As filed with the Securities and Exchange Commission on February
1, 1994.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FARAH INCORPORATED
(Exact name of registrant as specified in its charter)
Texas 74-1061146
(State of incorporation or organization) (IRS Employer Identification No.)
8889 Gateway West
El Paso, Texas 79925
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
8.5% Convertible Subordinated Debentures Due February 1, 2004
(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities to be Registered.
The securities to be registered hereunder are 8.5% Convertible
Subordinated Debentures due February 1, 2004 (the "Debentures") of
Farah Incorporated, a Texas corporation (the "Company"). For a
description of the Debentures, see the information set forth under
the caption "Description of New Notes" on pages 26 through 29 of
the Exchange Offer Memorandum dated December 3, 1993, filed as
Exhibit (a)(1) to the Company's Issuer Tender Offer Statement on
Schedule 13E-4 dated December 3, 1993, which information is hereby
incorporated herein by reference.
Item 2. Exhibits.
The following exhibits are filed as a part of this registration
statement:
Exhibit No. Description of Exhibit
1 Pages 26 through 29 of the Exchange Offer Memorandum
dated December 3, 1993, filed as Exhibit (a)(1) to
the Company's Issuer Tender Offer Statement on
Schedule 13E-4 dated December 3, 1993, filed
herewith.
2 Specimen of Debenture, filed herewith.
3 Indenture by and between the Company and Texas
Commerce Bank N.A. as trustee, dated as of February
1, 1994, filed herewith.
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
FARAH INCORPORATED
Date: February 2, 1994
By: /s/ James C. Swaim
James C. Swaim
Executive Vice President,
Chief Financial Officer and
Treasurer
<PAGE>
EXHIBIT 1
Pages 26 through 29 of the Exchange Offer Memorandum dated December 3, 1993,
filed as Exhibit (a)(1) to the Company's Issuer Tender Offer Statement on
Schedule 13E-4 dated December 3, 1993, filed herewith.
<PAGE>
DESCRIPTION OF THE NEW NOTES
General
The New Notes are issued under the New Indenture, to be dated as
of the Closing Date between the Company and Texas Commerce Bank,
N.A.
THE FOLLOWING STATEMENTS, UNLESS THE CONTEXT OTHERWISE REQUIRES,
ARE SUMMARIES OF THE SUBSTANCE OR GENERAL EFFECT OF CERTAIN
PROVISIONS OF THE NEW INDENTURE AND ARE QUALIFIED IN THEIR ENTIRETY
BY REFERENCE TO THE NEW INDENTURE AND NEW NOTES. Unless otherwise
defined, capitalized terms used in the following description are
used as defined in the New Indenture. All section references in
the following description are to sections of the New Indenture. A
copy of the New Indenture will be provided to any person requesting
the same. Please contact the Company, att: Corporate Secretary, at
8889 Gateway West, El Paso, Texas 79925 for a copy of the New
Indenture.
The New Notes will be limited to $3,925,000 aggregate principal
amount, will be unsecured obligations of the Company, will mature
February 1, 2004, and will bear interest from the Closing Date at
the rate of 8.5% per annum, payable semi-annually on February 1 and
August 1 of each year to the holders of record at the close of
business on the preceding January 15 or July 15, respectively,
subject to certain exceptions. (Section 2.03.) The first interest
payment will be due August 1, 1994. Principal is payable and the
New Notes are convertible and transferable at the office of the
Trustee; payment of interest may be made at the option of the
Company by check mailed to the address of the person entitled
thereto as it appears on the New Notes register. (Section 4.02,
6.01 and 6.02.)
The New Notes will be issued in fully registered form in
denominations of $1,000 or any whole multiple of $1,000. (Section
2.03.)
Conversion Rights
The holders of the New Notes will be entitled at any time prior
to the close of business on February 1, 2004, unless previously
redeemed, to convert the New Notes (or portions thereof of $1,000
or whole multiples of $1,000) into Common Stock of the Company at
a conversion price which is, subject to adjustment as provided in
the Indenture and referred to below. (Sections 4.01 and 4.04).
Subject to certain exceptions set forth in the Indenture, no
adjustment will be made on conversion of any New Notes for interest
accrued thereon or for dividends on any shares issued. (Section
4.02.) If any New Notes not called for redemption are converted
between a record date for the payment of interest and the next
succeeding interest payment date, such New Notes must be
accompanied by funds equal to the interest payable on such interest
<PAGE>
payment date to the registered holder on such record date. (Section
4.02.) The Company will not be required to issue fractional shares
and, in lieu thereof, will pay a cash adjustment. (Section 4.03.)
In the case of New Notes called for redemption, conversion rights
expire at the close of business on the second business day next
preceding the redemption date. (Section 4.01.)
The conversion price is subject to adjustment under formulas set
forth in the Indenture in certain events, including the issuance of
stock of the Company as a dividend on Common Stock; subdivisions,
combinations and reclassifications of the Common Stock; the
issuance to all holders of Common Stock of rights or warrants
entitling them to subscribe for Common Stock at less than the
current market price (as defined); and the distribution to all
holders of Common Stock of evidences of indebtedness of the Company
or of assets (other than dividends or distributions in cash out of
consolidated earnings or earned surplus). Except as stated in the
preceding sentence, the conversion price will not be adjusted for
the issuance of Common Stock in exchange for cash, property or
services, whether upon the exercise of present or future options or
warrants or otherwise. (Section 4.05).
Subordination of New Notes
Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation, or reorganization, the
payment of the principal of, premium, if any, and interest on the
New Notes is to be subordinated to the extent provided in the
Indenture in right of payment to the prior payment in full of all
Senior Indebtedness and, in the event and during the continuation
of any default in payment of Senior Indebtedness or an event of
default which permits acceleration of Senior Indebtedness, no
payment on account of principal, premium, if any, or interest may
be made on the New Notes (Sections 3.01, 3.02 and 3.03), but the
obligation of the Company to make payment of principal, premium, if
any, or interest on the New Notes will not otherwise be affected.
(Section 3.04.) The holders of the New Notes will be subrogated to
the rights of the holders of Senior Indebtedness to the extent of
payments made on Senior Indebtedness upon any distribution of
assets in any such proceedings out of the distributive shares of
the New Notes. (Section 3.02). By reason of such subordination,
certain general creditors of the Company may, in the event of
insolvency, recover more, ratably, than holders of the New Notes
upon any such distribution of assets.
