<PAGE> 1
As filed with the Securities and Exchange Commission on February 10, 1995
Registration No. 33-79424
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AURORA ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 75-1539534
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2030 MAIN STREET, SUITE 1120
IRVINE, CALIFORNIA 92714 (714) 660-1232
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
JIM C. COWART, CHAIRMAN AND COPY TO: ALAN J. BOGDANOW, ESQ.
CHIEF EXECUTIVE OFFICER HUGHES & LUCE, L.L.P.
AURORA ELECTRONICS, INC. SUITE 2800
2030 MAIN STREET, SUITE 1120 1717 MAIN STREET
IRVINE, CALIFORNIA 92714 (714) 660-1232 DALLAS, TEXAS 75201
(Name, address, including zip code,
and telephone number, including area
code, of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the Registration Statement becomes effective.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
line.
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If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following line. X
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<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Unit (1) Price (1) Fee (3)
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<S> <C> <C> <C> <C>
Common Stock 933,725 $4.28 (2) $3,996,343 (2) $1,378
($.03 par value)
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Calculation pursuant to Rule 457(c), based upon the average of the high
and low prices reported on the American Stock Exchange on February 7,
1995.
(3) A Registration Fee in the amount of $1,759 was previously submitted on
May 28, 1994 in connection with an earlier filing of Registration
Statement No. 33-79424, which is hereby amended.
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.
<PAGE> 2
AURORA ELECTRONICS, INC.
933,725 SHARES OF COMMON STOCK
This Prospectus relates to an aggregate offering of up to 933,725
shares of common stock, par value $.03 per share (the "Common Stock"), of
Aurora Electronics, Inc. ("Aurora" or the "Company") to be offered by certain
stockholders of the Company (the "Selling Stockholders"). See "Selling
Stockholders." In connection with the Company's acquisition of certain assets
of CCB Computer Brokers, Inc., a California corporation ("CCB"), pursuant to an
Asset Purchase Agreement (the "Century Purchase Agreement") (i) the Company
issued 256,000 shares of Common Stock and, (ii) subject to the provisions of
the Century Purchase Agreement, the Company is obligated to issue an estimated
621,495 additional shares of Common Stock shortly after December 31, 1995. In
addition, the Company agreed to issue up to 56,230 shares of Common Stock to
certain employees of CCB who have become employees of the Company or its
affiliates. The Company will not receive any proceeds from the sale of the
shares of Common Stock offered hereby. The shares may be offered in
transactions on the American Stock Exchange, Inc. (the "AMEX"), in negotiated
transactions (including, without limitation, privately negotiated transactions
with, or transfers in connection with a dissolution or liquidation of CCB to,
CCB's former employees and/or shareholders), or through a combination of such
methods of distribution, at prices relating to the prevailing market prices or
at negotiated prices. See "Plan of Distribution."
The shares of Common Stock being offered by this Prospectus have
been approved for listing, upon official notice of issuance, on the AMEX. On
February 7, 1995, the closing sales price of the Common Stock on the AMEX was
$4.25 per share.
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SEE "CERTAIN CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD
BE CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS.
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THESE 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.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTAINED AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
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The date of this Prospectus is February 10, 1995.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports, proxy statements,
information statements, and other information filed with the Commission can be
inspected and copied at Room 1024 of the Commission's office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549-1004 and the Commission's
Regional Offices in New York (7 World Trade Center, Suite 1300, New York, New
York 10048) and in Chicago (500 West Madison Street, Suite 1400, Chicago,
Illinois 60661). Copies of such material can be obtained at prescribed rates
from the Public Reference Room of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Common Stock is listed on the AMEX. Reports,
proxy materials and other information concerning the Company may also be
inspected at the offices of such exchange at 86 Trinity Place, New York, New
York 10006-1881.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other unaudited periodic
reports as it may determine to furnish or as may be required by law.
The Company has filed with the Commission a registration statement
on Form S-3 (referred to herein, together with all amendments and exhibits, as
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement which can be inspected at the public reference rooms
at the offices of the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, including any beneficial owner, upon the
written or oral request of such person, a copy of any or all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests should be directed to:
Investor Relations
Aurora Electronics, Inc.
2030 Main Street
Suite 1120
Irvine, California 92714
Telephone number: (714) 660-1232
The Company's (i) Annual Report on Form 10-K for the fiscal year
ended September 30, 1994, as amended by Amendment No. 1 on Form 10-K/A dated
February 6, 1995 (collectively referred to herein as the "1994 10-K"), (ii)
Amendment Nos. 1 and 2 to each of the Reports on Form 10-Q for the quarters
ended December 31, 1993, March 31, 1994 and June 30, 1994, (iii) all other
reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the
1994 10-K, and (iv) Form 8-A, dated February 14, 1983, containing a description
of the Company's Common Stock, and including any amendment or report filed for
the purpose of updating such description, are hereby incorporated by reference
into this Prospectus.
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All documents filed with the Commission by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering registered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified, replaced, 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 by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall be deemed, except as so modified or superseded, to constitute
a part of this Prospectus.
THE COMPANY
OVERVIEW
Aurora operates in one business segment which is comprised of
distributing computer service parts and system upgrade products and providing
materials management and recycling services to computer manufacturers and
service organizations. Through its three divisions -- Century Computer
Marketing, Premier Computer Products, and Asset Recovery Services -- Aurora
provides a broad range of services and products which assist computer
manufacturers and service organizations in more effectively supporting their
customer's maintenance, upgrade and recycling needs.
Aurora's customers include: (a) computer original equipment
manufacturers ("OEMs"), such as Apple Computer, AST Computer, Compaq Computer,
Dell Computer, Digital Equipment Corporation, Hewlett-Packard, IBM, ICL
(Fujitsu), Toshiba and Unisys; (b) major subsystems manufacturers, such as
Canon, Conner Peripherals, Exabyte, Quantum, Seagate Technology, and Toshiba;
and (c) service organizations, such as Bell Atlantic Business Service Systems,
Entex Information Services, General Electric Services, TSS, and Vanstar, as
well as the customer service departments of most of the major computer OEMs.
Aurora has approximately 534 employees and operates worldwide, with facilities
in the United States, Canada, the United Kingdom and the Netherlands.
CENTURY COMPUTER MARKETING DIVISION
Through its Century Computer Marketing Division ("Century"), the
Company believes it is among the largest providers of service parts
distribution and materials management services, supporting computer OEMs and
service organizations worldwide. Century distributes new and refurbished
computer service parts, primarily to the field service departments of computer
OEMs, third-party maintenance organizations, computer resellers and dealers and
large corporate self-maintainers. Century's service parts inventories include
products from over 500 manufacturers, with particular emphasis on products from
Apple Computer, AT&T, AST Computer, Compaq, Dell Computer, Digital Equipment
Corporation, Hewlett-Packard, IBM and Toshiba. In addition, Century provides a
broad range of materials management services, such as depot repair, advance
exchange programs, warranty materials and returned material management programs
and system and subsystem recycling and remarketing programs.
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The range of distribution, materials management and installed base
support services that Century provides includes:
# SERVICE PARTS SOURCING AND DISTRIBUTION -- Century sources and
distributes a wide range of service parts, many of which are
out-of-warranty and often out-of-production. Century sources these
parts either from its own inventory or from its parts sourcing
database and ships them to the customer typically within 24 hours.
Currently, approximately 70% of Century's shipments are products
that are sourced, reconditioned and tested the same day. Century
also works directly with computer OEMs and service parts
manufacturers as an authorized parts distributor, providing same
and next-day shipment for new service parts stocked by Century on
behalf of the OEM.
# SERVICE PARTS MANAGEMENT PROGRAMS -- Century provides its customers
with the ability to outsource various service parts management
activities, including the management of warranty and returned
materials, management of service parts inventories, logistics
support, including direct shipment of parts from and to customer
field locations, and the repair of defective parts.
# ADVANCE / EXCHANGE (A/E) PROGRAMS -- Century offers A/E programs
under which a service part is supplied from a standard selection
menu in advance of receiving the defective unit back from the
field. In most cases, the defective unit is repaired and placed
back into inventory to fulfill future A/E requests.
# REPAIR SERVICES AND REPAIR MANAGEMENT -- Century maintains one of
the widest ranges of subsystems repair capabilities in the
industry, with technical expertise in hard disks, floppy disks,
tape drives, laser printers, monitors, flat panel displays, printed
circuit boards and power supplies.
# SYSTEM RECYCLING AND REMARKETING PROGRAMS -- Century refurbishes,
reconditions and redistributes systems received from manufacturing
fallout, field dispositions, excess and obsolete inventories and
customer trade-in and exchange programs. Refurbished systems are
redistributed worldwide in cost-conscious markets and the net
revenues received by Aurora are shared with the client.
PREMIER COMPUTER PRODUCTS DIVISION
The Premier Computer Products Division designs, manufactures and
distributes a broad range of products that assist computer OEMs and end-users
in upgrading and expanding installed computer systems. Products include a wide
variety of memory expansion boards and single in-line memory modules, as well
as a range of mobile computing memory solutions.
ASSET RECOVERY SERVICES DIVISION
Through its Asset Recovery Services Division ("ARS"), Aurora
believes it is the world's leader in providing integrated circuit ("IC")
recycling and recovery services. ARS's customers for IC recycling services are
primarily major computer OEMs who look to the Company to provide an
environmentally sound and technologically secure approach to disposing of their
obsolete, excess or non-conforming electronic products. While the high
technology world is known for rapidly changing product designs, the ICs used in
these designs typically have long useful lives and can be recycled into
different applications for a
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worldwide customer base. By using ARS's services, OEM customers avoid the
liability and expense of disposal and create a new source of revenue through
the receipt of a portion of the ARS's sales revenues.
IC recycling involves the removal, sorting, reconditioning and
testing of commonly used ICs found on excess, obsolete or defective printed
circuit boards ("PCBs"). The reconditioned ICs are then resold to a wide
variety of manufacturers, brokers and distributors worldwide. In marketing its
IC recycling services, the Company must typically address three issues: (i) the
environmental issues involved in disposing of obsolete, excess and defective
PCBs; (ii) the security of the customer's proprietary product design and custom
chips; and (iii) the economic returns generated from marketing the
reconditioned ICs. The Company is able to demonstrate to its customers that
its handling and disposition of their materials meets all federal, state and
local environmental regulations. Additionally, the Company has procedures in
place designed to assure its customers that their products are secure while in
the Company's control. Customers are also afforded the opportunity to audit or
test the Company's recycling and reconditioning processes. Finally, the
Company provides its customers with competitive economic returns by sharing
with the customer a percentage of the revenues which it receives from the sale
of the reconditioned ICs.
COMPANY HISTORY
The Company was formerly known as BSN Corp. and was engaged in the
sporting goods industry. From 1990 to 1992, the Company divested itself of
most of its sporting goods assets. Effective September 30, 1992, the Company
announced that all of its remaining sporting goods operations would be
accounted for as discontinued operations and all such remaining operations were
in the process of being sold.
Effective September 30, 1992, the Company acquired Micro-C
Corporation, a San Diego, California based company founded in 1985 which
provided consumer-grade IC distribution and IC reconditioning services for
semiconductor manufacturers and computer OEMs. Effective September 30, 1993,
Aurora acquired FRS, Inc., a Sacramento, California based company founded in
1984, which provided subsystem repair and field spares inventory management
services for computer and peripheral OEMs. Effective April 8, 1994, FRS was
merged into Micro-C and Micro-C changed its name to Aurora Electronics Group,
Inc. ("AEG"). Effective March 1, 1994, Aurora and AEG acquired substantially
all of the assets and liabilities of CCB and CCM (collectively, "Century"),
Marina del Rey, California based companies founded in 1984 and 1992
respectively, which were the leading providers of spare parts procurement and
logistics services to the computer maintenance industry.
The Company was incorporated in Delaware in 1976. The Company's
principal executive office is located at 2030 Main Street, Suite 1120, Irvine,
California 92714. Its telephone number is (714) 660-1232.
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CERTAIN CONSIDERATIONS
In evaluating an investment in the Common Stock, prospective
investors should carefully consider the following factors in addition to the
other information presented or incorporated by reference in this Prospectus.
LEVERAGE AND DEBT SERVICE OBLIGATIONS
The Company incurred substantial indebtedness in connection with
the financing of the acquisition of Century (the "Century Acquisition"). As of
September 30, 1994, the Company had approximately $49.6 million of long-term
indebtedness (net of current maturities) and $26.9 million of stockholders'
equity. The resulting debt-to-stockholders' equity ratio was approximately
1.8 to 1. As of September 30, 1994, the Company had a negative tangible net
worth of $34,848,000.
In connection with the Century Acquisition, the Company entered
into a $40,000,000 Senior Secured Financing facility, which facility is secured
by a pledge of substantially all of the assets of AEG and the Company. This
facility is comprised of a $25,000,000 term loan (the "Term Loan") to finance
the Century Acquisition, a $10,000,000 replacement for the Company's existing
revolving line of credit (the "Revolving Credit Facility"), and a $5,000,000
senior refinancing facility for the retirement of the Company's 9-1/4%
Subordinated Debt on or before its scheduled maturity (the "Refinancing
Facility"). The Senior Secured Financing facility requires the Company to make
quarterly principal payments on the Term Loan. Scheduled principal payments
will equal $4.0 million in fiscal 1995, $4.5 million in fiscal 1996, $5.5
million in fiscal 1997, $6.0 million in fiscal 1998, and $3.0 million in fiscal
1999. In addition, the Company is required in each year to make certain
mandatory payments with respect to the Term Loan and the Revolving Credit
Facility, including certain payments to be made from (i) net cash proceeds
received from certain asset sales, (ii) 75.0% of excess cash flow (as defined
in the Senior Secured Financing facility) until an aggregate of $10 million in
principal payments have been made out of excess cash flow, and 50.0% of excess
cash flow thereafter, and (iii) additional equity issuances by the Company.
The Senior Secured Financing facility contains numerous financial
and operating covenants including, among others, restrictions on the ability of
the Company to incur additional indebtedness, to create liens or other
encumbrances, to make certain payments and investments, to make dividends or
other distributions of capital, and to sell or otherwise dispose of assets and
merge or consolidate with another entity. The Senior Secured Financing
facility also requires AEG and the Company to meet certain financial ratios and
tests, including minimum fixed charge coverage ratios, minimum interest expense
coverage ratios, a minimum current ratio, a maximum leverage ratio and a
minimum net profitability test. A failure to comply with the obligations
contained in the Senior Secured Financing facility would constitute an event of
default. At September 30, 1994, the Company was not in compliance with a
number of covenants and was required to obtain an agreement from its lenders
that financed the Senior Secured Financing facility (the "Lenders") to waive
such covenants for the period ended September 30, 1994. As a result of such
noncompliance, the Lenders temporarily suspended the Refinancing Facility. The
Lenders, in their sole and absolute discretion, can reinstate the Refinancing
Facility.
The Company's ability to satisfy its financial obligations with
respect to the Company's long-term indebtedness will depend upon the Company's
future operating performance, which is subject to prevailing economic
conditions, to levels of interest rates and to financial and business factors,
many of which are beyond the Company's control. The Company's debt service
obligations could have important consequences to stockholders, including the
following: (i) a significant portion of the Company's cash flow from
operations must be dedicated to the payment of principal and interest on its
indebtedness,
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thereby reducing the funds available to the Company for its operations; (ii)
the Company's ability to obtain additional financing for working capital,
capital expenditures, or other purposes in the future may be limited; and (iii)
the Senior Secured Financing facility contains financial and restrictive
covenants, the failure to comply with which may result in an event of default
which, if not cured or waived, could have a material adverse effect on the
Company. While the Company believes that based upon current levels of
operations it should be able to meet its debt service requirements, if the
Company cannot generate sufficient cash flow from ope2rations to meet its
obligations, then the Company might be required to refinance its debt or
dispose of assets. There can be no assurance that such refinancing or
disposition of assets could be effected on satisfactory terms or would be
permitted by the terms of the documents governing the Senior Secured Financing
facility.
MANAGEMENT OF GROWTH AND INTEGRATION OF ACQUISITIONS
The Company is experiencing rapid growth, which could place a
significant strain on its managerial, operational, financial and personnel
resources. The Company's growth will require it to continue to improve its
operational, management information and financial systems, and train, motivate
and manage its employees. If management is unable to manage the Company's
growth effectively, or if the productivity of its sales forces fall below
expectations, the Company's business could be materially and adversely
affected. In addition, all of the Company's operations have been acquired
within the preceding two and one-half years and have not previously been
operated as an integrated company. The Company's success will depend on its
ability to manage and integrate the operations of acquired companies. There
can be no assurance the Company will be able to successfully integrate these
acquisitions into its businesses, or profitably manage these, or any future,
acquisitions.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends, to a large extent, upon the efforts
and abilities of key managerial employees. Competition for qualified
management personnel in the industry is intense. The loss of services of
certain key managerial employees could have a material adverse effect on the
Company's business.
DEPENDENCE ON ELECTRONICS INDUSTRY
The Company is dependent upon the continued growth, viability and
financial stability of both its clients and customers, as well as potential
clients and customers. The electronics industry has been characterized by
rapid technological change, compressed product life cycles, intense
competition, and pricing and margin pressures. Although the Company provides
services that are related to the electronics installed base, which can be
expected to be more stable than new product shipment trends, there can be no
assurances that the general factors affecting the electronics industry will not
have an adverse effect on the demand for recycling, refurbishment, repair or
specialized distribution services such as those provided by the Company.
