF SHARES. No fractional shares of
Common Stock or scrip representing fractions of shares shall be
issued upon conversion of Debentures. If more than one Debenture
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 Debentures (or specified
portions thereof) so surrendered. Instead of any fractional
share of Common Stock which would otherwise be issuable upon
conversion of any Debenture or Debentures (or specified portions
thereof), the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the
Closing Price at the close of business on the day of conversion
(or, if such day is not a Trading Day on the Trading Day
immediately preceding such day).
11.4. ADJUSTMENT OF CONVERSION PRICE. The Conversion
Price shall be adjusted from time to time as follows:
(a) In case the Company shall (i) pay a dividend
or make a distribution in shares of its Capital Stock
(whether shares of Common Stock or of Capital Stock of
any other class), (ii) subdivide its outstanding Common
Stock, or (iii) combine its outstanding Common Stock
into a smaller number of shares, the Conversion Price in
effect immediately prior thereto shall be adjusted so
that the Holder of any Debenture
thereafter surrendered for conversion shall be entitled
to receive the number of shares of Capital Stock of the
Company which such Holder would have owned or have been
entitled to receive after the happening of any of the
events described above had such
Debenture been converted immediately prior to the
happening of such event. An adjustment made pursuant to
this subsection (a) shall become effective immediately
after the record date in the case of a dividend and
shall become effective immediately after the effective
date in the case of a subdivision or combination. If,
as a result of an adjustment made
pursuant to this subsection (a), the Holder of any
Debenture thereafter surrendered for conversion shall
become entitled to receive shares of two or more classes
of Capital Stock of the Company, the Board of Directors
(whose determination shall be conclusive and be
evidenced by a Board Resolution), shall determine the
allocation of the adjusted conversion price between or
among shares of such classes of Capital Stock.
(b) Except for distributions under the Rights
Agreement (or a successor plan) which shall be governed
by Section 11.2 of this Agreement, in case the Company
shall issue rights or warrants to all holders of its
Common Stock entitling them (for a period expiring
within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per
share less than the Current Market Price per share of
Common Stock (as defined in subsection (d) below) at the
record date for the determination of stockholders
entitled to receive such rights or warrants, the
Conversion Price in effect immediately prior thereto
shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the date of issuance of such rights
or warrants by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on
the date of issuance of such rights or warrants plus the
number of shares which the aggregate offering price of
the total number of shares so offered would purchase at
such Current Market Price, and of which the denominator
shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common
Stock offered for subscription or purchase. Such
adjustment shall be made successively whenever any such
rights or warrants are issued, and
shall become effective immediately after such record
date. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares
of Common Stock at less than such Current Market Price,
and in determining the aggregate offering price of such
shares, there shall be taken into account any
consideration received by the Company for such rights or
warrants, the value of such consideration, if other than
cash, to be determined by the Board of Directors (whose
determination shall be conclusive and be evidenced by a
Board Resolution).
(c) In case the Company shall distribute to all
holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends or
distributions paid from retained earnings of the
Company) or rights or warrants to subscribe or purchase
(excluding those referred to in subsection (b) above),
then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution by a
fraction of which the numerator shall be the Current
Market Price per share of the Common Stock on the record
date mentioned below less the then Fair Market Value (as
determined by the Board of Directors of the Company,
whose determination shall be conclusive), of the portion
of the assets or evidences of indebtedness so
distributed or of such rights or warrants applicable to
one share of Common Stock, and the denominator shall be
the Current Market Price per share of the Common Stock.
Such adjustment shall become effective immediately after
the record date for the determination of shareholders
entitled to receive such distribution.
(d) For the purpose of any computation under
subsection (b) and (c) above, the Current Market Price
per share of Common Stock (the "Current Market Price")
at any date shall be deemed to be the average of the
last reported sale prices for the twenty consecutive
days (which are Trading Days as defined below) next
preceding the day in question. The last reported sale
price for each day shall be (i) the last reported sale
price of Common Stock on the National Market System of
NASDAQ, or any similar system of automated dissemination
of quotations of securities prices then in common use,
if so quoted, or (ii) if not quoted as described in
clause (i), the mean between the high bid and low asked
quotations for Common Stock as reported by the National
Quotation Bureau Incorporated if at least two securities
dealers have inserted both bid
and asked quotations for such class of stock on at least
5 of the 10 preceding days, or (iii) if the Common Stock
is listed or admitted for trading on any national
securities exchange, the last sale price, or the closing
bid price if no sale occurred, of such class of stock on
the principal securities exchange on which such class of
stock is listed. If the Common Stock is quoted on a
national securities or central market system, in lieu of
a market or quotation system described above, the
closing price shall be determined in the manner set
forth in clause (ii) of the preceding sentence if bid
and asked quotations are reported but actual
transactions are not, and in the manner set forth in
clause (iii) of the preceding sentence if actual
transactions are reported. If none of the conditions
set forth above is met, the closing price of Common
Stock on any day or the average of such closing prices
for any period shall be the Fair Market Value of such
class of stock as determined by a member firm of the New
York Stock Exchange, Inc. selected by the Company. As
used herein the term "Trading Days" with respect to
Common Stock means (i) if the Common Stock is quoted on
the National Market System of the NASDAQ or any similar
system of automated dissemination of quotations of
securities prices, days on which trades may be made on
such system or (ii) if the Common Stock is listed or
admitted for trading on any national securities
exchange, days on which such national securities
exchange is open for business.
(e) No adjustment in the Conversion Price shall be
required unless such adjustment would require an
increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason
of this subsection (e) are not required to be made shall
be carried forward and taken into account in any
subsequent adjustment. All calculations under this
Article XI shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be.
Anything in this Section 11.4 to the contrary
notwithstanding, the Company shall be entitled to make
such reductions in the Conversion Price, in addition to
those required by this Section 11.4, as it in its
discretion shall determine to be advisable in order that
any stock dividends, subdivision of shares, distribution
of rights to purchase stock or securities, or
distribution of securities convertible into or
exchangeable for stock hereafter made by the Company to
its stockholders shall not be taxable.
(f) In any case in which this Section 11.4
provides that an adjustment shall become effective
immediately after a record date for any event, the
Company may defer until the occurrence of such event
(i) issuing to the Holder of any Debenture converted
after such date and before the occurrence of such event
the additional shares of Common Stock issuable upon such
conversion by reason of the adjustment required by such
event over and above the Common Stock
issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such holder any
amount in cash in lieu of any fraction pursuant to
Section 11.3.
(g) Notwithstanding any other provision of this
Section 11.4, no adjustment to the Conversion Price
shall result in zero or in a negative number or shall
reduce the conversion price below the then par value per
share of the Common Stock, and any such purported
adjustment shall instead reduce the Conversion Price to
such par value (unless the Common Stock then has no par
value in which case such purported adjustment shall
instead reduce the conversion price to $.01 per share).
The Company hereby covenants not to take any action (i)
to increase the par value per share of the Common Stock
or (ii) that would or does result in any adjustment in
the Conversion Price that, if made without giving effect
to the previous sentence, would cause the Conversion
Price to be less than the then par value per share of
the Common Stock; provided, that the covenant in this
sentence shall be suspended if within 10 days of
determining in good faith that such action would result
in such adjustment (but not later than the Business Day
following the effectiveness of such adjustment), the
Company gives a notice under Section 14.3 and effects
the redemption referred to in such notice on the
Redemption Date referred to therein, but shall be
retroactively reinstated if such notice or redemption
does not occur.
11.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted
Conversion Price in accordance with Section 11.4 and shall
prepare a certificate signed by the Chief Financial Officer or
the Treasurer of the Company setting forth the adjusted
Conversion Price and showing in reasonable detail the facts upon
which such adjustment is based, and such certificate shall
forthwith be filed at each office or agency maintained for the
purpose of conversion of Debentures pursuant to Section 11.1; and
(b) a notice stating that the Conversion Price has
been adjusted and setting forth the adjusted Conversion Price
shall forthwith be prepared, and as soon as practicable after it
is prepared, such notice shall be mailed by the Company to all
Holders at their last addresses as they shall appear in the
Debenture Register.
11.6 NOTICE OF CERTAIN CORPORATE ACTIONS. In case:
(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable otherwise than in
cash out of retained earnings; or
(b) the Company shall authorize the granting to
the holders of its Common Stock of rights or warrants to
subscribe for or purchase any shares of Capital Stock of any
class or of any other rights (excluding shares of Capital Stock
or options for Capital Stock issued pursuant to a benefit plan
for employees, officers or directors of the Company); or
(c) of any reclassification of the Common Stock
(other than a subdivision or combination of the outstanding
shares of Common Stock), or of any consolidation, merger or share
exchange to which the Company is a party and for which approval
of any stockholders of the Company is required, or of the sale or
transfer of the properties and assets of the Company
substantially as an entirety; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then the Company shall
cause to be filed at each office or agency maintained pursuant to
Section 11.1, and shall cause to be mailed to all Holders at
their last addresses as they shall appear in the Debenture
Register, at least 21 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record,
effective or expiration date hereinafter specified, a notice
stating (y) the date on which a record is to be taken for the
purpose of such dividend, distribution or granting of rights,
options or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record who will be
entitled to such dividend, distribution, rights or warrants are
to be determined, or (z) the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding-up is expected to become
effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their
shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding-up. Neither the
failure to give any such notice or any defect therein shall
affect the legality or validity of any action described in
clauses (a) through (d) of this Section 11.6.
11.7 COMPANY TO RESERVE COMMON STOCK; LISTING. The
Company shall at all times reserve and keep available, free from
preemptive rights, out of the authorized but unissued Common
Stock or out of the Common Stock held in treasury, for the
purpose of effecting the conversion of Debentures, the full
number of shares of Common Stock then issuable upon the
conversion of all outstanding Debentures. If and so long as any
shares of the Common Stock are listed on any national securities
exchange (as defined in the Exchange Act), the Company will, at
its expense, obtain and maintain the approval for listing on each
such exchange upon official notice of issuance of all shares of
the Common Stock receivable upon the conversion of the Debentures
at the time outstanding and maintain the listing of such shares
after their issuance; and the Company will so list on such
national securities exchange, will register under the Exchange
Act (and any similar state statute then in effect), and will
maintain such listing of, any other securities that at any time
are issuable upon conversion of the Debentures, if and at the
time that any securities of the same class shall be listed on
such national securities exchange by the Company.
11.8 TAXES ON CONVERSIONS. The Company will pay any
and all taxes that may be payable in respect of the issue or
delivery of shares of Common Stock on conversion of Debentures
pursuant hereto. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a
name other than that of the Holder of the Debenture or Debentures
to be converted, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
11.9 COVENANT AS TO COMMON STOCK. The Company
covenants that all shares of Common Stock which may be issued
upon conversion of Debentures will upon issue be validly issued,
fully paid and non-assessable and, except as provided in Section
11.8, the Company will pay all taxes, liens and charges with
respect to the issue thereof.