Senior Indebtedness is defined in the Indentures as the principal
of and premium, if any, and interest on (a) obligations of the
Company in respect or indebtedness of the Company's subsidiaries
outstanding or to be outstanding under the credit facility with
Congress Financial Corporation (Southwest) in the amount of
$40,000,000, (b) indebtedness of the Company or any of its
subsidiaries for money borrowed or evidenced by notes, debentures,
bonds or other securities sold by the Company for money, for the
payment of which indebtedness the Company is liable, or issued to
<PAGE>
or assumed for a vendor for all or part of the purchase price of
property purchased or acquired, whether outstanding on the date of
the Indenture or thereafter created, incurred, assumed or
guaranteed by the Company, unless in the instrument creating or
evidencing the same it is provided that such indebtedness is not
superior in right of payment to the New Notes and (c) renewals,
extensions and refunding of any such indebtedness.
Redemption
The New Notes are redeemable on not less than 30 nor more than
60 days' prior notice at 100% of their principal amount, plus
accrued interest, except that prior to February 1, 1996 the Company
may not elect to make a redemption of the New Notes unless the
average of the closing sale price of the Company's common stock as
reported by the New York Stock Exchange, Inc. for the twenty (20)
trading days immediately prior to the date of the notice of
redemption exceeds 140% of the Conversion Price.
Sinking Fund
There will be no Sinking Fund in respect of the New Notes.
Restrictions as to Dividends and Certain Other Payments
The Company may not (a) pay any dividend (other than those
payable in shares of its stock), (b) make any payment for the
purchase, redemption, or retirement of its stock (other than stock
retired by exchange for, or out of the proceeds of the
substantially concurrent sale of, other shares of stock) or
(c) permit any Subsidiary (as defined) to purchase, redeem or
otherwise acquire for value any shares of stock of the Company, if,
upon giving effect thereto, the sum of such payments made
subsequent to November 5, 1993 exceeds Consolidated Net Income (as
defined) of the Company and its Subsidiaries for the period
subsequent to November 5, 1993 plus (i) $5,000,00 and (ii) the net
proceeds of the sale after November 5, 1993 stock of the Company
and (iii) the principal amount of indebtedness (including the New
Notes) issued or sold after November 5, 1993 which has been
converted into stock of the Company after that date. In
determining the amount of net proceeds of the sale after January
31, 1994 of stock of the Company, such net proceeds shall be deemed
not to exceed the sum of the capital and surplus of any going
concern business acquired in connection therewith. (Section 6.03).
Modification of Indenture
The Company and the Trustee, with the consent of the holders of
not less than 66_% in aggregate principal amount of the New Notes
at the time outstanding, may execute supplemental indentures adding
to, changing, or eliminating the provisions of the Indenture or of
any supplemental indentures or modifying the rights of the holders
of the New Notes; provided, that no such supplement indenture
<PAGE>
shall (i) extend the fixed maturity of any New Notes or reduce the
rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof, or reduce any premium payable upon
the redemption thereof, or alter the provisions of the Indenture so
as to affect adversely the terms of conversion of the New Notes
into Common Stock, without the consent of the holder of each New
Notes so affected or (ii) reduce the aforesaid percentage of New
Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all
New Notes then outstanding; and provided further that no change
shall terminate or impair the subordination provisions of the
Indenture without prior written consent of the holders of Senior
Indebtedness. (Section 12.02.)
Rights Upon Default
No holder of any New Notes is to have any right under the
Indenture to institute any proceeding with respect to the Indenture
or for any remedy thereunder, unless such holder previously shall
have given to the Trustee written notice of default and unless also
the holders of not less than 25% in aggregate principal amount of
the New Notes shall have made written request upon the Trustee to
institute such proceeding in its own name as trustee thereunder and
shall have offered to the Trustee reasonable indemnity and the
Trustee for the sixty days shall have neglected or refused to
institute any such proceeding. The right of any holder of any New
Notes to institute suit for the enforcement of any payment of
principal, premium, if any, and interest on the New Notes, on or
the after the respective due dates expressed in the Indenture, may
not be impaired or affected without the consent of such holder.
(Section 8.04.)
In case any Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the Trustee or the holders of at
least 25% in aggregate principal amount of the New Notes then
outstanding may declare the principal of all the New Notes to be
due and payable immediately. Under certain circumstances, the
holders of a majority in aggregate principal amount of the New
Notes may waive all defaults and may rescind and annul a
declaration that the New Notes have become due and payable and its
consequences. (Section 8.01.)
Subject to certain exceptions set forth in the Indenture, the
holders of a majority of the New Notes are to 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. Prior to the declaration of the
maturity, the holders of a majority of the New Notes may on behalf
of all holders waive any past default and its consequences, except
a default in the payment of interest or premium, or the principal.
(Section 8.06.)
Events of Default
<PAGE>
The following are to be Events of Default: (a) failure to pay
interest when due, continued for 30 days; (b) failure to pay
principal (and premium, if any) when due and payable either at
maturity, upon redemption, by declaration or otherwise; (c) failure
to perform in any material respect any other covenant, continued
for 60 days after written notice by the Trustee or the holders of
at least 25% in aggregate principal amount of the New Notes then
outstanding; (d) failure to pay certain indebtedness at maturity or
upon acceleration of any indebtedness of the Company under the
terms of the instrument under which such indebtedness is issued, if
such acceleration is not annulled within 10 days after similar
written notice; and (e) certain events in bankruptcy, insolvency,
or reorganization. (Section 8.01.)
The Trustee, within ninety days after the occurrence of default,
is to give the holders of New Notes notice of all such defaults
known to the Trustee, unless cured or waived before the giving of
such notice; provided that except in the case of default in the
payment of principal of or interest on any of the New Notes or any
Sinking Fund payment, the Trustee may withhold 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 holders of the New Notes. (Section
8.07.)
Evidence of Compliance with Conditions and Covenants
As evidence of compliance with the conditions precedent, if any,
provided for in the Indenture relating to any action to be taken by
the Trustee upon any request or application by the Company, the
Company is to furnish to the Trustee an Officers' Certificate (as
defined) and an Opinion of Counsel (as defined) stating that such
conditions precedent have been complied with. (Section 16.05).
The Indenture also contains provisions for certificates and
opinions in certain other events, including a requirement that the
Company file each year an Officers' Certificate stating whether or
not to the knowledge of the signers the Company is in default with
respect to any covenant, agreement, or condition contained in the
Indenture. (Section 6.09.)
<PAGE>
EXHIBIT 2
Specimen of Debenture, filed herewith.
