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REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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KEY ENERGY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Maryland 04-2648081
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
OF INCORPORATION OR ORGANIZATION)
TWO TOWER CENTER, 20TH FLOOR, EAST BRUNSWICK, NEW JERSEY
(732) 247-4822
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OR REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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Francis D. John
Key Energy Group, Inc.
Two Tower Center, 20th Floor
East Brunswick, New Jersey 08816
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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Copies to:
Jack D. Loftis, Jr. Samuel N. Allen
Key Energy Group, Inc. Porter & Hedges, L.L.P.
Two Tower Center, 20th Floor 700 Louisiana, Suite 3500
East Brunswick, New Jersey 08816 Houston, Texas 77002
(732) 247-4822 (713) 226-0600
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement, as
determined by the Selling Securityholders.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or reinvestment plans, please check the following box. [x]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Per Share Aggregate Offering Price(1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par Value
$.10 per share 240,000 $20.625 $4,950,000 $1,461(2)
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</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
registration fee.
(2) Pursuant to Rule 457(c), the registration fee is calculated on the basis
of the high and low sale prices for the Common Stock on the American
Stock Exchange on December 17, 1997.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 23, 1997
PROSPECTUS
240,000 SHARES
KEY ENERGY GROUP, INC.
COMMON STOCK
All of the 240,000 shares of common stock, par value $.10 per share
(the "Common Stock"), of Key Energy Group, Inc., a Maryland corporation (the
"Company") offered hereby are being offered for sale by shareholders of the
Company. See "Selling Securityholders". The Company will not receive any of
the proceeds from the sale of the Common Stock offered hereby.
The Common Stock is listed on the American Stock Exchange (the "AMEX")
under the symbol KEG. On December 17, 1997, the closing price of the Common
Stock, as reported on the AMEX, was $20.375 per share.
The Common Stock may be offered and sold from time to time by the
Selling Securityholders through underwriters, dealers or agents or directly to
one or more purchasers in fixed price offerings, in negotiated transactions, at
market prices prevailing at the time of sale or at prices related to such
market prices. The terms of the offering and sale of Common Stock in respect
of which this Prospectus is being delivered, including any initial public
offering price, any discounts, commissions or concessions allowed, reallowed or
paid to underwriters, dealers or agents, the purchase price of the Common Stock
and the proceeds to the Selling Securityholders, and any other material terms
shall be as set forth in a Prospectus Supplement. See "Plan of Distribution"
for indemnification arrangements, including indemnification of agents, dealers
and underwriters.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 4.
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THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is December , 1997.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are hereby incorporated in this Prospectus and specifically made a part
hereof by reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997, as amended; (ii) the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997; (iii) the
Company's Proxy Statement dated November 28, 1997; (iv) the Company's Current
Reports on Form 8-K dated June 25, 1997, as amended, September 1, 1997, as
amended, September 25, 1997, as amended, October 1, 1997, as amended, and
October 9, 1997; (v) the description of the Common Stock contained in the
Company's Form 8-A filed on May 21, 1981, as amended on January 27, 1986 and
October 19, 1989; and (vi) the description of the Company's 7% Convertible
Subordinated Debentures due 2003 contained in the Company's Form 8-A filed on
June 6, 1996. All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and before the termination of the offering of the Common Stock
covered by this Prospectus shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein, or in any other subsequently filed document
that also is or is deemed to be incorporated herein by reference, modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the information that has been incorporated by
reference in this Prospectus (excluding exhibits unless such
exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Requests for such copies
should be made to the Company at its principal executive offices, Two Tower
Center, 20th Floor, East Brunswick, New Jersey 08816, telephone number (732)
247-4822, Attn: Jack D. Loftis.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Prospectus and the documents that are incorporated in this
Prospectus by reference contain certain statements that are "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Exchange Act. Those
statements include, among other things, the discussions of the Company's
business strategy and expectations concerning market position, future
operations, margins, profitability, liquidity and capital resources, and
statements concerning the integration of the operations acquired and
achievement of certain benefits in connection therewith. Forward Looking
Statements are included in the sections captioned "Risk Factors," "The
Company," and elsewhere in this Prospectus and in documents that are
incorporated in this Prospectus by reference. Although the Company believes
that the expectations reflected in such Forward Looking Statements are
reasonable, it can give no assurance that such expectations will prove to be
correct. Generally, these statements relate to business plans or strategies,
projected or anticipated benefits or other consequences of such plans or
strategies, projected or anticipated benefits from acquisitions made by or to
be made by the Company, or projections involving anticipated revenues,
expenses, earnings, levels of capital expenditures or other aspects of
operating results. The Company's operations are subject to uncertainties,
risks and other influences, many of which are outside of the Company's control
and any one of which, or a combination of which, could materially adversely
affect the results of the Company's operations and whether the Forward Looking
Statements prove to be accurate. Important factors that could cause actual
results to differ materially from the Company's expectations are disclosed in
"Risk Factors" and elsewhere in this Prospectus.
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THE COMPANY
Key Energy Group, Inc. (the "Company") operates approximately 795 well
service rigs, 623 fluid hauling and other trucks and 38 drilling rigs in the
Permian Basin, the Mid-Continent region, the Ark La Tex region, Michigan, the
Appalachian Basin, the Rocky Mountain region, the Four Corners area of the
Southwest and Argentina. The Company believes it operates the largest combined
fleet of active well service rigs and fluid hauling and other trucks onshore
the continental United States and the second largest fleet in Argentina. The
Company provides a full range of maintenance and workover services to major and
independent oil and gas companies in all of its operating regions. In addition
to maintenance and workover services, the Company provides services that
include the completion of newly drilled wells, the recompletion of existing
wells (including horizontal recompletions) and the plugging and abandonment of
wells at the end of their useful lives. Other services include oilfield fluid
and equipment transportation, storage and disposal services, frac tank rentals,
fishing and rental tools, wireline services, air drilling and hot oiling. In
addition, the Company is engaged in contract drilling in West Texas, the Ark La
Tex region, the Four Corners area, Michigan and Argentina and owns and produces
oil and natural gas in the Permian Basin.
The Company believes it has a distinctive business strategy designed
to take advantage of growth opportunities within the fragmented but
consolidating well service industry. The strategy emphasizes a decentralized
management philosophy that encourages decision making at the local level. The
strategy has resulted in growth through the enhancement of services and
strategic acquisitions and control of overhead and operating expenses. The
Company's strategy also is designed to minimize the business risks associated
with unexpected downturns in one or more of its business segments. As a result,
the Company has become a leader in its domestic markets by establishing a
reputation for competitive and comprehensive services, including high quality
equipment and well-trained crews that operate within stringent safety
guidelines.
Enhancement of Services: The Company has implemented a
strategy to provide its customers with a single source of well
services and equipment. The Company's ability to provide an increasing
array of services, along with the Company's reputation for reliability
and safety, has enabled the Company to increase its market share in
its primary areas of operations.
Acquisition Strategy: The Company's acquisition strategy
focuses on companies or equipment that either expand the range of
services that the Company provides or present opportunities to expand
its business into new markets. The Company attempts to acquire
businesses with strong customer relationships, a history of superior
customer service and the potential to be assimilated efficiently into
the Company's existing regional management structure with a minimal
increase in overhead costs. In the last two years, the Company has
acquired 32 well servicing operations, several oil and gas properties
and three drilling operations. In addition, an agreement for the
acquisition of one well service company and three drilling companies
are pending.
Decentralized Operations: The Company's decentralized
management philosophy is consistent with the regional nature of the
well service business. This structure allows the Company's senior
management to establish the Company's policies, and permits the
Company's regional managers to implement those policies in each of the
Company's business segments and markets. As a result, local managers
are better able to deal efficiently with local and time-sensitive
issues, thereby allowing them to be more responsive to customer needs.
Low Operating Costs: Because of its cost controls and low
corporate overhead, among other factors, the Company has one of the
lowest general and administrative costs to revenue ratios and one of
the highest EBITDA to revenue ratios in the well service industry.
The Company's principal offices are located at Two Tower Center, 20th
Floor, East Brunswick, New Jersey 08816, and its telephone number is (732)
247-4822.
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RISK FACTORS
The following should be considered carefully with the information
provided elsewhere in this Prospectus and the documents incorporated by
reference herein in reaching a decision regarding an investment in the Common
Stock offered hereby.
DEPENDENCE ON OIL AND GAS INDUSTRY; INDUSTRY CONDITIONS
The Company's business is substantially dependent upon conditions in
the oil and gas industry and, specifically, the production expenditures of oil
and gas companies. The demand for well servicing and workover activities is
directly influenced by oil and gas prices, expectations about future prices,
the cost of producing and delivering oil and gas, government regulation,
including environmental regulations, local and international political and
economic conditions, and governmental policies regarding exploration and
development of oil and gas reserves. The demand for well servicing and related
services in the United States was severely depressed for most of the last
decade due in large part to prolonged weakness and uncertainty of oil and gas
prices. As a consequence, diminished demand during that period led to lower day
rates and lower use of available equipment. Demand for well services has
stabilized over the last two years, and prices for such services have
stabilized or increased during that period. Nonetheless, there can be no
assurance that periods of diminished demand in the well service industry will
not occur.
RISKS ASSOCIATED WITH ACQUISITIONS
One of the Company's business strategies is to pursue acquisitions of
businesses that are complementary to those of the Company. In the last 20
months, the Company has acquired 29 well servicing operations, several oil and
gas properties and one drilling operation. Integrating the acquired businesses
and personnel requires significant management time and skill. Management of the
Company's growth will require continued expansion of the Company's operational
and financial control systems, which could place a significant strain on the
Company's resources. Acquisitions of companies involve financial, operational
and legal risks, including the difficulty of assimilating operations and
personnel of the acquired companies and of maintaining uniform standards,
controls, procedures and policies. There can be no assurance that the Company
will be successful in making additional acquisitions or be effective in
integrating such acquisitions. Any failure to effectively integrate future
acquisitions could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company
competes and will continue to compete with other buyers for acquisitions. As a
result, if the prices sellers seek were to rise, the Company could find fewer
acceptable acquisition opportunities.
POTENTIAL LABOR SHORTAGE
The Company's ability to maintain its productivity and profitability
depends on its ability to attract and retain skilled workers. Although the
Company's size has increased substantially over the last two years, the Company
historically has experienced a high employee turnover rate, and the Company
continues to need replacement and additional workers, and devotes significant
management time and effort to attracting and retaining workers. The Company
believes that many skilled or trainable workers reside in reasonable proximity
to its facilities; however, there can be no assurance that the Company will be
successful in recruiting and training such workers due to a variety of factors.
Such factors include the potential inability or lack of desire by such workers
to commute to the Company's facilities and job sites or relocate to areas
closer to the Company's areas of operation, and competition for workers from
other industries. Although the Company believes that its wage rates are
competitive and that its relationship with its workforce is good, a significant
increase in the wages other employers pay could result in a reduction in the
Company's
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workforce, increases in the Company's wage rates, or both. If either of these
events occurs, the Company's profitability could be diminished and the
Company's growth potential could be impaired.
OPERATING RISKS; INSURANCE
The Company's operations are subject to many hazards inherent in the
maintenance, workover, drilling and operation of oil and gas wells, the
occurrence of which could result in the suspension of operations, damage to or
destruction of equipment and injury or death to field personnel. These hazards
include explosions, blow-outs, reservoir damage, loss of well control,
cratering and fires. Damage to the environment also could result from the
Company's operations. The Company maintains insurance coverage in such amounts
and against such risks as it believes to be in accordance with normal industry
practice. Such insurance does not, however, provide coverage for all
liabilities (including liabilities for certain events involving pollution), and
there can be no assurance that such insurance will be adequate to cover all
losses or liabilities that the Company might incur in its operations. Moreover,
no assurance can be given that the Company will, in the future, be able to
maintain insurance at levels it deems adequate and at rates it considers
reasonable or that any particular types of coverage will be available.
The well service business also is subject to seasonal risks caused by
adverse weather conditions such as severe winter storms. In addition, the
Company's operations in Northern regions are subject to limitations on
transporting equipment during the spring thaw.
COMPETITION
Competition is intense in all of the Company's markets. The Company
competes on the basis of the quality of its equipment and service, its safety
record and pricing. While management believes that the Company's reputation for
quality of equipment and service and its safety record are among the best in
the industry, certain competitors have access to greater financial and other
resources than the Company, which could allow those companies to price their
services more aggressively than the Company.
GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state and local laws
and regulations including those relating to protection of the environment,
natural resources, health and safety, waste management, and transportation of
hydrocarbons and chemicals. Various operations conducted by the Company,
including waste disposal and the handling of materials which are classified as
wastes, pollutants or hazardous substances, may require permits or other
authorizations. Sanctions for noncompliance with these laws and regulations may
include administrative, civil and criminal penalties, as well as revocation of
permits, and corrective action orders. These laws may impose retroactive
liability and may render a party liable for environmental damage or threats to
human health or the environment without regard to that party's negligence or
fault. Consequently, the Company could be exposed to liability for the conduct
of, or conditions caused by, others, or for acts of the Company that were in
compliance with all applicable laws at the time such acts were performed. Laws
and regulations protecting the environment have been expanded, modified and
reinterpreted over the years, resulting in increasingly stringent requirements.
The application or interpretation of these regulations or the adoption of new
regulations could have a material adverse effect on the Company. In addition,
the modification or interpretation of existing laws or regulations or the
adoption of new laws or regulations curtailing exploratory or development
drilling for oil and gas for economic, environmental or other reasons could
have a material adverse effect on the Company's operations by limiting well
servicing opportunities.
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DEPENDENCE ON KEY PERSONNEL
The Company's business is partially dependent upon the performance of
certain of its executive officers. The Company has entered into employment
agreements with these executive officers that contain non-compete provisions.
Notwithstanding such agreements, there can be no assurance that the Company
will be able to retain such officers or that it will be able to enforce the
non-compete provisions in the event of their departure. Although the Company
maintains key man life insurance on the lives of certain of such officers,
including its Chief Executive Officer, the existence of such insurance does not
mean that the death or disability of one or more of them would not have a
material adverse effect upon the Company.
INTERNATIONAL INVESTMENTS
The Company has investments and may make additional investments in
Argentina. The Company also may make investments in other foreign countries and
in companies located or with significant operations outside the United States.
Such investments are subject to risks and uncertainties relating to the
political, social and economic structures of those countries. Risks may include
fluctuations in currency valuation, expropriation, confiscatory taxation and
nationalization, currency conversion restrictions, increased regulation and
approval requirements and governmental policies limiting returns to foreign
investors.
SUBSTANTIAL LEVERAGE
The Company has substantial indebtedness and is highly leveraged. The
degree to which the Company is leveraged could adversely affect the Company's
ability to obtain additional financing for working capital, acquisitions or
other purposes and could make it more vulnerable to industry downturns and
competitive pressures. At December 17, 1997, the Company's outstanding
long-term debt totaled approximately $292.6 million, consisting of (i) $4.6
million of outstanding 7% Convertible Subordinated Debentures due 2003 (the
"Debentures"), (ii) $216.0 million of outstanding 5% Convertible Subordinated
Notes due 2004 (the "Notes") and (iii) $72.0 million borrowed under the
Company's $250 million revolving credit facility (the "Revolving Credit
Facility"). At October 31, 1997, the Company's ratio of total debt to total
capitalization was approximately 67%. If the Company borrows the entire amount
available under the Revolving Credit Facility (and assuming no conversion of the
Debentures or the Notes), its total long-term debt would be $477.4 million and
its ratio of total debt to total capitalization would be approximately 78%
(based on the Company's stockholders' equity at October 31, 1997).
In recent years, cash generated from the Company's operating
activities in conjunction with borrowings and proceeds from private equity
issuances has been sufficient to meet its debt service, acquisition and capital
expenditure requirements. There can be no assurance that cash generated from
such sources will be sufficient to meet its future debt service requirements
and to make anticipated acquisitions, investments and capital expenditures.
SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON FUTURE MARKET
PRICES
As of December 17, 1997, the Company had a total of 18,355,296 shares
of Common Stock outstanding, including 416,666 shares recently purchased by the
company which the Company intends to convert to treasury shares promptly after
the settlement date for the latest purchase. Of the outstanding shares,
approximately 1,141,451 are "restricted securities" as that term is defined in
Rule 144 under the Securities Act, and as such, are subject to restrictions on
resale in the public markets. However, all but 125,000 shares of such restricted
securities are either registered under registration statements under the
Securities Act or are subject to registration under registration rights
agreements. The Company has reserved 532,760 shares (265,000 of which are
underlying warrants) for issuance in connection with pending and completed
acquisitions which the Company expects to issue in January 1998, all of which
shares are subject
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to registration under registration rights agreements. In addition,
approximately 8,378,465 shares of Common Stock are issuable upon the exercise
of existing options and warrants and the conversion of convertible securities,
including 471,795 shares currently issuable upon conversion of the Debentures
and 5,610,390 shares issuable upon conversion of the Notes. All of such shares
will be issued in registered transactions, or have been or will be registered
for resale pursuant to a registration rights agreement. Sales of a substantial
number of any of such shares in the public markets, or the perception that such
sales could occur, could adversely affect the market price of the Common Stock
and could impair the Company's future ability to raise capital through an
offering of its equity securities.
SELLING SECURITYHOLDERS
The following table sets forth information concerning the number of
shares of Common Stock offered by the Selling Securityholders (the "Shares").
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
BEFORE OFFERING(1)
------------------------------ NUMBER OF
NUMBER OF PERCENT OF SHARES
NAME SHARES CLASS OFFERED
---- ------------------------------ ---------
<S> <C> <C> <C>
Lynn Massingill(2) . . . . . . . . 95,600 * 95,600
Mark Massingill(2) . . . . . . . . 95,600 * 95,600
Billy Massingill . . . . . . . . . 20,000 * 20,000
Maureen McCutchin . . . . . . . . 20,000 * 20,000
Massingill Development, Inc. . . . 8,800 * 8,800
</TABLE>
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* Less than one percent.
(1) No information is given with respect to beneficial ownership after the
Offering because the Company is unable to determine the number of
shares of Common Stock that will be sold in the Offering.
(2) Lynn Massingill and Mark Massingill were previously the owners of all
of the issued and outstanding shares of capital stock of Well-Co
Oil Services, Inc., a Nevada corporation, which, effective June 25,
1997, was acquired by the Company.