11.10 CANCELLATION OF CONVERTED DEBENTURES. All
Debentures delivered for conversion shall be delivered to the
Company to be cancelled by or at the direction of the Company.
11.11 PROVISIONS IN CASE OF RECLASSIFICATION,
CONSOLIDATION, MERGER OR SALE OF ASSETS. In case of any
reclassification or change of outstanding shares of Common Stock
issuable upon conversion of the Debentures, consolidation of the
Company with, or merger of the Company into, any other Person,
any merger or consolidation of another Person into the Company
(other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or any conveyance, sale or
transfer of the properties and assets of the Company
substantially as an entirety, the Company or the Person formed by
such consolidation or resulting from such merger or which
acquires such assets of the Company, as the case may be, shall
execute and deliver to the Holders a written instrument providing
that the Holder of each Debenture then outstanding shall have the
right thereafter, during the period such Debenture shall be
convertible as specified in Section 11.1, to convert such
Debenture only into the kind and amount of securities, cash and
other property, if any, receivable upon such reclassification,
consolidation, merger, conveyance, sale or transfer by a holder
of the number of shares of Common Stock into which such Debenture
could have been converted immediately prior to such
reclassification, consolidation, merger, conveyance, sale or
transfer, assuming such holder of Common Stock (i) is not a
Person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which such
sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person, and
(ii) failed to exercise his rights of election, if any, as to the
kind or amount of securities, cash or other property receivable
upon such reclassification, consolidation, merger, conveyance,
sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such
reclassification, consolidation, merger, conveyance, sale or
transfer is not the same for each share of Common Stock held
immediately prior to such reclassification, consolidation,
merger, sale or transfer by other than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for
the purpose of this Section the kind and amount of securities,
cash and other property receivable upon such reclassification,
consolidation, merger, conveyance, sale or transfer 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 written instrument shall provide for adjustments which, for
events
subsequent to the effective date of such written instrument,
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article. The above provisions
of this Section shall similarly apply to successive
reclassifications, consolidations, mergers, sales or transfers.
ARTICLE XII
REGISTRATION AND TRANSFER OF RESTRICTED SHARES
12.1 SHELF REGISTRATION. (a) Timing of Filing,
Effectiveness and Period of Usability. The Company shall prepare
and file within 30 days of the Closing Date, and thereafter shall
use its best efforts to cause to be declared effective as soon as
possible but in any event within 90 days of the Closing Date, a
"shelf" Registration Statement (the "Initial Shelf Registration")
on any appropriate form pursuant to Rule 415 (or similar rule
that may be adopted by the Commission) under the Securities Act
for all the Restricted Shares, which form shall be available for
the sale of the Restricted Shares in accordance with the intended
method or methods of distribution thereof. The Company agrees to
use its best efforts to keep the Registration Statement
continuously effective and usable for resale of Restricted Shares
until three years from the Closing Date or such shorter period
which will terminate when all the Restricted Shares covered by
such Registration Statement have been sold pursuant to such
Registration Statement or when all Restricted Shares otherwise
have been sold pursuant to Rule 144 or are freely tradeable (the
"Effectiveness Period"); provided, however, that the Company
shall have no obligation to maintain such Registration Statement
current and usable (although the Company shall be obligated to
maintain its effectiveness) at any time when the Conversion Price
is greater than the Current Market Price, unless any of the
Debentures have been previously converted pursuant to Article XI.
The Company shall not permit any securities other than the
Restricted Shares (and any shares issuable upon conversion of the
Pari Passu Debentures) to be included in a Shelf Registration.
Each Purchaser hereby covenants and agrees, and each subsequent
Holder by its acceptance of a Debenture will be deemed to have
covenanted and agreed, that it will provide, upon the request of
the Company from time to time, the information required pursuant
to Item 507 of Regulation S-K under the Securities Act for use in
any Registration Statement relating to the Restricted Shares,
including, without limitation, the name of the beneficial and
record owner of the Debenture and the principal amount of
Debentures and Pari Passu Debentures held by such beneficial
owner.
(b) Subsequent Shelf Registrations. If the Initial
Shelf Registration or any Subsequent Shelf Registration ceases to
be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities
registered thereunder), the Company shall use its best efforts to
obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of
such cessation of effectiveness amend the Shelf Registration in a
manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional
"shelf" Registration Statement pursuant to Rule 415 covering all
of the Restricted Shares (a "Subsequent Shelf Registration"). If
a Subsequent Shelf Registration is filed, the Company shall use
its best efforts to cause the Subsequent Shelf Registration to be
declared effective as soon as practicable after such filing and
to keep such Registration Statement continuously effective for a
period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registration was previously
continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any
Subsequent Shelf Registration.
(c) Additional Interest for Liquidity. (1) In addition
to the interest required to be paid pursuant to the first
paragraph of the Debentures and clauses (2) and (3), if a Shelf
Registration is not effective for at least 270 days (whether or
not consecutive) during the period commencing on the Closing Date
and ending on July 18, 1995, then from July 18, 1995 through and
including January 17, 1996 interest shall accrue with respect to
the Debentures at the rate of one-sixteenth of one percent
(.0625%) per annum, which interest shall be payable by the
Company in cash directly to the Holders thereof on January 18,
1996, in the manner and subject to the same terms and conditions
set forth in this Agreement, as nearly as may be as though the
interest rate provided in the first paragraph of the Debentures
had been increased by one sixteenth of one percent (.0625%) per
annum.
(2) In addition to the interest required to be paid
pursuant to the first paragraph of the Debentures and clauses (1)
and (3), if a Shelf Registration is not effective for at least
540 days (whether or not consecutive) during the period
commencing on the Closing Date and ending on July 18, 1996, then
from July 18, 1996 through and including January 17, 1997
interest shall accrue with respect to the Debentures at the rate
of one-sixteenth of one percent (.0625%) per annum, which
interest shall be payable by the Company in cash directly
to the Holders thereof on January 18, 1997, in the manner and
subject to the same terms and conditions set forth in this
Agreement, as nearly as may be as though the interest rate
provided in the first paragraph of the Debentures had been
increased by one sixteenth of one percent (.0625%) per annum.
(3) In addition to the interest required to be paid
pursuant to the first paragraph of the Debentures and clauses (1)
and (2), if a Shelf Registration is not effective for at least
810 days (whether or not consecutive) during the period
commencing on the Closing Date and ending on July 18, 1997, then
from July 18, 1997 through and including January 17, 1998
interest shall accrue with respect to the Debentures at the rate
of one-sixteenth of one percent (.0625%) per annum, which
interest shall be payable by the Company in cash directly to the
Holders thereof on January 18, 1998, in the manner and subject to
the same terms and conditions set forth in this Agreement, as
nearly as may be as though the interest rate provided in the
first paragraph of the Debentures had been increased by one
sixteenth of one percent (.0625%) per annum.
(4) Notwithstanding the foregoing, any day on
which the Shelf Registration is required to be usable pursuant to
Section 12.1 but is not so usable shall be deemed to be a day on
which the Shelf Registration was not effective for purposes of
computing the time periods in clauses (1), (2) and (3) of this
Section (c).
(d) Expenses. The Company will pay all Registration
Expenses in connection with registrations pursuant to this
Section 12.1.
12.2 REGISTRATION PROCEDURES. If and whenever the
Company is required to effect or cause the registration of any
Restricted Shares under the Securities Act as provided in this
Agreement, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission such
amendments and post-effective amendments to the Registration
Statement, and such supplements to the Prospectus, as may be
required by the rules, regulations or instructions applicable to
the registration form utilized by the Company or by the
Securities Act or rules and regulations thereunder for Shelf
Registration or otherwise necessary to keep the Registration
Statement effective for the applicable period and cause the
Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable
period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(b) notify the sellers of Restricted Shares promptly,
and (if requested by any such Person) confirm such advice in
writing,
(1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed,
and, with respect to the Registration Statement or any
post-effective amendment, when the same has become
effective,
(2) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for
that purpose, and
(3) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Restricted Shares for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(c) furnish to each seller of such Restricted Shares
such number of copies of such Registration Statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the Prospectus included in
such Registration Statement (including each preliminary
Prospectus and summary Prospectus), in conformity with the
requirements of the Securities Act, and such other documents as
such seller may reasonably request in order to facilitate the
disposition of the Restricted Shares by such seller;
(d) register or qualify such Restricted Shares covered
by such registration statement under such other securities or
blue sky laws of such jurisdictions as each seller shall request,
and do any and all other acts and things which may be necessary
or advisable to enable such seller to consummate the disposition
in such jurisdictions of the Restricted Shares owned by such
seller;
(e) cause such Restricted Shares covered by such
registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof to consummate the
disposition of such Restricted Shares;
(f) immediately notify each seller of any such
Restricted Shares covered by such Registration Statement, at any
time when a Prospectus relating thereto is required to be
delivered under the Securities Act within the appropriate period
mentioned in clause (a) of this Section 12.2, of the Company
becoming aware that the Prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing, and
within five days prepare and furnish to all sellers a reasonable
number of copies of an amended or supplemental Prospectus as may
be necessary so that, as thereafter delivered to the purchasers
of such Restricted Shares, such Prospectus shall not include 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 not misleading in the light of the
circumstances then existing provided that the Company shall have
no obligation to do so prior to the conversion of any of the
Debentures at any time when the Conversion Price is greater than
the Current Market Price;
(g) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date
of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder;
(h) list such Restricted Shares on any securities
exchange on which the Common Stock is then listed, if such
Restricted Shares are not already so listed and if such listing
is then permitted under the rules of such exchange, and provide a
transfer agent and registrar for such Restricted Shares covered
by such Registration Statement not later than the effective date
of such Registration Statement;
(i) cooperate with the sellers of Restricted Shares and
the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Restricted
Shares to be sold and not bearing any restrictive legends; and
enable such Restricted Shares to be in such denominations and
registered in such names as the managing underwriters may request
at least two business days prior to any sale of Restricted Shares
to the underwriters;
(j) enter into such agreements (including an
underwriting agreement) and take all such other actions in
connection therewith in order to expedite or facilitate the
disposition of such Restricted Shares and in such connection,
whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration,
(1) make such representations and warranties to the holders of
such Restricted Shares and the underwriters in form, substance
and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when
requested; (2) 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 and the holders of a majority in principal amount of
the Restricted Shares being sold) addressed to each selling
holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested
by such holders and underwriters; (3) if an underwriting
agreement is entered into, the same shall set forth
indemnification provisions and procedures no less favorable than
those set forth in Section 12.3 hereof (or such other provisions
and procedures acceptable to the holders of a majority of the
Restricted Shares being sold) with respect to all parties to be
indemnified pursuant to such Section; and (4) the Company shall
deliver such documents and certificates as may be reasonably
requested by the holders of a majority of the Restricted Shares
being sold and the managing underwriters, if any, to evidence
compliance with clause (1) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company. The above shall be done
at each closing under such underwriting or similar agreement or
as and to the extent required thereunder;
(k) obtain a "cold comfort" letter or letters from the
Company's independent public accountants in customary form and
covering matters of the type customarily covered by "cold
comfort" letters as the sellers of more than 50% of such
Restricted Shares shall reasonably request;
(l) make available for inspection by any seller of such
Restricted Shares covered by such Registration Statement, by any
underwriter participating in any disposition to be effected
pursuant to such Registration Statement and by any attorney,
accountant or other agent retained by any such seller or any such
underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company as shall be
reasonably necessary to enable them to exercise their due
diligence responsibility, and cause all of the Company's
officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such
Registration Statement;
(m) use its best efforts to cause the Restricted Shares
covered by the Registration Statement to be rated with the
appropriate rating agencies, if so requested by Purchasers or the
holders of a majority in aggregate principal amount of the
Restricted Shares; and
(n) obtain a CUSIP number for all Restricted Shares
(unless already obtained), not later than the Effective Date.