<PAGE>
[form of face of debenture]
No. . . . $ . . .
FARAH INCORPORATED
8.50% Convertible Subordinated Debenture Due February 1, 2004
Farah Incorporated, a corporation duly organized and existing
under the laws of the State of Texas (herein referred to as the
"Company"), for value received, hereby promises to pay,
_______________ to its registered assigns, the principal sum of One
Million Six Hundred Seventy Three Thousand Dollars ($1,673,000), on
February 1, 2004, at its agency in The City of El Paso, Texas, 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 hereof as
hereinafter provided interest on said principal sum at the rate per
annum specified in the title of this Debenture, in like coin or
currency, from the February 1 or the August 1 next preceding the
date hereof to which interest has been paid (unless the date hereof
is a February 1 or August 1 or to which interest has been paid, in
which case from the date hereof, or unless the date hereof is after
January 15, and before the following February 1 or after July 15
and before the following August 1, in which case from such February
1 or August 1, provided, however, that if the Company shall default
in payment of the interest due on such February 1 or August 1, then
from the next preceding February 1 or August 1 to which interest
has been paid, or if no interest has been paid on the Debentures,
from the date hereof), semi-annually on February 1 and August 1 in
each year, provided the first such payment of interest shall not be
paid until August 1, 1994, until payment of said principal sum has
been made or duly provided for. The interest so payable on any
February 1 or August 1 will, subject to certain exceptions provided
in the Indenture hereinafter referred to, be paid to the person in
whose name this Debenture is registered at the close of business on
the fifteenth day of the calendar month next preceding such
February 1 or August 1 or, if such fifteenth day of the calendar
month is not a business day, the business day next preceding such
fifteenth day of the calendar month.
This Debenture 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.
This Debenture 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, Farah Incorporated has caused this Debenture to
be signed, manually or in facsimile, by its resident or Vice
<PAGE>
President and by its Secretary or an Assistant Secretary and a
facsimile of its corporate seal to be imprinted hereon.
Dated:
Farah Incorporated
BY .........................................
President
.........................................
Secretary
[form of reverse of debenture]
This Debenture is one of a duly authorized issue of Debentures
of the Company known as its 8.5% Convertible Subordinated
Debentures due February 1, 2004 (herein referred to as the
"Debentures"), limited to the aggregate principal amount of One
Million Six Hundred Seventy Three Thousand Dollars ($1,673,000),
all issued or to be issued under and pursuant to an indenture dated
as of February 1, 1994 (herein referred to as the "Indenture"),
duly executed and delivered between the Company and Texas Commerce
Bank, N.A., a national banking association, Trustee (herein
referred to as the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a
description of the respective rights, limitation of rights,
obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debentures.
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
Debentures then outstanding. It is also provided in the Indenture
that the holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may on behalf of the holders of
all of the Debentures 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 premium, if any) or interest
on any of the Debentures.
The payment of the principal of (and premium, if any) and
interest on this Debenture is expressly subordinated, as provided
in the Indenture, to the payment of all Senior Indebtedness, as
defined in the Indenture, and by acceptance of this Debenture 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.
<PAGE>
Subject to the provisions of the Indenture, the holder of this
Debenture is entitled, at his opinion, at any time on or before
February 1, 2004 (except that, in case this Debenture or any
portion thereof shall be called for redemption, such right shall
terminate with respect to this Debenture or portion thereof, as the
case may be so called for redemption at the close of business of
the second business day next preceding the date fixed for
redemption as provided in the Indenture), to convert the principal
amount of this Debenture (or any portion hereof which is $1,000 or
a whole multiple thereof) into shares of Common Stock of the
Company, as said shares shall be constituted at the date of
conversion, at the conversion price of $15.2375 principal amount of
Debentures for each share of such Common Stock, or at the adjusted
conversion price in effect at the date of conversion determined as
provided in the Indenture, upon surrender of this Debenture to the
Company at the office or agency of the Company in El Paso, Texas,
accompanied by written notice of election to convert, and (if so
required by the Company) by instruments of transfer, in form
satisfactory to the Company, duly executed by the registered holder
or by his duly authorized attorney. Such surrender shall, if made
during the period from the close of business of the fifteenth day
of the calendar month (or the next preceding business day if such
fifteenth day is a day on which banking institutions in El Paso,
Texas are authorized by law to close) next preceding the month
during which an interest payment date falls to the opening of
business on such interest payment date (unless this Debenture or
the portion being converted shall have been called for redemption),
also be accompanied by payment in New York Clearing House funds or
other funds acceptable to the Company of an amount equal to the
interest payable on such interest payment date on the principal
amount of this Debenture then being converted. Subject to the
foregoing, no adjustment is to be made on conversion for interest
accrued hereon or for dividends on Common Stock issued on
conversion. The Company is not required to issue fractional shares
in any such conversion, but shall make adjustment therefor in cash
on the basis of the current market value of such fractional
interest as provided in the Indenture.
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than 66-
2/3% in aggregate principal amount of the Debentures at the time
outstanding, evidenced as in the indenture provided, 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 Debentures; provided, however, that no such
supplemental indenture shall (i) extend the maturity of any
Debentures, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce
any premium payable upon the redemption thereof, or impair the
right to convert the Debentures as set forth in the Indenture,
without the consent of the holder of each Debenture so affected, or
(ii) reduce the aforesaid percentage of Debenture, the consent of
the holders of which is required for any such supplemental
indenture, without the consent of the holders of all Debentures
<PAGE>
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 consent or waiver by the registered holder of this
Debenture given as provided in the Indenture (unless effectively
revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders of this
Debenture and of any Debenture issued in exchange or substitution
herefor, irrespective of whether or not annotation of such consent
or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the
principal of (and premium, if any) and interest on this Debenture
at the place, at the respective times, at the rate and in the
currency herein prescribed.
The Debentures are issuable as Debentures without coupons in
the denominations of $1,000 and any whole multiple of $1,000. At
the office agency to be maintained by the Company in El Paso,
Texas, and in the manner and subject to the limitations provided in
the Indenture, Debentures may be exchanged for a like aggregate
principal amount of Debentures 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 premium, if any) and
interest on this Debenture are payable at the office or agency of
the Company in El Paso, Texas and, in the case of interest paid on
any interest payment date, by check mailed to the registered
holders of the Debentures.