PLAN OF DISTRIBUTION
This Prospectus relates to the resale of up to 240,000 shares of
Common Stock owned by the Selling Securityholders. The Company will not
receive any of the proceeds from the offering of the shares of Common Stock
offered hereby. The Company has been advised by the Selling Securityholders
that the Shares may be sold or distributed from time to time by the Selling
Securityholders directly to one or more purchasers (including pledgees) or
through brokers, dealers or underwriters who may act solely as agents or may
acquire Shares as principals, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices negotiated prices, or at
fixed prices, which may be changed. The distribution of the Shares may be
effected in one or more of the following methods: (i) ordinary brokers'
transactions, which may include long or short sales; (ii) transactions
involving cross or block trades or otherwise in any market or markets where the
Company's Common Stock is traded; (iii) purchases by brokers, dealers
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or underwriters as principal and resale by such purchasers for their own
accounts; (iv) "at the market" to or through market makers or into an existing
market for the Common Stock; (v) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (vi) through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise), or (vii) any combination of
the foregoing, or by any other legally available means.
To the extent not described herein and as otherwise required by law,
the Company will file, during any period in which offers or sales are being
made, a supplement to this Prospectus or a post-effective amendment to the
Registration Statement of which this Prospectus is a part, which sets forth,
with respect to a particular offering, the specific number of Shares to be
sold, the name of the Selling Securityholder, the sale price, the name of any
participating broker, dealer, underwriter or agent, any applicable commission
or discount and any other material information with respect to the plan of
distribution.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in
certain states the shares of Common Stock offered hereby may not be sold unless
they have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and
compliance therewith is effected.
The Selling Securityholders and any brokers, dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions or discounts received by such brokers, dealers, agents or
underwriters and any profit on the resale of the Common Stock offered hereby
and purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The Company and the Selling Securityholders have agreed to indemnify
each other against certain liabilities arising under the Securities Act. The
Company has agreed to pay all expenses incident to the offer and sale of the
Common Stock pursuant to this Prospectus other than selling commissions and
fees.
The Common Stock is listed for trading on the AMEX.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company is currently authorized to issue 25,000,000 shares of
Common Stock, and the Board of Directors has approved, subject to stockholder
approval, an increase in the authorized capital stock to 100,000,000 shares of
Common Stock. Of the 25,000,000 shares currently authorized, an aggregate of
18,355,296 shares were outstanding including 416,666 shares recently purchased
by the Company which the Company intends to convert to treasury shares
promptly after the settlement date for the latest purchase. All of the issued
and outstanding shares of Common Stock are fully paid and nonassessable. Each
share is entitled to one vote in the election of directors and other corporate
matters. The holders of Common Stock do not have cumulative voting rights,
which means that the holders of a majority of the votes entitled to be cast by
holders of the outstanding Common Stock are able to elect all of the Company's
directors. The Common Stock has no redemption provisions and the holders
thereof have no preemptive rights. The holders of Common Stock are entitled to
receive dividends in such amounts as may be declared by the Board of Directors,
as permitted by applicable law, and upon liquidation, dissolution, or winding
up of the Company subject to the rights of any preferred stock then
outstanding, the holders of Common Stock are
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entitled to share ratably in the Company's assets, according to the number of
shares they hold. The Common Stock is listed on the AMEX. The transfer agent
and registrar for the Common Stock is American Stock Transfer & Trust Company,
New York, New York.
The Board of Directors has the power under the Company's Articles of
Incorporation, without the need of any stockholder action, to redesignate all
or any of the authorized and unissued shares of Common Stock into one or more
series of preferred or preference stock and to establish the rights and
preferences (including, without limitation, dividend and liquidity preferences,
voting rights and conversion provisions), except that the Company charter
provides that no such class or series of shares (i) may have more than one vote
per share, (ii) may be issued in connection with any shareholder rights plan,
"poison pill" or other anti-takeover measure, or (iii) may be issued for less
than fair consideration, as determined in good faith by the Board of Directors.
7% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003
In July 1996, the Company issued $52 million principal amount of the
Debentures. The Debentures are convertible into shares of Common Stock at a
conversion price of $9 3/4 per share (subject to adjustment in certain events)
and, if such conversion occurs before July 1, 1999, holders of the Debentures
are entitled to a payment generally equal to 50% of the interest otherwise
payable on the Debentures converted from the date of conversion through July 1,
1999, payable in cash or Common Stock, at the Company's option. The Company's
obligation to repay principal and interest on the Debentures is guaranteed by
its principal subsidiaries. The Debentures are redeemable, at the Company's
option, on or after July 15, 1999 at a redemption price of 104% of principal
amount in the first 12 months, and 103%, 102% and 101% of principal amount in
the three years thereafter, respectively. Additionally, holders of the
Debentures have the right to require the Company to repurchase such Notes at
100% of the principal amount thereof, together with accrued interest, in the
event of a Change in Control (as defined in the Indenture relating to the
Debentures). As of December 12, 1997, $4,600,000 of Debentures remained
outstanding.
5% CONVERTIBLE SUBORDINATED NOTES DUE 2004
In September 1997, the Company issued $216.0 million principal amount
of the Notes. The Notes are convertible into shares of Common Stock at a
conversion price of $38.50 per share (subject to adjustment in certain events)
at any time on and after the earlier of (i) the date that a shelf registration
statement to cover the Notes and the Common Stock issuable upon conversion of
the Notes is declared effective and (ii) 270 days following the date of
original issuance of the Notes. The Company currently does not have a
sufficient number of shares of Common Stock authorized for issuance upon
conversion of the Notes. However, the Board of Directors has approved an
increase, subject to stockholder approval, in the number of authorized shares
of Common Stock and such increase, if approved, would be sufficient to reserve
a sufficient number of shares for issuance upon conversion of the Notes. Until
such time as the Company's authorized Common Stock has been increased to a
number of shares sufficient to reserve for the conversion of all of the Notes,
the Company may pay cash in lieu, in whole or in part, of delivering Common
Stock. The Notes are redeemable, at the Company's option, on or after September
15, 2000 at a redemption price of 102.86% of principal amount in the first
twelve months, and 102.14%, 101.43%, 100.71% and 100% of principal amount in
the four years thereafter, respectively. Additionally, holders of the Notes
have the right to require the Company to repurchase such Notes at 100% of the
principal amount thereof, together with accrued and unpaid interest, in the
event of a Change in Control (as defined in the Indenture relating to the
Notes).
9
<PAGE> 11
LEGAL MATTERS
Certain legal matters relating to the validity of the Common Stock
have been passed upon by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of the Company and
subsidiaries as of June 30, 1997 and 1996, and for each of the years in the
three-year period ended June 30, 1997, have been incorporated by reference in
this Prospectus in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, upon the authority of said firm as
experts in accounting and auditing.
The financial statements of Well-Co Oil Service, Inc. as of June 25,
1997 and for the period from July 1, 1996 to June 25, 1997, have been
incorporated by reference into this Prospectus in reliance upon the report of
Robinson Burdette Martin & Cowan, L.L.P. independent certified public
accountants, upon the authority of said firm as experts in accounting and
auditing.
The financial statements of Ram Oil Well Service, Inc. and Rowland
Trucking Co., Inc. as of December 31, 1996 and 1995, have been incorporated by
reference into this Prospectus in reliance upon the report of Johnson, Miller &
Co., independent certified public accountants, upon the authority of said firm
as experts in accounting and auditing.
The consolidated financial statements of Coleman Oil & Gas, Inc. and
Subsidiaries as of October 31, 1996 and 1995, have been incorporated by
reference into this Prospectus in reliance upon the report of Chandler &
Company LLP, independent certified public accountants, upon the authority of
said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") in Washington, D.C., a registration
statement on Form S-3 (together with all exhibits, schedules and amendments
thereto, the "Registration Statement") under the Securities Act with respect
to the Common Stock offered hereby. This Prospectus, which is a part of
the Registration Statement, does not contain all of the information set forth
in the Registration Statement. Statements in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference and the exhibits
and schedules thereto. For further information concerning the Company and
the Common Stock, reference is made to the Registration Statement. Copies of
the Registration Statement may be obtained from the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the prescribed fee.
The Company is subject to the information requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. The Registration Statement, as well as such
reports, proxy statements and other information can be inspected and copied at
the Public Reference Facilities maintained by the Commission at its principal
offices at 450 Fifth Street, N.W., Washington, D.C. 20549, and its regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048, and the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Such information also may be obtained on the Internet through the Commission's
EDGAR database at http://www.sec.gov. Copies of such materials also can be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006. With respect to each contract,
10
<PAGE> 12
agreement or other document filed as an exhibit to the Registration Statement
reference is made to such exhibit for a more complete description of the matter
involved and each such statement shall be deemed qualified in all respects by
such reference.
11
<PAGE> 13
================================================================================
NO DEALER, SALES PERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING SECURITYHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AND OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY, SINCE THE DATE HEREOF.
--------------------------
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Disclosure Regarding Forward Looking
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Selling Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
================================================================================
================================================================================
KEY ENERGY
GROUP, INC.
COMMON STOCK
240,000 SHARES
$.10 PAR VALUE PER SHARE
--------------------------
PROSPECTUS
--------------------------
DECEMBER , 1997
================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses
to be incurred in connection with the issuance and distribution of the
Securities registered hereby, other than underwriting discounts and
commissions.
<TABLE>
<S> <C>
Registration Fee Under Securities Act . . . . . . $ 1,500
Legal Fees . . . . . . . . . . . . . . . . . . . 7,500
Accounting Fees . . . . . . . . . . . . . . . . . 30,000
Printing and Engraving . . . . . . . . . . . . . 1,000
Miscellaneous Fees . . . . . . . . . . . . . . . 2,000
-------
Total . . . . . . . . . . . . . . . . . $42,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 2-418 of the Maryland General Corporation Law (the "MGCL")
provides that a corporation may indemnify any director made a party to any
proceeding against judgments, penalties, fines, settlements and reasonable
expenses, unless it is established that (i) the act or omission of the
director was material to the matter giving rise to the proceeding and was
committed in bad faith or was a result of deliberate dishonesty, (ii) the
director actually received an improper personal benefit or (iii) in a criminal
proceeding, the director had reasonable cause to believe the act or omission
was unlawful. A director may not be indemnified in any proceeding charging
improper personal benefit if the director was adjudged to be liable and, in a
derivative action, there shall not be indemnification if a director has been
adjudged liable to the corporation. A director or officer of a corporation
who has been successful in the defense of any proceeding shall be indemnified
against reasonable costs incurred in such defense. Indemnification may not
be made unless authorized pursuant to a determination that the director
has met the requisite standard of conduct.
Article Seventh of the Company's Amended and Restated Articles of
Incorporation, as amended (the "Charter"), provides that the Company shall
indemnify (i) its directors and officers, whether serving the Company or
at its request any other entity, to the full extent required or permitted by
the MGCL, including the advance of expenses under the procedures and to the
full extent permitted by law and (ii) other employees and agents to such extent
as shall be authorized by the Board of Directors or the Company's By-Laws and
be permitted by law. The foregoing rights of indemnification are exclusive of
any other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing
such provisions or such further indemnification arrangements as may be
permitted by the MGCL. Furthermore, no director or officer of the Company
shall be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director or an officer,
except to the extent that exculpation from liability is not permitted
under the MGCL as in effect when such breach occurred. No amendment of
the Charter or repeal of any of its provisions shall limit or eliminate the
limitations on liability provided to directors and officers with respect to
acts or omissions occurring prior to such amendment or repeal.
II-1
<PAGE> 15
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT NO. DESCRIPTION
---------- -----------
4.1 Indenture dated as of July 3, 1996, among Key Energy
Group, Inc., Yale E. Key, Inc., WellTech Eastern,
Inc., Odessa Exploration, Inc., Key Energy Drilling,
Inc., d/b/a Clint Hurt Drilling, Servicios
WellTech, S.A., and American Stock Transfer & Trust
Company, as Trustee, relating to the Company's
$52,000,000 7% Convertible Subordinated Debentures
due 2003 (incorporated by reference to Exhibit 4.2
of the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997).
4.2 Indenture dated as of September 25, 1997, among Key
Energy Group, Inc., and American Stock Transfer &
Trust Company, as Trustee, relating to the Company's
$216,000,000 5% Convertible Subordinated Notes due
2004.
5.1 Opinion of Porter & Hedges, L.L.P.
23.1 Consent of Porter & Hedges, L.L.P. (included in
Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Robinson Burdette Martin & Cowan, L.L.P.
23.4 Consent of Johnson, Miller & Co.
23.5 Consent of Chandler & Company LLP
24.1 Power of Attorney (included on signature page)
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement; provided, however, that subparagraphs
(i) and (ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in the periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities and
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
II-2
<PAGE> 16
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the Securities
offered herein, and the offering of such Securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the Securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange of 1934 that is incorporated by reference in
this registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to officers, directors and controlling
persons of the Registrant pursuant to the provisions described under Item 15 of
this registration statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the Securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is public policy as
expressed in such Act and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Key Energy Group, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New Brunswick, State of
New Jersey on December 23, 1997.
KEY ENERGY GROUP, INC.
By: /s/ FRANCIS D. JOHN
----------------------------
Francis D. John, President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on Form S-3 has been signed below by the
following persons in the capacities and on the dates indicated; and each of the
undersigned officers and directors of Key Energy Group, Inc. hereby severally
constitutes and appoints Francis D. John and Jack D. Loftis, and each of them,
to sign for him, and in his name in the capacity indicated below, such
Registration Statement on Form S-3 and for the purpose of registering such
securities under the Securities Act of 1933, as amended, and any and all
amendments thereto, including without limitation any registration statements or
post-effective amendment thereof filed under and meeting the requirements of
Rule 462(b) under the Securities Act, hereby ratifying and confirming our
signatures as they may be signed by our attorneys to such Registration
Statement and any and all amendments thereto.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ FRANCIS D. JOHN President, Chief Executive Officer, and December 23, 1997
-------------------------------------------------- Director
Francis D. John
/s/ WILLIAM S. MANLEY Director December 23, 1997
-------------------------------------------------
William S. Manley
/s/ MORTON WOLKOWITZ Director December 23, 1997
-------------------------------------------------
Morton Wolkowitz
/s/ DAVID J. BREAZZANO Director December 23, 1997
-------------------------------------------------
David J. Breazzano
/s/ KEVIN P. COLLINS Director December 23, 1997
--------------------------------------------------
Kevin P. Collins
/s/ PHILLIP W. MARCUM Director December 23, 1997
-------------------------------------------------
Phillip W. Marcum
/s/ STEPHEN E. McGREGOR Executive Vice President and Chief December 23, 1997
------------------------------------------------- Financial Officer
Stephen E. McGregor
/s/ DANNY R. EVATT Chief Accounting Officer and Treasurer December 23, 1997
-------------------------------------------------
Danny R. Evatt
</TABLE>
II-4
<PAGE> 18
EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
4.1 Indenture dated as of July 3, 1996, among Key Energy Group, Inc., Yale E. Key, Inc.,
WellTech Eastern, Inc., Odessa Exploration, Inc., Key Energy Drilling, Inc., d/b/a
Clint Hurt Drilling, Servicios WellTech, S.A., and American Stock Transfer & Trust
Company, as Trustee, relating to the Company's $52,000,000 7% Convertible Subordinated
Debentures due 2003 (incorporated by reference to Exhibit 4.2 of the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1997).
4.2 Indenture dated as of September 25, 1997, among Key Energy Group, Inc., and American
Stock Transfer & Trust Company, as Trustee, relating to the Company's $216,000,000
5% Convertible Subordinated Notes due 2004.
5.1 Opinion of Porter & Hedges, L.L.P.
23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1)
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Robinson Burdette Martin & Cowan, L.L.P.
23.4 Consent of Johnson, Miller & Co.
23.5 Consent of Chandler & Company LLP
24.1 Power of Attorney (included on signature page)
</TABLE>
<PAGE> 1
EXHIBIT 4.2
KEY ENERGY GROUP, INC.
$200,000,000 Principal Amount
of
5% Convertible Subordinated Notes due 2004
- -------------------------------------------------------------------------------
INDENTURE
- -------------------------------------------------------------------------------
Dated as of September 25, 1997
- -------------------------------------------------------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
Trustee
- -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1.3 Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 8
Section 1.4 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
THE SECURITIES
Section 2.1. Form and Dating; Securities in Global Form . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.3. Registrar, Paying Agent, Depository and Securities Custodian . . . . . . . . . . . . . . . . . 10
Section 2.4. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.5. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.6 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.7 Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.8 Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.9 Treasury Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.10 Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.11 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.12 Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE III
REDEMPTION
Section 3.1 Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.2 Selection of Securities to be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.3 Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.4 Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.5 Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.6 Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.7 Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.3 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.4 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.5 Compliance with Laws; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.6 Stay, Extension and Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.7 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.8 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.9 Limitation on Dispositions of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.10 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.11 Rule 144A Information Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V
SUCCESSORS
Section 5.1 When the Company May Merge, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.2 Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 6.3 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.5 Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.6 Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.7 Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.8 Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.9 Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.10 Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.11 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE VII
TRUSTEE
Section 7.1 Duties of a Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2 Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.3 Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.4 Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.5 Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.6 Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.8 Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.9 Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.10 Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.11 Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.12 No Obligation of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.2 Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.3 Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.4 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.2 With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.3 Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.4 Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.5 Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.6 Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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ARTICLE X
CONVERSION
Section 10.1 Right to Convert . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.2 Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends. . . . . . . . . . . . . . . . . . 46
Section 10.3 Cash Payments in Lieu of Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.4 Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.5 Adjustment of Conversion Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.6 Effect of Reclassification, Consolidation, Merger or Sale . . . . . . . . . . . . . . . . . . 51
Section 10.7 Taxes on Shares Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.8 Reservation of Shares; Shares to be Fully Paid; Compliance
with Governmental Requirements; Listing of Common Stock . . . . . . . . . . . . . . . . . 52
Section 10.9 Responsibility of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.10 Notice to Holders Before Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XI
SUBORDINATION
Section 11.1 Agreement to Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 11.2 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 11.3 Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.4 Company Not to Make Payments with Respect to Securities in
Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.5 Acceleration of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.6 When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.7 Notice by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.8 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.9 Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.10 Subordination May Not Be Impaired by Company . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.11 Distribution or Notice to Representative . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.12 Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.13 Effectuation of Subordination by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XII
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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Section 12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 12.3 Communication to Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.4 Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 60
Section 12.5 Statements Required in Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 12.6 Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.7 Additional Rights of Holders of Transfer Restricted Securities . . . . . . . . . . . . . . . 61
Section 12.8 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.9 No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.10 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 12.12 No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.13 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.15 Counterpart Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.16 Table of Contents, Headings, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
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<PAGE> 7
INDENTURE dated as of September 25, 1997, among KEY ENERGY
GROUP, INC., a Maryland corporation (the "Company"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, a New York corporation, as trustee (the "Trustee").