The Company may require each seller of Restricted Shares
as to which any registration is being effected to furnish the
Company such information regarding such seller from time to time
as may be required by the Securities Act.
Each holder of Restricted Shares agrees by acquisition
of such Restricted Shares that, upon receipt of any notice from
the Company of the happening of any event of the kind described
in clause (f) of this Section 12.2, such holder will forthwith
discontinue disposition of Restricted Shares pursuant to the
Registration Statement covering such Restricted Shares until such
holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by clause (f) of this Section 12.2, 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 Restricted Shares current at the time of
receipt of the Company's notice.
12.3 INDEMNIFICATION. (a) Indemnification by the
Company. In the event of any registration of any securities of
the Company under the Securities Act pursuant to Section 12.1,
the Company agrees to (i) indemnify and hold harmless, to the
extent permitted by law, the seller of any Restricted Shares
covered by such registration statement, its directors and
officers and employees and agents and general and limited
partners (and the directors and officers thereof), each other
Person who participates as an underwriter in the offering or sale
of such securities and their officers, directors and partners and
each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, against any
and all losses, claims, damages or liabilities, joint or several,
and expenses (including reasonable costs of investigation and
legal expenses) to which such seller, any such director or
officer or employee or agent or general or limited partner or any
such underwriter, officer, director, partner or controlling
person may become subject
under the Securities Act, common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon
(aa) any untrue statement or alleged untrue statement of any
material fact contained in any Registration Statement under which
such securities were registered under the Securities Act, any
preliminary, final or summary Prospectus contained therein, or
any amendment or supplement thereto, or (bb) 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, and (ii) reimburse such seller and each such
director, officer, employee, agent, general or limited partner,
underwriter, officer, director, partner and controlling person
for any legal or any other expenses reasonably incurred by them
in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or
alleged omission made in such Registration Statement or amendment
or supplement thereto or in any such preliminary, final or
summary Prospectus in reliance upon and in conformity with
written information furnished to the Company through an
instrument duly executed by such seller or any underwriter
specifically stating that it is for use in the preparation
thereof; and provided, further, that the Company will not be
required to indemnify any Person who participates as an
underwriter in the offering or sale of Restricted Shares or any
other Person, if any, who controls such underwriter within the
meaning of the Securities Act to the extent that any such loss,
claim, damage or liability for which indemnification is claimed
results from such underwriter's failure to send or give a copy of
the final Prospectus to the Person asserting an untrue statement
or an alleged untrue statement or omission or alleged omission at
or prior to the written confirmation of such sale, if such
statement or omission was corrected in such final Prospectus and
the Company has previously furnished copies thereof to such
underwriter. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of
such seller or any such director, officer, employee, agent,
general or limited partner, underwriter, officer, director,
partner or controlling person and shall survive the transfer of
such securities by such seller. This indemnity will be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by the Sellers. The Company may
require, as a condition to including any Restricted Shares in any
Registration Statement filed in accordance with this
Article XII, that the Company shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such
Restricted Shares or any underwriter, to indemnify and hold
harmless (in the same manner and to the same extent as set forth
in this Section 12.3(b)) the Company, any directors, officers,
employees, agents and other controlling persons thereof, and all
other prospective sellers with respect to any statement or
alleged statement in or omission or alleged omission from such
Registration Statement, any preliminary, final or summary
Prospectus contained therein, or any amendment or supplement, if
such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company through an instrument duly
executed by such seller or underwriter specifically stating that
it is for use in the preparation of such Registration Statement,
preliminary, final or summary Prospectus or amendment or
supplement, or a document incorporated by reference into any of
the foregoing. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of
the Company or any of the prospective sellers or any of their
respective directors, officers, employees, agents or controlling
persons and shall survive the transfer of such securities by such
seller.
(c) Notices of Claims. Promptly after receipt by an
indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 12.3, such
indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, that the
failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 12.3
except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such
indemnified party's judgment a conflict of interest between such
indemnified and indemnifying parties exists in respect of such
claim, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified
party and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently
incurred in connection with the defense thereof; provided,
however, that such indemnified party shall have the right to
employ separate
counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the
expense of such indemnified party unless (a) the indemnifying
party has agreed to pay such fees and expenses, (b) the
indemnifying party shall have failed to assume the defense of
such action or proceeding and have failed to employ counsel
reasonably satisfactory to such indemnified party in any such
action or proceeding, (c) such indemnified party shall have been
advised by counsel that there may be one or more legal defenses
available to such indemnified party which are different from or
additional to those available to the indemnifying party or other
indemnified party or (d) a conflict or potential conflict exists
(based on advice of counsel to any such indemnified party)
between such indemnified party and the indemnifying party (in
which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such action or
proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings 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 (together with
appropriate local counsel) at any time for such indemnified party
and any other indemnifying parties, which firm shall be
designated in writing by such indemnifying parties). Any such
fees and expenses payable by the indemnifying party shall be paid
to the indemnified party entitled thereto as incurred by such
indemnified party. The indemnifying party shall not be liable
for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written
consent, or if there be a final judgment for the plaintiff in any
such action or proceeding, the indemnifying party agrees to
indemnify and hold harmless such indemnified parties from and
against any loss or liability by reason of such settlement or
judgment. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 12.3 is unavailable to an indemnified party under
Section 12.3(a) or Section 12.3(b) hereof (other than by reason
of exceptions provided in those Sections) in respect of any
losses, claims, damages, liabilities or expenses referred to
therein, then each applicable 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 or expenses, (i) in
such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and each seller of Restricted
Shares on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, or
liabilities, as well as the other relevant equitable
considerations. The relative fault 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 indemnifying party or the particular seller and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission. The Company and the holders of Restricted Shares agree
that it would not be just and equitable if contributions pursuant
to this subsection (d) were to be determined by pro rata
allocation or by any other method of allocation that does not
take account of the equitable consideration referred to in the
first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim that is
the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), each seller of Restricted
Shares shall not be required to contribute any amount in excess
of the amount by which the proceeds received by such seller from
sales of Restricted Shares exceeds the amount of any damages that
such seller 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.
(e) Rule 144 and Rule 144A Information. For so long as
the Company is subject to the reporting requirements of Section
13 or 15 of the Exchange Act, the Company covenants that it will
file the reports required to be filed by it under the Securities
Act and Section 13(a) or 15(d) of the Exchange Act and the rules
and regulations adopted by the Commission thereunder. If the
Company is not subject to the reporting requirements of Section
13 or 15 of the Exchange Act, the Company also covenants that it
will provide the information required pursuant to Rule 144(c)(2)
and Rule 144A(d)(4) under the Securities Act upon the request of
any holder of Debentures
or Restricted Shares which continue to be "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act and
it will take such further action as any holder of such Debenture
or Restricted Shares may reasonably request, all to the extent
required from time to time to enable such holder to sell its
Debentures or Restricted Shares without registration under the
Securities Act within the limitation of the exemptions provided
by (a) Rule 144 under the Securities Act, as such rule may be
amended from time to time, (b) Rule 144A under the Securities
Act, as such rule may be amended from time to time, or (c) any
similar rule or regulation hereafter adopted by the Commission.
Upon the request of any holder of Debentures or Restricted
Shares, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
(f) Other Indemnification. Indemnification similar to
that specified in the preceding subdivisions of this Section 12.3
(with appropriate modifications) shall be given by the Company
and each seller of Restricted Shares with respect to any required
registration or other qualification of securities under any
federal or state law or regulation or governmental authority
other than the Securities Act.
12.4 UNDERWRITTEN REGISTRATIONS. If any of the
Restricted Shares covered by a registration pursuant to Section
12.1 are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will
administer the offering will be selected by the holders of a
majority in aggregate principal amount of such Restricted Shares
included in such offering; provided that such investment bankers
and managers must be reasonably satisfactory to the Company.
No Person may participate in any underwritten
registration hereunder unless such Person (a) agrees to sell such
Person's Restricted Shares on the basis provided in any
underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the
terms of such underwriting arrangements.
ARTICLE XIII
SUBORDINATION OF DEBENTURES
13.1 DEBENTURES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of a Debenture,
by his acceptance thereof, likewise covenants and agrees, that,
to the extent and in the manner hereinafter set forth in this
Article, the Debt represented by the Debentures and the payment
of the principal of, premium, if any, interest on and any other
payment with respect to, each and all of the Debentures are
hereby expressly made subordinate and subject in right of payment
as provided in this Article to the prior payment in full, in cash
or, as acceptable to each holder of Senior Indebtedness, in any
other manner, of all Senior Indebtedness (whether outstanding on
the date of this Agreement or hereafter incurred).
This Article 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 they or each of them
may enforce such provisions.
The Debentures shall be senior in right of payment and
in rights of liquidation to all Subordinated Indebtedness. The
Debentures shall be pari passu in right of payment and in rights
of liquidation with the Pari Passu Debentures.