SHORT-TERM SUPPLY CONTRACTS; SUPPLIER CONCENTRATION
The success of the Company's business depends on its ability to
continue to acquire a reliable stream of secondary materials which can be
repaired, refurbished, reconditioned and sold. Generally, the Company's
contracts under which secondary material is received are short-term,
non-exclusive and may be cancelled by the contracting parties upon short
notice.
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These contracts do not contain guaranteed or minimum quantities, and volumes
can vary substantially from month to month depending on shipments from clients.
The Company chooses not to make substantial future delivery commitments to its
customers because of the nature and availability of supply from its clients.
During the fiscal year ended September 30, 1994, the Company
derived approximately 42% of its revenue from material received from one
client. On a pro forma basis, the concentration of supply would have been
approximately 37% if Century had been part of the Company for the 12 months
ended September 30, 1994. The supply of materials the Company receives from
this client may be inconsistent and may vary substantially from month to month.
In December 1994, this client indefinitely suspended the program under which it
supplies reduced specification ICS to the Company. Although the Company has
been able to obtain in total an acceptable supply of materials from its clients
to date, there can be no assurance the Company will be able to secure a
continued supply in the future.
COMPETITION
Although the Company believes it is currently among the largest
suppliers of recycling, refurbishment, repair and specialized distribution
services, competition is expected to continue to intensify as the industry
grows. While the Company has a substantial base of technical know-how, there
are no patents or technological barriers that would prevent other companies
from participating in this industry.
The Company competes for both clients and customers. The
competition for clients -- semiconductor manufacturers and computer OEMs -- is
based on several factors, including: (i) service; (ii) security with respect
to client identity, materials being processed, and any proprietary products;
(iii) management of environmental matters; and (iv) pricing and economic
return. Competition for distribution customers is based principally on: (i)
product availability; (ii) price; (iii) quality; (iv) delivery; and (v)
customer service. Increased competitive pressures in these or other areas
could adversely affect the Company's operating results.
ENVIRONMENTAL REGULATIONS
The Company's business is subject to various federal, state and
local environmental laws and regulations relating to the disposal of waste
material. A major reason clients do business with the Company is that the
Company assists its clients in dealing with the reduction and disposal of
unwanted material. The material the Company handles is generally classified
under environmental regulations as industrial waste, a less burdensome
classification than toxic or hazardous waste. The Company believes it is in
compliance with all applicable federal, state and local environmental laws and
regulations and does not anticipate any substantial expenditures to remain in
such compliance. However, there can be no assurance that such regulations or
their application will not change, or that any such change would not have a
material effect on the Company's business and results of operations.
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SHARES ELIGIBLE FOR FUTURE SALE
The former stockholders of Micro-C own (i) 7% Subordinated
Convertible Promissory Notes due September 30, 1997 (the "7% Notes")
aggregating $3,872,000 and (ii) 138,234 shares of Common Stock. The 7% Notes
are convertible into 345,714 shares of Common Stock at $11.20 per share
(subject to certain anti-dilution provisions). In addition, the former
stockholders of Micro-C are eligible to receive up to 308,195 shares of Common
Stock over the next year, if certain operations of the Company achieve
predetermined levels in revenues and margins over the next year. The former
stockholders of Micro-C have the right to request the Company to register the
resale of their shares of Common Stock and may sell some of the shares pursuant
to Rule 144 promulgated under the Securities Act of 1933, as amended.
Jim C. Cowart, Chairman of the Board and Chief Executive Officer of
the Company, and David A. Lahar, President of the Company, own an aggregate of
700,000 common stock purchase warrants (the "Cowart/Lahar Warrants"). 237,500
of the Cowart/Lahar Warrants are exercisable into an aggregate of 237,500
shares of Common Stock at $6.40 per share and 462,500 of the Cowart/Lahar
Warrants are exercisable into an aggregate of 462,500 shares of Common Stock at
$5.60 per share. Mr. Cowart and Mr. Lahar have the right to request the
Company to register the resale of the shares of Common Stock underlying the
Cowart/Lahar Warrants.
The Lenders own an aggregate of 379,610 common stock purchase
warrants (the "Bank Warrants") as part of their financing fee. The number of
Bank Warrants may be reduced by 50% if certain loans and commitments under the
Senior Secured Financing facility are prepaid in full or terminated, as
appropriate, on or before May 12, 1995 from the proceeds of equity and/or
subordinated debt issued by the Company. Subject to the foregoing, the Bank
Warrants are exercisable into an aggregate of 379,610 shares of Common Stock at
$4.72 per share (subject to certain anti-dilution provisions). The holders of
the Bank Warrants have the right to request the Company to register the resale
of the shares of Common Stock underlying the Bank Warrants.
The Lenders also received additional common stock purchase warrants
to purchase shares of Common Stock (the "Contingent Warrants") at an exercise
price equal to 50% of the Fair Market Value (as defined in the Warrant
Agreements governing the Contingent Warrants) of one share of Common Stock as
of March 31, 1995 (the "Exercise Price"). The number of shares of Common Stock
underlying the Contingent Warrants is equal to (i) the balance of principal and
accrued and unpaid interest outstanding on March 31, 1995 on the Company's 7%
Subordinated Convertible Promissory Notes due September 30, 1997 (the "7%
Notes"), divided by (ii) the Exercise Price. The Contingent Warrants will be
declared null and void if certain conditions in the Senior Secured Credit
Agreement with respect to the 7% Notes are waived or met. However, if the
Company is unable to meet or waive these conditions, the Company will issue a
non-cash charge to operations during the three month period ending March 31,
1995 of approximately $4,000,000. The holders of the Contingent Warrants have
the right to request the Company to register the issuance of the shares of
Common Stock underlying the Contingent Warrants.
In addition to the foregoing, the Company currently has an
effective registration statement pursuant to which the former shareholders of
FRS may sell up to 743,859 shares of Common Stock. The Company also has an
effective registration statement pursuant to which four former officers of AEG
may receive and resell up to 293,750 shares of Common Stock upon the exercise
of stock options exercisable at $6.40 per share.
Sales of a substantial number of shares of Common Stock by the
foregoing persons or institutions may have an adverse effect on the market
price of the Common Stock.
-9-
<PAGE> 11
SELLING STOCKHOLDERS
The Selling Stockholders listed in the following table have agreed
to sell the number of shares of Common Stock set forth opposite their
respective names. The table sets forth information with respect to the
beneficial ownership of the Company's Common Stock by the Selling Stockholders
immediately prior to this offering and as adjusted to reflect the sale of
shares of Common Stock pursuant to the offering. All information with respect
to beneficial ownership has been furnished by the respective Selling
Stockholders.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
---------------------------- ----------------------
Number of Shares to Number of Percent of
Name of Beneficial Owner Shares be Sold Shares Class
- ----------------------------------- --------- --------- --------- ----------
<S> <C> <C> <C> <C>
CCB Computer Brokers, Inc. 877,495* 877,495* -0- **
Gary P. Owen 21,760 21,760 -0- **
Richard E. Smith 19,200 19,200 -0- **
Dennis J. Cagan 15,360 15,360 -0- **
</TABLE>
- -------------------
* Subject to the provisions of the Century Purchase Agreement,
621,495 of these shares will not be issued until December 31, 1995.
** Less than 1%.
PLAN OF DISTRIBUTION
The sale of the Common Stock by the Selling Stockholders may be
effected from time to time directly or by one or more broker-dealers or agents,
in one or more transactions (which may involve crosses and block transactions)
on the AMEX, in negotiated transactions (including, without limitation,
privately negotiated transactions with, or transfers in connection with a
dissolution or liquidation of CCB to, CCB's former employees and/or
shareholders), or through a combination of such methods of distribution, at
prices related to prevailing market prices or at negotiated prices.
In the event one or more broker-dealers or agents agree to sell the
Common Stock, they may do so by purchasing the Common Stock as principals or by
selling the Common Stock as agent for the Selling Stockholders. Any such
broker-dealers may receive compensation in the form of discounts, concessions,
or commissions from the Selling Stockholders and/or the purchasers of the
shares of Common Stock for which such broker-dealer may act as agent or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary compensation).
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Common Stock may not simultaneously
engage in market-making activities with respect to the Company's Common Stock
for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rule
10b-6.
In order to comply with certain states' securities laws, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the Common Stock
may not be sold unless the Common Stock has been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and is complied with.
-10-
<PAGE> 12
The Company has agreed to indemnify the Selling Stockholders and
certain other persons against certain liabilities including certain liabilities
arising under the Securities Act, and the Selling Stockholders have agreed to
indemnify the Company and certain other persons against any liabilities arising
out of any material misstatement in, or material omission from, any
registration statement or prospectus that was made in conformity with
information supplied in writing by the Selling Stockholders for that purpose.
The Company has agreed to use its best efforts to keep the
Registration Statement of which this Prospectus is a part continuously
effective for a period of at least 2 years from the date the shares were issued
or such shorter period ending when all the Common Stock covered by the
Registration Statement has been sold or otherwise distributed pursuant to the
Registration Statement or may be sold pursuant to Rule 144 under the Securities
Act.
USE OF PROCEEDS
Any sale of the Common Stock by the Selling Stockholders will be
for their own account. The Company will not receive any of the proceeds from
the offering.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby
will be passed upon for the Company by Hughes & Luce, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements and schedules of the Company
included in the 1994 10-K referred to under "Documents Incorporated by
Reference" have been audited by Arthur Andersen L.L.P. independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
-11-
<PAGE> 13
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee to the Commission................... $ 1,759
Accounting fees and expenses......................... 10,000*
Legal fees and expenses.............................. 20,000*
Printing and engraving............................... 1,000*
Miscellaneous expenses............................... 2,500*
Total............................ $35,259*
</TABLE>
__________________
* Estimated
The Company has agreed to bear all of the above expenses in connection
with the registration and sale of the shares of Common Stock being offered by
the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Restated Certificate of Incorporation and Bylaws, as
amended to date, provide for indemnification to officers and directors of the
Company to the fullest extent permitted by the Delaware General Corporation Law
("DGCL"). The Company's Restated Certificate of Incorporation provides,
consistent with the provisions of the DGCL, that no director of the Company
will be personally liable to the Company or any of its stockholders for
monetary damages arising from the director's breach of fiduciary duty as a
director. However, this does not apply with respect to any action in which the
director would be liable under Section 174 of Title 8 of the DGCL nor does it
apply with respect to any liability in which the director (i) has breached his
duty of loyalty to the Company and its stockholders, (ii) does not act in good
faith or, in failing to act, does not act in good faith, (iii) has acted in a
manner involving intentional misconduct or a knowing violation of law or, in
failing to act, has acted in a manner involving intentional misconduct or a
knowing violation of law, or (iv) has derived an improper personal benefit.
Pursuant to the provisions of Section 145 of the DGCL, every Delaware
corporation has the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of any corporation, partnership, joint venture, trust or other enterprise,
against any and all expenses, judgments, fines and amounts paid in settlement
and reasonably incurred in connection with such action, suit or proceeding.
The power to indemnify applies only if such person acted in good faith and in a
manner he reasonably believed to be in the best interest, or not opposed to the
best interest, of the corporation and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right
of the corporation as well, but only to the extent of defense and settlement
expenses and not to any satisfaction of a judgment or settlement of the claim
itself, and with the further limitation that in such
II-1
<PAGE> 14
actions no indemnification shall be made in the event of any adjudication
unless the court, in its discretion, believes that in light of all the
circumstances indemnification should apply.
To the extent any of the persons referred to in the two immediately
preceding paragraphs is successful in the defense of actions referred to
therein, such person is entitled, pursuant to Section 145, to indemnification
as described above.
The Company has entered into indemnity agreements with each of its
directors. Each such Indemnification Agreement provides for indemnification of
directors of the Company to the fullest extent permitted by the DGCL and
additionally permits advancing attorneys' fees and all other costs, expenses,
obligations, fines and losses, paid or incurred by a director generally in
connection with the investigation, defense or other participation in any
threatened, pending or completed action, suit or proceeding or any inquiry or
investigation thereof, whether conducted by or on behalf of the Company or any
other party. If it is later determined that the director is or was not
entitled to indemnification under applicable law, the Company is entitled to
reimbursement by the director.
The Indemnification Agreements further provide that in the event of a
change in control of the Company, then with respect to all matters thereafter
arising concerning the rights of directors to indemnity payments and expense
advances, all determinations regarding excludable claims will be made only by a
court of competent jurisdiction or by a special independent legal counsel
selected by the director and approved by the Company.
To the extent the board of directors or the stockholders of the
Company may in the future wish to limit or repeal the ability of the Company to
indemnify directors, such repeal or limitation may not be effective as to
directors who are currently parties to the Indemnification Agreements, because
their rights to full protection are contractually assured by the
Indemnification Agreements. It is anticipated that similar contracts may be
entered into, from time to time, with future directors of the Company.
The Company also provides customary indemnification of all of the
officers and directors of the Company pursuant to an insurance policy with a
third party insurer.
Insofar as indemnification by the Company for liabilities arising
under the Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.
ITEM 16. EXHIBITS.
The Exhibits to this registration statement are listed in the Index to
Exhibits on page II-6 of this registration statement, which index is
incorporated herein by reference.
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:
II-2
<PAGE> 15
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) and 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification by the Company for liabilities arising
under the Securities Act may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities 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 director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Irvine, State of
California, on February 9, 1995.
AURORA ELECTRONICS, INC.
By: /s/ Jim C. Cowart
Jim C. Cowart,
Chairman of the Board and
Chief Executive Officer
II-4
<PAGE> 17
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed on February 9, 1995 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title
- ---------------------------------- -----------------------------------
<S> <C>
/s/ Robert G. Allison * Director
- ----------------------------------
Robert G. Allison
/s/ Harvey B. Cash * Director
- ----------------------------------
Harvey B. Cash
/s/ Jim C. Cowart Chairman of the Board, Chief
- ---------------------------------- Executive Officer and Director
Jim C. Cowart (Principal Executive Officer)
/s/ John P. Grazer Vice President - Finance and Administration and Chief
- ---------------------------------- Financial Officer (Principal Accounting and Financial
John P. Grazer Officer)
/s/ Amin J. Khoury * Director
- ---------------------------------
Amin J. Khoury
/s/ David A. Lahar * Director
- ----------------------------------
David A. Lahar
/s/ William H. Watkins, Jr. * Director
- ----------------------------------
William H. Watkins, Jr.
/s/ Jim C. Cowart
- ----------------------------------
* Jim C. Cowart,
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequential
Exhibit Page
Number Description of Exhibits Number*
- ------ ------------------------------------------------------------------------------- ----------
<S> <C> <C>
2.1 Asset Purchase Agreement dated March 15, 1994 to be effective as of March 1, --
1994, as amended, by and among the Company, Aurora Electronics Group, Inc., CCB
Computer Brokers, Inc. and CCM Computers International, Ltd. (incorporated by
reference from Exhibit (b)(1) to the Company's Report on Form 10-Q for the
quarter ended March 31, 1994)
4.1 Indenture between the Company and MBank Dallas, National Association relating to --
the Company's 7-3/4% Convertible Subordinated Debentures due 2001, including form
of Debenture (incorporated by reference from Exhibit 4.1 to the Company's
Registration Statement on Form S-2 (Registration No. 33-4276))
4.2 First Supplemental Indenture relating to the Company's 7-3/4% Convertible --
Subordinated Debentures due 2001, dated December 1, 1987, between the Company and
MTrust Corp, National Association, appointing MTrust Corp as successor Trustee to
MBank Dallas (incorporated by reference from Exhibit 4.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1993.)
4.3*** Tripartite Agreement relating to the Company's 7-3/4% Convertible Subordinated
Debentures due 2001, dated as of January 7, 1990, by and among MTrust Corp,
National Association, Ameritrust Company National Association and the Company
4.4 Second Supplemental Indenture relating to the Company's 7-3/4% Convertible
Subordinated Debentures due 2001, dated to be effective as of November 30, 1992,
between the Company and Society National Bank (incorporated by reference from
Exhibit 4.4 to the Company's Post-Effective Amendment No. 1 to Registration
Statement on Form S-3 (No. 33-32377))
4.5*** Indenture, dated as of November 15, 1989, between the Company and Ameritrust
Texas N.A. (formerly MTrust Corp, National Association), relating to the
Company's 9-1/4% Senior Subordinated Notes due 1996, including form of Note
</TABLE>
II-6
<PAGE> 19
<TABLE>
<S> <C> <C>
4.6 First Supplemental Indenture relating to the Company's 9-1/4% Senior Subordinated --
Notes due 1996, dated as of June 29, 1990, by and between Ameritrust Texas N.A.
and the Company (incorporated by reference from Exhibit 4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1990)
4.7 Agreement relating to the Company's 9-1/4% Senior Subordinated Notes due 1996, --
dated March 31, 1991, among the Company, Ameritrust Texas N.A. and American Stock
Transfer & Trust Company (incorporated by reference from Exhibit 4 of the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1991)
4.8 Second Supplemental Indenture relating to the Company's 9-1/4% Senior --
Subordinated Notes due 1996, dated to be effective as of November 30, 1992,
between the Company and American Stock Transfer & Trust Company (incorporated by
reference from Exhibit 4.8 to the Company's Post-Effective Amendment No. 1 to
Registration Statement on Form S-3 (No. 33-32377))
4.9 Senior Secured Credit Agreement dated as of May 12, 1994, by and among Aurora --
Electronics Group, Inc., Banque Paribas, Banque Indosuez, Union Bank and Banque
Paribas, as Agent (incorporated by reference from Exhibit 2.1 to the Company's
Report on Form 8-K dated May 26, 1994)
4.9.1 First Amendment to Senior Secured Credit Agreement and First Amendment to
Guaranty dated as of December 27, 1994, by and among Aurora Electronics Group,
Inc., the Company, Banque Paribas as Agent on behalf of itself, Banque Indosuez
and Union Bank (incorporated by reference from Exhibit 10.17.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1994).