The Company and Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the
Company's 5% Convertible Subordinated Notes due 2004 (collectively, the
"Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"144A Global Note" means the global note in the form of
Exhibit A-1 hereto deposited with and registered in the name of the Depository,
or its nominee, that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person directly or
indirectly, whether through the ownership of Voting Stock, by agreement or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing; provided, however, that beneficial ownership of
10% or more of the Voting Stock of a person shall be deemed control.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depository, Euroclear and Cedel Bank that apply to such
transfer or exchange.
"Agent" means any Registrar (as defined in Section 2.3),
Paying Agent (as defined in Section 2.3) or co-Registrar.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"Board Resolution" means a resolution of the Board of
Directors of the Company.
<PAGE> 8
2
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in the Borough of
Manhattan, New York, New York are authorized or obligated by law or executive
order to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participation or other equivalents (however designated) of
corporate stock, including each class of common stock and preferred stock of
such Person and any warrants, options or other rights to acquire such stock.
"Closing Price" means, for each Trading Day, the reported last
sale price regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
either case on the New York Stock Exchange (if shares of the Common Stock are
listed for trading on such exchange) or the American Stock Exchange (if shares
of the Common Stock are listed for trading on such exchange) or, if the Common
Stock is not listed or admitted to trading on either such exchange, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers
Automated Quotations systems ("NASDAQ") National Market System ("NASDAQ/NMS")
or, if not listed or admitted to trading on NASDAQ/NMS, on NASDAQ, or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or NASDAQ/NMS or quoted on NASDAQ, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any National
Association of Securities Dealers, Inc. member firm selected from time to time
by the Company for that purpose.
"Common Stock" means, any stock of any class of the Company
that has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company. Subject to
the provisions of Section 10.6, however, shares issuable on conversion of
Securities shall include only shares of the class or classes resulting that
have no preference in respect of dividends or of amounts payable in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which are not subject to redemption by the Company, provided that
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion which
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Consolidated Net Worth" with respect to any Person means the
amount by which the assets of such Person and its Subsidiaries on a
consolidated basis exceed the sum of (i) the total liabilities of such Person
and its Subsidiaries on a consolidated basis, plus (ii) Disqualified Capital
Stock of such Person or Disqualified Capital Stock of any Subsidiary of such
Person
<PAGE> 9
3
issued to any Person other than such Person or another Wholly Owned Subsidiary
of such Person, all as determined on a consolidated basis and in accordance
with GAAP.
"Conversion Price" has the meaning set forth in Section 10.4.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.2 or such other address as the
Trustee may give by notice to the Company.
"Current Market Price" means, for each share of Common Stock,
(a) in respect of a conversion of the principal of any Notes into cash pursuant
to Section 10.1, the average of the daily Closing Prices for the five
consecutive Trading Days immediately preceding the conversion date, or (b) in
all other cases, on any date, the average of the daily Closing Prices for the
five consecutive Trading Days selected by the Company commencing not more than
twenty Trading Days before, and ending not later than, the earlier of the day
in question and the day before the "ex date" with respect to the issuance or
distribution requiring such computation.
"Default" means any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Definitive Securities" means Securities that are in the form
of the Note attached hereto as Exhibit A that do not include the information
called for by footnotes 1 and 2 thereof.
"Depository" means, with respect to the Securities issuable or
issued in whole or in part in global form, the Person specified in Section 2.3
as the Depository with respect to the Securities, until a successor shall have
been appointed and become such pursuant to the applicable provisions of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Capital Stock" means any Capital Stock that, by
its terms or by the terms of any security into which, at the option of the
holder, it is convertible or exchangeable, is, or upon the happening of an
event or the passage of time would be, required to be redeemed or repurchased,
including at the option of the holder, in whole or in part, or has, or upon the
happening of an event or the passage of time would have, a redemption or
similar payment due, on or before the maturity date of the Securities.
"ex date" means, when used with respect to any issuance of
distribution, the first date on which the Common Stock trades regular way on an
exchange or in such market without the right to receive such issuance or
distribution.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
<PAGE> 10
4
"Existing Debentures" means the 7% Convertible Subordinated
Debentures Due 2003 issued under that certain Indenture dated July 3, 1996
among the Company, the Trustee, and the Subsidiaries.
"GAAP" means generally accepted accounting principles as in
effect in the United States of America as of any date of determination.
"Global Securities" means individually and collectively, the
144A Global Note and the Regulation S Global Note, issued in accordance with
the terms hereof.
"Group of Persons" means any group of Persons or other
entities acting in concert as a partnership or other group within the meaning
of Section 13(d) of the Exchange Act.
"Holder" means a person in whose name a Security is registered
in the records of the Registrar.
"IAI" means an institutional "accredited investor" as defined
in Rule 501(a)(1),(2),(3) or (7) under the Securities Act.
"Indebtedness" means, with respect to any Person, without
duplication, (i) any indebtedness of such Person for money borrowed or for the
deferred purchase price of property or services (other than any such balance
that represents an account payable or any other monetary obligation to a trade
creditor created, incurred, assumed or guaranteed by such Person in connection
with obtaining goods, materials or services and due within 12 months (or such
longer period for payment as is customarily extended by such trade creditor) of
the incurrence thereof, which account is not overdue by more than 120 days,
according to the original terms of sale, unless such account payable is being
contested in good faith or has otherwise been extended), (ii) all capitalized
lease obligations, (iii) any such indebtedness or obligation secured by any
Lien on the assets of such Person and (iv) any such indebtedness or obligation
of others which such Person has directly or indirectly guaranteed, endorsed
with recourse (otherwise than for collection, deposit or other similar
transactions in the ordinary course of business), agreed to purchase or
repurchase or in respect of which such Person has agreed contingently to supply
or advance funds.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Issue Date" means the date on which the Notes are originally
issued under this Indenture.
"Lien" means, with respect to any Person, any mortgage,
pledge, lien, encumbrance, easement, restriction, covenant, right-of-way,
charge or adverse claim affecting title
<PAGE> 11
5
or resulting in an encumbrance against real or personal property of such
Person, or a security interest of any kind whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option,
right of first refusal or other similar agreement to sell in each case securing
obligations of such Person and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statute or statutes)
of any jurisdiction).
"Memorandum" means the Offering Memorandum, dated September
18, 1997, of the Company relating to the Securities and the Offering.
"Non-U.S. Person" means anyone who is not a U.S. Person.
"Notes" means the 5% Convertible Subordinated Notes due 2004
issued under this Indenture.
"Obligations" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the sale of the Securities to the Purchasers.
"Officers" means the Chairman of the Board, the President, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller,
Secretary or any Vice President of the Company.
"Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the principal executive officer, principal
financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, trust, estate, unincorporated
organization or government or any agency or political subdivision thereof.
"Property" means with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including, without limitation, Capital Stock in any
other Person.
<PAGE> 12
6
"Purchasers" means the initial purchasers of the Notes.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A of the Securities Act.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof by and among the Company and the
Purchasers, as such agreement may be amended, modified or supplemented from
time to time.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" means a global Note deposited with
and registered in the name of the Depository or its nominee that will be issued
in a denomination equal to the outstanding principal amount of the Notes sold
in reliance on Regulation S, or a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global
Note in the form of Exhibit A-1 hereto deposited with and registered in the
name of the Depository or its nominee that will be issued in a denomination
equal to the outstanding principal amount of the Regulation S Temporary Global
Note upon expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a single temporary
global Note in the form of Note attached hereto as Exhibit A-2 deposited with
and registered in the name of the Depository or its nominee that will be issued
in a denomination equal to the outstanding principal amount of the Notes sold
in reliance on Regulation S.
"Related Person" means (i) any Affiliate of the Company, (ii)
any individual or other Person who directly or indirectly holds 10% or more of
any class of Capital Stock of the Company, (iii) any relative of such
individual by blood, marriage or adoption not more remote than first cousin and
(iv) any officer or director of the Company.
"Restricted Period" means the period of 40 days commencing on
the latest of the commencement of the Offering and the Issue Date.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the Corporate Trust Office (or any successor group of
the Trustee) including any President, Vice President, Secretary, Assistant
Secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
<PAGE> 13
7
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of his knowledge of and familiarity
with the particular subject.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Notes issued pursuant to this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the Person named in Section 2.3,
as custodian with respect to the Securities in global form, or any successor
entity thereto.
"Senior Indebtedness" has the meaning provided in Section 11.2
hereof.
"Shelf Registration Statement" means a registration statement
filed pursuant to the Registration Rights Agreement with the SEC relating to
the sale by the holders thereof of Common Stock to be acquired upon conversion
of the Securities.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the Board of Directors or other Persons shall, at the time as of
which any determination is being made, be owned by the Company either directly
or through Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990,
and as in effect on the date on which this Indenture is qualified under the
TIA.
"Trading Day" means, if shares of the Common Stock are listed
for trading on a national securities exchange, a day on which such securities
exchange is open for the transaction of business and if shares of the Common
Stock are not listed for trading on a national securities exchange, a day on
which the NASDAQ Stock Market is open for the transaction of business.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
<PAGE> 14
8
"U.S. Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof for the
payment of which the full faith and credit of the United States of America is
pledged.
"U.S. Person" means a U.S. Person as defined in Rule 902(o)
under the Securities Act.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members
of the Board of Directors or other governing body of such Person.
"Wholly Owned Subsidiary" means a Subsidiary, all the Capital
Stock (other than directors' qualifying shares, if applicable) of which is
owned by the Company or another Wholly Owned Subsidiary.
Section 1.2 Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
- ---- ------------
<S> <C>
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Cedel Bank" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Change in Control" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Change in Control Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Change in Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Change in Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Euroclear" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Expiration Time" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.8
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Purchased Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Regulation S Temporary Global Note" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Representative" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2
"Securities Register" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
</TABLE>
<PAGE> 15
9
Section 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means
the Trustee;
"obligor" on the Securities means the Company and any
successor obligor upon the Securities.
All other terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute or defined by
SEC rule under the TIA have the meanings so assigned to them.
Section 1.4 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and
transactions.
<PAGE> 16
10
ARTICLE II
THE SECURITIES
Section 2.1. Form and Dating; Securities in Global Form.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto, which is incorporated
in and made a part of this Indenture and shall be in an aggregate principal
amount at maturity of no greater than $216,000,000. The Securities may have
notations, legends or endorsements as required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued initially
in denominations of $1,000 and whole multiples thereof.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture. To the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Except for Notes issued to an IAI, the Notes will initially be
issued in global form, substantially in the form of Exhibits A-1 and A-2. Such
Global Securities shall represent such of the outstanding Securities as shall
be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Securities from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby may
from time to time be reduced or increased, as appropriate, to reflect exchanges
and redemptions. Any adjustment on the books and records of the Depository or
any endorsement of a Global Security to reflect the amount of any increase or
decrease in the amount of outstanding Securities represented thereby shall be
made by the Trustee, or the Securities Custodian at the direction of the
Trustee, and in accordance with the standing instructions and procedures
existing between the Depository and the Securities Custodian, in each case in
accordance with instructions given by the Holder thereof.
Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of the Regulation S Temporary Global Note
(attached hereto as Exhibit A-2), which shall be deposited on behalf of the
purchasers of the Notes represented thereby with the Trustee, at its New York
office, as custodian for the Depository, and registered in the name of the
Depository or the nominee of the Depository for the accounts of designated
agents holding on behalf of the Euroclear System ("Euroclear") or Cedel Bank
N.A. ("Cedel Bank"), duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The Restricted Period shall be terminated
upon the receipt by the Trustee of (i) a written certificate from the
Depository, together with copies of certificates from Euroclear and Cedel Bank
certifying that they have received certification of non-United States
beneficial ownership of 100% of the aggregate
<PAGE> 17
11
principal amount of the Regulation S Temporary Global Note (except to the
extent of any beneficial owners thereof who acquired an interest therein during
the Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note), and (ii) an Officers' Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Permanent Global Notes may from time to
time be increased or decreased by adjustments made on the records of the
Trustee and the Depository or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall
be applicable to interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the agent members through
Euroclear or Cedel Bank.
Section 2.2. Execution and Authentication.
Officers of the Company shall sign and attest the Securities
for the Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Securities shall be substantially as set forth in Exhibit A hereto.
The Trustee shall, upon receipt of an Officers' Certificate
directing it to do so, authenticate Securities for original issue up to an
aggregate principal amount stated in Section 2.1. The aggregate principal
amount of Securities outstanding at any time may not exceed such amount, except
as provided in Section 2.7.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to
<PAGE> 18
12
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate.
Section 2.3. Registrar, Paying Agent, Depository and
Securities Custodian.
The Company shall maintain (a) an office or agency where
Securities may be presented for registration of transfer or for exchange (the
"Registrar") and (b) an office or agency where Securities may be presented for
payment (the "Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange (the "Securities Register"). The
Company may appoint one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. The
Company may change any Paying Agent, Registrar, or co-Registrar without notice
to any Holder. The Company shall notify the Trustee and the Trustee shall
notify the Holders of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any
of its Subsidiaries may act as Paying Agent, Registrar, or co-Registrar. The
Company shall enter into an appropriate agency agreement with any Agent not a
party to this Indenture, which shall incorporate the provisions of the TIA.
The agreement shall implement the provisions of this Indenture that relate to
such Agent. The Company shall notify the Trustee of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
or fails to give the foregoing notice, the Trustee shall act as such, and shall
be entitled to appropriate compensation in accordance with Section 7.7 hereof.
The Company initially appoints the Trustee as Registrar,
Paying Agent, and agent for service of notices and demands in connection with
the Securities.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global Securities.
The Company initially appoints Trustee to act as Securities
Custodian with respect to the Global Securities.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent in
connection with the exercise of a conversion right under Article 10, or for the
payment of principal or interest on the Securities, and will notify the Trustee
of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company
<PAGE> 19
13
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company) shall have no further liability for the money delivered to the
Trustee. If the Company or any Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders, including the aggregate principal amount of Securities held by them,
and the Company shall otherwise comply with TIA Section 312(a).
Section 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar or co-Registrar with a
request (x) to register the transfer of the Definitive Securities; or (y) to
exchange such Definitive Securities for an equal principal amount of Definitive
Securities of other authorized denominations, the Registrar or co-Registrar
shall register the transfer or make the exchange as requested if its
requirements for such transactions are met; provided, however, that the
Definitive Securities presented or surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar or
co-Registrar, duly executed by the Holder thereof or by his attorney,
duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that
are Definitive Securities, shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar or co-Registrar by a Holder for
registration in the name of such Holder, without transfer, a
certification from such Holder to that effect; or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption
<PAGE> 20
14
from registration in accordance with Rules 144 or 145 or
Regulation S or pursuant to an effective registration
statement under the Securities Act, a certification to that
effect from the transferee or transferor and an Opinion of
Counsel from the transferee or transferor reasonably
acceptable to the Company and to the Registrar or co-Registrar
to the effect that such transfer is in compliance with the
Securities Act, or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect and an Opinion of Counsel
reasonably acceptable to the Company and to the Registrar or
co-Registrar to the effect that such transfer is in compliance
with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(A) if such Definitive Security is a Transfer Restricted
Security, certification in form and substance satisfactory to the
Trustee that such Definitive Security is being transferred to a QIB in
accordance with Rule 144A under the Securities Act or to a Non-U.S.
Person in an offshore transaction in accordance with Rule 904 under
the Securities Act; and
(B) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to
make, or to direct the Securities Custodian to make, an endorsement on
the Global Security to reflect an increase in the aggregate principal
amount of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly and shall credit or cause to be credited to the
account of the Person specified in such instructions a beneficial interest in
the Global Security equal to the principal amount of the Definitive Security so
canceled. If no Global Securities are then outstanding, the Company shall
issue and the Trustee shall authenticate a new Global Security in the
appropriate principal amount.
<PAGE> 21
15
(c) Transfer and Exchange of Global Securities. (1) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depository in accordance with this Indenture
(including the restrictions on transfer set forth herein) and the procedures of
the Depository therefor.
(i) Notwithstanding any other provisions of this
Indenture (other than the provisions set forth in subsection (d) of this
Section 2.6), a Global Security may not be transferred as a whole except by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository.
(ii) A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order or instruction given in
accordance with the Depository's procedures and containing information
regarding the account of the Depository to be credited with a beneficial
interest in the Global Security. The Registrar shall, in accordance with such
instructions, instruct the Depository to credit to the account of the Person
specified in such instruction a beneficial interest in the Global Security and
to debit the account of the transferor of the beneficial interest in the Global
Security being transferred. Notwithstanding the foregoing to the contrary, all
transfers of beneficial interests in Global Securities shall be done in
accordance with Applicable Procedures.
(d) Transfer of a Beneficial Interest in a Global Security
for a Definitive Security. Any Person having a beneficial interest in a Global
Security may only exchange such beneficial interest for a Definitive Security
if:
(i) the Depository for the Securities notifies the
Company that the Depository is unwilling or unable to continue as
Depository for the Global Securities and a successor Depository for
the Global Securities is not appointed by the Company within 90 days
after delivery of such notice;
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture, or
(iii) such exchange is made concurrently with the transfer
of such Security to an IAI; or
(iv) an Event of Default has occurred and is continuing.
Upon on the occurrence of any such event and upon receipt by the Trustee of
written instructions (or such other form of instructions as is customary for
the Depository) from the Depository or its
<PAGE> 22
16
nominee on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Trustee of a written order or such other form
of instructions as is customary for the Depository or the Person designated by
the Depository as having such a beneficial interest containing registration
instructions and, in the case of a beneficial interest in a Transfer Restricted
Security only, the following additional information and documents (all of which
may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification from such Person to that effect; or
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act or pursuant to
an exemption from registration in accordance with Rules 144 or 145 or
Regulation S or pursuant to an effective registration statement under
the Securities Act, a certification to that effect from the transferee
or transferor and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company and to the Registrar
or co-Registrar to the effect that such transfer is in compliance with
the Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the transferee
or transferor and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company and to the Registrar
or co-Registrar to the effect that such transfer is in compliance with
the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures
existing between the Depository and the Securities Custodian, the aggregate
principal amount of the Global Security to be reduced (with appropriate
adjustments to the transferor's account) and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form
of an Officers' Certificate, the Trustee will authenticate and deliver to the
transferee, as the case may be, a Definitive Security.