13.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshaling of assets or
liabilities of the Company, then and in any such event:
(1) the holders of Senior Indebtedness shall be
entitled to receive payment in full in cash or, as acceptable to
each holder of Senior Indebtedness, in any other manner, of all
amounts due on or in respect of all Senior Indebtedness, before
the Holders of the Debentures are entitled to receive any payment
or distribution of any kind or character (excluding Permitted
Junior Securities) on account of principal of, premium, if any,
or interest on the Debentures (including any
payment or other distribution which may be received from the
holders of Subordinated Indebtedness as a result of any payment
on such Subordinated Indebtedness); and
(2) until all of the Senior Indebtedness is
repayed in full as provided in clause (1) above, any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities (excluding Permitted
Junior Securities), by set-off or otherwise, to which the Holders
would be entitled but for the provisions of this Article
(including any payment or other distribution which may be
received from the holders of Subordinated Indebtedness as a
result of any payment on such Subordinated Indebtedness) shall be
paid by the liquidating trustee or agent or other Person making
such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under 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, to the extent necessary
to make payment in full in cash or as acceptable to each holder
of Senior Indebtedness, in any other manner, of all Senior
Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(3) in the event that, notwithstanding the
foregoing provisions of this Section, the Holder of any Debenture
shall have received any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, in respect of principal, premium, if any, and
interest on the Debentures before all Senior Indebtedness is paid
in full, then and in such event such payment or distribution
(excluding Permitted Junior Securities) (including any payment or
other distribution which may be received from the holders of
Subordinated Indebtedness as a result of any payment on such
Subordinated Indebtedness) shall be paid over or delivered
forthwith directly to the holders of Senior Indebtedness or their
representative or representatives or to the trustee or trustees
under any indenture under which any instruments evidencing any of
such Senior Indebtedness have been issued for application to the
payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full in cash
or, as acceptable to each holder of Senior Indebtedness, any
other manner, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of
the Company with or into, another Person or the liquidation or
dissolution of the Company following the conveyance, transfer or
lease of its properties and assets substantially as an entirety
to another Person upon the terms and conditions set forth in
Article XVI shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of
creditors or marshaling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such
consolidation or the surviving entity of such merger or the
Person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case
may be, shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions set
forth in Article XVI.
13.3 SUSPENSION OF PAYMENT WHEN SENIOR INDEBTEDNESS IN
DEFAULT. (a) Unless Section 13.2 shall be applicable, upon the
occurrence and during the continuance of a Payment Default, no
payment (other than any payments previously made pursuant to
Section 15.1 of this Agreement) or distribution of any assets of
the Company of any kind or character (excluding Permitted Junior
Securities) shall be made by the Company on account of principal
of, premium, if any, or interest on, the Debentures, or on
account of the purchase, redemption, defeasance (whether under
Section 15.1) or other acquisition of or in respect of the
Debentures unless and until such Payment Default shall have been
cured or waived or shall have ceased to exist or the Senior
Indebtedness shall have been discharged or paid in full in cash
or in any other manner as acceptable to each holder of such
Senior Indebtedness, after which the Company shall (subject to
the other provisions of this Article XIII) resume making any and
all required payments in respect of the Debentures, including any
missed payments.
(b) Unless Section 13.2 shall be applicable, upon
(1) the occurrence and during the continuance of a Non-payment
Default and (2) receipt by the Holders and the Company from a
representative of the holder of any Senior Indebtedness
(collectively a "Senior Representative") or the holder of any
Senior Indebtedness of written notice of such Non-payment
Default, no payment (other than any payments previously made
pursuant to Section 15.1 of this Agreement) or distribution of
any assets of the Company of any kind or character (excluding
Permitted Junior Securities) shall be made by the Company on
account of any principal of, premium, if any, or interest on, the
Debentures, or on account of the purchase, redemption, defeasance
(whether under Section 15.1) or other acquisition of or in
respect of Debentures for a period ("Payment Blockage Period")
commencing on the date of receipt by the Holders of
such notice and continuing until the earliest of (subject to any
blockage of payments that may then or thereafter be in effect
under subsection (a) of this Section 13.3) (x) 179 days after
receipt of such written notice by the Holders (provided that any
Senior Indebtedness as to which notice was given shall
theretofore have not been accelerated), (y) the date on which
such Non-payment Default is cured or waived or ceases to exist or
on which the Senior Indebtedness related thereto is discharged or
paid in full in cash, or in any other manner as acceptable to the
applicable holder of Senior Indebtedness or (z) the date on which
such Payment Blockage Period shall have been terminated by
written notice to the Company or the Holders from the Senior
Representative or holder of Senior Indebtedness initiating such
Payment Blockage Period, after which, in the case of clause (x),
(y) or (z), the Company shall (subject to the other provisions of
this Article including paragraph (a) above) promptly resume
making any and all required payments in respect of the
Debentures, including any missed payments. Notwithstanding any
other provision of this Agreement, in no event shall a Payment
Blockage Period under this paragraph (b) extend beyond 179 days
from the date of the receipt by the Holders of the notice
referred to in clause (2) of this paragraph (b) (the "Initial
Blockage Period"). Any number of notices of Non-payment Defaults
may be given during the Initial Blockage Period; provided that
during any period of 365 consecutive days only one Payment
Blockage Period under this paragraph (b) may commence and the
duration of such period may not exceed 179 days. No Non-payment
Default with respect to Senior Indebtedness that existed or was
continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the
commencement of a second Payment Blockage Period, whether or not
within a period of 365 consecutive days, unless such Non-payment
Default shall have been cured or waived for a period of not less
than 90 consecutive days. The Company shall deliver a notice to
the Holders promptly after the date on which any Non-payment
Default is cured or waived or ceases to exist or on which the
Senior Indebtedness related thereto is discharged or paid in full
in cash, or in any other manner as acceptable to each holder of
Senior Indebtedness.
(c) In the event that, notwithstanding the foregoing,
the Company shall make any payment to the Holder of any Debenture
prohibited by the foregoing provisions of this Section, then and
in such event such payment shall be paid over and delivered
forthwith to a Senior Representative of the holders of the Senior
Indebtedness or as a court of competent jurisdiction shall
direct.
13.4 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS. After the payment in full, in cash or, as
acceptable to each holder of Senior Indebtedness, in any other
manner of all Senior Indebtedness, the Holders of the Debentures
shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness
until the principal of, premium, if any, and interest on the
Debentures shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of
Senior Indebtedness of any cash, property or securities to which
the Holders of the Debentures would be entitled except for the
provisions of this Article, and no payments over pursuant to the
provisions of this Article to the holders of Senior Indebtedness
by Holders of the Debentures, shall, as among the Company, their
creditors other than holders of Senior Indebtedness, and the
Holders of the Debentures, be deemed to be a payment or
distribution by the Company to or on account of the Senior
Indebtedness.
13.5 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article are intended solely for the purpose of
defining the relative rights of the Holders of the Debentures on
the one hand and the holders of Senior Indebtedness on the other
hand. Nothing contained in this Article or elsewhere in this
Agreement or in the Debentures is intended to or shall
(a) impair, as among the Company and the Holders of the
Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Debentures the
principal of, premium, if any, and interest on the Debentures as
and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights of the Holders of
the Debentures and creditors of the Company other than the rights
of the Holders of the Debentures in relation to the rights of the
holders of Senior Indebtedness; or (c) prevent the Holder of any
Debenture from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the
rights under this Article of the holders of Senior Indebtedness
(1) in any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other
marshaling of assets and liabilities of the Company referred to
in Section 13.2, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or
deliverable to such Holder, or (2) under the conditions specified
in Section 13.3, to prevent any payment prohibited by such
Section or enforce their rights pursuant to Section 13.3(c).
13.6 NO WAIVER OF SUBORDINATION PROVISIONS. (a) No
right of any present or future holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on
the part of the Company or by any act or failure to act, in good
faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(b) Without limiting the generality of Subsection
(a) of this Section, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Holders of the Debentures, without incurring
responsibility to the Holders of the Debentures and without
impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Debentures to
the holders of Senior Indebtedness, amend, extend, refinance,
replace, restate, supplement or otherwise modify the Credit
Agreement, so long as the aggregate principal amount of Debt
outstanding pursuant to Section 8.1(b) (computed as provided in
such Section) at any time does not exceed $110,000,000, and,
including, without limitation, may also do any one or more of the
following: (1) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior
Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding;
(2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(3) release any Person liable in any manner for the collection or
payment of Senior Indebtedness; and (4) exercise or refrain from
exercising any rights against the Company and any other Person;
provided, however, that in no event shall any such actions limit
the right of the Holders of the Debentures to take any action to
accelerate the maturity of the Debentures pursuant to Article IX
of this Agreement or to pursue any rights or remedies hereunder
or under applicable laws if the taking of such action does not
otherwise violate the terms of this Article, subject to the
rights under this Article, of the holders of Senior Indebtedness
to receive the cash, property or securities receivable upon the
exercise of such rights or remedies.
13.7 NOTICES. The Company shall provide the Holders
with prompt notice of any event known to the Company which would
prohibit the making of any payment of money to the Holders in
respect of the Debentures pursuant to the provisions of this
Article.
13.8 RELIANCE ON JUDICIAL ORDERS OR CERTIFICATES. Upon
any payment or distribution of assets of the Company referred to
in this Article, the Holders of the Debentures shall be entitled
to rely upon any order or decree entered by any court of
competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding
up or similar case or proceeding is pending, or a certificate of
the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the
Holders of Debentures or a certificate of a Senior
Representative, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the
holders of 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, provided that the foregoing shall
apply only if such court has been fully apprised of the
provisions of this Article.
13.9 NO SUSPENSION OF REMEDIES. Nothing contained in
this Article shall limit the right of the Holders of Debentures
to take any action to accelerate the maturity of the Debentures
pursuant to Article IX of this Agreement or to pursue any rights
or remedies hereunder or under applicable law, subject to the
rights under this Article of the holders of Senior Indebtedness
to receive the cash, property or securities receivable upon the
exercise of such rights or remedies.
13.10 REINSTATEMENT. The provisions of this Article
shall continue to be effective or reinstated, as the case may be,
if at any time any payment of the Senior Indebtedness is
rescinded or must otherwise be returned by any bank which is
party to the Credit Agreement or any other holder of Senior
Indebtedness upon the insolvency, bankruptcy or reorganization of
the Company or otherwise, all as though such payment had not been
made.
13.11 AMENDMENTS TO ARTICLE XIII. No change,
modification or amendment of any provision of this Article shall
be effective against any holder of Senior Indebtedness that did
not consent to such change, modification or amendment.
ARTICLE XIV
REDEMPTION OF DEBENTURES
14.1. RIGHT OF REDEMPTION. The Debentures may be
redeemed at the election of the Company, as a whole or from time
to time in part, at any time on or after January 18, 1998,
at the Redemption Prices specified in the form of Debenture
hereinafter set forth, together with accrued interest to the
Redemption Date.
14.2. APPLICABILITY OF ARTICLE. Redemption of
Debentures at the election of the Company or otherwise, as
permitted or required by any provision of this Agreement, shall
be made in accordance with such provision and this Article.
14.3. ELECTION TO REDEEM; NOTICE TO HOLDERS. The
election of the Company to redeem any Debentures pursuant to
Section 14.1 shall be evidenced by a Board Resolution. In case
of any redemption at the election of the Company of less than all
of the Debentures, the Company shall, at least 30 days prior to
the Redemption Date fixed by the Company, notify the Holders of
such Redemption Date and of the principal amount of Debentures to
be redeemed.