The Debentures are subject to redemption as a whole or in part
at any time, at the option of the Company, on not less than 30 nor
more than 60 days' prior notice given as provided in the Indenture,
together with interest accrued and unpaid thereon to the date fixed
for redemption, except that no redemption at the option of the
Company may be carried out prior to February 1, 1996 unless the
average of the current Market Price per share of the Common Stock,
for the 20 consecutive Trading Days, prior to the date upon which
the notice of redemption pursuant to the Indenture is first mailed
to holders of the Debentures shall have been at least 140% of the
then current conversion price.
The transfer of this Debenture is registrable by the
registered holder hereof in person or by his attorney duly
authorized in writing on the books of the Company at the office or
agency to be maintained by the Company in El Paso, Texas, 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 Debenture upon any such registration of
transfer, a new Debenture or Debentures of authorized denomination
or denominations, for the same aggregate principal amount, will be
issued to the transferee in exchange herefor.
<PAGE>
Prior to due presentment for registration of transfer of
this Debenture, the Company, the Trustee, any paying or conversion
agent and any Debenture registrar may deem and treat the person in
whose name this Debenture shall be registered upon the books of the
Company as the absolute owner of this Debenture (whether or not
this Debenture 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, premium, if any,
and interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any paying or conversion agent nor any
Debenture registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal
of, premium, if any, or the interest on this Debenture, 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 an incorporator, stockholder, officer or director, 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]
This is one of the Debentures described in the within-
mentioned Indenture.
_________________________________________
as Trustee
By: ...............................................
Authorized Officer
[form of conversion notice]
To Farah Incorporated:
The undersigned owner of this Debenture hereby
irrevocably exercises the option to convert this Debenture, or
portion hereof below designated, into shares of Common Stock of
Farah Incorporated in accordance with the terms of the Indenture
referred to in this Debenture, and directs that the shares issuable
and deliverable upon the conversion, together with any check in
payment for fractional shares and any Debentures representing any
unconverted principal amount hereof, be issued and delivered to the
registered holder hereof unless a different name has been indicated
below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes
<PAGE>
payable with respect thereto. Any amount required to be paid by
the undersigned on account of interest accompanies this Debenture.
Dated ................. , ......
............................................
Signature
Fill in for registration of shares and Debentures if to
be issued otherwise than to the registered holder.
....................................................
(Name)
....................................................
(Address)
....................................................
....................................................
Please print name and address
(including zip code number)
Tax Identification Principal Amount
Number to be Converted
$ ______________
EXHIBIT 3
Indenture by and between the Company and Texas Commerce Bank N.A.
as trustee, dated as of February 1, 1994, filed herewith.
<PAGE>
THIS INDENTURE, dated as of the day of February 1, 1994,
between Farah Incorporated, a corporation duly organized and existing
under the laws of the State of Texas (hereinafter sometimes
referred to as the "Company"), party of the first part, and Texas
Commerce Bank, N.A., a national banking association (hereinafter
sometimes referred to as the "Trustee"), party of the second part,
Witnesseth:
Whereas, for its lawful corporate purposes, the Company
has duly authorized an issue of its 8.50% Convertible Subordinated
Debentures due February 1, 2004 (hereinafter referred to as the
"Debentures"), for an aggregate principal amount of One Million Six
Hundred Seventy Three Thousand Dollars ($1,673,000), to be issued
as registered Debentures without coupons, to be authenticated by
the certificate of the Trustee, to be payable February 1, 2004 to
be redeemable as hereinafter provided, and the principal thereof to
be convertible into shares of Common Stock of the Company as
hereinafter provided; and, to provide the terms and conditions upon
which the Debentures are to be authenticated, issued and delivered,
the Company has duly authorized the execution of this Indenture;
and
Whereas, the Debentures and the Trustee's certificate of
authentication to be borne by the Debentures are to be
substantially in the following forms, respectively:
[form of face of debenture]
No. . . . $ . . .
FARAH INCORPORATED
8.50% Convertible Subordinated Debenture Due February 1, 2004
Farah Incorporated, a corporation duly organized and
existing under the laws of the State of Texas (herein referred to
as the "Company"), for value received, hereby promises to pay,
_______________ to its registered assigns, the principal sum of One
Million Six Hundred Seventy Three Thousand Dollars ($1,673,000), on
February 1, 2004, at its agency in The City of El Paso, Texas, 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 hereof as
hereinafter provided interest on said principal sum at the rate per
annum specified in the title of this Debenture, in like coin or
currency, from the February 1 or the August 1 next preceding the
<PAGE>
date hereof to which interest has been paid (unless the date hereof
is a February 1 or August 1 or to which interest has been paid, in
which case from the date hereof, or unless the
date hereof is after January 15, and before the
following February 1 or after July 15 and before
the following August 1, in which case from such
February 1 or August 1, provided, however, that
if the Company shall default in payment of the
interest due on such February 1 or August 1,
then from the next preceding February 1 or
August 1 to which interest has been paid, or if
no interest has been paid on the Debentures,
from the date hereof), semi-annually on February
1 and August 1 in each year, provided the first
such payment of interest shall not be paid until
August 1, 1994, until payment of said principal
sum has been made or duly provided for. The
interest so payable on any February 1 or August
1 will, subject to certain exceptions provided
in the Indenture hereinafter referred to, be
paid to the person in whose name this Debenture
is registered at the close of business on the
fifteenth day of the calendar month next
preceding such February 1 or August 1 or, if
such fifteenth day of the calendar month is not
a business day, the business day next preceding
such fifteenth day of the calendar month.
This Debenture 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.
This Debenture shall not be valid or
become obligatory for any purpose until the
<PAGE>
certificate of authentication hereon shall have
been signed by the Trustee under the Indenture.
In Witness Whereof, Farah Incorporated has
caused this Debenture to be signed, manually or
in facsimile, by its resident or Vice President
and by its Secretary or an Assistant Secretary
and a facsimile of its corporate seal to be
imprinted hereon.
Dated:
Farah Incorporated
BY .........................................
President
.........................................
Secretary
[form of reverse of debenture]
This Debenture is one of a duly
authorized issue of Debentures of the Company
known as its 8.5% Convertible Subordinated
Debentures due February 1, 2004 (herein referred
to as the "Debentures"), limited to the
aggregate principal amount of One Million Six
Hundred Seventy Three Thousand Dollars
($1,673,000), all issued or to be issued under
and pursuant to an indenture dated as of
February 1, 1994 (herein referred to as the
"Indenture"), duly executed and delivered
between the Company and Texas Commerce Bank,
N.A., a national banking association, Trustee
(herein referred to as the "Trustee"), to which
Indenture and all indentures supplemental
thereto reference is hereby made for a
description of the respective rights, limitation
of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the
holders of the Debentures.