(v) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section
2.6(d) shall be registered in such names and in such authorized
denominations as the Depository, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive Securities to the
Persons in whose names such Securities are so registered.
<PAGE> 23
17
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive
Securities, will authenticate and deliver Definitive Securities, in an
aggregate principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(e) Legends.
(i) Except as permitted by the following paragraph (ii), each
Note certificate evidencing the Global Securities and the Definitive Securities
(and all Notes issued in exchange therefor or substitution thereof) shall bear
a legend in substantially the following form:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THE NOTE EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE
EXCEPT (A) TO KEY ENERGY GROUP, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, BEFORE SUCH TRANSFER, FURNISHES TO AMERICAN STOCK
TRANSFER & TRUST COMPANY, AS TRUSTEE (OR SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR
(F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH
<PAGE> 24
18
TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE
EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F)
ABOVE), A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION
WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF SUCH NOTE, (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E)
ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
AMERICAN STOCK TRANSFER & TRUST COMPANY, AS TRUSTEE (OR SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(F) ABOVE, THE
HOLDER MUST, BEFORE SUCH TRANSFER, FURNISH TO AMERICAN STOCK TRANSFER & TRUST
COMPANY, AS TRUSTEE, (OR SUCCESSOR TRUSTEE AS APPLICABLE) SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F) ABOVE OR THE EXPIRATION OF TWO YEARS
FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Security) pursuant to an effective registration statement under the Securities
Act or satisfying the condition set forth in subclause (2)(E) of the legend set
forth in the immediately preceding paragraph:
(A) in the case of any Transfer Restricted Security that is a
Definitive Security, the Registrar or co-Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for a
Definitive Security that does not bear the legend set forth above and
rescind any restriction on the transfer of such Transfer Restricted
Security; and
(B) any such Transfer Restricted Security represented by a
Global Security shall not be subject to the provisions set forth in
(i) above (such sale or transfer being subject only to the provisions
of Section 2.6(c) hereof); provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security that does
not bear a legend, which request is made in reliance upon Rule 144 or
145, the Holder thereof shall certify in writing to the
<PAGE> 25
19
Registrar or co-Registrar and shall provide an Opinion of Counsel to
the Registrar or co-Registrar that such request is being made pursuant
to Rule 144 or 145.
(f) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to or retained and canceled by the Trustee.
At any time before such cancellation, if any beneficial interest in a Global
Security is exchanged for Definitive Securities, redeemed, repurchased or
canceled, the principal amount of Securities represented by such Global
Security shall be reduced and an adjustment shall be made on the books and
records of, or an endorsement shall be made on such Global Security by, the
Trustee or the Securities Custodian, at the direction of the Trustee, to
reflect the reduction, all in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian.
(g) Obligations with respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Definitive Securities and Global Securities at the Registrar's or
co-Registrar's request.
(ii) No service charge shall be made to a Holder
for any registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchanges or transfers pursuant to
Sections 2.10, 3.6 and 9.5 hereof).
(iii) The Registrar or co-Registrar shall not be
required to register the transfer or exchange of any Definitive Security
selected for redemption in whole or in part, except the unredeemed portion of
any Definitive Security being redeemed in part.
(iv) All Definitive Securities and Global
Securities issued upon any registration of transfer or exchange of Definitive
Securities or Global Securities shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture as the Definitive Securities or Global Securities surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, register the transfer of or exchange Securities
during a period beginning at the opening of business 15 days before
the day of any selection of Securities
<PAGE> 26
20
for redemption under Section 3.2 and ending at the close of business
of the day of selection, or
(B) to register the transfer or exchange of any Security so
selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
(vi) Before due presentment for registration of
transfer of any Security, the Trustee, any Agent and the Company may deem and
treat the Person in whose name any Security is registered as the absolute owner
of such Security for the purpose of receiving payment of principal of and
interest and premium, if any, on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and neither the Trustee,
any Agent, nor the Company shall be affected by notice to the contrary.
Section 2.7 Replacement Securities.
If any mutilated Security is surrendered to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by two Officers of the
Company, shall authenticate a replacement Security if the Trustee's
requirements for replacements of Securities are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
Section 2.8 Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation, and those reductions in the interests in a Global
Security effected by the Trustee hereunder, and those described in this Section
2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid
under Section 4.1 hereof, it ceases to be outstanding, and interest on it
ceases to accrue.
<PAGE> 27
21
Except as set forth in Section 2.9 hereof, a Security does not
cease to be outstanding because the Company or an Affiliate of the Company
holds the Security.
Section 2.9 Treasury Securities.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any Affiliate of the Company (whether
directly or by or through the Depository) shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
Securities that a Responsible Officer knows to be so owned shall be so
considered.
Section 2.10 Temporary Securities.
Until Definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of Definitive
Securities but may have variations that the Company and the Trustee consider
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee, upon receipt of an Officers' Certificate of the
Company directing it to do so, shall authenticate Definitive Securities in
exchange for temporary Securities. Until such exchange, temporary Securities
shall be entitled to the same rights, benefits and privileges as Definitive
Securities.
Section 2.11 Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment, conversion, replacement or cancellation and
shall destroy canceled Securities and certification of their destruction shall
be delivered to the Company (subject to the record retention requirement of the
Exchange Act) unless by a written order, signed by two Officers of the Company,
the Company shall direct that canceled Securities be returned to it. The
Company may not issue new Securities to replace Securities that it has redeemed
or paid, converted or that have been delivered to the Trustee for cancellation.
Section 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted
<PAGE> 28
22
interest, to the persons who are Holders on a subsequent special record date,
which date shall be at the earliest practicable date but in all events at least
five Business Days before the payment date, in each case at the rate provided
in the Securities and in Section 4.1 hereof. The Company shall, with the
consent of the Trustee, fix or cause to be fixed each such special record date
and payment date. At least 15 days before the special record date, the Company
(or the Trustee, in the name of and at the expense of the Company) shall mail
to Holders a notice that states the special record date, the related payment
date, and the amount of such interest to be paid.
ARTICLE III
REDEMPTION
Section 3.1 Notices to Trustee.
If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Section 3.7 hereof, it shall furnish to the
Trustee, at least 60 days but not more than 90 days before a redemption date,
an Officers' Certificate setting forth the Section of this Indenture pursuant
to which the redemption shall occur, the redemption date, the principal amount
of Securities to be redeemed, and the redemption price.
If the Company is required to make an offer to redeem
Securities pursuant to a Change in Control, it shall furnish to the Trustee,
within 60 days after a Change in Control, an Officers' Certificate setting
forth (a) the Section of this Indenture pursuant to which the redemption shall
occur, (b) the date of the Change in Control, (c) the Change in Control Payment
Date, (d) the principal amount of the Securities offered to be redeemed, (e) a
statement that a Change in Control has occurred and a description thereof, and
(f) a description of the procedures to be followed by Holders in order to have
their Securities repurchased.
If the Company is required to increase the interest rate on
the Securities pursuant to the Registration Rights Agreement, it shall furnish
to the Trustee not more than 15 days before the date such interest is due to be
paid an Officers' Certificate setting forth the rate at which interest on the
Securities is to be paid. The Company, or the Trustee, at the expense of the
Company, shall notify the Holders of the change in interest rate by notice sent
in accordance with Section 10.10(e) of this Indenture. Notwithstanding any
other provisions of this Indenture, the Trustee shall have no duty to inquire
as to whether the interest rate on the Securities has increased and shall not
be bound by the terms and conditions of the Registration Rights Agreement or
any other agreements or documents between the Holders and the Company.
<PAGE> 29
23
Section 3.2 Selection of Securities to be Redeemed.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed among the Holders in
accordance with any method the Trustee considers fair and appropriate (and in
such manner as complies with applicable legal and stock exchange requirements,
if any). In the event of partial redemption by lot, the particular Securities
to be redeemed shall be selected, unless otherwise provided herein, not less
than 15 nor more than 60 days before the redemption date by the Trustee from
the outstanding Securities not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Security
selected for partial redemption, the principal amount thereof to be redeemed.
Securities and portions of them selected shall be in amounts of $1,000 or whole
multiples thereof. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption.
Section 3.3 Notice of Redemption.
Subject to the provisions of Sections 4.10 and 4.11 hereof, at
least 15 days but not more than 60 days before a redemption date, the Company
shall mail a notice of redemption to each Holder whose Securities are to be
redeemed at its registered address. The notice shall identify the Securities
to be redeemed and shall state:
(a) the redemption date and that the right to convert such
Securities pursuant to Article 10 hereof shall be terminated on such
date;
(b) the redemption price;
(c) if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after
the redemption date upon surrender of such Security, a new Security of
the same series of Securities in principal amount equal to the
unredeemed portion will be issued;
(d) the name and address of the Paying Agent;
(e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Securities called for redemption
ceases to accrue on and after the redemption date;
<PAGE> 30
24
(g) the paragraph of the Securities and Section of this
Indenture pursuant to which the Securities called for redemption are
being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 60 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.4 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.3 hereof, Securities called for redemption become due and payable on the
redemption date at the redemption price. On and after the redemption date,
unless the Company defaults in the payment of the redemption price, interest
shall cease to accrue on the Securities or portions of them called for
redemption and all rights of Holders of such Securities shall terminate,
including without limitation the right to convert such Securities, except for
the right to receive the redemption price. Upon surrender to the Paying Agent,
such Holders shall be paid the redemption price plus accrued interest, if any,
to the redemption date, but interest installments whose maturity is on or
before the redemption date shall be payable to the Holder of record at the
close of business on the relevant record dates referred to in the Securities.
Section 3.5 Deposit of Redemption Price.
One Business Day before the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date. The Trustee or the Paying Agent shall return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess
of the amounts necessary to pay the redemption price of, and accrued interest
on, all Securities to be redeemed.
Interest on the Securities to be redeemed shall cease to
accrue on the applicable redemption date, whether or not such Securities are
presented for payment, if the Company provides money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
such date. If any Security called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such
<PAGE> 31
25
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Securities and in
Section 4.1 hereof.
Section 3.6 Securities Redeemed in Part.
Upon surrender of a Definitive Security that is redeemed in
part, the Company shall issue and the Trustee shall authenticate for the Holder
at the expense of the Company a new Security of the same series equal in
principal amount to the unredeemed portion of the Definitive Security
surrendered.
Section 3.7 Optional Redemption.
The Company may redeem at any time on or after September 15,
2000, all or any portion of the Securities outstanding at the following
redemption prices expressed as a percentage of the principal amount thereof, if
the Securities are redeemed during the 12-month period beginning September 15,
of the following years:
<PAGE> 32
26
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.86%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.14%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 101.43%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 100.71%
</TABLE>
Any redemption pursuant to this Section 3.7 shall be made, to
the extent applicable, pursuant to the provisions of Sections 3.1 through 3.6
hereof.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities.
The Company shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities.
Principal and interest shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary of the Company, holds at least
one Business Day before that date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal and
interest then due. Such Paying Agent shall return to the Company, no later
than five days following the date of payment, any money (including accrued
interest) that exceeds such amount of principal and interest paid on the
Securities.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate
on the Securities to the extent lawful. The Company shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law)
on overdue installments of interest (without regard to any applicable grace
period) at the same rate to the extent lawful.
<PAGE> 33
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Section 4.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, New
York, New York, an office or agency (which may be an office of the Trustee,
Registrar or co-Registrar) where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company shall fail
to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company also may from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, New York, New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.3.
Section 4.3 SEC Reports.
(a) So long as any of the Securities remain outstanding and
the Company is subject to the reporting requirements of the Exchange Act, the
Company shall file with the SEC and distribute to the Trustee for delivery to
the Holders of the Securities copies of the quarterly and annual reports
required to be filed with the SEC, and if the Company ceases to become subject
to the reporting requirements of the Exchange Act, the Company shall distribute
to the Trustee for delivery to the Holders of the Securities copies of the
quarterly and annual financial information that would have been required to be
filed with the SEC pursuant to the Exchange Act had the Company been subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act. All
such financial information shall include consolidated financial statements
(including footnotes) prepared in accordance with GAAP. Such annual financial
information shall also include an opinion thereon expressed by an independent
accounting firm of established national reputation. All such consolidated
financial statements shall be accompanied by a "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(b) The financial information to be distributed to Holders of
Securities shall be filed with the Trustee and shall be mailed by the Trustee
to the Holders at their addresses
<PAGE> 34
28
appearing in the register of Securities maintained by the Registrar, within 15
days after receipt of such financial information. The Company shall file such
financial information with the Trustee within 15 days after it is filed with
the SEC, if required, but in no event later than 105 days after the end of the
Company's fiscal year or later than 60 days after the end of each of the first
three quarters of each such fiscal year, in the case of quarterly reports;
provided, however, that the Trustee's only obligation is to mail the financial
information that it receives from the Company to the Holders and not to obtain
such information from the Company.
(c) The Company shall make such financial information
described in Section 4.3 (a) available to prospective purchasers of the Notes.
(d) The Company shall provide the Trustee with a sufficient
number of copies of all reports and other documents and information that the
Trustee may be required to deliver to the Holders under this Section 4.3.
Section 4.4 Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company during the preceding fiscal year has
been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge the Company has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge and what action is being taken or is proposed to
be taken with respect thereto) and that to the best of his knowledge no event
has occurred and remains in existence by reason of which payments on account of
the principal of or interest, if any, on the Securities are prohibited or if
such event has occurred, a description of the event and what action is being
taken or proposed to be taken with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
financial statements delivered pursuant to Section 4.3 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of Sections 4.1, 4.5, 4.7, 4.9, 4.10 or
4.11 hereof or of Article 5 of this Indenture or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such
<PAGE> 35
29
accountants shall not be liable directly or indirectly to any person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default or default in the performance of any
covenant, agreement or condition contained in this Indenture an Officers'
Certificate specifying such Default, Event of Default or default and what
action the Company is taking or proposes to take with respect thereto.
Section 4.5 Compliance with Laws; Taxes.
The Company shall, and shall cause each of its Subsidiaries
to, comply with all statutes, laws, ordinances or government rules and
regulations to which it is subject, noncompliance with which would materially
adversely affect the business, prospects, earnings, properties, assets or
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole.
The Company shall, and shall cause each of its Subsidiaries
to, pay before delinquency all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
Section 4.6 Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted to
the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
Section 4.7 Corporate Existence.
Subject to Sections 4.8 and Article 5 hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (a) its corporate existence in accordance with its
organizational documents (as the same may be amended from time to time) and (b)
its rights (charter and statutory), licenses and franchises; provided, however,
that the Company shall not be required to preserve any such right, license or
franchise, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in
<PAGE> 36
30
the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders.
Section 4.8 Liquidation.
The Board of Directors or the stockholders of the Company may
not adopt a plan of liquidation that provides for, contemplates or the
effectuation of which is preceded by (a) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company otherwise
than substantially as an entirety (Section 5.1 of this Indenture being the
Section hereof that governs any such sale, lease, conveyance or other
disposition substantially as an entirety) and (b) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and of the remaining assets of the Company to the holders of
Capital Stock of the Company, unless the Company, before making any liquidating
distribution pursuant to such plan, makes provision for the satisfaction of the
Company's Obligations hereunder and under the Securities as to the payment of
principal and premium thereon, if any, and interest. The Company shall be
deemed to make provision for such payments only if (x) the Company delivers in
trust to the Trustee or Paying Agent (other than the Company or its
Subsidiaries) money or U.S. Government Obligations maturing as to principal
and interest in such amounts and at such times as are sufficient without
consideration of any reinvestment of such interest to pay the principal of and
premium on, if any, and accrued interest on the Securities, or (y) there is an
express assumption and observance of all covenants and conditions to be
performed by the Company hereunder by the execution and delivery of a
supplemental indenture in form satisfactory to the Trustee by a Person that
acquires or will acquire (otherwise than pursuant to a lease) a portion of the
assets of the Company and which Person will have Consolidated Net Worth
(immediately after the acquisition) equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the acquisition and which is
organized and existing under the laws of the United States, any State thereof
or the District of Columbia; provided, however, that the Company shall not make
any liquidating distribution until after the Company shall have certified to
the Trustee pursuant to an Officers' Certificate at least five days before the
making of any liquidating distribution that it has complied with the provisions
of this Section 4.8 and that no Default or Event of Default then exists or
would occur as a result of any such liquidating distribution.
Section 4.9 Limitation on Dispositions of Assets.
The Company shall not sell, transfer or otherwise dispose of
all or substantially all of its properties or assets (including by way of a
sale and leaseback) except in accordance with the provisions of Section 5.1
hereof.
<PAGE> 37
31
Section 4.10 Change in Control.
If, at any time, (a) an event or series of events by which any
Person or Group of Persons shall, as a result of a tender or exchange offer,
open market purchase, privately negotiated purchase, merger, consolidation or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 50% or more of the combined voting power of the then
outstanding Voting Stock and warrants or options to acquire such Voting Stock,
calculated on a fully-diluted basis, of the Company, (b) the Company is merged
with or into another corporation with the effect that immediately after such
transaction the stockholders of the Company hold less than a majority of the
combined voting power of the then outstanding Voting Stock of the Person
surviving such transaction or, (c) the direct or indirect, sale, lease,
exchange or other transfer to any Person or Group of Persons of all or
substantially all of the assets of the Company (each a "Change in Control" and
the time of such Change in Control being referred to as the "Change in Control
Date"), then the Company shall notify the Holders in writing of such occurrence
and shall make an offer to purchase (as the same may be extended in accordance
with applicable law, the "Change in Control Offer") on a Business Day (the
"Change in Control Payment Date") not later than 60 days following each Change
in Control Date all then outstanding Securities at a purchase price equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon
to the Change in Control Payment Date, if any. The Change in Control Offer
shall be mailed by the Company not less than 30 days nor more than 45 days
before any Change in Control Payment Date to Holders of Securities at their
last registered address with a copy to the Trustee and the Paying Agent and
shall set forth (w) notice that a Change in Control has occurred and that each
Holder of Securities then outstanding has the right to require the Company to
repurchase, for cash, all or any portion (which is equal to $1,000 or a whole
multiple thereof) of such Holder's Securities at 100% of the principal amount
thereof plus accrued and unpaid interest thereon to the Change in Control
Payment Date, (x) the Change in Control Payment Date, (y) a description of the
Change in Control and (z) a description of the procedures to be followed by
such Holder in order to have its Securities repurchased. The Change in Control
Offer shall remain open for not less than 30 days, nor more than 45 days, and
until the close of business on any such Change in Control Payment Date. If the
Change in Control Payment Date is on or after an interest payment record date
and on or before the related Interest Payment Date, any accrued interest will
be paid to the person in whose name a Security is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender a Security pursuant to the Change in Control Offer.