14.4. SELECTION BY THE COMPANY OF DEBENTURES TO BE
REDEEMED. If less than all the Debentures are to be redeemed,
the particular Debentures to be redeemed shall be selected not
more than 30 days prior to the Redemption Date by the Company,
from the Debentures not previously called for redemption, by such
method as the Company shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal
to $1,000 or any integral multiple thereof) of the principal
amount of Debentures of a denomination larger than $1,000.
If any Debenture selected for partial redemption is
converted in part before termination of the conversion right with
respect to the portion of the Debenture so selected, the
converted portion of such Debenture shall be deemed (so far as
may be) to be the portion selected for redemption. Debentures
which have been converted during a selection of Debentures to be
redeemed shall be treated by the Company as outstanding for the
purpose of such selection.
The Company shall promptly notify the Holders in writing
of the Debentures selected for redemption and, in the case of any
Debentures selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Agreement, unless the context
otherwise requires, all provisions relating to the redemption of
Debentures shall relate, in the case of any Debentures redeemed
or to be redeemed only in part, to the portion of the principal
amount of such Debentures which has been or is to be redeemed.
14.5. NOTICE OF REDEMPTION. Notice of redemption shall
be given by first-class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the Redemption Date, to
each Holder to be redeemed, at his address appearing in the
Debenture Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Debentures are
to be redeemed, the identification (and, in
the case of partial redemption of any Debentures, the
principal amounts) of the
particular Debentures to be redeemed,
(4) that on the Redemption Date the
Redemption Price will become due and payable
upon each such Debenture to be redeemed and
that interest thereon will cease to accrue on
and after said date,
(5) the Conversion Price, the date on
which the right to convert the Debentures to
be redeemed will terminate and the place or
places where such Debentures may be
surrendered for conversion, and
(6) the place or places where such
Debentures are to be surrendered for payment
of the Redemption Price.
Notice of redemption of Debentures to be redeemed at the
election of the Company shall be given by the Company.
14.6. DEPOSIT OF REDEMPTION PRICE. On or prior to any
Redemption Date, the Company shall deposit with the Paying Agent
(which for purposes of this Article shall not be the Company) an
amount of money sufficient to pay the Redemption Price of, and
accrued interest on, all the Debentures which are to be redeemed
on that date other than any Debentures called for redemption on
that date which have been converted prior to the date of such
deposit.
If any Debenture called for redemption is converted, any
money deposited with the Paying Agent for the redemption of such
Debenture shall be paid to the Company upon request by the
Company.
14.7. DEBENTURES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Debentures so to
be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after
such date (unless the Company shall default in the payment of the
Redemption Price and accrued interest) such Debentures shall
cease to bear interest. Upon surrender of any such Debenture for
redemption in accordance with said notice, such Debenture shall
be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date.
If any Debenture called for redemption shall not be so
paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate borne by the Debenture.
14.8. DEBENTURES REDEEMED IN PART. Any Debenture which
is to be redeemed only in part shall be surrendered at an office
or agency of the Company designated by the Company in its notice
of redemption for that purpose (with, if the Company so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company
shall execute and deliver to the Holder of such Debenture without
service charge, a new Debenture or Debentures, of any authorized
denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Debenture so surrendered.
ARTICLE XV
SATISFACTION AND DISCHARGE
15.1 COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE. The Company may, at its option by Board Resolution,
at any time, with respect to the Debentures, elect to have either
Section 15.2 or Section 15.3 be applied to all of the outstanding
Debentures (the "Defeased Debentures"), upon compliance with the
conditions set forth below in this Article XV.
15.2 DEFEASANCE AND DISCHARGE. Upon the Company's
exercise under Section 15.1 of the option applicable to this
Section 15.2, the Company shall be deemed to have been discharged
from its obligations with respect to the Defeased Debentures on
the date the conditions set forth below are satisfied
(hereinafter, "Defeasance"). For this purpose, such
Defeasance means that the Company shall be deemed to have paid
and discharged the entire indebtedness represented by the
Defeased Debentures, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 15.5 and the other
Sections of this Agreement referred to in (a) and (b) below, and
to have satisfied all its other obligations under such Debentures
and this Agreement insofar as such Debentures are concerned (and
the Company shall execute proper instruments acknowledging
satisfaction and discharge of this Agreement), except for the
following which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Defeased
Debentures to receive solely from the trust fund described in
Section 15.4 and as more fully set forth in such Section,
payments in respect of the principal of (and premium, if any) and
interest on such Debentures when such payments are due, (b) the
Company's obligations with respect to any surviving rights of
conversion, registration of transfer or exchange of Debentures
herein expressly provided for. Subject to compliance with this
Article XV, the Company may exercise its option under this
Section 15.2 notwithstanding the prior exercise of its option
under Section 15.3 with respect to the Debentures.
15.3 COVENANT DEFEASANCE. Upon the Company's exercise
under Section 15.1 of the option applicable to this Section 15.3,
the Company shall be released from its obligations under any
covenant or provision contained in Article VIII with respect to
the Defeased Debentures on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Defeased Debentures shall thereafter be deemed to be not
"outstanding" for the purposes of any direction, waiver, consent
or declaration or act of the Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to
be deemed "outstanding" for all other purposes hereunder. For
this purpose, such Covenant Defeasance means that, with respect
to the Defeased Debentures, the Company may omit to comply with
and shall have no liability in respect of any term, condition or
limitation set forth in such Article, whether directly or
indirectly, by reason of any reference elsewhere herein to such
Article or by reason of any reference in such Article to any
other provision herein or in any other document and such omission
to comply shall not constitute a default or an Event of Default
under Section 9.1(c) or (d), but, except as specified above and
in the following sentence, the remainder of this Agreement and
such Defeased Debentures shall be unaffected thereby.
15.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 15.2 or Section 15.3 to the Defeased Debentures:
(1) The Company shall irrevocably have deposited
or caused to be deposited with the Paying Agent (which for
purposes of this Article shall not be the Company) as trust funds
in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such Debentures, (a) money in an
amount, or (b) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day
before the due date of any payment, money in an amount, or (c) a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Paying Agent, to
pay and discharge and which shall be applied by the Paying Agent
to pay and discharge the principal of, premium, if any, and
interest on the Defeased Debentures on the Stated Maturity of
such principal or installment of principal or interest on the day
on which such payments are due and payable in accordance with the
terms of this Agreement and of such Debentures; provided that the
Paying Agent shall have been irrevocably instructed to apply such
money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Debentures. For this purpose, "U.S.
Government Obligations" means securities that are (i) direct
obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or
(ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at
the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any
such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such
depository receipt.
(2) The Company has paid or caused to be paid all other
sums payable hereunder by the Company.
(3) No default or Event of Default shall have occurred
and be continuing on the date of such deposit or, insofar as
subsections 9.1(f) and (g) are concerned, at any time during the
period ending on the day after the expiration of the applicable
preference period set forth in Paragraph (8) below after the date
of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period).
(4) Such Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under, this Agreement or any other material agreement or
instrument to which the Company is a party or by which it is
bound.
(5) In the case of an election under Section 15.2,
either:
(A) all Debentures issued and delivered
(other than (i) Debentures which have been
destroyed, lost or stolen and which have been
replaced or paid as provided in Section 5.4
and (ii) Debentures for whose payment money has
theretofore been deposited
in trust or segregated and held in trust by
the Paying Agent pursuant to this Agreement
and thereafter repaid to the Company or
discharged from such trust, as provided in
Section 15.5) have been delivered to the
Company for cancellation; or
(B) all such Debentures not theretofore
delivered to the Company for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Stated Maturity within one year, or
(iii) are to be called for redemption
within one year under arrangements by
the Company following the giving of a
notice of redemption by the Company, or
(iv) are delivered to the Company for
conversion in accordance with Article XI.
(6) In the case of an election under Section 15.2, the
Company shall have delivered to the Holders an Opinion of Counsel
stating that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since
the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and
based thereon such opinion shall confirm that, the Holders of the
outstanding Debentures will not recognize income, gain or loss
for Federal income tax purposes as a result of such Defeasance
and will be subject to United States Federal income tax on the
same amounts, in the same manner and at the same times as would
have been the case if such Defeasance had not occurred.
(7) In the case of an election under Section 15.3, the
Company shall have delivered to the Holders an Opinion of Counsel
to the effect that the Holders of the outstanding Debentures will
not recognize income, gain or loss for United States Federal
income tax purposes as a result of such Covenant Defeasance and
will be subject to Federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred.
(8) The Company shall have delivered to the Holders, an
Opinion of Counsel to the effect that after the day after the
expiry of an applicable preference period (the "applicable
preference period") after the deposit, the trust funds
established pursuant to this Article will not be subject to the
effect of any applicable Bankruptcy Laws. (For the limited
purpose of the Opinion of Counsel referred to in this clause (8),
such Opinion may contain an assumption that the conclusions
contained in a customary solvency letter by a nationally
recognized appraisal firm, dated as of the date of the deposit
and taking into account such deposit, are accurate as of such
date, provided that such solvency letter is also addressed and
delivered to the Holders.)
(9) The Company shall have delivered to the Holders an
Officers' Certificate stating that the deposit made by the
Company pursuant to its election under Section 15.2 or 15.3 was
not made by the Company with the intent of preferring the Holders
over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the
Company or others.
(10) The Company shall have delivered to the Holders an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent (other than conditions requiring
the passage of time) provided for relating to either
the Defeasance under Section 15.2 or the Covenant Defeasance
under Section 15.3 (as the case may be) have been complied with
as contemplated by this Article XV. Opinions required to be
delivered under this Section may have qualifications customary
for opinions of the type required.
15.5 APPLICATION OF TRUST MONEY. All money deposited
with the Paying Agent pursuant to this Article XV shall be held
in trust and applied by it, in accordance with the provisions of
the Debentures and this Agreement, to the payment to the Persons
entitled thereto, of the principal (and premium, if any) and
interest for whose payment such money has been deposited with the
Paying Agent.
The Company shall pay and indemnify the Paying Agent
against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to
this Article XV or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law
is for the account of the Holders of the Defeased Debentures.
Anything in this Article XV to the contrary
notwithstanding, the Paying Agent shall deliver or pay to the
Company from time to time upon the written request of the Company
any money or U.S. Government Obligations held by it as provided
in this Article XV which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Paying Agent, are
in excess of the amount thereof which would then be required to
be deposited to effect an equivalent Defeasance or Covenant
Defeasance.
15.6 REINSTATEMENT. If the Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with
Section 15.2 or 15.3, as the case may be, by reason of any order
or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
Company's obligations under this Agreement and the Debentures
shall be revived and reinstated as though no deposit had occurred
pursuant to Section 15.2 or 15.3, as the case may be, until such
time as the Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 15.2 or
15.3, as the case may be; provided, however, that if the Company
makes any payment of principal, premium, if any, or interest on
any Debenture following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such
Debenture to receive such payment from the money held by the
Paying Agent.