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
<PAGE>
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
Debentures then outstanding. It is also provided
in the Indenture that the holders of a majority
in aggregate principal amount of the Debentures
at the time outstanding may on behalf of the
holders of all of the Debentures 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 premium,
if any) or interest on any of the Debentures.
The payment of the principal of (and
premium, if any) and interest on this Debenture
is expressly subordinated, as provided in the
Indenture, to the payment of all Senior
Indebtedness, as defined in the Indenture, and
by acceptance of this Debenture 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.
Subject to the provisions of the
Indenture, the holder of this Debenture is
entitled, at his opinion, at any time on or
before February 1, 2004 (except that, in case
this Debenture or any portion thereof shall be
called for redemption, such right shall
terminate with respect to this Debenture or
portion thereof, as the case may be so called
for redemption at the close of business of the
second business day next preceding the date
fixed for redemption as provided in the
Indenture), to convert the principal amount of
this Debenture (or any portion hereof which is
$1,000 or a whole multiple thereof) into shares
of Common Stock of the Company, as said shares
shall be constituted at the date of conversion,
at the conversion price of $15.2375 principal
amount of Debentures for each share of such
Common Stock, or at the adjusted conversion
price in effect at the date of conversion
determined as provided in the Indenture, upon
surrender of this Debenture to the Company at
the office or agency of the Company in El Paso,
Texas, accompanied by written notice of election
to convert, and (if so required by the Company)
by instruments of transfer, in form satisfactory
to the Company, duly executed by the registered
holder or by his duly authorized attorney. Such
<PAGE>
surrender shall, if made during the period from
the close of business of the fifteenth day of
the calendar month (or the next preceding
business day if such fifteenth day is a day on
which banking institutions in El Paso, Texas are
authorized by law to close) next preceding the
month during which an interest payment date
falls to the opening of business on such
interest payment date (unless this Debenture or
the portion being converted shall have been
called for redemption), also be accompanied by
payment in New York Clearing House funds or
other funds acceptable to the Company of an
amount equal to the interest payable on such
interest payment date on the principal amount of
this Debenture then being converted. Subject to
the foregoing, no adjustment is to be made on
conversion for interest accrued hereon or for
dividends on Common Stock issued on conversion.
The Company is not required to issue fractional
shares in any such conversion, but shall make
adjustment therefor in cash on the basis of the
current market value of such fractional interest
as provided in the Indenture.
The Indenture contains provisions
permitting the Company and the Trustee, with the
consent of the holders of not less than 66-2/3%
in aggregate principal amount of the Debentures
at the time outstanding, evidenced as in the
indenture provided, 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
Debentures; provided, however, that no such
supplemental indenture shall (i) extend the
maturity of any Debentures, or reduce the
principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon,
or reduce any premium payable upon the
redemption thereof, or impair the right to
convert the Debentures as set forth in the
Indenture, without the consent of the holder of
each Debenture so affected, or (ii) reduce the
aforesaid percentage of Debenture, the consent
of the holders of which is required for any such
supplemental indenture, without the consent of
the holders of all Debentures then outstanding;
and provided further that no change shall
terminate or impair the subordination provisions
<PAGE>
of the Indenture without the prior written
consent of the holders of Senior Indebtedness.
Any consent or waiver by the
registered holder of this Debenture given as
provided in the Indenture (unless effectively
revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon
all future holders of this Debenture and of any
Debenture issued in exchange or substitution
herefor, irrespective of whether or not
annotation of such consent or waiver is made
upon this Debenture.
No reference herein to the Indenture
and no provision of this Debenture or of the
Indenture shall alter or impair the obligation
of the Company, which is absolute and
unconditional, to pay the principal of (and
premium, if any) and interest on this Debenture
at the place, at the respective times, at the
rate and in the currency herein prescribed.
The Debentures are issuable as
Debentures without coupons in the denominations
of $1,000 and any whole multiple of $1,000. At
the office agency to be maintained by the
Company in El Paso, Texas, and in the manner and
subject to the limitations provided in the
Indenture, Debentures may be exchanged for a
like aggregate principal amount of Debentures 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 premium, if any) and interest
on this Debenture are payable at the office or
agency of the Company in El Paso, Texas and, in
the case of interest paid on any interest
payment date, by check mailed to the registered
holders of the Debentures.
The Debentures are subject to
redemption as a whole or in part at any time, at
the option of the Company, on not less than 30
nor more than 60 days' prior notice given as
provided in the Indenture, together with
interest accrued and unpaid thereon to the date
fixed for redemption, except that no redemption
at the option of the Company may be carried out
prior to February 1, 1996 unless the average of
the current Market Price per share of the Common
Stock, for the 20 consecutive Trading Days,
prior to the date upon which the notice of
redemption pursuant to the Indenture is first
mailed to holders of the Debentures shall have
<PAGE>
been at least 140% of the then current
conversion price.
The transfer of this Debenture is
registrable by the registered holder hereof in
person or by his attorney duly authorized in
writing on the books of the Company at the
office or agency to be maintained by the Company
in El Paso, Texas, 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 Debenture upon any such
registration of transfer, a new Debenture or
Debentures of authorized denomination or
denominations, for the same aggregate principal
amount, will be issued to the transferee in
exchange herefor.
Prior to due presentment for
registration of transfer of this Debenture, the
Company, the Trustee, any paying or conversion
agent and any Debenture registrar may deem and
treat the person in whose name this Debenture
shall be registered upon the books of the
Company as the absolute owner of this Debenture
(whether or not this Debenture 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, premium, if any, and interest
due hereon and for all other purposes, and
neither the Company nor the Trustee nor any
paying or conversion agent nor any Debenture
registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the
payment of the principal of, premium, if any, or
the interest on this Debenture, 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 an
incorporator, stockholder, officer or director,
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.
<PAGE>
[form of trustee's certificate of authentication]
This is one of the Debentures
described in the within-mentioned Indenture.
_________________________________________
as Trustee
By: ...............................................
Authorized Officer
[form of conversion notice]
To Farah Incorporated:
The undersigned owner of this
Debenture hereby irrevocably exercises the
option to convert this Debenture, or portion
hereof below designated, into shares of Common
Stock of Farah Incorporated in accordance with
the terms of the Indenture referred to in this
Debenture, and directs that the shares issuable
and deliverable upon the conversion, together
with any check in payment for fractional shares
and any Debentures representing any unconverted
principal amount hereof, be issued and delivered
to the registered holder hereof unless a
different name has been indicated below. If
shares are to be issued in the name of a person
other than the undersigned, the undersigned will
pay all transfer taxes payable with respect
thereto. Any amount required to be paid by the
undersigned on account of interest accompanies
this Debenture.