The Company shall comply with Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable, in the event that a Change in Control
occurs and the Company is required to repurchase the Securities pursuant to
this Section 4.10.
<PAGE> 38
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On the Change in Control Payment Date, the Company shall (x)
accept for payment Securities or portions thereof tendered pursuant to the
Change in Control Offer, (y) deposit with the Paying Agent money sufficient to
pay the purchase price of all Securities or portions thereof so tendered and
(z) deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof tendered to the Company.
The Paying Agent shall promptly mail to the Holders of Securities so accepted
payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail to such Holders a new Security of the same
series equal in principal amount to any unpurchased portion of the Security
surrendered.
Section 4.11 Rule 144A Information Requirement.
The Company has agreed to furnish to the Holders or beneficial
holders of Notes and prospective purchasers of Notes designated by the holders
of Transfer Restricted Securities, upon their request, the information required
to be delivered pursuant to Rule 144(d)(4) under the Securities Act unless and
until such time as the Company has registered the Notes for resale under the
Securities Act.
ARTICLE V
SUCCESSORS
Section 5.1 When the Company May Merge, etc.
The Company will not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of its
properties or assets (determined on a consolidated basis for the Company and
its Subsidiaries taken as a whole), in one or more related transactions, to
another Person or entity (other than a merger between the Company and any
Wholly Owned Subsidiary of the Company) unless:
(a) the Company survives such merger or such Person is a
corporation organized and existing under the laws of the United States
of America, one of the states thereof or the District of Columbia, and
expressly assumes by supplemental indenture all of the obligations
under the Securities, the Indenture, the Registration Rights
Agreement, and all other agreements pertaining thereto,
(b) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing, and
<PAGE> 39
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(c) immediately after giving effect to such transaction, the
Consolidated Net Worth of the resulting, surviving corporation is not
less than that of the Company immediately before the transaction.
The Company shall deliver to the Trustee before the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel to the effect that such merger,
sale, assignment, transfer, lease, conveyance or other disposition and, if
applicable, such Supplemental Indenture, comply with this Indenture and all
conditions precedent to such merger, sale, assignment, transfer, lease,
conveyance or other disposition have been satisfied. The Trustee shall be
entitled to rely conclusively upon such Officers' Certificate and Opinion of
Counsel.
Section 5.2 Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, lease, conveyance or other disposition is made shall succeed
to, and be substituted for, and may exercise every right and power of the
Company under this Indenture with the same effect as if such successor person
had been named as the Company, herein; provided, however, that the Company
shall not be released or discharged from the obligation to pay the principal of
or interest on the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
The following shall constitute an "Event of Default":
(a) default in the payment of principal of, or premium, if
any, on, the Securities when due at maturity, upon repurchase, upon
acceleration or otherwise, including failure of the Company to
repurchase the Securities following a Change in Control and failure to
make any redemption payment when due;
(b) default in the payment of any installment of interest on
the Securities when due (including any interest payable in connection
with any redemption payment) and continuance of such Default for more
than 30 days;
<PAGE> 40
34
(c) default on any other Indebtedness of the Company or any
Subsidiary if either (i) such default results from the failure to pay
principal of, premium, if any, or interest on any such Indebtedness
when due in excess of $25,000,000, or (ii) as a result of such
default, the maturity of such Indebtedness has been accelerated before
its expected maturity, without such default and acceleration having
been rescinded or annulled within a period of 10 days, and the
principal amount of any other such Indebtedness in default, or the
maturity of which has been so accelerated, aggregates $25,000,000 or
more;
(d) default by the Company or any Subsidiary in the
performance, or the breach, of any other covenant or warranty of the
Company or such Subsidiary in this Indenture and the failure to remedy
such Default within a period of 60 days after written notice thereof
to the Company from the Trustee or to the Company and the Trustee from
the Holders of 25% in principal amount of the outstanding Securities;
(e) the entry by a court of one or more judgments or orders
against the Company or any Subsidiary in an aggregate amount in excess
of $25,000,000 that are not covered by insurance written by third
parties that has not been vacated, discharged, satisfied or stayed
pending appeal within 60 days after the entry thereof;
(f) any act or acts by the Company or its Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
(i) commencing a voluntary case,
(ii) consenting to the entry of an order for
relief against it in an involuntary case,
(iii) consenting to the appointment of a Custodian
of it or for all or substantially all of its
property,
(iv) making a general assignment for the benefit
of its creditors, or
(v) which results in the Company or its
Subsidiaries generally not paying its debts as they
become due; or
(g) the entry of an order or decree by a court of competent
jurisdiction under any Bankruptcy Law that:
(i) is for relief against the Company or any
Subsidiary in an involuntary case,
<PAGE> 41
35
(ii) appoints a Custodian of the Company or any
Subsidiary or for all or substantially all of the
property of the Company or any Subsidiary, or
(iii) orders the liquidation of the Company or any
Subsidiary,
in each case, if such order or decree remains unstayed and in effect for 120
consecutive days.
The term "Bankruptcy Law" means title 11 of the United States
Code or any similar federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
Section 6.2 Acceleration.
If an Event of Default (other than an Event of Default
specified in clause (f) or (g) of Section 6.1) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the then outstanding Securities by notice to the Company and the
Trustee, may declare the unpaid principal of and any accrued interest on all
the Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately. If an Event of Default
specified in clause (f) or (g) of Section 6.1 occurs, such an amount shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder. The Holders of a majority
in principal amount of the then outstanding Securities by written notice to the
Trustee may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing Events of
Default (except nonpayment of principal or interest that has become due solely
because of the acceleration) have been cured or waived.
Section 6.3 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal or interest
on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy occurring upon an Event of Default shall not impair the right
or remedy or constitute a waiver of or acquiescence in the Event of Default.
All remedies are cumulative to the extent permitted by law.
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Section 6.4 Waiver of Past Defaults.
Holders of a majority in principal amount of the then
outstanding Securities by notice to the Trustee may waive an existing Default
or Event of Default and its consequences, except a continuing Default or Event
of Default in the payment of the principal or interest on any Security held by
a non-consenting Holder. Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Indenture. No such waiver shall extend to any
subsequent or other Default or impair any right consequent on any subsequent or
other Default.
Section 6.5 Control by Majority.
The Holders of a majority in principal amount of the
outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on such Trustee; provided that (a) such
direction is not in conflict with any rule of law or with this Indenture, (b)
the Trustee may take any other action it deems proper that is not inconsistent
with such direction and (c) such Holders have offered to the Trustee indemnity
as provided in Section 7.1(e).
Section 6.6 Limitation on Suits.
No Holder of any of the Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee or for any other
remedy under this Indenture, unless:
(a) such Holder has previously given notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of
the outstanding Securities have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own
name as Trustee under this Indenture;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
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(e) no direction inconsistent with such written request has
been given to the Trustee during such 30- day period by the Holders of
a majority in principal amount of the outstanding Securities.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over another Holder.
Section 6.7 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal and interest
on the Security, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder.
Section 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company or any other
obligor for the whole amount of principal and interest remaining unpaid on the
Securities and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and if the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.7 hereof out of the
estate in any such proceeding, shall be denied for any reason, payment of the
same shall
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be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders of the
Securities may be entitled to receive in such proceeding whether in liquidation
or under any plan of reorganization or arrangement or otherwise. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and
the costs and expenses of collection.
Second: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7, or a suit by Holders of more than 10% in
principal amount of the then outstanding Securities.
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ARTICLE VII
TRUSTEE
Section 7.1 Duties of a Trustee.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture, and the
Trustee undertakes to perform only those duties that are
specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this
Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture;
provided, however, that the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section 7.1;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section
6.5.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to the provisions of this Section 7.1.
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(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee shall have no responsibility for making any
calculations hereunder, including, without limitation, the amount of interest
owing on the Securities under any of the provisions of the Registration Rights
Agreement. The Company shall deliver to the Trustee an Officers' Certificate
specifying any additional interest due under the Registration Rights Agreement
on or before the 15th day prior to an interest payment date.
Section 7.2 Rights of Trustee.
(a) The Trustee may rely and shall be fully protected in
relying upon any document believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not investigate any fact
or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed and
monitored with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
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Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or
any Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights; provided, however, the
Trustee is subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture, the Securities or any documents relating to the
Securities. It shall not be accountable for the Company's use of the proceeds
from the Securities or any money paid to the Company or upon the Company's
discretion under any provision hereof. It shall not be responsible for the use
or application of any money received by any Paying Agent other than the Trustee
and it shall not be responsible for any statement or recital herein or any
statement in the Securities or any other document in connection with the sale
of the Securities or pursuant to this Indenture, other than its certificate of
authentication.
Section 7.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders a notice of
the Default or Event of Default within 90 days after it occurs. A Default or
an Event of Default shall not be considered known to the Trustee unless it is a
Default or Event of Default under Section 6.1(a) or (b) or the Trustee shall
have received notice thereof, in accordance with this Indenture, from the
Company or from the Holders of a majority in principal amount of the
outstanding Securities, and in the absence of such notice the Trustee may
conclusively assume there is no Default or Event of Default. Except in the case
of a Default or Event of Default in payment of principal or interest on any
Security (including the failure to make a mandatory redemption pursuant
hereto), the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice
is in the interests of Holders.
Section 7.6 Reports by Trustee to Holders.
Within 60 days after each August 1 beginning with the August 1
following the date hereof, the Trustee shall mail to Holders a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the 12 months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(n). The Trustee shall also transmit by mail
all reports as required by TIA Section 313(c).
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At the time of its mailing to Holders, a copy of each report
sent to Holders shall be filed with the SEC and each stock exchange on which
the Securities are listed. The Company shall promptly notify the Trustee when
the Securities are listed on any stock exchange.
Section 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, advances and expenses
incurred or made by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
except as set forth in the next paragraph. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. The Company
shall defend the claim, and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel, and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien with priority over the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Securities. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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Section 7.8 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.8.
The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Securities may remove the Trustee by
so notifying the Trustee and the Company. The Company may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who had
been a Holder for at least six months fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all of the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as
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Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.7.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the
Company's obligations under Section 7.7 hereof shall continue for the benefit
of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trustee power, shall be subject to supervision or examination by
federal or state authority and shall have a combined capital and surplus of at
least $10 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1). The Trustee is subject to TIA Section
310(b), including the optional provision permitted by the second sentence of
TIA Section 310(b)(9).
Section 7.11 Preferential Collection of Claims Against
Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or has been removed shall be subject to TIA Section 311(a) to the
extent indicated therein.
Section 7.12 No Obligation of the Trustee.
(a) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security or a participant in the Depository or
other Person with respect to the accuracy of the records of the Depository or
its nominee or of any participant, with respect to any ownership interest in
the Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depository) of any notice
(including any notice of redemption) or the payment of any amount, under or
with respect to such Securities. All notices and communications to be given to
the Holder and all payments to be made to Holders under the Securities shall be
given or made only to or upon the order of the registered Holders (which shall
be the Depository or its nominee in the case of a Global Security). The rights
of
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beneficial owners in any Global Security may only be exercised through the
Depository subject to the Applicable Procedures. The Trustee may rely and
shall be fully protected in relying upon information furnished by the
Depository with respect to its members, participants and any beneficial owners.
(b) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under the Indenture or under applicable law with respect to any transfer of any
interest in any security (including any transfers between or among Depository
participants, members or beneficial owners in any Global Security) other than
to require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by, the
terms of the Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.1 Termination of Company's Obligation.
This Indenture shall cease to be of further effect (except
that the Company's obligations under Section 7.7 and 8.4, and the Company's,
Trustee's and Paying Agent's obligations under Section 8.3 shall survive) when
all outstanding Securities theretofore authenticated and issued have been
delivered (other than destroyed, lost or stolen Securities that have been
replaced or paid) to the Trustee for cancellation and the Company has paid all
sums payable by the Company under this Indenture. In addition, subject to the
conditions described below, at the Company's option, either (a) the Company
will be deemed to have been discharged from their obligations with respect to
the Securities on the 31st day after the applicable conditions set forth below
have been satisfied or (b) the Company shall cease to be under any obligation
to comply with Article 4 of this Indenture, at any time after the conditions
set forth below have been satisfied:
(i) the Company has deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders (A) money or (B) noncallable U.S. Government Obligations,
which through the payment of interest and principal in respect thereof
in accordance with their terms, will provide either (i) payment in
full of principal, premium on, if any, and interest on, the
outstanding Securities as of the date of such payment, or (II)
(without any reinvestment of such interest or principal), not later
than one day before the due date of any payment, money or (C) a
combination of (A) and (B), in an amount sufficient, in the
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opinion (with respect to (B) and (C)) of a nationally recognized firm
of independent public accountants expressed in a written certification
thereof delivered to the Trustee at or before the time of such
deposit, to pay and discharge each installment of principal of,
premium on, if any, and interest on, the outstanding Securities on the
dates such installments are due;
(ii) no Default or Event of Default has occurred and is
continuing on the date of such deposit or shall occur as a result of
such deposit, and such deposit shall not result in a breach or
violation of, or constitute a Default under, any other instrument to
which the Company is a party to or is bound, as evidenced to the
Trustee in an Officers' Certificate delivered to the Trustee
concurrently with such deposit;
(iii) the Company has paid or duly provided for payment of
all amounts then due or to become due to the Trustee pursuant to
Section 7.7 of the Indenture; and
(iv) the Company has delivered to the Trustee an Officers'
Certificate, stating that there has been compliance with all
conditions precedent provided for in the Indenture relating to the
satisfaction and discharge of this Indenture.
If the Company selects option (a) above, this Indenture shall
cease to be of further effect on the 31st day after the conditions set forth
above have been satisfied (except as provided in this paragraph), and the
Trustee, on demand of the Company, shall execute proper instruments
acknowledging confirmation of and discharge under this Indenture and the
Securities; provided, however, the Company's obligations in Sections 2.3, 2.4,
2.5, 2.6, 4.1, 4.6, 7.7, 7.8, 8.3 and 8.4, and the Trustee's and Paying Agent's
obligations in Section 8.3 shall survive until the Securities are no longer
outstanding. Thereafter, only the Company's obligations under Sections 7.7 and
8.4 and the Company's, Trustee's, and Paying Agent's obligations under Section
8.3 shall survive. If the Company elects option (b) above, the Company's
obligations under Article 4 hereunder shall terminate upon the satisfaction of
the conditions, and all other obligations shall survive until the Securities
are no longer outstanding. Thereafter, only the Company's obligations under
Sections 7.7 and 8.4 and the Company's, Trustee's and Paying Agent's
obligations under Section 8.3 above shall survive.
After such irrevocable deposit is made pursuant to this
Section 8.1 and satisfaction of the other conditions set forth herein, the
Trustee, upon request, shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified above.
In order to have money available on a payment date to pay
principal of or interest on the Securities, the U.S. Government Obligations
shall be payable as to principal or interest at
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least one Business Day before such payment date in such amounts as will provide
the necessary money. U.S. Government Obligations shall not be callable at the
issuer's option.
Section 8.2 Application of Trust Money.
The Trustee or a trustee satisfactory to the Trustee and the
Company shall hold in trust money or U.S. Government Obligations deposited
with it pursuant to Section 8.1. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal and interest on the
Securities.
Section 8.3 Repayment to Company.
To the extent permitted by applicable law, the Trustee and the
Paying Agent shall promptly pay to the Company upon written request any excess
money or securities held by them at any time in excess of amounts required to
pay principal of or interest on the Securities.
The Trustee and the Paying Agent shall pay to the Company upon
written request any money held by them for the payment of principal or interest
that remains unclaimed for one year after the date upon which such payment
shall have become due; provided, however, that the Company shall have either
caused notice of such payment to be mailed to each Holder entitled thereto no
less than 30 days before such repayment or within such period shall have
published such notice in a financial newspaper of widespread circulation
published in New York, New York. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
Section 8.4 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 8.2 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.1 until such time as the Trustee or Paying Agent is permitted to
apply all such money or U.S. Government Obligations in accordance with Section
8.2; provided, however, that if the Company has made any payment of interest on
or principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
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to receive such payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders.
The Company and the Trustee may amend this Indenture and the
Securities without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Section 5.1;
(c) to provide for uncertificated Securities in addition to
certificated Securities;
(d) to make any change that does not adversely affect the
legal rights hereunder of any Holder; and
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such Supplemental
Indenture and upon receipt by the Trustee of the documents described in Section
9.6 hereof, the Trustee shall join with the Company in the execution of any
Supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
Supplemental Indenture which affects its own rights, duties or immunities under
this Indenture or otherwise.
Section 9.2 With Consent of Holders.
Except as provided below in this Section 9.2, the Company and
the Trustee may amend this Indenture or the Securities with the written consent
of the Holders of at least a majority in principal amount of the then
outstanding Securities. The Holders of a majority in principal amount of the
Securities then outstanding may, or the Trustee with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities may,
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49
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Securities.
Upon the request of the Company, accompanied by a resolution
of its Board of Directors authorizing the execution of any such Supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.6 hereof, the Trustee shall
join with the Company in the execution of such Supplemental Indenture unless
such Supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such Supplemental
Indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such Supplemental Indenture or
waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in
principal amount of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities, provided, however, that without the consent of each Holder
affected, an amendment or waiver under this Section may not (with respect to
any Securities held by a non-consenting Holder):
(a) reduce the principal amount of Securities whose Holders
must consent to an amendment or waiver;
(b) reduce the rate of or change the time for payment of
interest, including default interest, on any Security;
(c) reduce the principal of or change the fixed maturity of
any Security or alter the optional or mandatory redemption provisions
or the price at which the Company shall offer to purchase such
Securities pursuant to Sections 3.7 and 4.10 hereof;
(d) make any Security payable in money other than that stated
in the Security;
(e) make any change in Section 6.4 or 6.7 hereof or in this
sentence of this Section 9.2; or
<PAGE> 56
50
(f) waive a Default in the payment of principal of, premium
or interest on, or redemption payment with respect to, any Security.