5.1*** Opinion of Hughes & Luce, L.L.P. regarding validity of the Common Stock --
23.1*** The Consent of Hughes & Luce, L.L.P. is contained in its opinion filed as Exhibit --
5.1
23.2*** Consent of Arthur Andersen L.L.P. --
25.1** Power of Attorney
</TABLE>
____________________
* The page numbers where exhibits (other than those incorporated
by reference) can be found are only on the manually signed copy
of the Registration Statement.
** Previously filed.
*** Filed herewith.
II-7
<PAGE> 1
EXHIBIT 4.3
TRIPARTITE AGREEMENT
THIS AGREEMENT is being entered into as of January 17, 1990, among BSN
Corp. (the "Company"), a corporation organized and existing under the laws of
the State of Delaware, MTrust Corp., N.A., a national banking association, as
Trustee (the "Predecessor Trustee") and Ameritrust Company National Association
(the "Successor Trustee"), a national banking association.
WITNESSETH:
WHEREAS, the Company has presently issued and outstanding
approximately $12,450,000 of its 7-3/4% Convertible Subordinated Debentures due
2001 (the "Debentures") under an Indenture, dated as of April 15, 1986, between
the Company and Mtrust Corp. N.A., as Trustee, as supplemented by First
Supplemental Indenture dated as of December 1, 1987 (collectively the
"Indenture"); and
WHEREAS, by letter and notice, dated January 17, 1990 (the "Notice of
Resignation"), the Predecessor Trustee notified the Company that it was
resigning as Trustee under the Indenture pursuant to Section 8.09 of Article 8
of the Indenture and Section 8.10 of Article 8 of the Indenture, such
resignation being effective upon the acceptance of appointment by the Company
of a successor trustee as provided in said Article 8; and
WHEREAS, under Section 8.10 of the Indenture, the Company is obligated
to promptly appoint a successor trustee to fill the vacancy created by the
resignation of the Predecessor Trustee; and
WHEREAS, the Company desires to appoint the Successor Trustee as
successor trustee under the Indenture; and
WHEREAS, all actions and conditions precedent provided for in the
Indenture (including any covenant the compliance with which constitutes a
condition precedent) with respect to the appointment of the Successor Trustee
as Trustee under the Indenture have been performed and complied with; and
WHEREAS, the Successor Trustee is willing to accept appointment as
Trustee under the Indenture:
NOW, THEREFORE, in consideration of the mutual covenants and
agreements and representations and warranties of the parties herein contained,
the parties hereto agree as follows:
Section 1. Resignation of Trustee. The Predecessor Trustee in
accordance with the Notice of Resignation hereby resigns from the office of
Trustee under the Indenture, and the Company hereby accepts such resignation,
all effective as of 5:00 p.m., Dallas, Texas, time on January 17, 1990.
1
<PAGE> 2
Section 2. Appointments and Acceptance of Appointments. The Company,
pursuant to the Board of Directors' resolutions attached hereto as Exhibit "A"
hereby appoints the Successor Trustee as Trustee and Cleveland, Ohio as the
trustee's principal office under the Indenture. Mtrust will continue in its
capacity as Registrar and Paying Agent and as the office or agency of the
Company in Dallas, Texas, and New York, New York, where notices and demands to
or upon the Company in respect of the Debentures or of the indenture may be
served, with all authority, rights, powers, trusts and immunities which are
vested in, and all duties and obligations which are binding upon, the Trustee
in such capacity under the Indenture, such appointment to be effective as of
5:00 p.m., Dallas, Texas, time on January 17, 1990.
The Successor Trustee hereby accepts its appointment as Trustee, under
the Indenture at its principal corporate trust office at 2073 East 9th Street,
Cleveland, Ohio 44115, as Trustee, effective as of 5:00 p.m., Dallas, Texas,
time on January 17, 1990, and accepts the authority, rights, powers, trusts,
immunities, duties and obligations created by the Indenture, and hereby agrees
to perform said authorities, rights, powers, trusts, immunities, duties and
obligations upon the terms and conditions set forth in the Indenture.
The Successor Trustee represents and warrants that it is qualified and
eligible under Section 310 of the Trust Indenture Act of 1939 and Section 8.08
of Article 8 of the Indenture to act as Trustee.
Section 3. Assignment of Trust Powers and Confirmation by the Company.
Pursuant to the request of the Successor Trustee and Company, the Predecessor
Trustee hereby assigns, transfers, delegates and delivers, effective as of 5:00
p.m., Dallas, Texas time on January 17, 1990, to the Successor Trustee as
Trustee, under the Indenture all its authority, rights, powers, trusts,
immunities, duties and obligations as Trustee, under the Indenture, and all
property and monies, if any, held by it as Trustee, under the Indenture. In
furtherance of the foregoing, the Predecessor Trustee shall promptly execute
and deliver to the Successor Trustee that certain Assignment in the form and
upon the terms of Exhibit "B" hereto, which shall be acknowledged by the
Successor Trustee.
Pursuant to the request of Successor Trustee, the Company hereby
confirms the assignment and transfer to Successor Trustee by the Predecessor
Trustee of all of the Predecessor Trustee's authority, rights, powers, trusts,
immunities, duties and obligations as Trustee under the Indenture.
Section 4. Predecessor Trustee Representations and Warranties.
Predecessor Trustee represents and warrants that as of the date hereof it is
not holding any property or funds as Trustee under the Indenture. The
Predecessor Trustee represents and warrants to Successor Trustee that the
Company has paid to it all amounts due it as Trustee, known to it as of this
date for reasonable compensation, expenses, disbursements and advancements
under Section 8.06 of the Indenture or has made provision satisfactory to the
Predecessor Trustee for all such payments. The Predecessor Trustee makes no
representation or warranty regarding the financial condition of the Company or
the Company's ability to fulfill its obligations under the Indenture.
2
<PAGE> 3
Section 5. Notice to Holders of Debentures. In accordance with the
provisions of Section 8.10 of the Indenture, the Successor Trustee agrees to
give notice of the resignation of the Predecessor Trustee, as Trustee and the
succession of the Successor Trustee, as Trustee under the Indenture, and as an
office or agency of the Company in the City of Cleveland, State of Ohio, where
notices and demands to or upon the Company in respect of the Debentures or of
the Indenture may be served, by mailing, within 10 business days after
acceptance by Successor Trustee of its appointment, the form of notice attached
hereto as Exhibit "C" by first-class mail, postage prepaid, to the holders of
the Debentures as their names and addresses appear in the Debenture register.
Mtrust, the Predecessor Trustee, will continue in its capacity as Registrar and
Paying Agent and as the office or agency of the Company in Dallas, Texas, and
New York, New York, where notices and demands to or upon the Company in respect
of the Debentures or of the Indenture may be served. Such notice shall include
the name of the Successor Trustee and the address of its principal corporate
trust office.
Section 6. Indemnification and Compensation. In addition to the
indemnification contained in Section 8.01 of the Indenture, the Company hereby
agrees to indemnify and hold Successor Trustee harmless from any costs, losses,
or expenses, including attorneys' fees, actually incurred or liabilities
actually paid by Successor Trustee arising out of or in connection with the
acts or omissions of Predecessor Trustee to the extent the Predecessor Trustee
would be indemnified for such acts or omissions under the Indenture. In
connection with any claim made under the indemnification provision set forth in
this paragraph, the Company shall be given written notice setting forth in full
the nature of the claim and an accounting setting forth all costs, expenses,
losses or liabilities in reasonable detail.
In addition to the agreements of the Company contained in Section 8.06
of the Indenture, the Company shall pay to the Successor Trustee from time to
time compensation for its services in accordance with the Successor Trustee's
then current fee schedule. The Successor Trustee's current fee schedule is
attached hereto as Exhibit "D".
Section 7. Company Representations and Warranties. The Company
represents and warrants to Successor Trustee that:
(a) Corporate Existence. The Company is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware.
(b) Corporate Power and Authorization. The Company is
duly authorized and empowered to execute, deliver and perform this
Agreement and the Indenture; and all corporate action on the Company's
part requisite for the due execution, delivery and performance of this
Agreement and of the Indenture has been duly and effectively taken.
(c) Binding Obligations. This Agreement, the Debentures
and the Indenture constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of
equitable remedies may be limited by equitable principles of general
application).
3
<PAGE> 4
(d) No Default. The Company has not committed a breach
or violation of the performance of any of the material covenants,
conditions or provisions of the Indenture and there exists no
condition, event or act which constitutes an Event of Default as
defined in Section 7.01 of the Indenture, and no condition, event or
act which with the giving of notice or lapse of time, or both, would
become such an Event of Default.
(e) Conditions Precedent. All conditions precedent
provided for in the Indenture (including any covenants the compliance
with which constitutes a condition precedent), and all provisions
contained therein, including but not limited to those with respect to
the appointment of Successor Trustee as Trustee under the Indenture
have been complied with.
(f) Exchange Listing. The Debentures are listed and
traded on the American Stock Exchange.
Section 8. Preservation of Rights. Except as expressly provided
herein, nothing contained in this Agreement shall in any way affect the
obligations or rights of the Company, Predecessor Trustee, Successor Trustee or
any Debentureholder under the Indenture.
Section 9. Execution in Counterparts. This instrument may be executed
in several counterparts, each of which, when so executed, shall be deemed to be
an original, but such counterparts shall together constitute but one and the
same instrument.
Section 10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BSN CORP.
By: _________________________
Michael J. Blumenfeld,
President
AMERITRUST COMPANY NATIONAL
ASSOCIATION
By: ________________________
Name: ______________________
Title: _____________________
[SEAL]
ATTEST:
4
<PAGE> 5
________________________________
K. Joyce, Assistant Secretary
________________________________
By: ____________________________
Name: __________________________
Title: _________________________
[SEAL]
ATTEST:
_________________________________
Greg Hasty, Vice President
THE STATE OF _________ )
)
COUNTY OF ___________ )
This foregoing instrument was acknowledged before me this ____ day of
_________, 19___, by _________________________ of ____________________, a
________ corporation, on behalf of the corporation.
___________________________________
Notary Public - State of __________
My Commission Expires:
______________________________
5
<PAGE> 6
THE STATE OF _________ )
)
COUNTY OF ___________ )
This instrument was acknowledged before me this ____ day of _________,
19___, by _________________________ of ____________________, a national banking
association, on behalf of said association.
___________________________________
Notary Public - State of __________
My Commission Expires:
___________________________________
THE STATE OF _________ )
)
COUNTY OF ___________ )
This instrument was acknowledged before me this ____ day of _________,
19___, by _________________________ of ____________________, a national banking
association, on behalf of said association.
__________________________________
Notary Public - State of _________
My Commission Expires:
___________________________________
6
<PAGE> 1
EXHIBIT 4.5
THIS INDENTURE dated as of the fifteenth day of November, 1989,
between BSN CORP., a Delaware corporation (the "Company"), and MTrust Corp,
National Association (the "Trustee").
Both parties agree as follows for the benefit of the other and for the
equal and ratable benefit of the holders of the Company's 9-1/4% Senior
Subordinated Notes due 1996.
ARTICLE ONE
Definitions and Incorporation by Reference
SECTION 1.01. Certain terms defined. The terms defined in this
Section 1.01 (except as otherwise expressly provided or unless the context
otherwise requires) for all purposes of this Indenture and of any indenture
supplemental hereto shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in the
TIA or which are by reference therein defined in the Securities Act of 1933
(except as otherwise expressly provided or unless the context otherwise
requires) shall have the meanings assigned to such terms in the TIA and in said
Securities Act as they are in force at the date of the execution of this
Indenture.
Board of Directors: The term "Board of Directors," when used with
reference to the Company, shall mean the Board of Directors of the Company, or
the Executive Committee of the Board of Directors of the Company, if any.
Business Day: The term "business day" shall mean a day other than a
Saturday, a Sunday, or a day which shall be in the City of Dallas, Texas, a day
on which banking institutions are authorized or obligated by law, regulation,
or executive order to close.
Company: The term "Company" shall mean BSN Corp., a Delaware
corporation, and, subject to the provisions of Article Eleven, shall also
include its successors and assigns.
Event of Default: The term "Event of Default" shall mean any event
specified in Section 6.01, continued for the period of time, if any, and after
the giving of notice, if any, therein designated.
Indenture: The term "Indenture" shall mean this instrument as
originally executed, or, if amended or supplemented as herein provided, as so
amended or supplemented.
Interest Payment Date: The term "Interest Payment Date" shall mean
the stated maturity of an installment of interest on the Notes.
Note or Notes; Outstanding: The term "Note" or "Notes" shall mean any
Note or Notes, as the case may be, authenticated and delivered under this
Indenture.
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The term "outstanding," when used with reference to Notes, shall,
subject to the provisions of Section 8.04, mean, as of any particular time, all
Notes authenticated and delivered by the Trustee under this Indenture, except
(a) Notes theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Notes, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other
than the Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent),
provided that such Notes shall have reached their stated maturity, or,
if such Notes are to be redeemed prior to the maturity thereof, notice
of such redemption shall have been given as in Article Four provided,
or provision satisfactory to the Trustee shall have been made for
giving notice; and
(c) Notes in lieu of or in substitution for which other
Notes shall have been authenticated and delivered pursuant to the
terms of Section 2.07, unless proof satisfactory to the Trustee is
presented that any such Notes are held by bona fide holders in due
course.
Note Register: The term "Note Register" shall have the meaning
specified in Section 2.05.
Noteholder; Registered Holder: The term "Noteholder," "holder of
Notes," or "registered holder" or other similar terms, shall mean any person
who shall at the time be the registered holder of any Note or Notes on the
books of the Company kept for that purpose in accordance with the provisions of
the Indenture and shall also mean the executors, administrators, and other
legal representatives of such person.
Officers' Certificate: The term "Officers' Certificate" shall mean a
certificate signed by the Chairman of the Board or the President or any Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company. Each such certificate shall include the
statements provided for in Section 14.05, if and to the extent required by the
provisions thereof.
Opinion of Counsel: The term "Opinion of Counsel" shall mean an
opinion in writing signed by legal counsel, who may be an employee of, or of
counsel to, the Company and who shall be satisfactory to the Trustee. Each
such opinion shall include the statements provided for in Section 14.05, if and
to the extent required by the provisions thereof.
Record Date: The term "Record Date" shall mean a Regular Record Date
or a Special Record Date.
Redemption Date: The term "Redemption Date" when used with respect to
any Notes to be redeemed shall mean the date fixed for redemption by or
pursuant to this Indenture.
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Regular Record Date: The term "Regular Record Date" for the interest
payable on any Interest Payment Date shall mean the April 30 or October 31, as
the case may be, next preceding such Interest Payment Date, or, if such April
30 or October 31 is not a business day, the business day next preceding such
April 30 or October 31.
Responsible Officer: The term "responsible officer," when used with
respect to the Trustee, shall mean any officer within the Debt Administration
Department of the Trustee, including (without limitation) any Vice President,
Assistant Vice President, any trust officer, or any other officer performing
functions similar to those performed by the persons who at the time shall be
such officers, and any other officer of the Trustee to whom corporate trust
matters are referred because of his knowledge of and familiarity with the
particular subject.
SEC: The term "SEC" shall mean the Securities and Exchange Commission.
Senior Indebtedness: The term "Senior Indebtedness" shall mean the
principal, premium (if any), interest, penalties, and other amounts (including
attorneys' fees, costs, and expenses associated therewith) due with respect to
any indebtedness, contingent or otherwise, now outstanding or created,
incurred, issued, assumed, or guaranteed in the future by the Company or to
which assets of the Company are subject, including, without limitation: (i)
indebtedness for money borrowed, (ii) indebtedness of the Company which is
evidenced by a note, debenture, or similar instrument given in connection with
the acquisition of any property or assets, (iii) obligations incurred under
leases which are required to be capitalized under generally accepted accounting
principles, and (iv) all deferrals, renewals, extensions, and refundings of any
such indebtedness or obligations; other than (a) indebtedness as to which, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right of
payment to all other indebtedness of the Company, (b) indebtedness which by its
terms refers explicitly to the Notes issued hereunder and states that such
indebtedness shall not be senior thereto, (c) indebtedness of the Company in
respect of the Notes, (d) indebtedness of the Company in respect of its 7-3/4%
Convertible Subordinated Debentures due 2001, (e) indebtedness of or amounts
owed by the Company for compensation to employees, or for goods or materials
purchased in the ordinary course of business, or for services, and (f) lease
obligations which are not capitalized as provided in (iii) above.
Special Record Date: The term "Special Record Date" for payment of
any defaulted interest shall mean a date fixed by the Trustee pursuant to
Section 2.03.
Subordinated Debt: The term "Subordinated Debt" shall mean the
principal, premium (if any), and unpaid interest on (i) the Company's 7-3/4%
Convertible Subordinated Debentures due 2001, and (ii) any indebtedness for
money borrowed now outstanding or hereafter incurred as to which, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such indebtedness is subordinate in right of
payment to all other indebtedness of the Company.