Dated ................. , ......
............................................
Signature
<PAGE>
Fill in for registration of shares and
Debentures if to be issued otherwise than to the
registered holder.
...............................................
(Name)
...............................................
(Address)
...............................................
...............................................
Please print name and address
(including zip code number)
Tax Identification Principal Amount
Number to be Converted
$______________
And whereas, all acts and things
necessary to make the Debentures, when executed
by the Company and authenticated and delivered
by the Trustee as in this Indenture provided,
the valid, binding and legal obligations of the
Company, and to constitute these presents a
valid indenture and agreement according to its
terms, have been done and performed, and the
execution of this Indenture and the issue
hereunder of the Debentures have in all respects
been duly authorized, and the Company, in the
exercise of the legal right and power vested in
it, is executing this Indenture and proposes to
make, execute, issue and deliver the Debentures;
<PAGE>
Now, Therefore, This Indenture Witnesseth:
That in order to declare the terms and
conditions upon which the Debentures are
authenticated, issued and delivered, and in
consideration of the premises, of the purchase
and acceptance of the Debentures by the holders
thereof and of the sum of One Dollar to it duly
paid by the Trustee at the execution of these
presents, the receipt whereof is hereby
acknowledged, the Company covenants and agrees
with the Trustee, for the equal and
proportionate benefit of the respective holders
from time to time of the Debentures, as follows:
ARTICLE 1.
Definitions.
SECTION 1.01. 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
Trust Indenture Act of 1939, as amended, or
which are by reference therein defined in the
Securities Act of 1933, as amended (except as
herein otherwise expressly provided or unless
the context otherwise requires), shall have the
meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as they
were in force at the date of the execution of
this Indenture.
Authorized Newspaper:
The term "Authorized Newspaper" shall
mean a newspaper printed in the English language
and customarily published at least once a day
for at least five days in each calendar week and
of general circulation in El Paso, Texas.
Whenever successive publications are required to
be made in an Authorized Newspaper, the
successive publications may be made in the same
or in a different newspaper meeting the
foregoing requirements and in each case on any
day of the week. If, because of temporary or
permanent suspension of publication or general
<PAGE>
circulation of any newspaper or for any other
reason, it is impossible or impracticable to
publish any notices required by this Indenture
in the manner herein provided, then such
publication in lieu thereof as shall be made
with the approval of the Trustee shall
constitute a sufficient publication of such
notice.
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.
Business Day:
The term "business day" shall mean a
day which is neither a Saturday nor a Sunday nor
a day on which banking institutions in El Paso,
Texas; are authorized by law to close.
Certificate of a Firm of Independent Public
Accountants:
The term "Certificate of a Firm of
Independent Public Accountants" shall mean a
certificate signed by an independent public
accountant or a firm of independent public
accountants (who may be the independent
accountants regularly retained by the Company)
acceptable to the Trustee. Such accountant or
firm shall be entitled to rely upon an Opinion
of Counsel as to the interpretation of any legal
matters relating to such certificate. The
acceptance by the Trustee of or its actions on,
such a certificate shall be sufficient evidence
that such accountant is acceptable to the
Trustee. Any Certificate of a Firm of
Independent Public Accountants shall contain a
statement that such firm is independent.
Common Stock:
The term "Common Stock", when used
with reference to stock of the Company, shall
mean all shares now or hereafter authorized of
the class of the Common Stock of the Company
presently authorized and stock of any other
<PAGE>
class into which such shares may hereafter have
been changed.
Company:
The term "Company" shall mean Farah
Incorporated, and, subject to the provisions of
Article Thirteen, shall also include its
successors and assigns.
Consolidated Net Income:
The term "Consolidated Net Income"
shall mean the aggregate of the net income or
net deficit, determined in accordance with
generally accepted accounting principles, of (a)
the Company since November 5, 1993 to the end of
its last fiscal quarter preceding the date of
such determination, and (b) each Subsidiary
since the date such corporation became a
Subsidiary to the end of its last fiscal quarter
preceding the date of such determination, after
(i) making appropriate deduction for outstanding
minority interests, if any, and (ii) making
appropriate provision for eliminations and
adjustments of intercompany items.
Conversion Price:
The term "conversion price" shall mean
the price per share of Common Stock from time to
time in effect at which Debentures may be
converted into Common Stock as hereinafter in
Article Four provided.
Date of Conversion:
The term "date of conversion" shall
mean the date on which any Debenture shall be
surrendered for conversion and notice given in
accordance with the provisions of Article Four
hereof.
Debenture or Debentures:
The term "Debenture" or "Debentures"
shall mean any Debenture or Debentures, as the
case maybe, authenticated and delivered under
this Indenture.
The term "outstanding", when used with
reference to Debentures, shall, subject to the
provisions of Section 10.04, mean, as of any
<PAGE>
particular time, all Debentures authenticated
and delivered by the Trustee under this
Indenture, except
(a)Debentures theretofore
canceled by the Trustee or
delivered to the Trustee for
cancellation;
(b)Debentures 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 on
paying agent), provided
that, if such Debentures are
to be redeemed prior to the
maturity thereof, notice of
such redemption shall have
been given as in Article
Five provided or provision
satisfactory to the Trustee
shall have been made for
giving such notice; and
(c)Debentures in lieu of or in
substitution for which other
Debentures shall have been
authenticated and delivered
pursuant to the terms of
Section 2.07.
Debentureholder; Registered holder:
The terms "debentureholder," "holder
of Debentures," "registered holder" or other
similar terms shall mean any person who shall at
the time be the registered holder of any
Debenture or Debentures on the books of the
Company kept for that purpose in accordance with
the provisions of this Indenture.
Event of Default:
The term "Event of Default" shall mean
any event specified in Section 8.01, continued
<PAGE>
for the period of time, if any, therein
designated.
Indenture:
The term "Indenture" shall mean this
instrument or, if amended or supplemented as
herein provided, as so amended or supplemented.