Section 9.3 Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall be
set forth in a Supplemental Indenture that complies with the TIA as then in
effect.
Section 9.4 Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
is not made on any Security; provided, however, that any such Holder or
subsequent Holder may revoke the consent as to his or her security if the
Trustee receives written notice of revocation before the date the waiver or
amendment becomes effective. An amendment or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
The Company may fix a record date for determining which Holders must
consent to such amendment or waiver. If the Company fixes a record date, the
record date shall be fixed at (a) the later of 30 days before the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee before such solicitation pursuant to Section 2.05, or
(b) such other date as the Company shall designate.
Section 9.5 Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities of the same series that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new
Security of the same series shall not affect the validity and effect of such
amendment or waiver.
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Section 9.6 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or Supplemental Indenture
authorized pursuant to this Article 9 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If it
does, the Trustee may, but need not, sign it. In signing or refusing to sign
such amendment or Supplemental Indenture, the Trustee shall be entitled to
receive, and, subject to Section 7.1, shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel as conclusive evidence that
such amendment or Supplemental Indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms. The Company may not
sign an amendment or Supplemental Indenture until the Board of Directors
approves it.
ARTICLE X
CONVERSION
Section 10.1 Right to Convert.
(a) Subject to and upon compliance with the provisions of
this Indenture, at any time on or after 270 days after the Issue Date and on or
before maturity, each Holder shall have the right, at its option, to convert
the principal amount of any Security, or any portion of such principal amount
which is $1,000 or a whole multiple thereof, into, at the Company's option,
either (i) cash, payable by the Company to the Paying Agent for the benefit of
such Holder in an amount equal to the Current Market Price, as of the
conversion date, of the Common Stock to which the Securities would otherwise be
converted, or (ii) that number of fully paid and nonassessable shares of Common
Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Security or portion thereof surrendered for conversion
by the conversion price in effect at such time, or (iii) a combination of cash
and Common Stock in proportions determined by the Company in its sole
discretion; provided, however, that the Company's option to convert Securities
into cash under Section 10.1(a)(i) or into a combination of cash and Common
Stock under Section 10.1(a)(iii), shall terminate at the close of business on
the date the Company's charter is amended to increase the number of shares of
authorized Common Stock to at least that number of shares sufficient to reserve
for the conversion of all the Notes.
(b) Notwithstanding anything in this Section 10.1 to the
contrary, the right to convert with respect to any Security or portion of a
Security that shall be called for redemption or delivered for repurchase, shall
terminate at the close of business on the date fixed for redemption of such
Security or portion of a Security on the second trading day preceding a
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52
Change in Control Payment Date, as the case may be, unless the Company shall
default in payment due upon redemption or repurchase thereof.
(c) A holder of Securities is not entitled to any rights of a
holder of Common Stock until such holder has converted his Securities to Common
Stock, and only to the extent such Securities are deemed to have been converted
to Common Stock under this Article 10.
Section 10.2 Exercise of Conversion Privilege; Issuance of
Common Stock on Conversion; No Adjustment for Interest or Dividends.
In order to exercise the conversion privilege, the Holder of
any Security to be converted in whole or in part shall surrender such Security,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 2.3, accompanied by the funds, if any, required by the last paragraph
of this Section 10.2, and shall give written notice of conversion in the form
provided on the Securities (or such other notice that is acceptable to the
Company) to the Company at such office or agency that the Holder elects to
convert such Security or the portion thereof specified in such notice, stating
the name or names (with address) in which the certificate or certificates for
shares of Common Stock, if any, that shall be issuable on such conversion shall
be issued. So long as the Company's option to convert Securities into cash or a
combination of cash and Common Stock exists, then within five business days
after receipt of such Holder's notice of conversion, the Company shall notify
such Holder of the Company's election to convert the Securities to cash or,
Common Stock, or a combination of cash and Common Stock. Holder shall then
deliver to the Company any transfer taxes required pursuant to Section 10.7.
Each Security surrendered for conversion shall, unless the shares issuable on
conversion are to be issued in the same name as the registration under such
Security, be duly endorsed by, or be accompanied by instruments of transfer in
form satisfactory to the Company duly executed by, the Holder or his duly
authorized attorney. Holder may not withdraw its conversion notice after
receipt of the Company's notice of its election regarding conversion.
As promptly as practicable after the surrender of such
Security and the receipt of such notice and funds, if any, as aforesaid, (a) if
the conversion is for Common Stock, the Company shall issue and shall deliver
at such office or agency to such Holder, or on his written order, (i) a
certificate or certificates for the number of full shares issuable upon the
conversion of such Security or portion thereof in accordance with the
provisions of this Article, and (ii) a check or cash in respect of any
fractional interest in respect of a share of Common Stock arising upon such
conversion as provided in Section 10.3, or (b) if the conversion is for cash or
a combination of cash and Common Stock, the Company shall, one business day
after its notice to Holder of the Company's election regarding conversion,
deposit with Paying Agent money sufficient to pay the conversion price for, and
all accrued interest on, the Securities being converted to cash. In case any
Security of a denomination greater than $1,000 shall be
<PAGE> 59
53
surrendered for partial conversion, and subject to Article 2, the Company shall
execute and the Trustee shall authenticate and deliver to or upon the written
order of the holder of the Note so surrendered, without charge to him, a new
Security or Securities in authorized denominations in an aggregate principal
amount equal to the unconverted portion of the surrendered Security.
Each conversion shall be deemed to have been effected on the
date on which such Security shall have been surrendered (accompanied by the
funds, if any, required by the last paragraph of this Section 10.2) and such
notice shall have been received by the Company, as aforesaid, and, if the
conversion is for Common Stock, the person in whose name any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become on said date the holder of record of the shares
represented thereby; provided, however, that any such surrender on any date
when the stock transfer books of the Company shall be closed shall constitute
the person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next day on which such stock transfer books are
open, but such conversion shall be at the conversion price in effect on the
date upon which such Security shall have been surrendered.
Any Security or portion thereof surrendered for conversion
during the period from the close of business on the record date for any
interest payment date to the opening of business on such interest payment date
shall (unless such Security or portion thereof being converted shall have been
called for redemption on a date in such period) be accompanied by payment, in
funds acceptable to the Company, of an amount equal to the interest otherwise
payable on such interest payment date on the principal amount being converted;
provided, however, that no such payment need be made if there shall exist at
the time of conversion a default in the payment of interest on the Securities.
An amount equal to such payment shall be paid by the Company on such interest
payment date to the holder of such Security at the close of business on such
record date; provided, however, that if the Company shall default in the
payment of interest on such interest payment date, such amount shall be paid to
the person who made such required payment. Except as provided above in this
Section 10.2, no adjustment shall be made for interest accrued on any Security
converted or for dividends on any shares issued upon the conversion of such
Security as provided in this Article 10. If any Security or portion thereof
which has been called for redemption on a date during the period from the close
of business on the record date for any interest payment date to the opening of
business on such interest payment date is surrendered for conversion during
such period, no interest shall be payable to the holder of such Security on
account of such Security or portion thereof.
<PAGE> 60
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Section 10.3 Cash Payments in Lieu of Fractional Shares.
No fractional shares of Common Stock or scrip representing
fractional shares shall be issued upon conversion of Securities. If more than
one Security shall be surrendered for conversion at one time by the same
holder, the number of full shares which shall be issuable upon conversion shall
be computed on the basis of the aggregate principal amount of the Securities
(or specified portions thereof to the extent permitted hereby) so surrendered.
If any fractional share of Common Stock would be issuable upon the conversion
of any Security or Securities, the Company shall make an adjustment therefor in
cash at the current market value thereof. The current market value of a share
of Common Stock shall be the Closing Price on the day (that is not a Legal
Holiday as defined in Section 12.8) before the day on which the Securities (or
specified portions thereof) are deemed to have been converted and such Closing
Price shall be determined as provided in subsection (f) of Section 10.5.
Section 10.4 Conversion Price.
The conversion price shall be as specified in the form of
Security hereinabove set forth, subject to adjustment as provided in this
Article.
Section 10.5 Adjustment of Conversion Price.
(a) In case the Company shall (i) pay a dividend, or make a
distribution, in shares of its Common Stock on its Common Stock, (ii) subdivide
its outstanding Common Stock into a greater number of shares, 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 Security thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock of the Company that he would have
owned or have been entitled to receive after the happening of any of the events
described above had such Security been converted immediately before 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 subdivision or combination.
(b) 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 at the record date for the determination of stockholders entitled
to receive such rights or warrants, except as provided in subsection (f) below,
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 before 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
<PAGE> 61
55
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 (determined by multiplying the total number of shares by
the exercise price of such rights or warrants and dividing the product so
obtained by the 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. Except as provided in subsection
(f) below, 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 of
Common stock, 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 of the Company
whose determination shall be conclusive and described in a certificate filed
with the Trustee. Upon the expiration of any right or warrant to purchase
Common Stock the issuance of which resulted in an adjustment in the conversion
price pursuant to this subsection (b), if any such right or warrant shall
expire and shall not have been exercised, the conversion price shall
immediately upon such expiration be recomputed to the conversion price which
would have been in effect had the adjustment of the conversion price made upon
the issuance of such rights or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights or warrants actually exercised.
(c) In case the Company shall distribute to all holders of
its Common Stock any shares of Capital Stock of the Company (other than Common
Stock) or evidences of its indebtedness or assets (excluding cash dividends or
other distributions to the extent paid from retained earnings of the Company)
or rights or warrants to subscribe for or purchase any of its securities
(excluding those referred to in subsection (b) above), then, except as provided
in subsection (f) below, 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 before the date of such distribution by
a fraction of which the numerator shall be the Current Market Price per share
(as defined in subsection (f) below) of the Common Stock on the record date
mentioned below less the fair market value on such record date (as determined
by the Board of Directors of the Company, whose determination shall be
conclusive, and described in a certificate filed with the Trustee) of the
portion of the Capital Stock or 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 market price per share (as defined in
subsection (f) below) of the Common Stock on such record date. Such adjustment
shall become effective immediately after
<PAGE> 62
56
the record date for the determination of stockholders entitled to received such
distribution, except as provided in subsection (f) below.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash in an aggregate amount that,
combined together with (1) the aggregate amount of any other distributions to
all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution and in respect of which no
adjustment pursuant to this paragraph (d) has been made and (2) the aggregate
of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any of its Subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to paragraph (e) of
this Section has been made, exceeds 10% of the product of the Current Market
Price per share of the Common Stock on the date for the determination of
holders of shares of Common Stock entitled to receive such distribution times
the number of shares of Common Stock outstanding on such date, then, and in
each such case, immediately after the close of business on such date for
determination, the conversion price shall be reduced so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately before the close of business on the date fixed for determination of
the stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the excess of such combined amount over such 10% and (y)
the number of shares of Common Stock outstanding on such date for determination
and (ii) the denominator of which shall be equal to the Current Market Price
per share of the Common Stock on such date for determination.
(e) In case a tender offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender offer (as amended at the time of the expiration thereof) shall require
the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchase Shares (as defined
below) of an aggregate consideration having a fair market value (as determined
by the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) that combined together with (1) the aggregate
of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) as of the expiration of such tender offer, of consideration payable
in respect of any other tender offer, by the Company or any Subsidiary for all
or any portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this paragraph (e) has been made and (2) the aggregate amount of any
distributions to all holders of the Company's Common Stock made exclusively in
cash within 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to
<PAGE> 63
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paragraph (d) of this Section has been made, exceeds 10% of the product of the
Current Market Price per share of the Common Stock as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately before the opening of business on the day after the date of
the Expiration Time, the conversion price shall be adjusted so that the same
shall equal the price determined by multiplying the conversion price in effect
immediately before close of business on the date of the Expiration Time by a
fraction (i) the numerator of which shall be equal to (A) the product of (1)
the Current Market Price per share of the Common Stock on the date of the
Expiration Time and (2) the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, less (B) the amount of
cash plus the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender offer) of Purchased Shares, and
(ii) the denominator of which shall be equal to the product of (A) the Current
Market Price per share of the Common Stock as of the Expiration Time and (B)
the number of shares of Common Stock outstanding (including any tendered
shares) as of the Expiration Time less the number of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted up to any such maximum, being referred to as the "Purchased Shares").
(f) 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 (f) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
10 shall be made by the Company and 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
10.5 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 10.5, 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 a distribution of securities convertible into
or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
(g) Whenever the conversion price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an Officers' Certificate setting forth the
conversion price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
conversion price setting forth the adjusted conversion price and the date on
which such adjustment becomes effective and shall mail or cause to be mailed
such notice of such adjustment of the conversion price to the Holder of each
Security at his last address appearing on the Security register provided for in
Section 2.3 of this Indenture.
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(h) In any case in which this Section 10.5 provides that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to the
Holder of any Security converted after such record 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 10.3.
Section 10.6 Effect of Reclassification, Consolidation,
Merger or Sale.
If any of the following events occur, namely (i) any
reclassification or change of outstanding shares of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), (ii) any
consolidation, merger or combination of the Company with another corporation as
a result of which holders of Common Stock shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock, or (iii) any sale or conveyance of the
properties and assets of the Company as, or substantially as, an entirety to
any other corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for such Common Stock shall occur, then
the Company or the successor or purchasing corporation, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall conform to
the TIA as in force at the date of execution of such supplemental indenture)
providing that each Security shall be convertible into the kind and amount of
shares of stock and other securities or property or assets (including cash)
receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance by a holder of a number of shares of Common
Stock issuable upon conversion of such Securities immediately before such
reclassification, change, consolidation, merger, combination, sale or
conveyance. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article.
The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder of Securities, at his
address appearing on the Security register provided for in Section 2.3 of this
Indenture.
The above provisions of this Section 10.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
<PAGE> 65
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Section 10.7 Taxes on Shares Issued.
The issue of stock certificates on conversions of Securities
shall be made without charge to the converting Holder of Securities for any tax
in respect of the issue thereof. 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 stock in any name other than that of the Holder of any
Security converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has
been paid.
Section 10.8 Reservation of Shares; Shares to be Fully Paid;
Compliance with Governmental Requirements; Listing of Common Stock.
The Company shall use its best efforts, including asking its
stockholders to authorize additional Common Stock to provide, free from
preemptive rights, out of its authorized but unissued shares or shares held in
treasury, sufficient shares of Common Stock to provide for the conversion of
the Securities from time to time as such Securities are presented for
conversion.
Before taking any action which would cause an adjustment
reducing the conversion price below the then par value, if any, of the shares
of Common Stock issuable upon conversion of the Securities, the Company will
take all corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue shares of
such Common Stock at such adjusted conversion price.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Securities will upon issue be fully paid and
nonassessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.
The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of Securities hereunder require
registration with or approval of any governmental authority under any Federal
or State law before such shares may be validly issued upon conversion, the
Company will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be.
The Company further covenants that if at any time Common Stock
shall be listed on the American Stock Exchange or any other national securities
exchange the Company will, if permitted by the rules of such exchange, list and
keep listed so long as the Common Stock shall be so listed on such exchange,
all Common Stock issuable upon conversion of the Securities.
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Section 10.9 Responsibility of Trustee.
The Trustee and any other conversion agent shall not at any
time be under any duty or responsibility to any Holder of Securities to
determine whether any facts exist which may require any adjustment of the
conversion price or other adjustment or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, herein or in any supplemental indenture provided to be employed, in
making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, which may at any
time be issued or delivered upon the conversion of any Security; and the
Trustee and any other conversion agent make no representations with respect
thereto. Subject to the provisions of Section 7.1, neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article 10. Without limiting the
generality of the foregoing, neither the Trustee nor any conversion agent shall
be under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 10.6
relating either to the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders of Securities upon the
conversion of their Securities after any event referred to in Section 10.6 or
to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.1, may accept as conclusive evidence of the correctness
of any such provisions, and shall be protected in relying upon, the Officers'
Certificate (which the Company shall be obligated to file with the Trustee
before the execution of any such supplemental indenture) with respect thereto.
Section 10.10 Notice to Holders Before Certain Actions.
In case:
(a) the Company shall declare a dividend (or any
other distribution) on its Common Stock (other 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 share of any class or any other rights or warrants; or
(c) of any reclassification of the Common Stock of
the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value
to no par value, or from no par value to par value), or of any
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consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) of an increase in the interest rate on the
Securities pursuant to the Registration Rights Agreement,
the Company shall cause to be filed with the Trustee and to be mailed to each
Holder of Securities at his address appearing on the Securities Register
provided for in Section 2.3 of this Indenture, as promptly as possible but in
any event at least fifteen days before the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights, or, if a record is not to
be taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or
occurring and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of
such dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up.
ARTICLE XI
SUBORDINATION
Section 11.1 Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Security
agrees, that the indebtedness evidenced by the Securities, and any guarantee of
that indebtedness, is subordinated in right of payment, to the extent and in
the manner provided in this Article, to the prior payment in full of all Senior
Indebtedness, and that the subordination is for the benefit of the holders of
Senior Indebtedness.
Section 11.2 Certain Definitions.
"Senior Indebtedness" means:
<PAGE> 68
62
(a) the principal of, interest (including, to the extent
permitted by applicable law, interest on or after the commencement of
a proceeding referred to in clauses (f) or (g) of Section 6.1 whether
or not representing an allowed claim in such proceeding) and premium,
if any, on and any other amounts owing with respect to (i) any
indebtedness of the Company, now or hereafter outstanding, in respect
of borrowed money (other than the Securities and the Existing
Debentures), (ii) any indebtedness of the Company, now or hereafter
outstanding (other than the Securities and the Existing Debentures),
evidenced by a bond, note, debenture, capitalized lease, letter of
credit or other similar instrument, (iii) any other written obligation
of the Company, now or hereafter outstanding, to pay money issued or
assumed as all or part of the consideration for the acquisition of
property, assets or securities, including without limitation, interest
rate swap agreements, currency hedging obligations, hedging
obligations with respect to the purchase or sale of oil and gas, and
any other hedging agreement entered into in the ordinary course of
business and (iv) any guaranty or endorsement (other than for
collection or deposit in the ordinary course of business) or discount
with recourse of, or other agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire, to supply or advance funds
or to become liable with respect to (directly or indirectly), any
indebtedness or obligation of any person of the type referred to in
the preceding subclauses (i), (ii) and(iii) now or hereafter
outstanding; and
(b) any refundings, refinancings, renewals or extensions of
any indebtedness or other obligation described in clause (a) of this
Section 11.2.