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<PAGE> 4
Subsidiary: The term "Subsidiary" shall mean any corporation or other
entity at least a majority of the outstanding voting shares of which is at the
time directly or indirectly owned or controlled (either alone or through
Subsidiaries or together with Subsidiaries) by the Company or another
Subsidiary.
Trustee; Principal Office: The term "Trustee" shall mean MTrust Corp,
National Association, and, subject to the provisions of Article Seven, shall
also include its successors. The term "principal office" shall mean the
principal office of the Trustee, at which at any particular time its corporate
trust business may be administered.
TIA: The term "TIA" shall mean the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb) as it is in force at the date of execution of
this Indenture.
U.S. Government Obligations: The term "U.S. Government Obligations"
shall mean direct obligations of the United States of America for the payment
of which the full faith and credit of the United States of America is pledged.
SECTION 1.02. References are to Indenture. Unless the context
otherwise requires, all references herein to "Articles," "Sections," and other
subdivisions refer to the corresponding Articles, Sections, and other
subdivisions of this Indenture, and the words "herein," "hereof," "hereby,"
"hereunder," and words of similar import refer to this Indenture as a whole and
not to any particular Article, Section, or other subdivision hereof.
SECTION 1.03. 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 Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute, or defined by SEC rules and
not otherwise defined herein shall have the meanings assigned to them therein.
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SECTION 1.04. 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 generally accepted accounting
principles in effect on the date hereof, and any other reference in
this Indenture to "generally accepted accounting principles" refers to
generally accepted accounting principles on the date hereof.
(3) "or" is not exclusive.
(4) words in the singular include the plural, and words in the
plural include the singular.
(5) provisions apply to successive events and transactions.
ARTICLE TWO
Issue, Description, Execution, Registration,
and Transfer of Notes
SECTION 2.01. Designation, amount, authentication, and delivery of
Notes. The Notes shall be designated as 9-1/4% Senior Subordinated Notes due
1996. Notes in the aggregate principal amount of up to Twenty-Five Million
dollars ($25,000,000), upon the execution of this Indenture, or from time to
time thereafter, may be executed by the Company and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate and deliver
said Notes to or upon the written order of the Company, signed by its President
or a Vice President, without any further corporate action by the Company. Such
written order need not be accompanied by the Officers' Certificate and Opinion
of Counsel provided for in Section 14.05.
The aggregate principal amount of Notes authorized by this Indenture
is limited to Twenty-Five Million dollars ($25,000,000) and, except as provided
in Section 2.07, the Company shall not execute and the Trustee shall not
authenticate or deliver Notes in excess of such aggregate principal amount.
Nothing contained in thisSection 2.01 or elsewhere in this Indenture,
or in the Notes, is intended to or shall limit execution by the Company or
authentication or delivery by the Trustee of Notes under the circumstances
contemplated by Sections 2.05, 2.06, 2.07, 4.02, 4.03, 10.04 and 11.02.
SECTION 2.02. Form of Notes and Trustee's Certificate. The
definitive Notes and the Trustee's Certificate of Authentication to be borne by
the Notes shall be substantially in the form attached as Exhibit A, and may
have such letters, numbers, or other marks of identification or designation and
such legends or endorsements printed, lithographed, or engraved thereon as the
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<PAGE> 6
officers executing the same may deem appropriate and as are not inconsistent
with the provisions of this Indenture, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange on which the Notes may be listed, or to
conform to usage.
SECTION 2.03. Date of Notes and denominations; payment of interest;
persons deemed owners. The Notes shall bear interest at the rate per annum set
forth in their title, payable semi-annually on May 15 and November 15
commencing May 15, 1990, shall mature on November 15, 1996, and shall be
issuable as registered Notes without coupons in denominations of $1,000 and any
integral multiple thereof. The person in whose name any Note is registered at
the close of business of the paying agent hereunder on any Record Date with
respect to any Interest Payment Date shall be entitled to receive the interest
payable thereon on such Interest Payment Date notwithstanding the cancellation
of such Note upon registration of transfer thereof subsequent to such Record
Date and prior to the Interest Payment Date, unless such Note shall have been
called for redemption on a Redemption Date subsequent to such Record Date and
prior to such Interest Payment Date, in which case interest shall be paid to
the Redemption Date, or unless an Event of Default shall have occurred and be
continuing as the result of a default in the payment of interest due on such
Interest Payment Date on any Note, in which case the defaulted interest shall
be paid to the person in whose name such Note (or any Note or Notes issued upon
registration of transfer or exchange thereof) is registered on the Special
Record Date. Payment of interest may be made at the option of the Company by
check mailed by the paying agent to the registered address of the person
entitled thereto.
Except as provided in the next sentence, the Notes shall be dated the
date of their authentication and shall bear interest from November 30, 1989,
or, if interest to any subsequent May 15 or November 15 has been paid, from the
most recent such May 15 or November 15, semi-annually on May 15 or November 15
of each year, commencing May 15, 1990, or if such date is not a business day,
on the next succeeding business day thereafter until payment of said principal
sum has been made or duly provided for. Each Note authenticated between the
Regular Record Date for any Interest Payment Date and such Interest Payment
Date shall be dated the date of its authentication but shall bear interest from
such Interest Payment Date.
Any interest on any Note which is payable, but is not punctually paid,
on any Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the registered holder thereof on the relevant
Regular Record Date by virtue of having been such holder; and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in clause (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the persons in whose names the Notes are
registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Note and the date of
the proposed payment, and at the same
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time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
persons entitled to such Defaulted Interest as in this Section 2.03(a)
provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall not be more than 15
days and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date. In the name and at the expense
of the Company, the Trustee shall cause notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Noteholder at his address
as it appears in the Note Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the
persons in whose names the Notes are registered on such Special Record
Date and shall no longer be payable pursuant to the following clause
(b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this Section 2.03(b), such payment shall be deemed
practicable by the Trustee.
Interest on the Notes shall be computed on the basis of a 360 day year
comprised of twelve 30 day months.
Overdue installments of interest on the Notes shall bear interest (to
the extent permitted by law) at the rate per annum specified in the title of
the Notes.
SECTION 2.04. Execution of Notes. The Notes shall be signed on
behalf of the Company, manually or in facsimile, by its Chairman or Vice
Chairman of the Board, President, or a Vice President under its corporate seal
(which may be in facsimile) reproduced thereon and attested, manually or in
facsimile, by its Secretary or an Assistant Secretary. Only such Notes as
shall bear thereon a Trustee's Certificate of Authentication, substantially in
the form found on Exhibit A attached hereto, signed manually by the Trustee,
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. Such certificate by the Trustee upon any Note executed by the
Company shall be conclusive evidence that the Note so authenticated has been
duly authenticated and delivered hereunder and that the holder is entitled to
the benefits of this Indenture.
In case any officer of the Company whose signature appears on any of
the Notes, manually or in facsimile, shall cease to be such officer before such
Notes so signed shall have been authenticated and delivered by the Trustee, or
disposed of by the Company, such Notes nevertheless may be authenticated and
delivered or disposed of as though the person whose signature appears on such
Notes had not ceased to be such officer of the Company; and any Note
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may be signed, and the corporate seal reproduced thereon may be attested, on
behalf of the Company, manually or in facsimile, by such person as, at the
actual date of the execution of such Note, shall be the proper officer of the
Company, although at the date of the execution of this Indenture any such
person was not such officer.
SECTION 2.05. Transfer of Notes. The Company shall keep or cause
to be kept, at the office or agency to be maintained by the Company in
accordance with the provisions of Section 5.02, a register or registers
(sometimes referred to herein as the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall register Notes
and maintain a list of the names and addresses of the Noteholders and shall
register the transfer of Notes as provided in this Article Two. Upon surrender
for registration or transfer of any Note at such office or agency, the Company
shall execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Note or Notes for a like aggregate principal
amount. The Trustee shall have the right to examine the register at any time.
All Notes presented or surrendered for registration of transfer,
redemption, or payment shall, if so required by the Company or the Trustee, be
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Trustee, duly executed by the registered
holder or by his duly authorized attorney.
No service charge shall be made for any registration or transfer of
Notes to the Noteholder, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
The Company shall not be required to issue or register the transfer of
any Notes for a period of fifteen days next preceding any date for the
selection of Notes to be redeemed. The Company shall not be required to
register the transfer of any Note called or being called for redemption.
SECTION 2.06. Temporary Notes. Pending the preparation of
definitive Notes, the Company may execute and the Trustee shall authenticate
and deliver temporary Notes (printed, lithographed, or typewritten) of any
authorized denomination and substantially in the form of the definitive Notes,
but with or without a recital of specific redemption prices and with such
omissions, insertions, and variations as may be appropriate for temporary
Notes, all as may be determined by the Board of Directors of the Company.
Temporary Notes may contain such reference to any provisions of the Indenture
as may be appropriate. Every such temporary Note shall be authenticated by the
Trustee upon the same conditions and in substantially the same manner, and with
the same effect, as the definitive Notes. Without unnecessary delay the
Company will execute and deliver to the Trustee definitive Notes and thereupon
any or all Notes may be surrendered in exchange therefor, at any office or
agency to be maintained by the Company in accordance with the provisions of
Section 5.02, and the Trustee shall authenticate and deliver in exchange for
such temporary Notes an equal aggregate principal amount of definitive Notes.
Until so exchanged, the temporary Notes shall in all respects be entitled to
the same benefits under this Indenture as definitive Notes authenticated and
delivered hereunder.
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SECTION 2.07. Mutilated, destroyed, lost, or stolen Notes. In case
any temporary or definitive Notes shall become mutilated or be destroyed, lost,
or stolen, the Company shall, in the case of any mutilated Notes, and in the
case of any destroyed, lost, or stolen Notes in its discretion may, execute,
and upon the Company's request the Trustee shall authenticate and deliver, a
new Note bearing a number not contemporaneously outstanding in exchange and
substitution for the mutilated Note, or in lieu of and substitution for the
Note so destroyed, lost, or stolen, or, if any such Note shall have matured or
shall be about to mature, instead of issuing a substituted Note, the Company
may pay the same without surrender thereof except in the case of a mutilated
Note. In every case the applicant for a substituted Note or for such payment
shall furnish to the Company and to the Trustee such security or indemnity as
may be required by them to save each of them harmless, and, in every case of
destruction, loss, or theft, the applicant shall also furnish to the Company
and to the Trustee evidence to their satisfaction of the destruction, loss, or
theft of such Note and of the ownership thereof. The Trustee may authenticate
any such substituted Note and deliver the same, or the Trustee or any paying
agent of the Company may make any such payment, upon the written request or
authorization of any officer of the Company, and shall incur no liability to
anyone by reason of anything done or omitted to be done by it in good faith
under the provisions of this Section 2.07. Upon the issue of any substituted
Note, the Company may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other expenses connected therewith.
Every substituted Note issued pursuant to the provisions of this
Section 2.07 in substitution for any destroyed, lost, or stolen Note shall
constitute a contractual obligation of the Company, whether the destroyed,
lost, or stolen Note shall be found at any time, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
All Notes shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement or payment
of mutilated, destroyed, lost, or stolen Notes, and shall preclude (to the
extent lawful) any and all other rights or remedies, notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
surrender.
SECTION 2.08. Cancellation of surrendered Notes. All Notes
surrendered upon or for the purpose of payment, redemption, substitution, or
registration of transfer, shall, if surrendered to the Company or any paying
agent or registrar, be delivered to the Trustee and the same, together with
Notes surrendered to the Trustee, shall be cancelled by it, and no Notes shall
be issued in lieu thereof except as expressly permitted by any of the
provisions of this Indenture. The Trustee shall return cancelled Notes to the
Company.
ARTICLE THREE
Subordination of Notes
SECTION 3.01. Notes Subordinate to Senior Indebtedness. The
Company, for itself, its successors, and assigns, covenants and agrees and each
Noteholder, by his acceptance thereof,
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likewise covenants and agrees, that all Notes issued hereunder shall be
subordinated and subject, to the extent and in the manner herein set forth, in
right of payment to the prior payment in full of all Senior Indebtedness. The
provisions of this Article Three are made for the benefit of all holders of
Senior Indebtedness, and any such holder may proceed to enforce such
provisions.
SECTION 3.02. Distribution on dissolution, liquidation, and
reorganization; Subrogation of Notes. Upon any distribution of assets by the
Company upon any dissolution, winding up, liquidation, or reorganization of the
Company, whether in bankruptcy, insolvency, reorganization, or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Company or otherwise (subject
to the power of a court of competent jurisdiction to make other equitable
provision reflecting the rights conferred in this Indenture upon the Senior
Indebtedness and the holders thereof with respect to the Notes and the holders
thereof by a lawful plan of reorganization under applicable bankruptcy law),
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full of the principal thereof (and
premium, if any) and the interest due thereon before the holders of
the Notes are entitled to receive any payment upon the principal of
(or premium, if any) or interest on indebtedness evidenced by the
Notes;
(b) any payment or distribution of assets of the Company
of any kind or character, whether in cash, property, or securities, to
which the holders of the Notes or the Trustee (this Section shall not
affect fees and expenses due the Trustee underSection 7.06) would be
entitled except for the provisions of this Article Three shall be paid
by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee, or otherwise, directly to the holders of
Senior Indebtedness or their representative or representatives or to
the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on
account of the principal of (and premium, if any) and interest on the
Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company of any kind or
character, whether in cash, property, or securities, shall be received
by the Trustee or holders of the Notes before all Senior Indebtedness
is paid in full, such payment or distribution shall be paid over to
the holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full after giving effect
to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
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Subject to the payment in full of all Senior Indebtedness, the holders of the
Notes shall be subrogated to the rights of the holders of Senior Indebtedness
to receive payments or distributions of cash, property, or securities of the
Company applicable to the Senior Indebtedness until the principal of and
interest on the Senior Indebtedness shall be paid in full and no such payments
or distributions to the holders of the Notes of cash, property, or securities
otherwise distributable to the holders of Senior Indebtedness shall, as between
the Company, its creditors, other than the holders of Senior Indebtedness, and
the holders of the Notes, be deemed to be a payment by the Company to or on
account of the Notes. It is understood that the provisions of this Article
Three are and are intended solely for the purpose of defining the relative
rights of the holders of the Notes, on the one hand, and the holders of Senior
Indebtedness, on the other hand. Nothing contained in this Article Three or
elsewhere in this Indenture or in the Notes is intended to or shall impair, as
between the Company, its creditors, other than the holders of Senior
Indebtedness, and the holders of the Notes, the obligation of the Company,
which is unconditional and absolute, to pay to the holders of the Notes the
principal of and interest on the Notes as and when the same shall become due
and payable in accordance with their terms or to affect the relative rights of
the holders of the Notes and creditors of the Company, other than the holders
of the Senior Indebtedness, nor shall anything herein or in the Notes prevent
the Trustee or the holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article Three of the holders of Senior Indebtedness
in respect of cash, property, or securities of the Company received upon the
exercise of any such remedy. Upon any payment or distribution of assets of the
Company referred to in this Article Three, the Trustee, subject to the
provisions of Section 7.01, and the holders of the Notes shall be entitled to
rely upon a certificate of the liquidating trustee or agent or other person
making any distribution to the Trustee or to the holders of the Notes for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Three.
The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness, and shall not be liable to any such holders
if it shall pay over or distribute to or on behalf of holders of Notes or the
Company money or assets to which any holders of Senior Indebtedness shall be
entitled by virtue of this Article Three.
SECTION 3.03. Payments on Notes prohibited during event of default
under Senior Indebtedness. In the event and during the continuation of any
default in the payment of principal of (or premium, if any), interest on, or
sinking fund obligation with respect to any Senior Indebtedness beyond any
applicable period of grace, or in the event that any event of default with
respect to any Senior Indebtedness shall have occurred and be continuing, or
would occur as a result of the payment referred to hereinafter, permitting the
holders of such Senior Indebtedness (or a trustee on behalf of the holders
thereof) to accelerate the maturity thereof, then, unless and until such
default or event of default shall have been cured or waived or shall have
ceased to exist, no payment of principal of or interest on the Notes shall be
made by the Company.
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SECTION 3.04. Payments on Notes permitted. Nothing contained in
this Indenture or in any of the Notes shall (a) affect the obligation of the
Company to make, or prevent the Company from making, at any time except as
provided in Sections 3.02 and 3.03, payments of principal of or interest on the
Notes, or (b) prevent the application by the Trustee of any moneys deposited
with it hereunder to the payment of or on account of the principal of or
interest on the Notes, if at least three business days prior to the date of
payment or the date such deposit is made, the Trustee did not have written
notice of any event prohibiting the making of such deposit by the Company.
SECTION 3.05. Authorization of Noteholders to Trustee to Effect
Subordination. Each holder of Notes by his acceptance thereof authorizes and
directs the Trustee in his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article Three
and appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 3.06. Notices to Trustee. Notwithstanding any other
provisions of this Indenture, neither the Trustee nor any paying agent shall be
charged with knowledge of the existence of any Senior Indebtedness or of any
event which would prohibit the making of any payment of moneys to or by the
Trustee or such paying agent, unless and until a responsible officer of the
Trustee assigned to its debt administration department or such paying agent
shall have received written notice thereof from the Company or from the holder
of any Senior Indebtedness or from the representative of any such holder.