Market Price Per Share of Common Stock:
The term "Market Price per share of
Common Stock" for any Trading Day means (x) the
closing bid price for the Common Stock on such
Trading Day as published by the National
Association of Securities Dealers Automated
Quotation System ("NASDAQ") (or, if such prices
are not so published by NASDAQ, the average of
the high and low bid prices for the Common Stock
on such Trading Day, as furnished by any New
York Stock Exchange member firm selected from
time to time by the Company for such purpose) or
(y) if the Common Stock is then listed or
admitted to trading on a national securities
exchange, the last sale price for the Common
Stock on such Trading Day as reported in the
consolidated transaction or other reporting
system for securities listed or traded on such
exchange, or, in case no such reported sale
takes place on such Trading Day, the reported
closing bid price for the Common Stock on such
Trading Day on the principal national securities
exchange on which the Common Stock is then
listed or admitted to trading.
Officers' Certificate:
The term "Officers' Certificate" shall
mean a certificate signed by 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 16.05, 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, or who may be counsel
<PAGE>
not employed by, or of counsel to, the Company
who is acceptable to the Trustee. Each such
opinion shall include the statements provided
for in Section 16.05, if and to the extent
required by the provisions thereof.
Responsible Officer:
The term "responsible officer", when
used with respect to the Trustee, shall mean the
chairman and vice-chairman of the board of
directors or trustees, the chairman and
vice-chairman of the executive committee of the
board of directors or trustees, the president,
any vice-president, the secretary, the cashier,
the treasurer, any trust officer, any assistant
or second vice-president, or any other officer
or an assistant officer of the Trustee
customarily performing functions similar to
those performed by the persons who at the time
shall be such officers, respectively, or to whom
any corporate trust matter is referred because
of his knowledge of and familiarity with the
particular subject.
Senior Indebtedness:
The term "Senior Indebtedness" shall
mean the principal of and premium, if any, on
and interest on the following: (a) obligations
of the Company in respect of the Accounts
Financing Agreement [Security Agreement], dated
as of August 2, 1990, between Congress Financial
Corporation (Southwest) ("Congress") and Farah
U.S.A., Inc. ("Farah USA"), and together with
all amendments and supplements thereto,
including, but not limited to, the Covenant
Supplement to Accounts Financing Agreement
[Security Agreement] dated as of August 2, 1990,
and all other agreements, documents and
instruments at any time executed and/or
delivered in connection with any of the
foregoing or related thereto, as the same now
exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or
replaced, collectively, the "Financing
Agreements"), which Financing Agreements
include, inter alia, the guarantees of all
obligations of Farah USA to Congress by each of
the Company, Farah International, Inc., Farah
Sales Corp., Farah Manufacturing Company, Inc.,
Farah Manufacturing Company of New Mexico, Inc.,
<PAGE>
Farah Licensing Corp., Farah Clothing Company,
Inc., FTX, Inc., Radco Sportswear, Inc., Value
Slacks, Inc., and Value Clothing Company, Inc.,
(b) indebtedness for money borrowed (other than
the Debentures), for the payment of which the
Company is responsible or liable, and any
indebtedness evidenced by notes, debentures,
bonds or other securities sold by the Company
for money, for the payment of which the Company
is responsible or liable, or indebtedness issued
to or assumed for a vendor for all or part of
the purchase price of real or personal property
purchased, or real or personal property acquired
in any consolidation, merger or similar
transaction, whether outstanding on the date of
execution of this Indenture or thereafter
created, incurred, assumed or guaranteed by the
Company, unless in the instrument creating or
evidencing the same or pursuant to which the
same is outstanding it is provided that such
indebtedness is not superior in right of payment
to the Debentures, and (c) renewals, extensions
and refundings of any such indebtedness.
Subsidiary:
The term "Subsidiary" shall mean any
corporation of which the Company, or the Company
and one or more Subsidiaries, or any one or more
Subsidiaries, directly or indirectly own or
control more than 50% of the outstanding capital
stock having under ordinary circumstances (not
dependent upon the happening of a contingency)
voting power in the election of members of the
board of directors, managers or trustee of said
corporation.
Trading Day:
The term "Trading Day" shall mean any
day on which trading takes place (x) in the
over-the-counter market and prices reflecting
such trading are published by NASDAQ, or (y) if
the Common Stock is then listed or admitted to
trading on a national securities exchange, on
the principal national securities exchange on
which the Common Stock is then listed or
admitted to trading.
Trustee:
<PAGE>
The term "Trustee" shall mean Texas
Commerce Bank, N.A., and, subject to the
provisions of Article Nine hereof, shall also
include its successors. The term "principal
office" of the Trustee shall mean the principal
office of the Trustee, in El Paso, Texas, at
which the corporate trust business of the
Trustee shall, at any particular time, be
administered, which office is, at the date of
the execution of this Indenture, located at El
Paso, Texas.
Trust Indenture Act of 1939:
Except as herein otherwise expressly
provided or unless the context inquires
otherwise, the term "Trust Indenture Act of
1939" shall mean the Trust Indenture Act of 1939
as it was in force at the date of execution of
this Indenture.
SECTION 1.02. A Certificate of a Firm
of Independent Public Accountants shall be
conclusive evidence of Consolidated Net Income
as of the date of any determination.
Notwithstanding the foregoing, the Trustee shall
be under no duty to require that it is furnished
with a Certificate of a Firm of Independent
Public Accountants either annually or at any
other periodic interval or in any event unless
evidence of Consolidated Net Income shall be
required.
ARTICLE 2.
Issue, Description, Execution, Registration, Transfer
and Exchange of Debentures.
SECTION 2.01. The Debentures shall be
designated as 8.5% Convertible Subordinated
Debentures due February 1, 2004 Debentures for
the aggregate principal amount of One Million
Six Hundred Seventy Three Thousand Dollars
($1,673,000) 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
Debentures 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.
<PAGE>
The aggregate principal amount of
Debentures authorized by this Indenture is
limited to One Million Six Hundred Seventy Three
Thousand Dollars ($1,673,000) and, except as
provided in Section 2.07, the Company shall not
execute and the trustee shall not authenticate
or deliver Debentures in excess of such
aggregate principal amount.
Nothing contained in this Section 2.01
or elsewhere in this Indenture, or in the
Debentures, is intended to or shall limit
execution by the Company or authentication or
delivery by the Trustee of Debentures under the
circumstances contemplated by Sections 2.05,
2.06, 4.02, 5.02 and 12.04 hereof.