ARTICLE XVI
CONSOLIDATION, MERGER, CONVEYANCE, SALE, TRANSFER OR LEASE
16.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS. The Company shall not consolidate with or merge into any
other Person or convey, sell, transfer or lease its properties
and assets substantially as an entirety to any Person, and the
Company shall not permit any Person to consolidate with or merge
into the Company or convey, sell, transfer or lease its
properties and assets substantially as an entirety to the
Company, unless:
(1) in case the Company shall consolidate
with or merge into another Person or convey, sell,
transfer or lease its properties and assets
substantially as an entirety to any Person, the
Person formed by such consolidation or into which
the Company is merged or the Person which acquires
by conveyance, sale or transfer, or which leases,
the properties and assets of the Company
substantially as an entirety shall be a corporation,
partnership or trust, shall be
organized and validly existing under the laws of
the United States of America, any State thereof or
the District of Columbia and shall expressly
assume, by a counterpart to this Agreement or an
agreement, executed and delivered to the Company,
in form satisfactory to the Company, the due and
punctual payment of the principal of (and premium,
if any) and interest on all the Debentures and the
performance or observance of every covenant of this
Agreement on the part of the Company to be
performed or observed and shall have provided for
conversion rights in accordance with Sections 11.1
and 11.11;
(2) immediately after giving effect to such
transaction and treating any Debt which becomes an
obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred
by the Company or such Subsidiary at the time of
such transaction, no Event of Default, and no event
which, after notice or lapse of time
or both, would become an Event of Default, shall
have happened and be continuing;
(3) if, as a result of any such consolidation
or merger or such conveyance, transfer or lease,
properties or assets of the Company would become
subject to a mortgage, pledge, lien, security
interest or other encumbrance which would not be
permitted by this Agreement, the Company or such
successor corporation or Person, as the case may
be, shall take such steps as shall be necessary
effectively to secure the Debentures (and if the
Company selects, any Debt ranking pari passu with
the Debentures) equally and ratably with all Debt
secured thereby; and
(4) the Company has delivered to the Holders
an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger,
conveyance, transfer or lease and, if a counterpart
to this Agreement or an agreement is required in
connection with such transaction, such counterpart
or agreement complies with this Article and that
all conditions precedent herein provided for
relating to such transaction have been complied
with.
16.2 Successor Substituted.
Upon any consolidation of the Company with, or merger of
the Company into, any other Person or any conveyance, sale,
transfer or lease of the properties and assets of the Company
substantially as an entirety in accordance with Section 16.1, the
successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, sale, transfer or
lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this
Agreement with the same effect as if such successor Person had
been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Agreement and the
Debentures.
ARTICLE XVII
MISCELLANEOUS
17.1 AMENDMENTS AND WAIVERS. This Agreement may not be
changed, modified or discharged orally, nor may any waivers or
consents be given orally hereunder, and every such change,
modification, discharge, waiver or consent shall be in writing
and, except as provided in the following sentence, signed by the
Person against which enforcement thereof is sought. Subject to
the subordination provisions contained in Article XIII, this
Agreement may be amended, and any of its restrictions or
provisions may be waived, with the consent of the Company and of
the Holders of not less than 51% in aggregate principal amount of
the Debentures then outstanding, except that (i) without the
consent of the Holders of all the Debentures then outstanding no
amendment to or waiver under this Agreement shall extend the
maturity of any Debenture, or reduce the rate of interest or any
premium payable with respect to any Debenture, or amend Article
VI, IX, XI or XIII or reduce the proportion of the principal
amount of the Debentures required to consent to any waiver,
consent or amendment and (ii) the consent of the Holders shall
not be necessary for any amendments to this Agreement which
provide solely for the issuance of Debentures (in an aggregate
principal amount which, when added to the principal amount of
Debentures previously issued pursuant to this Agreement or any
amendments thereto, does not exceed $20,000,000) by the Company
to additional purchasers at any time after the date hereof.
17.2 COPIES TO REGULATORY BODIES. Each Purchaser and
each Holder that is an institutional investor may furnish copies
of any financial statements and other certificates, reports or
documents delivered to it pursuant to this Agreement to any
regulatory body or commission to whose jurisdiction such Holder
may be subject.
17.3 INTEGRATION AND SEVERABILITY. This Agreement
embodies the entire agreement and understanding between the
Purchasers and the Company and supersedes all prior agreements
and understandings relating to the subject matter hereof. In
case any one or more of the provisions contained in this
Agreement or in any Debenture, or any application thereof, shall
be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein, and any other application thereof,
shall not in any way be affected or impaired thereby.
17.4 SUCCESSORS AND ASSIGNS. All covenants,
agreements, statements, representations and warranties in this
Agreement or any certificate delivered pursuant hereto by or on
behalf of the Company or by or on behalf of each Purchaser shall
bind and inure to the benefit of the respective successors and
assigns of such party hereto, except where the context otherwise
requires, and except that such Purchaser
shall not be obligated to acquire any Debenture from any issuer
other than the Company.
17.5 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS.
All covenants, agreements, statements, representations and
warranties made herein or in any certificate delivered pursuant
hereto (i) shall be deemed to be material and to have been relied
upon by each Purchaser, notwithstanding any investigation
heretofore or hereafter made by any Purchaser or on such
Purchaser's behalf, and (ii) shall survive the execution and
delivery of the Debentures and shall continue in full force and
effect so long as any Debenture is outstanding and unpaid and
thereafter as provided in Section 7.7.
17.6 VERIFICATION. Each Purchaser and each other
Holder shall be entitled to make such independent examinations as
such person may deem reasonable, and to receive copies of all
such instruments, certificates, opinions and other evidence as it
may reasonably request, with respect to the transactions
contemplated by this Agreement and the taking of all corporate
proceedings in connection therewith and for the purpose of
verifying the accuracy of any certificate which is made or
required to be made pursuant to this Agreement.
17.7 NOTICES AND OTHER COMMUNICATIONS. All notices,
requests, consents and other communications hereunder shall be in
writing and shall be delivered, or shall be sent by certified or
registered mail, return receipt requested, postage prepaid and
addressed (i) if to any Purchaser at its address for
communications set forth in Schedule 1 hereto or to such other
address as may have been furnished to the Company by notice from
such Purchaser, or (ii) if to any Holder of a Debenture other
than the Purchasers, to its address set forth in the Debenture
Register or to such other address as may have been furnished to
the Company by notice from such Holder or (iii) if to the
Company, to Zenith Electronics Corporation, 1000 Milwaukee
Avenue, Glenview, Illinois 60025, Attention Secretary, with a
copy to the General Counsel, or to such other address as may have
been furnished to the Purchasers and the Holders other than the
Purchasers by notice from the Company. All notices shall be
deemed to have been given either at the time of the delivery
thereof to any officer or employee of the person entitled to
receive such notice at the address of such persons for purposes
of this Section 17.7, or, if mailed, at the completion of the
fifth full day following the time of such mailing thereof to such
address, as the case may be. Whenever pursuant to this Agreement
or any Debenture, notice is required to be given to any or all of
the Holders, such requirement shall be satisfied if such notice
is given, in the manner prescribed, to the persons last known by
the Company to be
Holders of such Debentures, entitled to such notice, at the
addresses of such persons last known to the Company.
17.8 GOVERNING LAW. This Agreement and the Debentures
shall be construed in accordance with and governed by the laws of
the State of New York (without giving effect to the principles of
conflict of laws). If any action or proceeding shall be brought
by any Purchaser or by any Holder in order to enforce any right
or remedy under this Agreement or under any Debenture, the
Company hereby consents and will, and the Company will cause each
Subsidiary to, submit to the jurisdiction of any state or federal
court of competent jurisdiction sitting within the area
comprising the Southern District of New York on the date of this
Agreement. Nothing contained in this section shall affect the
right of any Holder of Debentures to serve legal process in any
other manner permitted by law or to bring any action or
proceeding in the courts of any jurisdiction against the Company
or to enforce a judgment obtained in the courts of any other
jurisdiction.
17.9 RESTRICTED SHARE LEGEND. Each Restricted Share,
prior to the registration thereof pursuant to Article XII of this
Agreement, shall bear the following legend:
By its acceptance hereof, the holder of this
Security agrees that, in absence of the
registration of the Security under the
Securities Act of 1933, as amended (the
"Securities Act"), it will offer, sell or
otherwise transfer this Security (i) only
(A) to the Company, (B) pursuant to an
exemption from registration under the
Securities Act in accordance with Rule 144, as
amended from time to time, promulgated under
the Securities Act or (C) in accordance with
any other available exemption from the
requirements of Section 5 of the Securities
Act.
17.10 REPRODUCTION OF DOCUMENTS. This Agreement and
all documents relating to this Agreement, including, without
limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by any Purchaser at
the closing of the purchase of the Debentures (except the
Debentures themselves) and (c) financial statements, certificates
and other information previously or hereafter furnished to any
Purchaser, may be reproduced by such Purchaser by any
photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process, and such Purchaser may
destroy any original document so reproduced. The
Company agrees and stipulates that any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by any
Purchaser in the regular course of business) and that any
enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
17.11 TABLE OF CONTENTS AND HEADINGS. The table of
contents and the headings of the various subdivisions hereof are
for convenience of reference only and shall in no way modify any
of the terms or provisions hereof.
17.12 COUNTERPARTS. This Agreement may be signed by
each party hereto upon a separate copy in which event both of
said copies shall constitute a single counterpart of this
Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
IN WITNESS WHEREOF, the Company and the Purchasers have
caused this Agreement to be executed and delivered in New York
City, New York by their respective officers thereunto duly
authorized.
ZENITH ELECTRONICS CORPORATION
By
Name:
Title:
McMAHAN SECURITIES CO., L.P.
By
Name:
Title:
EXHIBIT A
By its acceptance hereof, the holder of this
Debenture agrees that, in absence of the
registration of the Debenture under the
Securities Act of 1933, as amended (the
"Securities Act"), it will offer, sell or
otherwise transfer this Debenture (i) only
(A) to the Company, (B) pursuant to any
transaction under and meeting the requirements
of Rule 144A, as amended from time to time,
promulgated under the Securities Act,
(C) pursuant to an exemption from registration
under the Securities Act in accordance with
Rule 144, as amended from time to time,
promulgated under the Securities Act or (D) in
accordance with any other available exemption
from the requirements of Section 5 of the
Securities Act.
ZENITH ELECTRONICS CORPORATION
8.5% SENIOR SUBORDINATED CONVERTIBLE DEBENTURE
DUE JANUARY 18, 2001
$
Cusip No. R-
FOR VALUE RECEIVED, the undersigned, ZENITH ELECTRONICS
CORPORATION (herein called the "Company"), a corporation
organized and existing under the laws of the State of Delaware,
hereby promises to pay to or registered
assigns, the principal sum of DOLLARS, on
January 18, 2001, together with interest payable semi-annually
(computed on the basis of a 360-day year of twelve 30-day months)
on the unpaid principal hereof from the date of this Debenture
until said principal hereof shall become due and payable, at the
rate of 8.5% per annum, and to pay interest at the rate of 10.5%
per annum on any overdue payment of principal and, to the extent
not prohibited by law, on any overdue payment of interest and
premium, until the same shall be paid in full.