SECTION 3.07. Notes Senior to Subordinated Debt. Notwithstanding
the provisions of this Article Three or any other provisions of this Indenture,
the Company covenants and agrees that each holder of a Note, subject to the
rights of the holders of Senior Indebtedness, shall be first entitled to
receive payment in full of the principal thereof (and the premium, if any) and
the interest due thereon before the holders of any Subordinated Debt at any
time issued by the Company are entitled to receive any distributions of assets
or securities of the Company.
ARTICLE FOUR
Redemption of Notes
SECTION 4.01. Redemption Price. The Company may, at any time at
its option, redeem all or from time to time any part of the Notes at a
redemption price equal to 100% of the unpaid principal amount thereof plus
accrued interest thereon to the date fixed for redemption.
SECTION 4.02. Notice of Redemption; Selection of Notes. In case
the Company shall desire to exercise such right to redeem all or, as the case
may be, any part of the Notes in accordance with the right reserved so to do,
it shall at least 60 days prior to the Redemption Date fixed by the Company
(unless shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of Notes to be
redeemed and provide the Trustee with an Officers' Certificate as to the
satisfaction of relevant conditions precedent to such redemption.
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Notice of redemption shall be given by the Trustee in the name of and
at the expense of the Company to the holders of Notes to be redeemed as a whole
or in part by mailing by first-class mail a notice of such redemption not less
than 30 days nor more than 60 days prior to the date fixed for redemption to
their last addresses as they shall appear upon the registry books, but failure
to give such notice by mailing to the holder of any Note designated for
redemption as a whole or in part, or any defect therein, shall not affect the
validity of the proceedings for the redemption of any other Notes.
Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether the holder actually
receives the notice.
Each such notice of redemption shall specify the total principal
amount to be redeemed, the date fixed for redemption, and the redemption price
at which the Notes are to be redeemed, and shall state that payment of the
redemption price of the Notes to be redeemed will be made at the office or
agency to be maintained by the Company in accordance with the provisions of
Section 5.02, upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in said
notice, and that on and after said date interest thereon will cease to accrue.
If less than all the Notes are to be redeemed, the notice of redemption to each
holder shall identify the Notes to be redeemed. In case any Note is to be
redeemed in part only, the notice which relates to such Note shall state the
portion of the principal amount thereof to be redeemed (which shall be $1,000
or an integral multiple thereof), and shall state that on and after the
redemption date, upon surrender of such Note, the holder will receive the
redemption price together with accrued interest in respect of the principal
amount thereof called for redemption and, without charge to the Noteholder, a
new Note or Notes of authorized denominations for the principal amount thereof
remaining unredeemed.
At least one business day prior to the Redemption Date specified in
the notice of redemption given as provided in this Section 4.02, the Company
will deposit with the Trustee or with one or more paying agents an amount of
money sufficient in next day funds to redeem on the Redemption Date all the
Notes or portions of Notes so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption.
If less than all the Notes are to be redeemed, the Company shall give
the Trustee, at least 60 days (or such shorter period acceptable to the
Trustee) in advance of the date fixed for redemption, notice of the aggregate
principal amount of Notes to be redeemed, and thereupon the Trustee shall
select, on a pro rata basis or by lot, Notes or portions of Notes thereof to be
redeemed and shall thereafter promptly notify the Company in writing of the
numbers of the Notes or portions thereof to be redeemed.
SECTION 4.03. When Notes Called for Redemption Become Due and
Payable. If the giving of notice of redemption shall have been completed as
above provided, the Notes or portions of Notes specified in such notice shall
become due and payable on the date and at the place stated in such notice at
the applicable redemption price, together with interest accrued to the date
fixed for redemption, and on and after such date fixed for redemption (unless
the
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Company shall default in the payment of such Notes at the redemption price,
together with interest accrued to the date fixed for redemption) interest on
the Notes or portions of Notes so called for redemption shall cease to accrue.
On presentation and surrender of such Notes at the place of payment in said
notice specified, the said Notes shall be paid and redeemed by the Company at
the applicable redemption price, together with interest accrued to the date
fixed for redemption. If the date fixed for redemption is an Interest Payment
Date, such payment shall not include accrued interest, which interest shall be
paid in the usual manner otherwise provided for herein. Upon presentation of
any Note which is redeemed in part only, the Company shall execute and the
Trustee shall authenticate and deliver at the expense of the Company, a new
Note or Notes in principal amount equal to the unredeemed portion of the Note
so presented.
SECTION 4.04. Cancellation of Redeemed Notes. All Notes
surrendered to the Trustee, pursuant to the provisions of this Article Four,
shall be forthwith cancelled by it and returned to the Company.
ARTICLE FIVE
Particular Covenants of the Company
The Company covenants as follows:
SECTION 5.01. Payment of Principal of and Interest on Notes. The
Company will duly and punctually pay or cause to be paid the principal of and
interest on each of the Notes at the time and place and in the manner provided
in the Notes and this Indenture.
SECTION 5.02. Maintenance of Office or Agency for Registration of
Transfer, Exchange, and Payment of Notes. So long as any of the Notes shall
remain outstanding, the Company will maintain an office or agency in the
Borough of Manhattan, The City of New York, State of New York and in the City
of Dallas, State of Texas where the Notes may be surrendered for registration
of transfer as in this Indenture provided, and where notices and demands to or
upon the Company in respect of the Notes or of this Indenture may be served,
and where the Notes may be presented or surrendered for payment. The Company
will give to the Trustee notice of the location of any such office or agency
and of any change of location thereof. In case the Company shall fail to
maintain any such office or agency or shall fail to give such notice of the
location or of any change in location thereof, or at the option of the
Noteholder, such surrenders, presentations, and demands may be made and notices
may be served at the principal corporate trust office of the Trustee in the
City of Dallas, Texas and the Company hereby appoints the Trustee its agent to
receive at the aforesaid offices all such surrenders, presentations, notices,
and demands.
SECTION 5.03. Appointment to Fill a Vacancy in the Office of
Trustee. The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 7.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
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SECTION 5.04. Provision as to Paying Agent.
(a) The Company initially appoints the Trustee as paying
agent. If the Company shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and deliver to the
Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of thisSection 5.04,
(1) that it will hold all sums held by it as
such agent for the payment of the principal of or interest
on the Notes (whether such sums have been paid to it by the
Company or by any other obligor on the Notes) in trust for
the benefit of the persons entitled thereto;
(2) that it will give the Trustee notice of
any failure by the Company (or by any other obligor on the
Notes) to make any payment of the principal of or interest
on the Notes when the same shall be due and payable;
(3) that at any time during the continuance of
any such failure, upon the written request of the Trustee,
it will forthwith pay to the Trustee all sums so held in
trust by such paying agent; and
(4) that it will maintain such records as may be
requested by the Trustee and furnish to the Trustee such copies
thereof as the Trustee may request.
(b) Whenever the Company shall have one or more paying
agents, it will prior to each due date of the principal of or interest
on any Notes, deposit with a paying agent a sum sufficient to pay the
principal or interest so becoming due, such sum to be held in trust
for the benefit of the holders of Notes entitled to such principal or
interest, and (unless such paying agent is the Trustee) the paying
agent will promptly notify the Trustee of its failure to so act.
(c) If the Company shall act as its own paying agent, it
will, on or before each due date of the principal of or interest on
the Notes, set aside, segregate, and hold in trust for the benefit of
the persons entitled thereto, a sum sufficient to pay such principal
or interest so becoming due and will notify the Trustee of any failure
to take such action.
(d) Anything in this Section 5.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of
obtaining a satisfaction and discharge of this Indenture pursuant
toArticle Twelve hereof, or for any other reason, pay or cause to be
paid to the Trustee all sums held in trust by it, or any paying agent
hereunder, as required by this Section 5.04, such sums to be held by
the Trustee or such paying agent upon the trusts herein contained.
(e) Anything in this Section 5.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in
this Section 5.04 is subject to the provisions of Sections 12.03 and
12.04.
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(f) Within a reasonable time prior to each Interest
Payment Date, the Company shall instruct each paying agent, if any,
concerning the manner in which payment of interest is to be made. If
no instructions are received within five days prior to any Interest
Payment Date, each paying agent may make the payments required to be
made by it on such Interest Payment Date in any manner permitted
hereunder.
SECTION 5.05. Officers' Certificates as to Default. The Company
will, so long as any of the Notes are outstanding:
(a) deliver to the Trustee, within 15 days of becoming
aware of any defaults in the performance of any covenant, agreement,
or condition contained in this Indenture, an Officers' Certificate
specifying such default or defaults, and additional Officers'
Certificates as reasonably requested by the Trustee with respect to
the continuance of such default or defaults; and
(b) deliver to the Trustee within 90 days after the end
of each fiscal year of the Company, beginning with the fiscal year
ending December 31, 1989, an Officers' Certificate stating, as to each
signer thereof, that:
(1) a review of the activities of the Company
during such year and of performance under this Indenture has
been made under his supervision; and
(2) to the best of his knowledge, based on
such review, the Company has fulfilled all its obligations
under this Indenture throughout such year, or, if there has
been a default in the fulfillment of any such obligation,
specifying each such default known to him and the nature and
status thereof.
SECTION 5.06. Limitation on Dividends and Other Payments. So long
as any of the Notes are outstanding, if an Event of Default exists under this
Indenture, the Company will not declare or pay any dividends or make any other
distributions of any sort in respect of its capital stock or to its
stockholders (other than dividends or distributions payable solely in capital
stock of the Company), or make or permit any Subsidiary to make any payment on
account of the purchase, redemption, or other acquisition or retirement of any
of the capital stock of the Company.
SECTION 5.07. Reports by the Company.
(a) The Company covenants and agrees to file with the
Trustee within 15 days after the Company is required to file the same
with the SEC, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the
foregoing as the SEC may from time to time by rules and regulations
prescribe) which the Company may be required to file with the SEC
pursuant to Sections 13 or Section 15(d) of the Securities Exchange
Act of 1934; or, if the Company is not required to file information,
documents, or reports pursuant to either of such sections, then to
file with the Trustee and the SEC, in accordance with rules and
regulations prescribed from time to
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<PAGE> 17
time by the SEC, such of the supplementary and periodic information,
documents, and reports which may be required pursuant to Section 13 of
the Securities Exchange Act of 1934 in respect of a security listed
and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the
Trustee and the SEC, in accordance with the rules and regulations
prescribed from time to time by the SEC, such additional information,
documents, and reports with respect to compliance by the Company with
the conditions and covenants provided for in this Indenture as may be
required from time to time by such rules and regulations.
(c) The Company covenants and agrees to transmit to the
holders of Notes within 30 days after the filing thereof with the
Trustee such summaries of any information, documents, and reports
required to be filed by the Company pursuant to subsections (a) and
(b) of this Section 5.07 as may be required by rules and regulations
prescribed from time to time by the SEC.
ARTICLE SIX
Remedies of the Trustee and Distributions
on Event of Default
SECTION 6.01. Event of Default defined. In case one or more of the
following Events of Default shall have occurred and be continuing, that is to
say:
(a) default in the payment, whether or not prohibited by
the provisions of Article Three, of any installment of interest upon
any of the Notes as and when the same shall become due and payable,
and continuance of such default for a period of 30 days; or
(b) default in the payment, whether or not prohibited by
the provisions of Article Three, of the principal of any of the Notes
as and when the same shall become due and payable either at maturity,
or upon redemption, by declaration or otherwise; or
(c) failure on the part of the Company duly to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Company in the Notes or in this
Indenture for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Company by the Trustee, or to the Company and the
Trustee by the holders of at least 25% in principal amount of the
Notes at the time outstanding; or
(d) a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect,or appointing a receiver,
liquidator, assignee, custodian, trustee, or sequestrator (or similar
official) of the Company
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or for any substantial part of its property, or ordering the
winding-up or liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive
days; or
(e) The Company shall commence a voluntary case under any
applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case under any such law, or shall consent to
the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, or sequestrator (or similar official) of
the Company or for any substantial part of its property, or shall make
any general assignment for the benefit of creditors;
then and in each and every such case, unless the principal of all the Notes
shall have already become due and payable, either the Trustee or the holders of
not less than 33-1/3% in aggregate principal amount of the Notes then
outstanding hereunder, by notice in writing to the Company (and to the Trustee
if given by the Noteholders), may declare the principal of all the Notes to be
due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable, anything in this Indenture or
in the Notes to the contrary notwithstanding. This provision, however, is
subject to the condition that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the Notes
and the principal of any and all Notes which shall have become due and
otherwise than by declaration (with interest on overdue installments of
interest to the extent permitted by law, and on such principal at the rate of
interest borne by the Notes to the date of such payment or deposit) and the
expenses of the Trustee, and any and all defaults under the Indenture, other
than the nonpayment of principal of and accrued interest on the Notes which
shall have become due by declaration, shall have been remedied, then and in
every such case the holders of a majority in aggregate principal amount of the
Notes then outstanding, by written notice to the Company and to the Trustee,
may waive all defaults and rescind and annul such declaration and its
consequences; but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default, or shall impair any right consequent
thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Trustee, and the Noteholders shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies, and
powers of the Company and the Trustee shall continue as though no such
proceedings had been taken.
SECTION 6.02. Payment of Notes on default; suit therefor. The
Company covenants that (1) in case default shall be made in the payment of any
installment of interest on any of the Notes, as and when the same shall become
due and payable, and such default shall have continued for a period of 30 days,
or (2) in case default shall be made in the payment of the principal of any of
the Notes when the same shall have become due and payable, whether upon
maturity of the Notes or
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upon redemption or upon declaration or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the
Noteholders, the whole amount that then shall have become due and payable on
all such Notes for principal or interest, or both as the case may be, with
interest upon the overdue principal and installment of interest (to the extent
permitted by law) at the rate of interest borne by the Notes; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including compensation to the Trustee, its agents,
attorneys, and counsel, and any expenses or liabilities incurred by the
Trustee.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor upon the
Notes, and collect in the manner provided by law out of the property of the
Company or any other obligor upon the Notes wherever situated the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor upon the Notes under the
federal bankruptcy laws or any other applicable law or in connection with the
insolvency of the Company or any other obligor upon the Notes or in case a
receiver or trustee shall have been appointed for its property, or in case of
any other judicial proceedings relative to the Company or any other obligor
upon the Notes or to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 6.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Notes, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee and of the
Noteholders allowed in any judicial proceeding relative to the Company or any
other obligor upon the Notes, its creditors, or its property, and to collect
and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same after the deduction of its charges and
expenses; and any receiver, assignee, or trustee in bankruptcy or
reorganization is hereby authorized by each of the Noteholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to
the making of such payments directly to the Noteholders, to pay to the Trustee
any amount due it for compensation and expenses, including counsel fees
incurred by it up to the date of such distribution. To the extent that such
payment of compensation, expenses, liabilities, and counsel fees out of the
estate in any such proceedings shall be denied for any reason, payment of the
same shall not be subordinated to the payment of Senior Indebtedness pursuant
to Article Three and shall be secured by a lien on, and shall be paid out of,
any and all distributions, dividends, moneys, securities, and other property
which the Noteholders may be entitled to receive in such proceedings, whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
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<PAGE> 20
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment, or composition affecting Notes or
the rights of Noteholders, or to authorize the Trustee to vote in respect of
the claim of any Noteholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall be for the ratable benefit of the Noteholders.
SECTION 6.03. Application of moneys collected by Trustee. Subject
to the provisions of Article Three, any moneys collected by the Trustee
pursuant to Section 6.02 shall be applied in the order following, at the date
or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Notes, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid.
First: To the payment of all amounts due the Trustee pursuant
to Section 7.06;
Second: In case no principal of the outstanding Notes shall
have become due and be unpaid, to the payment of interest on the
Notes, in the order of the maturity of the installments of such
interest, with interest upon the overdue installment of interest (so
far as permitted by law and to the extent that such interest has been
collected by the Trustee) at the rate of interest borne by the Notes,
such payments to be made ratably to the persons entitled thereto,
without discrimination or preference;
Third: In case any principal of the outstanding Notes shall
have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Notes for principal and
interest, with interest on the overdue principal (and premium, if any)
and installments of interest (so far as permitted by law and to the
extent that such interest has been collected by the Trustee) at the
rate of interest borne by the Notes; and in case such moneys shall be
insufficient to pay in full the whole amount so due and unpaid upon
the Notes, then to the payment of such principal and interest, without
preference or priority of principal over interest, or of interest over
principal or of any installment of interest over any other installment
of interest, ratably to the aggregate of such principal (and premium,
if any) and accrued and unpaid interest; and
Fourth: To the payment of the remainder, if any, to the
Company, its successors, or assigns, or to whosoever may be lawfully
entitled to receive the same, or as a court of competent jurisdiction
may direct.
SECTION 6.04. Limitations on suits by holders of Notes. No holder
of any Note shall have any right by virtue or by availing itself of any
provision of this Indenture to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such holder
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previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinabove provided, and unless also the holders of
not less than 25% in aggregate principal amount of the Notes then outstanding
shall have made written request upon the Trustee to institute such action,
suit, or proceeding in its own name as Trustee hereunder and shall have offered
to the Trustee such indemnity as it may require against the costs, losses,
expenses, and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request, and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding and no direction inconsistent with such written request shall have
been given to the Trustee pursuant to Section 6.06; it being understood and
intended, and being expressly covenanted by the taker and holder of every Note
with every other taker and holder and the Trustee, that no one or more
Noteholders shall have any right in any manner whatever by virtue or by
availing itself of any provision of this Indenture to affect, disturb, or
prejudice the rights of any other Noteholders, or to obtain or seek to obtain
priority over or preference to any other such Noteholder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable, and common benefit of all Noteholders. For the protection and
enforcement of the provisions of this Section 6.04, each and every Noteholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Notwithstanding any other provisions of this Indenture, but subject to
the provisions of Article Three, the right of any holder of any Note to receive
payment of the principal of and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such holder.