Notwithstanding the foregoing (i) if, by the terms of the instrument creating
or evidencing any indebtedness or obligation referred to in clauses (a) or (b)
above, it is expressly provided that such indebtedness or obligation is not
senior in right of payment to the Securities, such indebtedness or obligation
shall not be included as Senior Indebtedness, and (ii) the Notes shall be, pari
passu, in right of payment with the Existing Debentures, except that the
Existing Debentures have the benefit of guarantees by the Company's
Subsidiaries.
"Representative" means the indenture trustee or other trustee,
agent or representative for an issue of Senior Indebtedness.
<PAGE> 69
63
Section 11.3 Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a
liquidation, dissolution or winding up of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(1) holders of Senior Indebtedness shall be entitled
to receive payment in full, in cash or in a manner
satisfactory to the holders of such Senior Indebtedness, of
all Senior Indebtedness before Holders shall be entitled to
receive, from the Company or from any guarantor of the
Obligations under this Indenture and the Notes, any payments
of principal of or premium, if any, or interest on Securities;
and
(2) until the Senior Indebtedness is paid in full in
cash or in a manner satisfactory to the holders of such Senior
Indebtedness, any distribution to which Holders would be
entitled but for this Article shall be made to holders of
Senior Indebtedness as their interest may appear, except that
Holders may receive securities that are subordinated to Senior
Indebtedness to at least the same extent as the Securities.
A distribution may consist of cash, securities or other
property.
Section 11.4 Company Not to Make Payments with Respect to
Securities in Certain Circumstances.
(a) Upon the maturity of any Senior Indebtedness by lapse of
time, acceleration or otherwise, all principal thereof, premium, if any, and
interest thereon and any other amounts owing in respect thereof shall first be
paid in full, or such payment duly provided for in cash or in a manner
satisfactory to the holders of such Senior Indebtedness, before any payment is
made on account of the principal of or premium, if any, or interest on the
Securities or to acquire any of the Securities.
(b) Upon the happening of an event of default (or if any
event of default would result upon any payment upon or with respect to the
Securities) with respect to any Senior Indebtedness as such event of default is
defined therein or in the instrument under which it is outstanding, permitting
holders to accelerate the maturity thereof, and, if the default is other than
default in payment of the principal of, premium, if any, or interest on or any
other amount owing in respect of such Senior Indebtedness, upon written notice
thereof given to the Company and the Trustee by the holders of Senior
Indebtedness or their Representative, then, unless such an event of default
shall have been cured or waived or shall have ceased to exist, no payment shall
be made
<PAGE> 70
64
by the Company or any guarantor with respect to the principal of or premium, if
any, or interest on the Securities or to acquire any of the Securities.
Section 11.5 Acceleration of Securities.
If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.
Section 11.6 When Distribution Must Be Paid Over.
If a distribution is made to Holders that, because of this
Article 11, should not have been made to them, the Holders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness and pay
it over to them as their interests may appear.
Section 11.7 Notice by Company.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of principal
of or premium, if any, or interest on the Securities to violate this Article
11.
Section 11.8 Subrogation.
After all Senior Indebtedness is paid in full and until the
Securities are paid in full, Holders shall be subrogated to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
have been applied to the payment of Senior Indebtedness. A distribution made
under this Article 11 to holders of Senior Indebtedness which otherwise would
have been made to Holders is not, as between the Company and Holders, a payment
by the Company on Senior Indebtedness.
Section 11.9 Relative Rights.
This Article 11 defines the relative rights of Holders and
holders of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and premium, if any, and interest on the Securities in
accordance with their terms;
<PAGE> 71
65
(2) affect the relative rights of Holders and creditors of
the Company, other than holders of Senior Indebtedness and any
guarantors of the Obligation under this Indenture and the Notes; or
(3) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness to receive distributions otherwise payable to
Holders.
If the Company fails because of this Article 11 to pay
principal of or premium, if any, or interest on a Security on the due date,
such failure shall nevertheless be deemed a Default.
Section 11.10 Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce the
subordination of the indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
the terms of this Indenture.
Section 11.11 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative.
Section 11.12 Rights of Trustee and Paying Agent.
Notwithstanding any provisions of this Indenture to the
contrary, the Trustee and any Paying Agent may continue to make payments on the
Securities and shall not at any time be charged with knowledge of the existence
of any facts which would prohibit the making of such payments until it receives
written notice (received by a Responsible Officer, in the case of the Trustee)
reasonably satisfactory to it that payments may not be made under this Article
11 and, before the receipt of any such notice, the Trustee, subject to the
provisions of Article 7, and any agent shall be entitled to assume conclusively
that no such facts exist. The Company, an Agent, a Representative or a holder
of Senior Indebtedness may give the notice. If an issue of Senior Indebtedness
has a Representative, only the Representative (or any Representative, if more
than one) may give the notice with respect to such Senior Indebtedness.
The Trustee shall be entitled to rely on the delivery to it of
a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a Representative) to establish that such notice has been given
by a holder of Senior Indebtedness (or a Representative), and shall be entitled
to rely on any written notice by a Person representing himself to be a holder
<PAGE> 72
66
of Senior Indebtedness to the effect that such issue of Senior Indebtedness has
no Representative.
Any deposit of moneys by the Company with the Trustee or any
Paying Agent (whether or not in trust) for the payment of the principal of or
premium, if any, or interest on, or payment on account of Change in Control, if
any, of, any Securities shall be subject to the provisions of this Article 11,
except that if, at least three business days before the date on which by the
terms of this Indenture any such moneys may become payable for any purpose
(including, without limitation, the payment of principal of or premium, if any,
or interest on any Security), the Trustee shall not have received with respect
to such moneys the notice provided for in this Section 11.12, then the Trustee
shall have full power and authority to receive such moneys and to apply the
same to the purpose for which they were received and shall not be affected by
any notice to the contrary which may be received by it within three business
days before or on or after such date. This Section 11.12 shall be construed
solely for the benefit of the Trustee and Paying Agent and shall not otherwise
affect the rights of holders of Senior Indebtedness. If the Trustee determines
in good faith that further evidence is required with respect to the right of
any Person as holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 11, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of the Senior Indebtedness held by such Person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article 11, and, if
such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
payment.
The Trustee shall not be deemed to owe any fiduciary duty to
holders of Senior Indebtedness by virtue of the provisions of this Article 11.
The Trustee's responsibilities to the holders of Senior Indebtedness are
limited to those set forth in this Article 11, and no implied covenants or
obligations shall be read into this Indenture. The Trustee shall not become
liable to the holders of Senior Indebtedness if it makes a payment prohibited
by this Article 11 in good faith.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any agent may do the same with like rights.
Section 11.13 Effectuation of Subordination by Trustee.
Each Holder of Securities, by acceptance thereof, authorizes
and directs the Trustee on his behalf to take such action as may be necessary
or appropriate to effect the subordination
<PAGE> 73
67
provided in this Article 11 and appoints the Trustee his attorney-in-fact for
any and all such purposes.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318 (c), the imposed duties
shall control.
Section 12.2 Notices.
Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
Attention: Francis D. John
Telecopier No.: (732) 247-5148
With a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Attention: Samuel N. Allen
Telecopier No.: (713) 228-1331
<PAGE> 74
68
If to the Trustee:
American Stock Transfer & Trust Company
40 Wall Street
46th Floor
New York, New York 10005
Attention: Executive Vice President
Telecopier No.: (718) 236-4558
With a copy to:
Herbert J. Lemmer
American Stock Transfer & Trust Company
6201 15th Avenue, 3rd Floor
Brooklyn, New York 11219
Telecopier No.: (718) 331-1552
The Company or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee at the same time.
<PAGE> 75
69
Section 12.3 Communication to Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any anyone else shall
have the protection of TIA Section 312(c).
Section 12.4 Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall, upon request,
furnish to the Trustee an Officer's Certificate and Opinion of Counsel in form
and substance reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 13.5) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with.
Section 12.5 Statements Required in Certificate.
Each certificate with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a) (4)) shall include:
(a) a statement that the person making such certificate has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate are based;
(c) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
<PAGE> 76
70
Section 12.6 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 12.7 Additional Rights of Holders of Transfer
Restricted Securities.
In addition to the rights provided to Holders of Securities
under this Indenture, Holders of Transferred Restricted Securities shall have
all the rights set forth in the Registration Rights Agreement and certain other
agreements executed and delivered in connection herewith.
Section 12.8 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York, New York, or at a place of payment are
authorized or obligated by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
Section 12.9 No Recourse Against Others.
No past, present or future director, officer, employee, agent,
manager, stockholder or other Affiliate of the Company shall have any liability
for any obligations of the Company under the Securities, the Indenture, or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability.
Section 12.10 Duplicate Originals.
The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.
<PAGE> 77
71
Section 12.11 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
Section 12.12 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 12.13 Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 12.14 Severability.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 12.15 Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 12.16 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
[SIGNATURE PAGES FOLLOW]
<PAGE> 78
IN WITNESS WHEREOF, the parties hereto have causes this
Indenture to be executed as of the day and year first above written.
Dated as of September 25, 1997 KEY ENERGY GROUP, INC.
By: /s/ Stephen E. McGregor
---------------------------
Its: EVP & CFO
---------------------------
Attest:
/s/ Jack D. Loftis (SEAL)
- ------------------
Dated as of September 25, 1997 AMERICAN STOCK TRANSFER
& TRUST COMPANY, as Trustee
By:/s/ Herbert J. Lemmer
---------------------
Its: HERBERT J. LEMMER
------------------
VICE PRESIDENT
Attest:
Susan Silber (SEAL)
- -------------------
SUSAN SILBER
Assistant Secretary
<PAGE> 79
Exhibit A-1
(Face of Security)
5% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
No. $______
KEY ENERGY GROUP, INC.
promises to pay to
or its registered assigns, the principal sum of
Dollars on September 25, 2004.
Interest Payment Dates: September 15 and March 15, commencing March 15, 1998.
Record Dates: September 1 and March 1 (whether or not a Business Day).
KEY ENERGY GROUP, INC.
By:
Officer of the Company
(SEAL)
Attest:
This is one of the 5% Convertible Subordinated
Notes due 2004 referred to in the By:
within-mentioned Indenture: Officer of the Company
American Stock Transfer & Trust Company, as Trustee
By
Authorized Signature
Dated: ,
<PAGE> 80
(Back of Security)
5% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
[Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, 55 Water Street, New York, New
York ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.](1)
THE NOTE EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THE NOTE EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE
EXCEPT (A) TO KEY ENERGY GROUP, INC. OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE
UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, BEFORE SUCH TRANSFER, FURNISHES TO AMERICAN STOCK
TRANSFER & TRUST COMPANY, AS TRUSTEE (OR SUCCESSOR TRUSTEE, AS APPLICABLE), A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM SUCH
____________________
(1) This paragraph is to be included only if the Security is in global form.
<PAGE> 81
TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH
NOTE, (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO AMERICAN STOCK TRANSFER
& TRUST COMPANY, AS TRUSTEE (OR SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE
PROPOSED TRANSFER IS PURSUANT TO CLAUSE 2(F) ABOVE, THE HOLDER MUST, BEFORE
SUCH TRANSFER, FURNISH TO AMERICAN STOCK TRANSFER & TRUST COMPANY, AS TRUSTEE
(OR SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND
WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY
PURSUANT TO CLAUSE 2(F) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL
ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
Section 1. Interest. Key Energy Group, Inc., a Maryland
corporation (the "Company"), promises to pay interest on the principal amount
of this 5% Convertible Subordinated Note due 2004 (the "Note") at the rate and
in the manner specified below.
The Company will pay interest semi-annually on September 15
and March 15 of each year commencing March 15, 1998, or if any such day is not
a Business Day, on the next Business Day (each an "Interest Payment Date") to
record holders of Notes ("Holders") at the close of business on September 1 or
March 1 immediately preceding the applicable Interest Payment Date. A copy of
the Indenture (defined below), the Registration Rights Agreement and all other
agreements affecting this Note or the Holders may be obtained from the Company
upon request.
Interest shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid
<PAGE> 82
or, if no interest has been paid, from the date of the original issuance of
this Note. To the extent lawful, the Company shall pay interest on overdue
principal at the rate of 1% per annum in excess of the then applicable interest
rate on this Note; it shall pay interest on overdue installments of interest
(without regard to any applicable grace periods) at the same rate to the extent
lawful.
Section 2. Method of Payment. The Company shall pay
interest on the Notes (except defaulted interest) to Holders at the close of
business on the record date next preceding the Interest Payment Date, even if
such Notes are canceled after such record date and on or before such Interest
Payment Date. The Holder hereof must surrender this Note to a Paying Agent (as
defined in the Indenture) to collect principal payments. The Company shall pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. The Company,
however, may pay principal and interest by check payable in such money. It may
mail an interest check to a Holder's registered address.
Section 3. Paying Agent and Registrar. Initially, the
Trustee shall act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to any Holder. The
Company and any of its Subsidiaries may act in any such capacity.
Section 4. Indenture. The Company issued the Notes
under an Indenture, dated as of September 25, 1997 (the "Indenture"), among the
Company and American Stock Transfer & Trust Company, as Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990,
and as in effect on the date of the Indenture. The Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes. Capitalized terms used
herein that are not specifically defined herein shall have the meanings set
forth in the Indenture. The Notes are unsecured general obligations of the
Company limited to $216,000,000 in aggregate principal amount.
Section 5. Optional Redemption. The Company may redeem
at any time on or after September 15, 2000, all or any portion of the
Securities outstanding at the following redemption prices expressed as a
percentage of the principal amount thereof, if the Securities are redeemed
during the 12-month period beginning September 15, of the following years:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.86%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.14%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 101.43%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 100.71%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
</TABLE>
<PAGE> 83
Section 6. Redemption or Repurchase at Option of Holder.
If there is a Change in Control (as defined in the Indenture), the Company will
be required to offer to purchase on the Change in Control Payment Date (as
defined in the Indenture) all outstanding Notes at 100% of the principal amount
thereof, plus accrued and unpaid interest to the date of purchase. Holders
whose Notes are subject to an offer to purchase will receive an offer to
purchase from the Company prior to any related Change in Control Payment Date
and may elect to have their Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
Section 7. Notice of Redemption. Notice of redemption
will be mailed at least 30 days but not more than 45 days before the redemption
date to each Holder to be redeemed at its registered address. Notes may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
Section 8. Conversion. Subject to the provisions of the
Indenture, the Holder hereof has the right, at its option, at any time on or
after 270 days after the Issue Date and on or before the maturity, to convert
the principal hereof or any portion of such principal that is $1,000 or a
multiple thereof, into, at the Company's option, (a) cash in an amount equal to
the Current Market Price, as of the conversion date, of the Common Stock to
which the principal would otherwise be converted, or (b) that number of shares
of the Company's Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of this Note or portion thereof to be
converted by the conversion price of $38.50, or such conversion price as
adjusted from time to time as provided in the Indenture or (c) a combination of
cash and Common Stock in proportions determined by the Company in its sole
discretion; provided, however, that the Company's option to convert the
principal into cash or into a combination of cash and Common Stock, shall
terminate at the close of business on the date the Company's charter is amended
to increase the number of shares of authorized Common Stock to at least that
number of shares sufficient to reserve for the conversion of all the Notes.
The right to convert with respect to any Security or portion
of a Security that shall be called for redemption or delivered for repurchase,
shall terminate at the close of business on the date fixed for redemption of
such Security or portion of a Security or the second trading day preceding a
Change in Control Payment Date, as the case may be, unless the Company shall
default in payment due upon redemption or repurchase thereof.
<PAGE> 84
No adjustments in respect of interest or dividends will be
made upon any conversion; provided, however, that if the Note shall be
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the opening of business on the
following interest payment date, this Note (unless it or the portion being
converted shall have been called for redemption on a date in such period) must
be accompanied by an amount, in funds acceptable to the Company, equal to the
interest payable on such interest payment date on the principal amount being
converted. No fractional shares will be issued upon any conversion, but an
adjustment in cash shall be made, as provided in the Indenture, in respect of
any fraction of a share which would otherwise be issuable upon the surrender of
any Note or Notes for conversion. A holder of Notes is not entitled to any
rights of a holder of Common Stock until such holder has converted his Notes to
Common Stock, and only to the extent such Notes are to have been converted to
Common Stock under the Indenture.
The conversion price is subject to adjustment in accordance
with Section 10.5 of the Indenture.
Section 9. Subordination. The Securities are
subordinated to Senior Indebtedness (as defined in the Indenture). To the
extent provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid either by the Company or any guarantor of Obligations
under this Indenture and the Note. The Company agrees, and each Holder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give effect to such provisions, and
each Holder appoints the Trustee his attorney-in-fact for any and all such
purposes. This Note shall be pari passu, in all respects, with the Existing
Debentures (as defined in the Indenture), except that the Existing Debentures
have the benefit of guarantees by the Company's Subsidiaries.
Section 10. Denominations, Transfer, Exchange. The Notes
are initially issued in global form. The global Note represents such of the
outstanding Securities as shall be specified therein or endorsed thereon in
accordance with the Indenture. The definitive Securities are in registered
form without coupons in denominations of $1,000 and whole multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of
an Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed.
Section 11. Persons Deemed Owners. Before due
presentment to the Trustee for registration of the transfer of this Note, the
Trustee, any Agent and the Company may deem and treat the person in whose name
this Note is registered as its absolute owner for the purpose of receiving
payment of principal of and interest on this Note and for all other purposes
whatsoever, whether or not this Note is overdue, and neither the Trustee, any
Agent
<PAGE> 85
nor the Company shall be affected by notice to the contrary. The registered
holder of an Note shall be treated as its owner for all purposes.