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Payments of the principal of, and the premium, if any,
and interest on, this Debenture shall be made in lawful money of
the United States of America in the manner and at the place
provided in Article VI of the Agreement hereinafter referred to.
Interest accrued and unpaid on this Debenture shall be
payable semi-annually commencing on July 18, 1994 and on each
January 18 and July 18 thereafter until this Debenture has been
paid in full, and each such payment of interest to be in addition
to any payment of principal payable on this Debenture. If any
amount of principal, premium, if any, or interest on or in
respect of this Debenture becomes due and payable on any date
which is not a Business Day (as defined in the Agreement), said
amount shall be payable on the next succeeding Business Day.
This Debenture is one of the Company's 8.5% Senior
Subordinated Convertible Debentures due January 18, 2001, limited
in aggregate principal amount to $20,000,000 which are issued, in
fully registered form, pursuant to that certain Debenture
Purchase Agreement, dated as of January 11, 1994, between the
Company and and the purchasers listed on Schedule 1 thereto.
This Debenture is entitled to the benefits of, and
is subject to the terms contained in, said Debenture Purchase
Agreement (said Debenture Purchase Agreement, as amended and
modified from time to time, being herein called the "Agreement").
The provisions of the Agreement are hereby incorporated in this
Debenture to the same extent as if set forth at length herein.
The Company may deem and treat the person in whose name
this Debenture is registered pursuant to Article V of the
Agreement as the holder and owner hereof for the purpose of
receiving payments and for all other purposes whatsoever,
notwithstanding any notations of ownership or transfer hereon and
notwithstanding that this Debenture is overdue, and the Company
shall not be affected by any notice to the contrary until
presentation of this Debenture for registration of transfer as
provided in Article V of the Agreement. This Debenture may be
transferred or exchanged and, if lost, stolen, damaged or
destroyed, this Debenture may be replaced, in the manner and upon
the conditions set forth in said Article V.
This Debenture is registered on the books of the Company
and is transferrable only by surrender thereof at the office of
the Company designated for notices in accordance with Section
7.12 of the Agreement duly endorsed or accompanied by a
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written instrument of transfer duly executed by the registered
holder of this Debenture or its attorney duly authorized in
writing. By its acceptance hereof, the holder of this Debenture
agrees that in the absence of the registration of the Debentures
under the Securities Act of 1933, as amended (the "Securities
Act"), it will offer, sell or otherwise transfer this Debenture
(i) only (A) to the Company, (B) pursuant to any transaction
under and meeting the requirements of Rule 144A, as amended from
time to time, promulgated under the Securities Act, (C) pursuant
to an exemption from registration under the Securities Act in
accordance with Rule 144, as amended from time to time,
promulgated under the Securities Act or (D) in accordance with
any other available exemption from the requirements of Section 5
of the Securities Act, (ii) in accordance with any applicable
federal and state securities laws and (iii) in the case of
resales pursuant to subclauses (B), (C) or (D) of clause (i)
above, after delivering to the Company a completed and signed
Assignment Form attached to this Debenture or other documentation
that demonstrates to the reasonable satisfaction of the Company
that such transaction is exempt from the registration
requirements of the Securities Act.
In certain circumstances involving the occurrence of a
Change of Control or Asset Sale (each as defined in the
Agreement), the Holder hereof shall have the right to require the
Company to repurchase this Debenture at 100% of the principal
amount hereof, together with accrued interest, if any, to the
date of repurchase.
In case an Event of Default (as defined in the
Agreement) shall happen and be continuing, the principal of this
Debenture may become or be declared due and payable in the manner
and with the effect provided in the Agreement.
This Debenture is convertible, on the conditions
specified in the Agreement, at the option of the holder hereof at
any time after the date of this Debenture, upon surrender hereof,
with the notice of conversion set forth hereon duly executed, at
the place specified in Article XI of the Agreement, at the unpaid
principal amount hereof or any portion of such principal amount,
into shares of Common Stock of the Company, as such shares shall
be constituted at the time of conversion, at the initial
Conversion Price of $10.00 per share of such Common Stock as
constituted on January 11, 1994, as such Conversion Price shall
be adjusted as provided in Article XI of the Agreement.
This Debenture is subordinated to all Senior
Indebtedness (as defined in the Agreement), to the extent and as
provided in Article XIII of the Agreement.
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The Debentures are subject to redemption upon not less
than 30 nor more than 60 days' notice by mail, at any time on or
after January 18, 1998, as a whole or in part, at the
election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed
during the period January 18, 1998 through January 17, 1999 at
104%, and if redeemed during the 12-month period beginning
January 18, of the years indicated,
Year Redemption Price
1999 102.5%
2000 100.0%
together in the case of any such redemption with accrued interest
to the Redemption Date.
The Agreement contains provisions for defeasance of the
Debentures (a) at certain times of the entire indebtedness under
the Debentures and (b) at any time of certain restrictive
covenants, in each case upon compliance with certain conditions
set forth therein.
Should the indebtedness represented by this Debenture or
any part thereof be collected in any proceeding provided for in
the Agreement or be placed in the hands of attorneys for
collection, the Company agrees to pay, in addition to the
principal, premium, if any, and interest due and payable hereon,
all costs of collecting this Debenture, including reasonable
attorneys' fees and expenses.
This Debenture and the Agreement are governed and
construed in accordance with the laws of the State of New York
(without giving effect to the principles of conflict of laws).
IN WITNESS WHEREOF, ZENITH ELECTRONICS CORPORATION has
caused this Debenture to be dated , , and to
be executed on its behalf by its officers thereunto duly
authorized in New York, New York.
ZENITH ELECTRONICS CORPORATION
By
Chairman or [Vice] President
By
Treasurer or [Assistant]
Secretary
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NOTICE OF CONVERSION
[To be Signed Only Upon Conversion of a Debenture]
To ZENITH ELECTRONICS CORPORATION
The undersigned, the holder of the foregoing Debenture,
hereby irrevocably surrenders such Debenture for conversion into
shares of Common Stock of ZENITH ELECTRONICS CORPORATION to the
extent of $ * unpaid principal amount of such
Debenture, and requests that the certificates for such shares be
issued in the name of, and delivered to,
whose address is .
Dated:
(Address)
* Insert here the unpaid principal amount of the Debenture
(or, in the case of a partial conversion, the portion
thereof as to which the Debenture is being converted). In
the case of a partial conversion, a new Debenture or
Debentures will be issued and delivered, representing the
unconverted portion of the unpaid principal amount of this
Debenture, to or upon the order of the holder surrendering
such Debenture.
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ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
I or we assign and transfer this Debenture to
(Print or type assignee's name, address and zip code)
and irrevocably appoint agent to
transfer this Debenture on the books of the Company.
The agent may substitute another to act for him.
Date: Your Signature:
In connection with any transfer of any of the Debentures
evidenced by this certificate occurring prior to the date that is
the earlier of (i) three years after the later of (a) the date of
original issuance of such Debentures and (b) the last date, if
any, on which such Debentures were owned by the Company or any
Affiliate of the Company, and (ii) the date of the declaration by
the Commission of the effectiveness of a registration statement
under the Securities Act covering resales of this Debenture
(which effectiveness shall not have been suspended or terminated
at the date of transfer), the undersigned confirms that it has
not utilized any general solicitation or general advertising in
connection with the transfer and that such Debentures are being
transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] to a "Qualified Institutional Buyer" (as defined
in Rule 144A under the Securities Act), which
person has been advised that the Debentures have
been sold or transferred to it in reliance upon
Rule 144A; or
A-6
(3) [ ] to an institutional investor and an "accredited
investor" (as defined in Regulation D under the
under the Securities Act of 1933, as amended (the
"Securities Act")) that is acquiring the
Debentures for investment purposes and not for
distribution; it has such knowledge and experience
in financial and business matters as to be capable
of evaluating the merits and risks of its
investment in the Debentures, and it and any
accounts for which it is acting are each able to
bear the economic risk of its investment; it is
acquiring the Debentures purchased by it for its
own account or for one or more accounts as to each
of which it exercises sole investment discretion;
or
(4) [ ] pursuant to another available exemption from the
registration requirements of the Securities Act of
1933, as amended.
TO BE COMPLETED BY PURCHASER (OR BROKER/DEALER
ON ITS BEHALF) IF (2), (3) OR (4) ABOVE IS CHECKED
The undersigned purchaser confirms that the Debentures are being
transferred in accordance with the provisions of Section 1.3(b)
of the Debenture Purchase Agreement between Zenith Electronic
Corporation, a Delaware corporation and the purchasers listed on
Schedule 1 thereto (the "Debenture Purchase Agreement"), a copy
of which has been previously delivered to it, and the legend on
the Debentures, and further, that it understands that in
connection with any such transfer, the Company may request, and
if so requested the undersigned purchaser will furnish, such
certificates and other information as may reasonably be required
to confirm that any such transfer complies with the restrictions
set forth therein.
The Debentures should be registered as follows:
Name:
Address:
Tax Identification Number:
Physical Location of Debentures (including address):
Contact:
If this assignment is being completed by a U.S. registered
broker-dealer on behalf of the transferee, the undersigned
broker-dealer confirms that (a) it has delivered to the
transferee a copy of the Debenture Purchase Agreement or a notice
regarding the restrictions on transfer of the Debentures
A-7
by such transferee as set forth in the legend on the Debentures
and (b) to the best of its knowledge, the information provided
herein about the transferee is true and correct.
The Company is entitled to rely upon this assignment and is
irrevocably authorized to produce this assignment or a copy
hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters
covered hereby.
Unless one of the boxes is checked, the Company will refuse to
register any of the Debentures evidenced by this certificate in
the name of any person other than the registered Holder thereof;
provided, however, that if box (3) or (4) is checked, the Company
may require, prior to registering any such transfer of the
Debentures, in its sole discretion, such legal opinions,
certifications and other information as the Company has
reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act of 1933,
as amended, such as the exemption provided by Rule 144A under the
Securities Act.
The undersigned purchaser confirms that (i) the acquisition of
the Debentures by such person does not constitute a "prohibited
transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA and (ii) it will not have, immediately after
the acquisition of any Debentures, Beneficial Ownership, directly
or indirectly, of Common Stock of the Company representing more
than 5% of the outstanding Common Stock of the Company (as
calculated as set forth in Section 1.3(b) of the Debenture
Purchase Agreement).