SECTION 6.05. Proceedings by Trustee; Remedies cumulative and
continuing. In case of a default hereunder the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any of such rights, either by suit in equity or by
action at law or by proceeding in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in this Indenture
or in aid of the exercise of any power granted in this Indenture, or to enforce
any other legal or equitable right vested in the Trustee by this Indenture or
by law. All powers and remedies given by this Article Six to the Trustee or to
the Noteholders shall, to the extent permitted by law, be deemed cumulative and
not exclusive of any thereof or of any other powers and remedies available to
the Trustee or the Noteholders, by judicial proceedings or otherwise, to
enforce the performance or observance of the covenants and agreements contained
in this Indenture, and no delay or omission of the Trustee or of any of the
Noteholders to exercise any right or power accruing upon any default occurring
and continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence therein; and
subject to the provisions of Section 6.04, every power and remedy given by this
Article Six or by law to the Trustee or to the Noteholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Noteholders.
SECTION 6.06. Rights of holders of majority in principal amount of
Notes to direct Trustee and to waive defaults. The holders of a majority in
aggregate principal amount of the
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Notes at the time outstanding (determined as provided in Section 8.04), or, if
a record date is set in accordance with Section 8.05 as of such record date,
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided, however, that subject to the
provisions of Section 7.01, the Trustee shall have the right to decline to
follow any such direction if the Trustee being advised by counsel shall
determine that the action so directed may not lawfully be taken, and provided
further that nothing in this Indenture shall impair the right of the Trustee in
its discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction by the Noteholders. Prior to the declaration
of the maturity of the Notes as provided in Section 6.01, the holders of a
majority in aggregate principal amount of the Notes at the time outstanding
(determined as provided in Sections 8.04 and 8.05) may on behalf of all of the
Noteholders waive any past default hereunder and its consequences, except a
default in the payment of interest on, or the principal of, any of the Notes.
In the case of any such waiver the Company, the Trustee, and the Noteholders
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
SECTION 6.07. Trustee to give notice of defaults known to it, but
may withhold in certain circumstances. The Trustee shall, within 90 days after
the occurrence of a default hereunder, give to the Noteholders notice of such
defaults known to the Trustee unless such defaults shall have been cured or
waived before the giving of such notice (the term "defaults" for the purposes
of this Section 6.07 being hereby defined to be the events specified in clauses
(a), (b), (c), (d), and (e) of Section 6.01, not including any periods of grace
provided for in clauses (a), (c), and (d), respectively, and irrespective of
the giving of notice specified in clause (c)); provided that, except in the
case of default in the payment of the principal of or premium, if any, or
interest on any of the Notes, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or responsible officers of the Trustee in
good faith determines that the withholding of such notice is in the interest of
the Noteholders.
SECTION 6.08. Requirements of an undertaking to pay costs in
certain suits under the Indenture or against the Trustee. All parties to this
Indenture agree, and each holder of any Note by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against Trustee for any action taken or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section 6.08 shall not apply
to any suit instituted by the Trustee, to any suit instituted by any
Noteholder, or group of Noteholders holding in the aggregate more than 10% in
aggregate principal amount of the Notes outstanding, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
interest on any Note, on or after the due date expressed in such Note.
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ARTICLE SEVEN
Concerning the Trustee
SECTION 7.01. Duties and responsibilities of Trustee. The Trustee,
prior to the occurrence of an Event of Default and after the curing or waiving
of all Events of Default which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture.
In case an Event of Default has occurred (which has not been cured or waived)
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 man would exercise or use under the circumstances in the conduct of his
own affairs.
Subject toSection 6.07, the Trustee shall not be charged with
knowledge of the continuance either of default in payment of interest on the
Notes or of any Event of Default unless either (a) a responsible officer of the
Trustee assigned to its debt administration department shall, as such officer,
have actual knowledge thereof, or (b) written notice of such continuance shall
have been given to a responsible officer of the Trustee by the Company or by
the holders of at least 25% in principal amount of the Notes at the time
outstanding.
No provisions of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct; provided, however, that
(a) prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have
occurred:
(1) the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Indenture, and the Trustee shall not be liable except for the
performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates
or opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether they
conform to the formal requirements of this Indenture:
(b) the Trustee shall not be liable for any error of
judgment made in good faith by a responsible officer or officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
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(c) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the holders of not less than a majority in
principal amount of the Notes at the time outstanding (determined as
provided in Sections 8.04 or 8.05) relating to the time, method, and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties hereunder or in the exercise
of any of its rights or powers, if the Trustee has a reasonable basis for
believing that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
SECTION 7.02. Reliance on documents, opinions, etc. Subject to the
provisions of Section 7.01:
(a) The Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, waiver,
approval, bond, Note, or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(b) Any request, direction, order, or demand of the
Company mentioned herein shall be sufficiently evidenced by an
instrument signed in the name of the Company by the President or any
Vice President and the Secretary or any Assistant Secretary or the
Treasurer or any Assistant Treasurer (unless other evidence in respect
thereof be herein specifically 2prescribed); and any resolution of the
Board of Directors of the Company may be evidenced to the Trustee by a
copy thereof certified by the Secretary or any Assistant Secretary of
the Company;
(c) The Trustee may consult with counsel and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered,
or omitted by it hereunder in good faith and in accordance with such
advice or Opinion of Counsel;
(d) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request, order or direction of any of the Noteholders, pursuant to the
provisions of this Indenture, unless such Noteholders shall have
offered to the Trustee indemnity or security satisfactory to it
against any costs, losses, expenses, and liabilities which may be
incurred therein or thereby; but nothing herein contained shall,
however, relieve the Trustee of the obligation, upon the occurrence of
an Event of Default (which has not been cured or waived), to exercise
such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent
man would exercise or use under the circumstances in the conduct of
his own affairs, taking into account the absence of such security or
indemnity,
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except that in the absence of such security or indemnity the Trustee
shall not be required to expend its own funds;
(e) The Trustee shall not be liable for any actions
taken, suffered, or omitted by it in good faith and believed by it to
be authorized or within the discretion or right or powers conferred
upon it by this Indenture;
(f) Prior to the occurrence of an Event of Default
hereunder and after the curing or waiving of all Events of Default,
the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond, Note, or other paper or document, unless requested in
writing so to do by the holders of not less than 66-2/3% in aggregate
principal amount of the Notes then outstanding (determined as provided
in Section 8.04 or 8.05); provided, however, that if the payment
within a reasonable time to the Trustee of any costs, losses,
expenses, or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity or
security against such expense or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by the Company or, if paid by the Trustee, shall be repaid by the
Company upon demand; and
(g) The Trustee may execute any trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys. The Trustee shall not be responsible or
in any way liable for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
SECTION 7.03. Trustee's Disclaimer. The Trustee makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes, and it shall not be responsible for any statement in the Notes other
than its certificate of authentication or in any prospectus or registration
statement used in connection with the offer and sale of the Notes.
SECTION 7.04. Trustee, paying agent, or Note registrar may own
Notes. The Trustee or any paying agent or Note registrar, in its individual or
any other capacity, may become the owner or pledgee of Notes with the same
rights it would have if it were not Trustee, paying agent, or Note registrar.
The Trustee shall be entitled to all the rights set forth in Article
Three in respect of any Senior Indebtedness at any time held by it, to the same
extent as any other holder of Senior Indebtedness and nothing in Section 7.13
or elsewhere in this Indenture shall be construed to deprive the Trustee of any
of its rights as such holder.
SECTION 7.05. Moneys received by Trustee to be held in trust
without interest. Subject to the provisions of Section 12.04, all moneys
received by the Trustee shall, until used or applied as
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herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
moneys received by it hereunder except such as it may agree in writing with the
Company to pay thereon.
SECTION 7.06. Compensation and expenses of Trustee. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, compensation (which shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust), and the
Company will pay or reimburse the Trustee upon its request for all reasonable
expenses, disbursements, and advances incurred or made by the Trustee in
connection with the acceptance or administration of its trust under this
Indenture (including the compensation and the expenses and disbursements of its
counsel and all persons not regularly in its employ). The Company also
covenants to indemnify the Trustee for, and to hold it harmless against, any
loss, liability, or expense incurred without negligence or bad faith on the
part of the Trustee, other than as specifically provided in Section 7.01
hereof, and arising out of or in connection with (a) the acceptance or
administration of this trust, including liability which the Trustee may incur
as a result of the failure to withhold, pay or report, any tax, assessment, or
governmental charge and including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder, or (b) any act or omission of any
Note registrar or paying agent. The obligations of the Company under this
Section 7.06 to compensate the Trustee and to pay or reimburse the Trustee for
expenses, disbursements, and advances shall constitute additional indebtedness
for services hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall not be subordinated to the
payment of Senior Indebtedness pursuant to Article Three and shall be secured
by a lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Notes and shall be further secured by a right of set
off hereby granted by the Company to the Trustee against all funds deposited by
the Company with the Trustee other than funds deposited by the Company with the
Trustee pursuant to the terms of this Indenture.
SECTION 7.07. Right of Trustee to rely on Officers' Certificate
where no other evidence specifically prescribed. Subject to the provisions of
Section 7.01, whenever in the administration of the provisions of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking, suffering, or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such Officers' Certificate,
in the absence of negligence or bad faith on the part of the Trustee, shall be
full warrant to the Trustee for any action taken, suffered, or omitted by it
under the provisions of this Indenture upon the faith thereof.
SECTION 7.08. Eligibility: Disqualification. This Indenture shall
always have a Trustee who satisfies the requirements of TIA Section 310(a)(1).
The Trustee shall have a combined capital and surplus of at least $10,000,000
as set forth in its most recent published annual report of condition.
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The Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9).
SECTION 7.09. Resignation or removal of Trustee.
(a) The Trustee, or any trustee hereafter appointed, may
at any time either before or after an Event of Default has occurred
and is continuing hereunder resign by giving written notice of such
resignation to the Company. Upon receiving such notice of resignation
the Company shall promptly appoint a successor trustee by written
instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment
within thirty days after the mailing of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor trustee, or any Noteholder who has
been a bona fide holder of a Note or Notes for at least six months
may, subject to the provisions ofSection 6.08, on behalf of himself
and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribed, appoint a
successor trustee.
(b) In case at any time either of the following shall
occur--
(1) the Trustee shall cease to be eligible in
accordance with the provisions of Section 7.08 and shall fail
to resign after written request therefor by the Company or by
any such Noteholder, or
(2) the Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation, or liquidation, then, in any such case, the
Company may remove the Trustee and appoint a successor trustee
by written instrument, in duplicate, executed by order of the
Board of Directors of the Company, one copy of which
instrument shall be delivered to the Trustee so removed and
one copy to the successor trustee, or, subject to the
provisions of Section 6.08, any Noteholder who has been a bona
fide holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem
proper and prescribed, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal
amount of the Notes at the time outstanding (determined as provided
inSection 8.04) may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments signed by such
holders or their attorneys-in-fact duly authorized, or by the
affidavits of the
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permanent chairman and secretary of a meeting of the Noteholders
evidencing the vote upon a resolution or resolutions submitted thereto
with respect to such removal and appointment (as provided in Article
Nine), and by delivery thereof to the Trustee so removed, to the
successor trustee and to the Company.
(d) Any resignation or removal of the Trustee and
appointment of any successor trustee pursuant to any of the provisions
of thisSection 7.09 shall become effective upon (i) acceptance of
appointment by the successor trustee as provided inSection 7.10 and
(ii) payment of all fees and expenses due to the Trustee hereunder.
SECTION 7.10. Acceptance by successor to Trustee; Notice of
succession of a Trustee. Any successor trustee appointed as provided in
Section 7.09 shall execute, acknowledge, and deliver to the Company and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed, or
conveyance, shall become vested with all the rights, powers, duties, and
obligations of its predecessor hereunder, with like effect as if originally
named trustee herein; but, nevertheless, on the written request of the Company
or of the successor trustee, the trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of Section 7.06, execute and
deliver an instrument transferring to such successor trustee all the rights and
powers of the trustee so ceasing to act. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all
such rights and powers. Any trustee ceasing to act shall, nevertheless, retain
a lien upon all property or funds held or collected by such trustee to secure
any amounts then due it pursuant to the provisions of Section 7.06.
No successor trustee shall accept appointment as provided in this
Section 7.10 unless at the time of such acceptance such successor trustee shall
be qualified under the provisions of Section 7.08.
Upon acceptance of appointment by a successor trustee as provided in
thisSection 7.10, the Company shall mail to the Noteholders by first-class mail
notice thereof. If the Company fails to mail such notice within thirty days
after acceptance of appointment by the successor trustee, the successor
trustee, shall, in its discretion, cause such notice to be mailed at the
expense of the Company.
SECTION 7.11. Successor to Trustee by merger, consolidation, or
succession to business. Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger or conversion or consolidation, to which the Trustee shall be a
party, or any corporation succeeding to the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be qualified under the provisions of Section 7.08, without
the execution or filing of any paper or any further act on the part of the
parties hereto, anything herein to the contrary notwithstanding.
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In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor Trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such Notes either
in the name of any predecessor hereunder or in the name of the successor
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Notes or in this Indenture provided that the
certificate of the Trustee shall have; provided, however, that the right to
adopt the certificate of authentication of any predecessor Trustee or
authenticate Notes in the name of any predecessor Trustee shall apply only to
its successor or successors by merger, conversion, or consolidation.
SECTION 7.12. Reports by Trustee to Noteholders. Within 60 days
after each May 15 beginning with the May 15 first following the date of this
Indenture, the Trustee shall mail to each Noteholder a brief report dated as of
May 15 that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b) and TIA Section 313(c).
A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each securities exchange on which the Notes are
listed. The Company agrees to notify the Trustee whenever the Notes become
listed on any securities exchange.
SECTION 7.13. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE EIGHT
Concerning the Noteholders
SECTION 8.01. Evidence of action by Noteholder. Whenever in this
Indenture it is provided that the holders of a specified percentage in
aggregate principal amount of the Notes may take any action (including the
making of any demand or request, the giving of any notice, consent, or waiver,
or the taking of any other action) the fact that the holders of such specified
percentage, determined as of the time such action was taken or, if a record
date was set with respect thereto pursuant to Section 8.05, as of such record
date, have joined therein may be evidenced (a) by any instrument or any number
of instruments of similar tenor executed by Noteholders in person or by agent
or proxy appointed in writing, or (b) by the record of the holders of Notes
voting in favor thereof at any meeting of Noteholders duly called and held in
accordance with the provisions of Article Nine, or (c) by combination of such
instrument or instruments and any such record of such meeting of Noteholders.
SECTION 8.02. Proof of execution of instrument and of holding of
Notes. Subject to the provisions of Sections 7.01, 7.02 and 9.05, proof of the
execution of any instrument by a Noteholder or his agent or proxy shall be
sufficient if made in accordance with such reasonable
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rules and regulations as may be prescribed by the Trustee or in such manner as
shall be satisfactory to the Trustee.
The ownership of Notes shall be proved by the Note Register, or by a
certificate of the registrar thereof.
The Trustee may accept such other proof or require such additional
proof of any matter referred to in this Section 8.02 as it shall deem
reasonable.
The record of any Noteholders' meeting shall be provided in the
manner provided in Section 9.06.
SECTION 8.03. Who may be deemed owners of Notes. The Company, the
Trustee, any paying agent, and any Note registrar may deem and treat the person
in whose name any Note shall be registered upon the books of the Company as the
absolute owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or other writing thereon) for the
purpose of receiving payment of or on account of the principal and interest on
such Note and for all other purposes; and neither the Company nor the Trustee
nor any paying agent nor any Note registrar shall be affected by any notice to
the contrary. All such payments so made to, or upon the order of, any such
holder shall be valid, and, to the extent of the sum or sums so paid, effectual
to satisfy and discharge the liability for moneys payable upon any such Note.
Notwithstanding anything to the contrary contained herein, any sale, transfer,
or assignment of a Note shall be effective upon registration of the name of the
transferee in the Note Register.
SECTION 8.04. Notes owned by Company or controlled or controlling
persons disregarded for certain purposes. In determining whether the holders
of the requisite aggregate principal amount of Notes have concurred in any
demand, direction, request, notice, consent, waiver, or other action under this
Indenture, Notes which are owned by the Company or any other obligor on the
Notes or by any person directly or indirectly controlling or controlled by or
under direct or indirect common control with the company or any other obligor
on the Notes shall be disregarded and deemed not to be outstanding for the
purpose of any such determination, provided that for the purposes of
determining whether the Trustee shall be protected in relying on any such
demand, direction, request, notice, consent, or waiver, only Notes which the
Trustee actually knows are so owned shall be so disregarded. Notes so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 8.04, if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right to vote such Notes and that the
pledgee is not a person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company or any such other
obligor. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.