Section 12. Amendments and Waivers. Subject to certain
exceptions, the Indenture or the Securities may be amended with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Securities, and any existing default (except a payment default) may be waived
with the consent of the holders of a majority in principal amount of the then
outstanding Securities. Without the consent of any Holder, the Indenture or
the Securities may be amended to cure any ambiguity, defect or inconsistency,
to provide for assumption of Company obligations to Holders, to make any change
that does not adversely affect the rights of any Holder, to provide for any
uncertificated Notes in addition to certificated Notes, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
Section 13. Defaults and Remedies. Events of default
include: default in payment of interest on the Securities for 30 days; default
in payment of principal of or premium on the Securities when due; failure by
the Company for 60 days after notice to it to comply with its agreements in the
Indenture or the Securities; defaults under and acceleration before express
maturity of certain other Indebtedness that aggregates $25,000,000 or more;
certain final judgments which remain undischarged if the aggregate of all such
judgments exceeds $25,000,000 or more; certain final judgments which remain
undischarged if the aggregate of all such judgments exceeds $25,000,000; and
certain events of bankruptcy or insolvency. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Securities may declare all the Securities to be due and
payable immediately, except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all outstanding Securities
become due and payable immediately without further action or notice and all
outstanding Securities, and all Obligations and Claims with respect thereto,
become immediately due and payable. Holders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice
of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the Trustee.
Section 14. Trustee Dealings with Company. The Trustee
under the Indenture, in its individual or any other capacity, may make loans
to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not Trustee; provided, however, that if the Trustee acquires any
conflicting interest as described in the Trust Indenture Act, it must eliminate
such conflict or resign.
<PAGE> 86
Section 15. No Recourse Against Others. No director,
officer, employee, agent, manager, stockholder or other Affiliates of the
Company shall have any liability for any obligations of the Company under the
Securities, the Indenture, or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
Section 16. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
Section 17. Abbreviations. Customary abbreviations may
be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST = Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
Section 18. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification number placed thereon.
Section 19. Additional Rights of Holders of Transfer
Restricted Securities. In addition to the rights provided to Holders of
Securities under the Indenture, Holders of Transferred Restricted Securities
shall have all the rights set forth in the Registration Rights Agreement
referred to in the Indenture and certain other agreements executed and
delivered in connection therewith.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
Attn: Francis D. John
<PAGE> 87
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name
appears on the face of
this Security)
Signature Guaranteed:
By:
(THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stock Brokers, Savings and Loan Associations,
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.)
<PAGE> 88
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.10 of the Indenture (Change in
Control), state the amount you elect to have purchased (if all, write "ALL"):
$__________________________
Date:
Your Signature:
(Sign exactly as your name
appears on the face of
this Security)
Signature Guaranteed:
By:
(THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stock Brokers, Savings and Loan Associations,
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.)
<PAGE> 89
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITIES (2)
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of of this Global Signature of
decrease in Amount of Increase Security authorized officer
Principal in Principal following such of Trustee or
Date of Amount of this Amount of this decrease (or Securities
Exchange Global Security Global Security increase) Custodian
- -------------- --------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
- -----------------
(2) This is to be included only if the Security is in global form
<PAGE> 90
Exhibit A-2
(Face of Security)
5% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
No. $______
KEY ENERGY GROUP, INC.
promises to pay to
or its registered assigns, the principal sum of
Dollars on September 25, 2004.
Interest Payment Dates: September 15 and March 15, commencing March 15, 1998.
Record Dates: September 1 and March 1 (whether or not a Business Day).
KEY ENERGY GROUP, INC.
By:
Officer of the Company
(SEAL)
Attest:
This is one of the 5% Convertible Subordinated
Notes due 2004 referred to in the By:
within-mentioned Indenture: Officer of the Company
American Stock Transfer & Trust Company, as Trustee
By
Authorized Signature
Dated: ,
A2-1
<PAGE> 91
(Back of Security)
5% CONVERTIBLE SUBORDINATED NOTE
DUE 2004
[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).]
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6 OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.]
[Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company, 55 Water Street, New York, New
York ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.](1)
THE NOTE EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED
____________________
(1) This paragraph is to be included only if the Security is in global form.
A2-2
<PAGE> 92
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED
HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY RESELL OR OTHERWISE
TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION
OF SUCH NOTE EXCEPT (A) TO KEY ENERGY GROUP, INC. OR ANY SUBSIDIARY THEREOF,
(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, BEFORE SUCH TRANSFER, FURNISHES TO
AMERICAN STOCK TRANSFER & TRUST COMPANY, AS TRUSTEE (OR SUCCESSOR TRUSTEE, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE
EFFECTIVE AT THE TIME OF SUCH TRANSFER); AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE, (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE 2(E) ABOVE), THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO AMERICAN STOCK TRANSFER & TRUST COMPANY, AS TRUSTEE
(OR SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFER IS PURSUANT TO
CLAUSE 2(F) ABOVE, THE HOLDER MUST, BEFORE SUCH TRANSFER, FURNISH TO AMERICAN
STOCK TRANSFER & TRUST COMPANY, AS TRUSTEE (OR SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY PURSUANT TO
CLAUSE 2(F) ABOVE OR THE EXPIRATION OF TWO YEARS FROM THE ORIGINAL ISSUANCE OF
THE NOTE EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.
Section 20. Interest. Key Energy Group, Inc., a Maryland
corporation (the "Company"), promises to pay interest on the principal amount
of this 5% Convertible Subordinated Note due 2004 (the "Note") at the rate and
in the manner specified below.
A2-3
<PAGE> 93
The Company will pay interest semi-annually on September 15
and March 15 of each year commencing March 15, 1998, or if any such day is not
a Business Day, on the next Business Day (each an "Interest Payment Date") to
record holders of Notes ("Holders") at the close of business on September 1 or
March 1 immediately preceding the applicable Interest Payment Date. A copy of
the Indenture (defined below), the Registration Rights Agreement and all other
agreements affecting this Note or the Holders may be obtained from the Company
upon request.
Interest shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of the original issuance of this Note. To the extent lawful, the Company
shall pay interest on overdue principal at the rate of 1% per annum in excess
of the then applicable interest rate on this Note; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) at the same rate to the extent lawful.
Section 1. Method of Payment. The Company shall pay
interest on the Notes (except defaulted interest) to Holders at the close of
business on the record date next preceding the Interest Payment Date, even if
such Notes are canceled after such record date and on or before such Interest
Payment Date. The Holder hereof must surrender this Note to a Paying Agent (as
defined in the Indenture) to collect principal payments. The Company shall pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts. The Company,
however, may pay principal and interest by check payable in such money. It may
mail an interest check to a Holder's registered address.
Section 2. Paying Agent and Registrar. Initially, the
Trustee shall act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to any Holder. The
Company and any of its Subsidiaries may act in any such capacity.
Section 3. Indenture. The Company issued the Notes
under an Indenture, dated as of September 25, 1997 (the "Indenture"), among the
Company and American Stock Transfer & Trust Company, as Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
Sections 77aaa-77bbbb), as amended by the Trust Indenture Reform Act of 1990,
and as in effect on the date of the Indenture. The Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes. Capitalized terms used
herein that are not specifically defined herein shall have the meanings set
forth in the Indenture. The Notes are unsecured general obligations of the
Company limited to $216,000,000 in aggregate principal amount.
Section 4. Optional Redemption. The Company may redeem
at any time on or after September 15, 2000, all or any portion of the
Securities outstanding at the following redemption prices expressed as a
percentage of the principal amount thereof, if the Securities are redeemed
during the 12-month period beginning September 15, of the following years:
A2-4
<PAGE> 94
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.86%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.14%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 101.43%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 100.71%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
</TABLE>
Section 5. Redemption or Repurchase at Option of Holder.
If there is a Change in Control (as defined in the Indenture), the Company will
be required to offer to purchase on the Change in Control Payment Date (as
defined in the Indenture) all outstanding Notes at 100% of the principal amount
thereof, plus accrued and unpaid interest to the date of purchase. Holders
whose Notes are subject to an offer to purchase will receive an offer to
purchase from the Company prior to any related Change in Control Payment Date
and may elect to have their Notes purchased by completing the form entitled
"Option of Holder to Elect Purchase" appearing below.
Section 6. Notice of Redemption. Notice of redemption
will be mailed at least 30 days but not more than 45 days before the redemption
date to each Holder to be redeemed at its registered address. Notes may be
redeemed in part but only in whole multiples of $1,000, unless all of the Notes
held by a Holder are to be redeemed. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
Section 7. Conversion. Subject to the provisions of the
Indenture, the Holder hereof has the right, at its option, at any time on or
after 270 days after the Issue Date and on or before the maturity, to convert
the principal hereof or any portion of such principal that is $1,000 or a
multiple thereof, into, at the Company's option, (a) cash in an amount equal to
the Current Market Price, as of the conversion date, of the Common Stock to
which the principal would otherwise be converted, or (b) that number of shares
of the Company's Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of this Note or portion thereof to be
converted by the conversion price of $38.50, or such conversion price as
adjusted from time to time as provided in the Indenture or (c) a combination of
cash and Common Stock in proportions determined by the Company in its sole
discretion; provided, however, that the Company's option to convert the
principal into cash or into a combination of cash and Common Stock, shall
terminate at the close of business on the date the Company's charter is amended
to increase the number of shares of authorized Common Stock to at least that
number of shares sufficient to reserve for the conversion of all the Notes.
The right to convert with respect to any Security or portion
of a Security that shall be called for redemption or delivered for repurchase,
shall terminate at the close of business on the date fixed for redemption of
such Security or portion of a Security or the
A2-5
<PAGE> 95
second trading day preceding a Change in Control Payment Date, as the case may
be, unless the Company shall default in payment due upon redemption or
repurchase thereof.
No adjustments in respect of interest or dividends will be
made upon any conversion; provided, however, that if the Note shall be
surrendered for conversion during the period from the close of business on any
record date for the payment of interest to the opening of business on the
following interest payment date, this Note (unless it or the portion being
converted shall have been called for redemption on a date in such period) must
be accompanied by an amount, in funds acceptable to the Company, equal to the
interest payable on such interest payment date on the principal amount being
converted. No fractional shares will be issued upon any conversion, but an
adjustment in cash shall be made, as provided in the Indenture, in respect of
any fraction of a share which would otherwise be issuable upon the surrender of
any Note or Notes for conversion. A holder of Notes is not entitled to any
rights of a holder of Common Stock until such holder has converted his Notes to
Common Stock, and only to the extent such Notes are to have been converted to
Common Stock under the Indenture.
The conversion price is subject to adjustment in accordance
with Section 10.5 of the Indenture.
Section 8. Subordination. The Securities are
subordinated to Senior Indebtedness (as defined in the Indenture). To the
extent provided in the Indenture, Senior Indebtedness must be paid before the
Securities may be paid either by the Company or any guarantor of Obligations
under this Indenture and the Note. The Company agrees, and each Holder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give effect to such provisions, and
each Holder appoints the Trustee his attorney-in-fact for any and all such
purposes. This Note shall be pari passu, in all respects, with the Existing
Debentures (as defined in the Indenture), except that the Existing Debentures
have the benefit of guarantees by the Company's Subsidiaries.
Section 9. Denominations, Transfer, Exchange. The Notes
are initially issued in global form. The global Note represents such of the
outstanding Securities as shall be specified therein or endorsed thereon in
accordance with the Indenture. The definitive Securities are in registered
form without coupons in denominations of $1,000 and whole multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion of
an Note selected for redemption. Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before a selection of Notes to be
redeemed.
Section 10. Persons Deemed Owners. Before due
presentment to the Trustee for registration of the transfer of this Note, the
Trustee, any Agent and the Company may deem and treat the person in whose name
this Note is registered as its absolute owner for the purpose of receiving
payment of principal of and interest on this Note and for all other purposes
whatsoever, whether or not this Note is overdue, and neither the Trustee, any
Agent
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<PAGE> 96
nor the Company shall be affected by notice to the contrary. The registered
holder of an Note shall be treated as its owner for all purposes.
Section 11. Amendments and Waivers. Subject to certain
exceptions, the Indenture or the Securities may be amended with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Securities, and any existing default (except a payment default) may be waived
with the consent of the holders of a majority in principal amount of the then
outstanding Securities. Without the consent of any Holder, the Indenture or
the Securities may be amended to cure any ambiguity, defect or inconsistency,
to provide for assumption of Company obligations to Holders, to make any change
that does not adversely affect the rights of any Holder, to provide for any
uncertificated Notes in addition to certificated Notes, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the TIA.
Section 12. Defaults and Remedies. Events of default
include: default in payment of interest on the Securities for 30 days; default
in payment of principal of or premium on the Securities when due; failure by
the Company for 60 days after notice to it to comply with its agreements in the
Indenture or the Securities; defaults under and acceleration before express
maturity of certain other Indebtedness that aggregates $25,000,000 or more;
certain final judgments which remain undischarged if the aggregate of all such
judgments exceeds $25,000,000 or more; certain final judgments which remain
undischarged if the aggregate of all such judgments exceeds $25,000,000; and
certain events of bankruptcy or insolvency. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Securities may declare all the Securities to be due and
payable immediately, except that in the case of an Event of Default arising
from certain events of bankruptcy or insolvency, all outstanding Securities
become due and payable immediately without further action or notice and all
outstanding Securities, and all Obligations and Claims with respect thereto,
become immediately due and payable. Holders may not enforce the Indenture or
the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders notice
of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the Trustee.
Section 13. Trustee Dealings with Company. The Trustee
under the Indenture, in its individual or any other capacity, may make loans
to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not Trustee; provided, however, that if the Trustee acquires any
conflicting interest as described in the Trust Indenture Act, it must eliminate
such conflict or resign.
Section 14. No Recourse Against Others. No director,
officer, employee, agent, manager, stockholder or other Affiliates of the
Company shall have any liability for any obligations of the Company under the
Securities, the Indenture, or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a Note
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<PAGE> 97
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
Section 15. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
Section 16. Abbreviations. Customary abbreviations may
be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST = Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
Section 17. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and has directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification number placed thereon.
Section 18. Additional Rights of Holders of Transfer
Restricted Securities. In addition to the rights provided to Holders of
Securities under the Indenture, Holders of Transferred Restricted Securities
shall have all the rights set forth in the Registration Rights Agreement
referred to in the Indenture and certain other agreements executed and
delivered in connection therewith.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:
Key Energy Group, Inc.
Two Tower Center, Tenth Floor
East Brunswick, New Jersey 08816
Attn: Francis D. John
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<PAGE> 98
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date:
Your Signature:
(Sign exactly as your name
appears on the face of
this Security)
Signature Guaranteed:
By:
(THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stock Brokers, Savings and Loan Associations,
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.)
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<PAGE> 99
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security
purchased by the Company pursuant to Section 4.10 of the Indenture (Change in
Control), state the amount you elect to have purchased (if all, write "ALL"):
$__________________________
Date:
Your Signature:
(Sign exactly as your name
appears on the face of
this Security)
Signature Guaranteed:
By:
(THE SIGNATURE(S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stock Brokers, Savings and Loan Associations,
and Credit Unions) WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM PURSUANT TO S.E.C. RULE 17Ad-15.)
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<PAGE> 100
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITIES (2)
The following exchanges of a part of this Global Security for Definitive
Securities have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of of this Global Signature of
decrease in Amount of Increase Security authorized officer
Principal in Principal following such of Trustee or
Date of Amount of this Amount of this decrease (or Securities
Exchange Global Security Global Security increase) Custodian
- --------- --------------- ------------------ ---------------- -------------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------------
(2) This is to be included only if the Security is in global form
A2-11
<PAGE> 1
EXHIBIT 5.1
December 23, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Key Energy Group, Inc. - Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Key Energy Group, Inc., a Maryland corporation
(the "Company"), in connection with the registration on Form S-3 under the
Securities Act of 1933, as amended, of 240,000 shares (the "Shares") of the
Company's common stock, par value $.10 per share (the "Common Stock"). In such
capacity, we have examined the Amended and Restated Certificate of
Incorporation, the bylaws, and corporate proceedings of the Company, and based
on such examination and having regard for applicable legal principles, it is
our opinion the Shares to be offered and sold pursuant to the Registration
Statement will be validly issued, fully-paid and nonassessable outstanding
shares of Common Stock.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our firm in the Registration Statement.
Very truly yours,
/s/ Porter & Hedges, L.L.P.
PORTER & HEDGES, L.L.P.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Key Energy Group, Inc.:
We consent to the use of our reports incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the Prospectus.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Midland, Texas
December 23, 1997
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Key Energy Group, Inc. on Form S-3 of our report dated August 8, 1997, on our
audit of the financial statements of Well-Co Oil Service, Inc. as of June 25,
1997 and for the period from July 1, 1996 to June 25, 1997, which report is
included in Key Energy Group, Inc.'s current report on Form 8-K/A (Amendment
No. 2) dated June 25, 1997.
/s/ Robinson Burdette Martin & Cowan, L.L.P.
Robinson Burdette Martin & Cowan, L.L.P.
Lubbock, Texas
December 23, 1997
<PAGE> 1
EXHIBIT 23.4
[JOHNSON, MILLER & CO. LETTERHEAD]
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in the registration statement
of Key Energy Group, Inc. on Form S-3 of our reports dated January 23, 1997 and
February 7, 1997, on our audits of the financial statements of Ram Oil Well
Service, Inc. and Rowland Trucking Co., Inc., respectively, as of December 31,
1996 and 1995, which reports are included in Key Energy Group, Inc.'s current
report on Form 8-K/A (Amendment No. 2) dated September 1, 1997.
Johnson, Miller & Co.
/s/ JOHNSON, MILLER & CO.
Hobbs, New Mexico
December 11, 1997
<PAGE> 1
EXHIBIT 23.5
[CHANDLER & COMPANY LLP LOGO]
CONSENT OF CHANDLER & COMPANY LLP
The Board of Directors
Key Energy Group, Inc.
We consent to the incorporation by reference in this current report of Key
Energy Group, Inc. on Form S-3 of our report dated July 25, 1997, on our audits
of the consolidated balance sheets of Coleman Oil & Gas, Inc. and Subsidiaries
as of October 31, 1996 and 1995, and the related statements of earnings,
stockholders' equity, and cash flows for the years then ended, and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ CHANDLER & COMPANY LLP
Farmington, New Mexico
December 22, 1997