Date: , [Name of Prospective Purchaser
or Registered Broker/Dealer]
Signature Guarantee: Signature
Signature
A-8
THIRD AMENDMENT
AMENDMENT NO. 3 dated January 7, 1994, to the U.S. $90,000,000
Credit Agreement Dated as of May 21, 1993 as heretofore amended
(the "Agreement"; capitalized terms not defined herein shall have
the meanings ascribed thereto in the Agreement), between Zenith
Electronics Corporation as Borrower, General Electric Capital
Corporation, as Agent and Lender, The Bank of New York Commercial
Corporation, as Lender, and Congress Financial Corporation, as Lender.
WITNESS:
WHEREAS, Borrower has requested that Agent and Requisite Lenders
agree to amend provisions of the Agreement upon the terms and
conditions set forth herein; and
WHEREAS, Agent and the Lenders signatory hereto have agreed to
such amendments only upon the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as
follows:
1. Amendment to Schedule A of the Agreement.
(a) Schedule A of the Agreement is hereby amended by adding to
such section in the appropriate alphabetical order the following
new defined terms:
"Additional Convertible Debentures shall mean Indebtedness
of Borrower under one or more Debenture Purchase Agreements
relating to the Senior Subordinated Convertible Debentures due
2000 or later of Borrower in aggregate principal amount not to
exceed $20,000,000 and having the terms and conditions, other
than rate and conversion price, substantially as set forth in
attachment A to Amendment No. 1 to this Agreement."
(b) Schedule A of the Agreement is hereby further amended
by inserting as the final language to the definition of "Interest
Reserve" contained there at the following phrase: "and Additional
Convertible Debentures."
2. Amendment of Schedules 3.10 and 6.5. Schedules 3.10
and 6.5 of the Agreement are amended, effective upon issuance of
the Additional Convertible Debentures, to reflect the Additional
Convertible Debentures.
3. Amendment to Section 6.3. Section 6.3 of the Agreement
is hereby amended by adding to this section:
"(K). The Additional Convertible Debentures."
4. Amendment to Section 6.24. Section 6.24 is hereby
amended by adding "Additional Convertible Debentures," after
Convertible Debentures on the third line.
5. Amendment to Section 6.25. Section 6.25 of the Agreement
is hereby restated in its entirety to read as follows:
"Borrower shall not, and shall not cause or permit any Subsidiary
to, directly or indirectly, prepay, repurchase, redeem, retire
or otherwise prepay the Subordinated Debt, the Convertible
Debentures, the Additional Convertible Debentures or the
Term Debt, except that (i) Borrower may cause the Subordinated
Debt, the Convertible Debentures or the Additional Convertible
Debentures to be converted into common stock of the Borrower or,
on terms satisfactory to Agent in its sole discretion, into
preferred stock or subordinated debt of Borrower, and (ii)
Borrower shall (subject to the terms and conditions set forth in
this Agreement and the other Loan Documents with respect to the
Lenders' commitments to make Revolving Credit Advances), no later
than March 15, 1994 repurchase or redeem the Term Debt in full,
if the net proceeds of the sale of the Convertible Debentures
exceed the amount necessary to repurchase or redeem the Term Debt
in full, or, if such proceeds do not exceed the amount necessary
to repurchase or redeem the Term Debt in full, repurchase or
redeem the Term Debt in part to the extent of such proceeds."
6. Representations and Warranties. The representations
and warranties of Borrower set forth in the Agreement or which
are contained in any certificate, document or financial or other
statement furnished pursuant to or in connection with the Agreement
are true and correct in all material respects on and as of
the date hereof with the same effect as if made on the date
hereof and no Default or Event of Default has occurred and is
continuing under the Agreement.
7. Conditions to Effectiveness. This Third Amendment
shall become effective as of the date when counterparts hereof
shall have been duly executed and delivered by each of the parties
hereto and acknowledged by Borrower and Guarantor Subsidiaries;
provided, however, that this Third Amendment shall not
become effective unless (i) the net proceeds of the Additional
Convertible Debentures are first applied to reduce the outstanding
balance of the Revolving Credit Loan and the entire remainder
of such net proceeds shall be used for any purpose permitted by
this Agreement and (ii) none of the terms or conditions of the
Additional Convertible Debentures will differ in any material
respect from those set forth in attachment A to Amendment No. 1
to this Agreement other than as to rate or conversion price.
8. Continuing effects. Except as expressly modified by
the First Amendment, the Second Amendment, by this Third Amendment
and by waivers dated September 1, 1993, September 15, 1993
and December 17, 1993, the provisions of the Agreement shall remain in
full force and effect and are hereby in all respects ratified and confirmed.
9. Expenses. Borrower agrees to pay and reimburse the
Agent for all of its out-of-pocket costs and expenses incurred in
connection with the negotiation, preparation, execution and
delivery of this Third Amendment, including the fees and expenses
of counsel to the Agent.
10. Counterparts. This Third Amendment may be executed
on any number of separate counterparts and all of said counterparts
taken together shall be deemed to constitute one and the
same instrument.
12. Governing law. THIS THIRD AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be duly executed and delivered in New York,
New York by their proper and duly authorized officers as of the
day and year first above written.
ZENITH ELECTRONICS CORPORATION
By:___________________________
Title: Vice President-Treasurer
GENERAL ELECTRIC CAPITAL CORPORATION
AS AGENT
By:___________________________
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
By:___________________________
THE BANK OF NEW YORK COMMERCIAL
CORPORATION
By:___________________________
CONGRESS FINANCIAL CORPORATION
By:___________________________
ACKNOWLEDGEMENT AND CONSENT
Each of the undersigned does hereby acknowledge and consent to
the foregoing Third Amendment. Each of the undersigned does
hereby confirm and agree that, after giving effect to such Third
Amendment, the Guarantees and other Collateral Documents in favor
of the Agent to which it is a party are and shall continue to
be in full force and effect and are hereby confirmed and ratified
in all respects.
ZENITH DISTRIBUTING CORPORATION OF ILLINOIS
By:_________________________________
Title: Secretary
ZENITH DISTRIBUTING CORPORATION-MIDSTATES
By:_________________________________
Title: Secretary
ZENITH DISTRIBUTING CORPORATION OF NEW ENGLAND
By:_________________________________
Title: Secretary
ZENITH DISTRIBUTING CORPORATION OF NEW YORK
By:_________________________________
Title: Secretary
ZENITH DISTRIBUTING CORPORATION-SOUTHEAST
By:_________________________________
Title: Secretary
ZENITH DISTRIBUTING CORPORATION-WEST
By:_________________________________
Title: Secretary
ZENITH/INTEQ, INC.
By:_________________________________
Title: Secretary
ZENITH ELECTRONICS CORPORATION OF ARIZONA
By:_________________________________
Title: Secretary
ZENITH ELECTRONICS CORPORATION OF TEXAS
By:_________________________________
Title: Secretary
ZENITH MICROCIRCUITS CORPORATION
By:_________________________________
Title: Secretary
ZENITH VIDEO TECH CORPORATION
By:_________________________________
Title: Secretary
ZENITH VIDEO TECH CORPORATION-FLORIDA
By:_________________________________
Title: Secretary
ZENTRANS, INC.
By:_________________________________
Title: Secretary
AMENDMENT NO. 2
TO
DEBENTURE PURCHASE AGREEMENT
DATED AS OF NOVEMBER 19, 1993
Amendment No. 2, dated as of January 11, 1994 (the
"Amendment"), between ZENITH ELECTRONICS CORPORATION, a Delaware
corporation (the "Company"), and the Holders, to the Debenture
Purchase Agreement, dated as of November 19, 1993, as amended by
Amendment No. 1, dated as of November 24, 1993 (as amended, the
"Agreement").
WHEREAS, Section 17.1 of the Agreement provides that the
Company may amend the Agreement, and that restrictions contained
in the Agreement may be waived as provided therein, with the
written consent of the Holders of not less than 51% in aggregate
principal amount of the Debentures then outstanding; and
WHEREAS, Reliance Insurance Company (directly or
through its nominees) is the Holder of in excess of 51% in
aggregate principal amount of the Debentures outstanding as of
the date hereof.
NOW, THEREFORE, the Company and the Holders agree as
follows:
1. All capitalized terms used herein which are not
defined herein shall have the meanings assigned to them in the
Agreement.
2. Section 8.1(d) of the Agreement is hereby deleted in
its entirety and the following is inserted in lieu thereof:
"(d) Debt which either (i) ranks subordinate in
right of payment to the Debentures (to at least
the same extent as the Debentures are
subordinated to Senior Indebtedness) and which by
its terms, upon the happening of any event, or
otherwise (other than as a result of a default or
event of default), does not mature and is not
required to be redeemed, and is not redeemable at
the option of the holder, in whole or in part,
prior to the first anniversary of the Stated
Maturity of the Debentures, or (ii) is secured by
a Lien permitted by Section 8.2; provided,
however, that the aggregate principal amount of
Debt (or if any Debt is issued at a price less
than the principal amount thereof, the
original issue price thereof) outstanding
pursuant to this clause (d) at any time shall not
exceed $170,000,000, less the amount by which the
aggregate principal amount of Debt outstanding
pursuant to clause (b) of this Section 8.1
(computed as provided in such clause) exceeds
$90,000,000; provided, further, that up to
$20,000,000 of the Debt outstanding pursuant to
this clause (d) may rank pari passu in right of
payment with the Debentures if, by its terms,
upon the happening of an event, or otherwise
(other than as a result of a default or event of
default), it does not mature and is not required
to be redeemed, and is not redeemable at the
option of the holder, in whole or in part, prior
to the Stated Maturity of the Debentures (other
than pursuant to provisions which are
substantially similar to Sections 8.4 and 8.5
hereof); and"
3. By their execution of this Amendment, the Holders
hereby consent to the inclusion, in a Shelf Registration filed
pursuant to Article XII of the Agreement, of Common Stock of
the Company issuable upon conversion of any debentures which
rank pari passu with the Debentures and are issued in
compliance with Section 8.1(d) of the Agreement, as amended
hereby; the Holders hereby waive all restrictions on such
inclusion contained in the Agreement, including, without
limitation, those contained in the last sentence of Section
12.1(a) of the Agreement.
4. This Amendment is limited and shall not
constitute a modification of, waiver of or consent in respect
of any other provision of the Agreement. Except as modified by
this Amendment, the Agreement shall remain in full force and
effect.
5. This Amendment may be signed by each party hereto
upon a separate copy in which event both of said copies shall
constitute a single counterpart of this Amendment.
6. This Amendment shall be construed in accordance
with and governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed and delivered in New York, New
York by their respective officersthereunto duly authorized.
ZENITH ELECTRONICS CORPORATION
By: /s/ Willard C. McNitt III
Name: Willard C. McNitt III
Title: Vice President-Treasurer
RELIANCE INSURANCE COMPANY
By: /s/ John P. Fitzsimons
Name: John P. Fitzsimons
Title: Vice President