SECTION 8.05. Record date for action by Noteholders. Whenever in
this Indenture it is provided that holders of a specified percentage in
aggregate principal amount of the Notes may take any action (including the
making of any demand or request, the giving of any direction,
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notice, consent, or waiver, or the taking of any other action), other than any
action taken at a meeting of Noteholders called pursuant to Article Nine, the
Company, pursuant to a resolution of its Board of Directors, or the holders of
at least 10% in aggregate principal amount of the Notes then outstanding, may
request the Trustee to fix a record date for determining Noteholders entitled
to notice of and to take any such action. In case the Company or the holders
of Notes in the amount specified shall desire to request Noteholders to take
any such action to be requested, the Trustee shall promptly (but in any event
within five days of receipt of such request) fix a record date which shall be a
business day not less than 15 nor more than 20 days after the date on which the
Trustee receives such request. If the Trustee shall fail to fix a record date
as hereinabove provided, then the Company or the holders of Notes in the amount
above specified may fix the same by mailing written notice thereof (the record
date to be fixed to be a business day not less than 15 nor more than 20 days
after the date on which such written notice shall be given) to the Trustee. If
a record date is fixed according to this Section 8.05, only persons shown as
Noteholders on the registration books of the Company at the close of business
on the record date so fixed shall be entitled to take the requested action and
the taking of such action by the holders on the record date of the required
percentage of the aggregate principal amount of the Notes shall be binding on
all Noteholders.
SECTION 8.06. Instruments executed by Noteholders bind future
holders. At any time prior to (but not after) the evidencing to the Trustee,
as provided in Section 8.01, of the taking of any action by the holders of the
percentage in aggregate principal amount of the Notes specified in this
Indenture in connection with such action, any holder of a Note which is shown
by the evidence to be included in the Notes the holders of which have consented
to such action may, by filing written notice with the Trustee at its principal
corporate trust office and upon proof of holding as provided in Section 8.02,
revoke such action so far as concerns such Note. Except as aforesaid any such
action taken by the holder of any Note and any direction, demand, request,
waiver, consent, vote, or other action of any Noteholder which by any
provisions of this Indenture is required or permitted to be given shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Note, and of any Note issued in lieu thereof, irrespective of whether
any notation in regard thereto is made upon such Note. Any action taken by the
holders of the percentage in aggregate principal amount of the Notes specified
in this Indenture in connection with such action shall be conclusively binding
upon the Company, the Trustee, and all Noteholders.
ARTICLE NINE
Noteholders' Meetings
SECTION 9.01. Purposes for which meetings may be called. A meeting
of Noteholders may be called at any time and from time to time pursuant to the
provisions of this Article Nine for any of the following purposes:
(1) to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to consent to the waiving
of any default hereunder and its
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consequences, or to take any other action authorized to be taken
by Noteholders pursuant to any of the provisions of Article Six;
(2) to remove the Trustee and appoint a successor trustee
pursuant to the provisions of Article Seven;
(3) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section
10.01; or
(4) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount
of the Notes under any other provisions of this Indenture or under
applicable law.
SECTION 9.02. Manner of calling meetings; record date. The Trustee
may at any time call a meeting of Noteholders to take any action specified in
Section 9.01, to be held at such time and at such place in the City of Dallas,
Texas, as the Trustee shall determine. Notice of every meeting of the
Noteholders, setting forth the time and the place of such meeting, and in
general terms the action proposed to be taken at such meeting, shall be mailed
not less than 20 nor more than 60 days prior to the date fixed for the meeting
to such Noteholders at their registered addresses. For the purpose of
determining Noteholders entitled to notice of any meeting of Noteholders, the
Trustee shall fix in advance a date as the record date for such determination,
such date to be a business day not more than 10 days prior to the date of the
mailing of such notice as hereinabove provided. Only persons in whose name any
Note shall be registered upon the books of the Company on a record date fixed
by the Trustee as aforesaid, or by the Company or the Noteholders as in Section
9.03 provided, shall be entitled to notice of the meeting of Noteholders with
respect to which such record date was fixed.
SECTION 9.03. Call of meeting by Company or Noteholders. In case
at any time the Company, pursuant to a resolution of its Board of Directors, or
the holders of at least 50% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders
to take any action authorized in Section 9.01 by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed notice of such meeting within 20 days after
receipt of such request, then the Company or the holders of Notes in the amount
above specified, as the case may be, may fix the record date with respect to,
and determine the time and the place in said City of Dallas, Texas, for, such
meeting and may call such meeting to take any action authorized in Section
9.01, by mailing notice thereof as provided in Section 9.02. The record date
fixed as provided in the preceding sentence shall be set forth in a written
notice to the Trustee and shall be a business day not less than 15 nor more
than 20 days after the date on which such notice is sent to the Trustee.
SECTION 9.04. Who may attend and vote at meetings. Only persons
entitled to receive notice of meetings of Noteholders and their respective
proxies duly appointed by an instrument in writing shall be entitled to vote at
such meeting. The only persons who shall be entitled to be present or to speak
at any meeting of Noteholders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its
counsel and any
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representatives of the Company and its counsel. When a determination of
Noteholders entitled to vote at any meeting of Noteholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
SECTION 9.05. Regulations. Notwithstanding any other provisions of
this Indenture, the Trustee may make such regulations as it may deem advisable
for any meeting of Noteholders, in regard to proof of the holding of Notes and
of the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates,
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit. Except as otherwise permitted or
required by any such regulations, the holding of Notes shall be proved in the
manner specified in Section 8.02.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 9.03, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by a vote of the holders of a
majority in principal amount of the Notes represented at the meeting and
entitled to vote.
Subject to the provisions ofSection 8.04, at any meeting each
Noteholder or proxy entitled to vote thereat shall be entitled to one vote for
each $1,000 principal amount of Notes held or represented by him, provided,
however, that no vote shall be cast or counted at any meeting in respect of any
Note challenged as not outstanding and ruled by the chairman of the meeting to
be not outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Notes held by him or instruments in writing as
aforesaid duly designating him as the person to vote on behalf of other
Noteholders. Any meeting of Noteholders duly called pursuant to the provisions
of Section 9.02 or 9.03 may be adjourned from time to time, and the meeting may
be held as so adjourned without further notice.
At any meeting of Noteholders, the presence of persons who held, or
who are acting as proxy for persons who held, an aggregate principal amount of
Notes on the record date for such meeting sufficient to take action on the
business for the transaction of which such meeting was called shall constitute
a quorum, but, if less than a quorum is present, the persons holding or
representing a majority in aggregate principal amount of the Notes represented
at the meeting may adjourn such meeting with the same effect, for all intents
and purposes, as though a quorum had been present.
SECTION 9.06. Manner of voting at meeting and record to be kept.
The vote upon any resolution submitted to any meeting of Noteholders shall be
by written ballots on each of which shall be subscribed the signature of the
Noteholder or proxy casting such ballot and the identifying number or numbers
of the Notes held or represented in respect of which such ballot is cast. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Noteholders shall be prepared by the
secretary of
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the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 9.02. The record shall show the identifying numbers of the Notes
voting in favor of or against any resolution. Each counterpart of such record
shall be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting and one of the counterparts shall be delivered to the
Company and the other to the Trustee to be preserved by the Trustee.
Any counterpart record so signed and verified shall be conclusive
evidence of the matters therein stated and shall be the record referred to in
clause (b) of Section 8.01.
SECTION 9.07. Exercise of rights of Trustee and Noteholders not to
be hindered or delayed. Nothing in this Article Nine contained shall be deemed
or construed to authorize or permit, by reason of any call of a meeting of
Noteholders or any right expressly or impliedly conferred hereunder to make
such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Noteholders under any of
the provisions of this Indenture or of the Notes.
ARTICLE TEN
Supplemental Indentures
SECTION 10.01. Purposes for which supplemental indentures may be
entered into without consent of Noteholders. The Company, when authorized by a
resolution of its Board of Directors, and the Trustee may from time to time and
at any time enter into an indenture or indentures supplemental hereto (which
shall comply with the provisions of the Trust Indenture Act of 1939 as then in
effect) for one or more of the following purposes:
(a) to evidence the succession of another corporation to
the Company, or successive successions, and the assumption by the
successor corporation of the covenants, agreements, and obligations of
the Company pursuant toArticle Eleven;
(b) to add to the covenants of the Company such further
covenants, restrictions, or conditions as its Board of Directors and
the Trustee shall consider to be for the protection of the
Noteholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants,
restrictions, or conditions a default or an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however,
that in respect of any such additional covenant, restriction, or
condition, such supplemental indenture may provide for a particular
period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default or may limit the remedies
available to the Trustee upon such default;
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(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture or any
supplemental indenture as shall not adversely affect the interests of
the Noteholders; and
(d) to provide for the issuance under this Indenture of
Notes, whether or not then outstanding, in coupon form (including
Notes registrable as to principal only) and to provide for
exchangeability of such Notes with Notes issued hereunder in fully
registered form and to make all appropriate notice provisions and
other changes for such purpose.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, mortgage, pledge, or assignment of any property
thereunder, provided that if any such supplemental indenture affects the
Trustee's own rights, duties, or immunities under this Indenture or otherwise,
the Trustee may in its discretion, but shall not be obligated to, enter into
such supplemental indenture.
Any supplemental indenture authorized by the provisions of thisSection
10.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 10.02.
SECTION 10.02. Modification of Indenture with consent of holders
of majority of principal amount of Notes. With the consent (evidenced as
provided in Section 8.01) of the holders of not less than a majority of the
aggregate principal amount of the Notes at the time outstanding (determined as
provided in Section 8.04), or, if a record date is set with respect to such
consent in accordance with Section 8.05, as of such record date, the Company,
when authorized by a resolution of its Board of Directors, and the Trustee may
from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall comply with the provisions of the Trust
Indenture Act of 1939 as then in effect) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or modifying in any manner the
rights of the Noteholders; provided, however, that no such supplemental
indenture shall (i) extend the stated maturity of any Note, or reduce the rate
or extend the time of payment of interest thereon, or reduce the principal
amount thereof or impair the right to institute suit for the enforcement of any
such payment on or after the stated maturity thereof (or, in the case of
redemption, on or after the redemption date), without the consent of the holder
of each Note so affected, or (ii) reduce the aforesaid percentage of Notes, the
consent of the holders of which is required for any such supplemental
indenture, without the consent of the holders of all Notes then outstanding;
and provided further that no change or modification shall directly or
indirectly modify or eliminate the provisions of Article Three in any manner
which might terminate or impair the subordination of the Notes to Senior
Indebtedness without the prior written consent of the holders of Senior
Indebtedness, or (iii) modify any of the provisions of this Section 10.02,
except to increase any such percentage or to
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provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the holder of each Note affected thereby.
Upon the request of the Company, accompanied by a copy of a resolution
of its Board of Directors certified by the Secretary or an Assistant Secretary
of the Company authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of Noteholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture, provided that if such supplemental indenture affects
the Trustee's own rights, duties, or immunities under this Indenture or
otherwise, 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 Noteholders under
this Section 10.02, to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 10.02, the
Company shall mail a notice to the Noteholders, setting forth in general terms
the substance of such supplemental indenture. 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.
SECTION 10.03. Effect of supplemental indentures. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article Ten, this Indenture shall be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties, and immunities under this Indenture of the Trustee, the
Company, and the Noteholders shall thereafter be determined, exercised, and
enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be deemed to be part of the terms and conditions of this Indenture for
any and all purposes.
SECTION 10.04. Notes may bear notation of changes by supplemental
indentures. Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article Ten, or after
any action taken at a Noteholders' meeting pursuant to Article Nine, may bear a
notation in form approved by the Trustee and the Company as to any matter
provided for in such supplemental indenture or as to any action taken at any
such meeting. If the Company or the Trustee shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Notes then outstanding.
SECTION 10.05. Opinion of Counsel. The Trustee may rely upon an
Opinion of Counsel as conclusive evidence that any such supplemental indenture
complies with the provisions of this Article Ten.
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SECTION 10.06. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act of 1939 as then in effect if this
Indenture shall then be qualified under that Act.
ARTICLE ELEVEN
Consolidation, Merger and Sale
SECTION 11.01. Company may consolidate, etc., on certain terms.
Nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company) or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale or conveyance of the
property of the Company as an entirety, or substantially as an entirety, to any
other corporation (whether or not affiliated with the Company) authorized to
acquire and operate the same; provided, however, and the Company hereby
covenants and agrees, that any such consolidation, merger, sale, or conveyance
shall be upon the condition that (a) immediately after such consolidation,
merger, sale, or conveyance the corporation (whether the company or such other
corporation) formed by or surviving any such consolidation or merger, or to
which such sale or conveyance shall have been made, shall not be in default in
the performance or observance of any of the terms, covenants, and conditions of
this Indenture to be kept or performed by the Company; (b) the corporation (if
other than the Company) formed by or surviving any such consolidation or
merger, or to which such sale or conveyance shall have been made, shall be a
corporation organized under the laws of the United States of America or any
State thereof; and (c) the due and punctual payment of the principal of and
interest on all of the Notes, according to their tenor, and the due and
punctual performance and observance of all the covenants and conditions of this
Indenture to be performed or observed by the Company, shall be expressly
assumed, by supplemental indenture complying with the requirements of Article
Ten, satisfactory in form to the Trustee, executed and delivered to the Trustee
by the corporation formed by such consolidation, or into which the Company
shall have been merged, or by the corporation which shall have acquired such
property. If at any time there be any consolidation or merger or sale or
conveyance or lease of property to which the covenant of this Section 11.01 is
applicable, then in any such event the successor corporation will promptly
deliver to the Trustee:
(1) an Officers' Certificate stating that as of the time
immediately after the effective date of any such transaction the
covenants of the Company contained in thisSection 11.01 have been
complied with and the successor corporation is not in default under
the provisions of the Indenture; and
(2) an Opinion of Counsel stating that in his opinion
such covenants have been complied with and that any instrument or
instruments executed in the performance of such covenants comply with
the requirements thereof.
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SECTION 11.02. Successor corporation to be substituted. In case of
any such consolidation, merger, sale, or conveyance and upon the assumption by
the successor corporation, in the manner hereinabove provided, of the due and
punctual payment of the principal of and interest on all the Notes and the due
and punctual performance and observance of all of the covenants and conditions
of this Indenture to be performed or observed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of the Company, any or all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the order of such successor corporation
(instead of the Company) and subject to all the terms, conditions, and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Notes which previously shall have been signed and delivered
by the officers of the Company to the Trustee for authentication, and any Notes
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Notes so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Notes theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Notes had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, or conveyance such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
SECTION 11.03. Opinion of Counsel. The Trustee, subject to the
provisions ofSections 7.01 and 7.02, may receive and rely on an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale, or
conveyance, and any such assumption, complies with the provisions of this
Article Eleven.
ARTICLE TWELVE
Satisfaction and Discharge of Indenture;
Unclaimed Moneys
SECTION 12.01. Satisfaction and discharge of Indenture. If (a) the
Company shall deliver to the Trustee for cancellation all Notes theretofore
authenticated (other than any Notes which shall have been destroyed, lost, or
stolen and which shall have been replaced or paid as provided in Section 2.07)
and not theretofore cancelled, or (b) all the Notes not theretofore cancelled
or delivered to the Trustee for cancellation shall have become due and payable,
or are by their terms to become due and payable within one year or are to be
called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption, and the Company shall deposit
with the Trustee as trust funds money or U.S. Government Obligations pursuant
to the terms of an irrevocable trust agreement satisfactory in form and
substance to the Trustee the entire amount sufficient to pay at maturity,
without consideration of any reinvestment of principal and interest, or upon
redemption of all of such Notes not theretofore cancelled or
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delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or redemption date, as the case may
be, and if in either case the Trustee shall have received irrevocable written
instructions from the Company to apply said amounts to payment of principal and
interest on such Notes and the Company shall also pay or cause to be paid all
other sums payable hereunder by the Company then (except as otherwise provided
in Article Thirteen) this Indenture shall cease to be of further effect, and
the Trustee, on demand of the Company and at the cost and expense of the
Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture, the Company, however, hereby agreeing to reimburse
the Trustee for any costs or expenses theretofore and thereafter incurred by
the Trustee in connection with this Indenture or the Notes. In order to have
money available on a payment date to pay principal or interest on the Notes,
the U.S. Government Obligations shall be payable as to principal or interest on
or before such payment dates in such amounts as will provide the necessary
funds without reinvestment. The U.S. Government Obligations shall not be
callable at the Company's option.
SECTION 12.02. Application by Trustee of funds deposited for
payment of Notes. All moneys deposited with the Trustee pursuant to Section
12.01 shall be held in trust and applied by it to the payment, either directly
or through any paying agent (including the Company acting as its own paying
agent), to the holders of the particular Notes, for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest.
SECTION 12.03. Repayment of moneys held by paying agent. In
connection with the satisfaction and discharge of this Indenture all moneys
then held by any paying agent under the provisions of this Indenture shall,
upon demand of the Company, be paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.
SECTION 12.04. Repayment of moneys held by Trustee. Any moneys
deposited with the Trustee or any paying agent for the payment of the principal
of or interest on any Notes and not applied but remaining unclaimed by the
Noteholders for two years after the date upon which such payment shall have
become due, shall be repaid to the Company by the Trustee or by such paying
agent on demand; and thereupon the Trustee and such paying agent shall be
released from all further liability with respect to such moneys, and any
Noteholders entitled to receive such payment shall thereafter look only to the
Company for the payment thereof; provided, however, that the Trustee or any
paying agent before required to make any such repayment may at the expense of
the Company mail to each holder or cause to be published once, in a newspaper
of general circulation in the City of Dallas, or City of New York, or both,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than thirty days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
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ARTICLE THIRTEEN
Immunity of Incorporators, Stockholders,
Officers, and Directors
SECTION 13.01. Incorporators, stockholders, officers, and directors
of Company exempt from individual liability. No recourse under or upon any
obligation, covenant, or agreement of this Indenture, or of any Note, or for
any claim based thereon or otherwise in respect thereof, shall be had against
any incorporator, stockholder, officer, of director as such, past, present, or
future, of the Company or of any successor corporation either directly or
through the Company, whether by virtue of any constitution, statute, or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the incorporators,
stockholders, officers, or directors as such, of the Company or of any
successor corporation, or any of them, because of the creation of indebtedness
hereby authorized, or under or by reason of the obligations, covenants, or
agreements contained in this Indenture or in any of the Notes or implied
therefrom; and that any and all such personal liability of every name and
nature, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
stockholder, officer, or director as such, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Notes or
implied therefrom are hereby expressly waived and released as a condition of,
and as a consideration for, the execution of this Indenture and the issue of
such Notes.
ARTICLE FOURTEEN
Miscellaneous Provisions
SECTION 14.01. Successors and assigns of Company bound by Indenture.
All the covenants, stipulations, promises, and agreements in this Indenture
contained by or in behalf of the Company shall bind its successors and assigns,
whether so expressed or not.
SECTION 14.02. Acts of Board, committee, or officers of successor
corporation valid. Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee, or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee, or officer of any corporation that shall
at the time be the lawful sole successor of the Company.
SECTION 14.03. Required notices or demand may be served by mail;
waiver. Any notice or demand which by any provisions of this Indenture is
required or permitted to be given or served by the Trustee or by the
Noteholders to or on the Company shall be deemed to have been sufficiently
given or made, for all purposes, upon receipt at the principal offices of the
Company at BSN Corp., 1901 Diplomat, Farmers Branch, Texas 75234, marked to the
attention of the
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President (until another address is filed by the Company with the Trustee for
such purpose). Any notice, direction, request or demand by any Noteholder or
the Company to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, upon receipt at the principal office of the
Trustee in the City of Dallas which on the date hereof is located at 1717 Main
Street, P.O. Box 2320, Dallas, Texas 75221-2320, Attn: Debt Administration
Department.
Where this Indenture provides for notice to Noteholders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Noteholder affected by such event, at his address as it appears in the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the person entitled to receive such notice, either
before or after the event or action relating thereto, and such waiver shall be
equivalent of such notice. Waivers of notice by Noteholders shall be filed
with the Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
SECTION 14.04. Indenture and Notes to be construed in accordance with
the laws of the State of Texas. This Indenture and each Note shall be deemed
to be a contract made under the laws of the State of Texas; and for all
purposes shall be governed by and construed in accordance with the laws of said
State.
SECTION 14.05. Evidence of compliance with conditions precedent.
Upon any request or application by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officers' Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent have been complied with, except that
in the case of any such application or demand as to which the furnishing of
such document is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate or
opinion need be furnished.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or
covenant provided for in this Indenture shall include (1) a statement that the
person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based; (3) a statement that, in the opinion of such
person, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether such covenant or condition has
been complied with; and (4) a statement as to whether, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement, or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representation by counsel, unless
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such officer knows that the certificate or opinion or representations with
respect to the matters upon which his certificate, statement, or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous. Any certificate, statement, or opinion of
counsel may be based, insofar as it relates to factual matters or information
with respect to which is in the possession of the Company, upon the
certificate, statement, or opinion of or representations by an officer or
officers of the Company, unless such counsel knows that the certificate,
statement, or opinion or representations with respect to the matters upon which
his certificate, statement, or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement, or opinion of an officer of the Company or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement, or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous. Any certificate or opinion of any independent firm of
public accountants filed with the Trustee shall contain a statement that such
firm is independent.
SECTION 14.06. Payments due on Saturdays, Sundays, and holidays. In
any case where the date of payment of interest on or principal of the Notes or
the date fixed for redemption of any Note shall not be a business day then
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding business day with the same force
and effect as if made on the date of payment or the date fixed for redemption,
and no interest shall accrue for the period after such date.
SECTION 14.07. Provisions required by TIA to control. If and to
the extent that any provision of this Indenture limits, qualifies, or conflicts
with another provision included in this Indenture which is required to be
included in this Indenture by any of Sections 310 to 317, inclusive, of the
Trust Indenture Act of 1939, such required provision shall control.
SECTION 14.08. Communications by Noteholders with Other
Noteholders. Noteholders may communicate in accordance with TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, and any other person shall have the
protection of TIA Section 312(c).
SECTION 14.09. Provisions of the Indenture and Notes for the sole
benefit of the parties, the Noteholders, and holders of Senior Indebtedness.
Nothing in this Indenture or in the Notes, expressed or implied, shall give or
be construed to give any person, firm, or corporation, other than the parties
hereto and the Noteholders and holders of Senior Indebtedness, any legal or
equitable right, remedy, or claim under or in respect of this Indenture, or
under any covenant, condition, or provision herein contained, all its
covenants, conditions, and provisions being for the sole benefit of the parties
hereto, the Noteholders and the holders of Senior Indebtedness.
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SECTION 14.10. Indenture may be executed in counterparts; Acceptance
by Trustee. This Indenture may be executed in any number of counterparts, each
of which shall be an original; but such counterparts shall together constitute
but one and the same instrument. The Trustee hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
SECTION 14.11. Article and Section headings. The Article and Section
references herein and in the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 14.12. Action by Executive Committee of Board of Directors.
Whenever by the terms of this Indenture any action is permitted or required to
be taken by the Board of Directors, such action shall be deemed to have been
taken by the Board of Directors if such action is taken by the Executive
Committee thereof if such Committee is duly authorized so to act under
applicable law and the Company's Restated Certificate of Incorporation and
Bylaws.
SECTION 14.13. Separability Clause. In case any provision in this
Indenture or in the Notes 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 14.14. Maximum Lawful Rate. It is the intention of the
Company to conform strictly to usury laws now or hereafter in effect under
applicable law, and in no event shall the Company be required to pay, or any
Noteholder be entitled to receive, interest on the Notes at a rate in excess of
the highest lawful rate permitted by applicable law, and in no event shall the
Company be required to pay, or any Noteholder be entitled to receive, interest
on the Notes at a rate in excess of the highest lawful rate permitted by
applicable law. To the extent permitted by applicable law, in determining
whether the interest paid or payable, under any specific contingency, exceeds
the highest lawful rate permitted by applicable law, (a) any non-principal
payment shall be characterized as an expense, fee, or premium rather than as
interest, (b) any voluntary prepayment and the effect thereof shall be
excluded, and (c) the total amount of interest shall be spread throughout the
entire contemplated term of the Notes; provided that if any of the Notes are
paid prior to their maturity, and if the interest paid on any of the Notes are
paid prior to their maturity and if the interest paid on any Note to a
Noteholder for the actual period such Note was outstanding exceeds the highest
lawful rate permitted by applicable law, any excess shall be repaid to the
Company; further provided, however, that the Company shall not take any action
pursuant to the voluntary redemption provisions of Section 4.01 which results,
or may result, in the requirement for any such repayment.
The Company shall be solely responsible for the calculation of whether
interest paid or payable exceeds for the highest lawful rate permitted by
applicable law; and the Trustee shall bear no responsibility for any such
calculation or payments made in excess of such rate, nor for any recovery of
any such excess payments made to any person.
IN WITNESS WHEREOF, BSN Corp., has caused this Indenture to be signed
and acknowledged by its Chairman of the Board, President, or one of its Vice
Presidents; and MTrust
-43-
<PAGE> 44
Corp, National Association has caused this Indenture to be signed and
acknowledged by one of its officers, all as of the day and year first written
above.
BSN CORP.
By:
----------------------------------------
Michael J. Blumenfeld
Its: President
----------------------------------------
MTRUST CORP, NATIONAL ASSOCIATION
By:
----------------------------------------
Its:
----------------------------------------
-44-
<PAGE> 45
EXHIBIT A
[FORM OF FACE OF NOTE]
No. __________________________ $_____________________
BSN CORP.
9-1/4% SENIOR SUBORDINATED NOTE DUE 1996
BSN CORP., a corporation duly organized and existing under the laws of
the State of Delaware (herein referred to as the "Company"), for value
received, hereby promises to pay to _________________________, or registered
assigns, the principal sum of _________________________________ DOLLARS, on
November 15, 1996, at the office or agency of the Company in the City of
Dallas, Texas, or at the option of the registered holder hereof, at the office
or agency of the Company in the Borough of Manhattan, The City of New York, New
York, in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts, and to
pay to the registered holder upon presentment hereof, as hereinafter provided,
interest on said principal sum computed on the basis of a 360 day year
comprised of twelve 30 day months at the rate per annum specified in the title
of this Note, in like coin or currency, from November __, 1989, or, if interest
to any subsequent May 15 or November 15, has been paid, from the most recent
such May 15 or November 15, semi-annually on May 15 and November 15 in each
year, commencing May 15, 1990, or if such date is not a business day (as
defined in the Indenture) on the next succeeding business day thereafter until
payment of said principal sum has been made or duly provided for. Overdue
installments of interest shall bear interest (to the extent permitted by law)
at the rate per annum specified in the title of this Note. The interest so
payable on any May 15 or November 15 will, subject to certain exceptions
provided in the Indenture hereinafter referred to, be paid to the person in
whose name this Note is registered at the close of business on the April 30 or
October 31, as the case may be, next preceding such May 15 or November 15, or,
if such April 30 or October 31 is not a business day, the business day next
preceding such April 30 or October 31. Payment of interest may be made at the
option of the Company by check mailed by the paying agent to the registered
address of the person entitled thereto.
As provided in the Indenture, this Note shall be deemed to be a
contract made under the laws of the State of Texas and for all purposes shall
be governed by and construed in accordance with the laws of such state.
This Note is continued on the reverse hereof and the additional
provisions there set forth shall for all purposes have the same effect as if
set forth at this place.
Exhibit A-1
<PAGE> 46
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture.
IN WITNESS WHEREOF, BSN CORP. has caused this instrument to be duly
executed under its corporate seal.
Dated
<TABLE>
<S> <C>
[Corporate Seal] BSN CORP.
Attest: By:
------------------------------------------ ---------------------------------------------
Secretary President
</TABLE>
[Form of Reverse of Note]
This Note is one of a duly authorized issue of Notes of the Company
known as its 9-1/4% Senior Subordinated Notes due 1996 (herein referred to as
the "Notes"), limited (subject to certain exceptions provided in the Indenture
hereinafter referred to) to the aggregate principal amount of twenty-five
million dollars ($25,000,000), all issued or to be issued under and pursuant to
an Indenture dated as of November 15, 1989 (herein referred to as the
"Indenture"), duly executed and delivered between the Company and MTrust Corp,
National Association, Trustee (herein referred to as the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Notes
and for the definitions of certain terms used herein (unless otherwise defined
herein).
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture. The Indenture provides
that in certain events such declaration and its consequences may be waived by
the holders of a majority in aggregate principal amount of the Notes then
outstanding or outstanding on the record date, if any, fixed therefor in
accordance with the provisions of the Indenture. It is also provided in the
Indenture that the holders of a majority in aggregate principal amount of the
Notes outstanding at the time or outstanding on any such record date may on
behalf of the holders of all the Notes waive, prior to such declaration, any
past default under the Indenture and its consequences, except a default in the
payment of the principal of or interest on any of the Notes.
The payment of the principal of and interest on this Note is expressly
subordinated, as provided in the Indenture, to the payment of all Senior
Indebtedness, as defined in the Indenture,
Exhibit A-2
<PAGE> 47
and by acceptance of this Note the Holder hereof agrees, expressly for the
benefit of the present and future holders of Senior Indebtedness, to be bound
by the provisions of the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority of the
aggregate principal amount of the Notes outstanding at the time or outstanding
on any record date, if any, fixed therefor in accordance with the provisions of
the Indenture, evidenced as provided in the Indenture, to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or
modifying in any manner the rights of the holders of the Notes; provided,
however, that no such supplemental indenture shall (i) extend the stated
maturity of any Note, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or impair the right to
institute suit for the enforcement of any such payment on or after the stated
maturity thereof without the consent of the holder of each Note so affected, or
(ii) reduce the aforesaid percentage of Notes, the consent of the holders of
which is required for any such supplemental indenture, without the consent of
the holders of all Notes then outstanding; and provided further that no change
shall terminate or impair the subordination provisions of the Indenture without
the prior written consent of the holders of Senior Indebtedness.
Any such consent or waiver by the registered holder of this Note
(unless effectively revoked as provided in the Indenture) shall be conclusive
and binding upon such holder and upon all future holders of this Note and of
any Note issued in exchange or substitution hereof, irrespective of whether or
not any notation of such consent or waiver is made upon this Note or such other
Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the place, at the respective times, at the rate, and in the currency herein
prescribed.
The Notes are issuable as fully registered Notes without coupons in
the denominations of $1,000 and any integral multiple of $1,000. At any office
or agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, Notes may be exchanged
for a like aggregate principal amount of Notes of other authorized
denominations, without payment of any charge other than a sum sufficient to
reimburse the Company for any tax or other governmental charge incident
thereto. Both principal of and interest on this Note are payable at the office
or agency of the Company in The Borough of Manhattan, The City of New York, New
York or the City of Dallas, Texas and, at the option of the Company, payment of
interest hereon may be made by check mailed to the registered address of the
person entitled thereto.
The Notes are subject to redemption at any time upon not less than 30
nor more than 60 days' notice by first class mail, as a whole or in part, at
the election of the Company, at a redemption price equal to 100% of the
principal amount hereof, plus accrued interest thereon to the date fixed for
redemption.
Exhibit A-3
<PAGE> 48
The transfer of this Note is registrable by the registered holder
hereof in person or by his attorney duly authorized in writing on the books of
the Company at any office or agency of the Company referred to on the face
hereof, subject to the terms of the Indenture but without payment of any charge
other than a sum sufficient to reimburse the Company for any tax or other
governmental charge incident thereto, and upon surrender and cancellation of
this Note upon any such transfer, a new Note or Notes of authorized
denomination or denominations, for the same aggregate principal amount, will be
issued to the transferee in exchange herefor.
The Company, the Trustee, any paying agent, and any Note registrar may
deem and treat the person in whose name this Note shall be registered upon the
books of the Company as the absolute owner of this Note (whether or not this
Note shall be overdue and notwithstanding any notation of ownership or other
writing hereon), for the purpose of receiving payment of or on account of the
principal hereof and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments shall be
valid and effectual to satisfy and discharge the liability on this Note to the
extent of the sum or sums so paid.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, stockholder, officer, director,
or employee as such, past, present, or future, of the Company or of any
successor corporation, whether by virtue of any constitution, statute, or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the consideration
for the issue hereof, expressly waived and released.
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
MTrust Corp, National Association, as Trustee, certifies that this is
one of the Notes referred to in the Indenture.
MTRUST CORP,
National Association, as
Trustee
By:
-----------------------------------
Authorized Signer
Exhibit A-4
<PAGE> 1
EXHIBIT 5.1
February 9, 1995
Aurora Electronics, Inc.
2030 Main Street, Suite 1120
Irvine, California 92714-7241
Ladies and Gentlemen:
We have acted as counsel to Aurora Electronics, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the resale of up to 933,725
shares of the Company's common stock, $.03 par value per share (the "Shares"),
by certain stockholders of the Company (the "Selling Stockholders"). In
connection with the Company's acquisition of certain assets of CCB Computer
Brokers, Inc., a California corporation now known as MDB I, Inc. ("CCB"), (i)
the Company issued, pursuant to an Asset Purchase Agreement (the "Century
Purchase Agreement"), 256,000 shares of Common Stock, (ii) subject to the
provisions of the Century Purchase Agreement, the Company is obligated to issue
an estimated 621,495 additional shares of Common Stock shortly after December
31, 1995, and (iii) the Company agreed to issue up to 56,230 shares of Common
Stock to certain employees of CCB who became employees of the Company or its
affiliates. The resale of the Shares is being registered pursuant to a
Registration Statement on Form S-3 (33-79424), as amended by Amendment No. 1
dated February 10, 1995 (the "Registration Statement").
In connection with this opinion, we have examined such documents and
records of the Company and such statutes, regulations and other instruments and
certificates as we have deemed necessary or advisable for the purposes of this
opinion. We have assumed that all signatures on all documents presented to us
are genuine, that all documents submitted to us as originals are accurate and
complete and that all documents submitted to us as copies are true and correct
copies of accurate and complete originals thereof. We have also relied upon
such certificates of public officials, corporate agents, and officers of the
Company and such other certifications with respect to the accuracy of material
factual matters contained therein that were not independently established.
Based on the foregoing, we are of the opinion that the Shares are, or will be
when issued and delivered to the Selling Stockholders, validly issued, fully
paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement. Consent is also given to the reference to this firm as
having passed on the validity of the Shares under the caption "Legal Matters"
in the prospectus contained in the Registration Statement. In giving this
consent, we do not admit that we are included in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Hughes & Luce, L.L.P.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 of our report dated December 30, 1994, included in
Aurora Electronics, Inc.'s Form 10-K/A for the year ended September 30, 1994,
and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Orange County, California
February 8, 1995