SECTION 2.02. The Debentures and the
Trustee's certificate of authentication to be
borne by the Debentures shall be substantially
of the tenor and purport as in this Indenture
above recited, and may have such letters,
numbers or other marks of identification or
designation and such legends or endorsements
thereon as the Board of Directors of the Company
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 regulations made pursuant thereto or
with any rule or regulation of any stock
exchange on which the Debenture may listed, or
to conform to usage. The Debentures may be
printed, lithographed or fully or partly
engraved.
SECTION 2.03. The Debentures shall
bear interest at the rate per annum set forth in
their title, payable semiannually on February 1
and August 1, shall mature on February 1, 2004
and shall be issuable as fully registered
Debentures without coupons in denominations of
$1,000 and any whole multiple of $1,000. The
person in whose name any Debenture is registered
at the close of business on any record date (as
hereinbelow defined) 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 Debenture upon any
transfer, exchange or conversion thereof
subsequent to such record date and prior to such
interest payment date, unless the Company shall
default in the payment of interest due on such
<PAGE>
interest payment date on any Debentures, in
which case such defaulted interest shall be paid
to the person in whose name such Debenture (or
any Debenture or Debentures issued upon transfer
or exchange thereof) is registered on a
subsequent record date, which shall be the
fifteenth day next preceding the date of payment
of such defaulted interest, to be established by
a written notice to debenture holders given by
or on behalf of the Company not less than ten
days prior to the record date for the payment of
such defaulted interest. The term "record date"
as used in this Section 2.03 with respect to any
regular interest payment date shall mean the
fifteenth day of the calendar month next
preceding such interest payment date, or, if
such fifteenth day of the calendar month is not
a business day, the business day next preceding
such fifteenth day of the calendar month, and
such term, as used in this Section, with respect
to the payment of any defaulted interest, shall
mean the fifteenth day next preceding the date
fixed by the Company for the payment of
defaulted interest.
Except as provided in the next
sentence, the Debentures shall be dated the date
of authentication and shall bear interest from
the February 1 or August 1, as the case may be,
to which interest has been paid last preceding
the date thereof, unless such date is a February
1 or August 1 to which interest has been paid,
in which case they shall bear interest from such
date, or unless the date hereof is on or prior
to July 15, 1994, in which case from the date
hereof, or if no interest has been paid on the
Debentures they shall bear interest from the
date hereof. Each Debenture authenticated
between the 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;
provided, however, that if and to the extent the
Company shall default in the payment of the
interest due on such interest payment date, then
any Debenture so authenticated shall bear
interest from the February 1 or August 1, as the
case may be, next preceding the date of such
Debenture, to which interest has been paid, or
if no interest has been paid on the Debentures,
from February 1, 1994.
<PAGE>
SECTION 2.04. The Debenture shall be
signed on behalf of the Company, manually or in
facsimile, by its President or a Vice President,
Secretary or an Assistant Secretary under its
corporate name which may be a facsimile. Only
such Debentures as shall bear a certificate of
authentication substantially in the form herein
recited, executed by the Trustee, shall be
entitled to the benefits of this Indenture or be
valid or obligatory for any purpose. The
Certificate by the Trustee upon any Debenture
executed by the Company shall be conclusive
evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder
and that holder is entitled to the benefits of
this Indenture.
In case any officer of the Company who
shall have signed any of the Debentures,
manually or in facsimile, shall cease to be such
officer before the Debentures so signed shall
have been authenticated and delivered by the
Trustee, or disposed of by the Company, such
Debentures nevertheless may be authenticated and
delivered or disposed of as though the person
who signed such Debentures had not ceased to be
such officer of the Company; and any Debenture
may be signed on behalf of the Company, manually
or in facsimile, by such persons as, at the
actual date of the execution of such Debenture,
shall be the proper officers of the Company,
although at the date of the execution of this
Indenture any such person was not such officer.
SECTION 2.05. Debentures may be
exchanged for a like aggregate principal amount
of Debentures of other authorized denominations.
Debentures to be exchanged shall be surrendered
at the office or agency to be maintained by the
Company in accordance with the provisions of
Section 6.02. and the Company shall execute and
the Trustee shall authenticate and such office
or agency shall deliver in exchange therefor the
Debenture or Debentures which the
debentureholder making the exchange shall be
entitled to receive.
The Company shall keep, at the office
or agency to be maintained by the Company in
accordance with the provisions of Section 6.02,
a register or registers in which, subject to
such reasonable regulations as it may prescribe,
the Company shall register the Debentures and
the transfer of Debentures as in this Article
<PAGE>
Two provided. Upon surrender for registration of
transfer of any Debenture at such office or
agency, the Company shall execute and the
Trustee shall authenticate and the Company shall
deliver in the name of the transferee or
transferees a new Debenture or Debentures for a
like aggregate principal amount.
All Debentures presented or
surrendered for exchange, registration of
transfer, redemption, conversion 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 attorney duly
authorized in writing.
No service charge shall be made for
any exchange or registration of transfer of
Debentures, 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 (a)
to issue, exchange or register the transfer of
any Debentures during a period beginning at the
opening of business 15 days before the day of
the mailing of a notice of redemption of less
than all the outstanding Debentures and ending
at the close of business on the day of such
mailing, or (b) to exchange or register the
transfer of any Debentures or portions thereof
called or selected for redemption.
SECTION 2.06. Pending the preparation
of definitive Debentures, the Company may
execute and the Trustee shall authenticate and
deliver temporary Debentures (printed or
lithographed) of any denomination and
substantially in the form of the definitive
Debentures, with such omissions, insertions and
variations as may be appropriate for temporary
Debentures, all as may be determined by the
Board of Directors of the Company. Temporary
Debentures may contain such reference to any
provisions of this Indenture as may be
appropriate. Every such temporary Debenture
shall be authenticated by the Trustee upon the
same conditions and in substantially the same
manner, and with the same effect, as the
definitive Debentures. Without unnecessary
delay the Company will execute and deliver to
the Trustee definitive Debentures and thereupon
<PAGE>
any or all temporary Debentures may be
surrendered in exchange therefor, at the
principal office of the Trustee in El Paso,
Texas, and the Trustee shall authenticate and
deliver in exchange for such temporary
Debentures an equal aggregate principal amount
of definitive Debentures. Until so exchanged,
the temporary Debentures shall in all respects
be entitled to the same benefits under this
Indenture as definitive Debentures authenticated
and delivered hereunder.
SECTION 2.07. In case any temporary
or definitive Debenture shall become mutilated
or be destroyed, lost or stolen, the Company, in
the case of any mutilated Debenture shall, and
in the case of any destroyed, lost or stolen
Debenture in its discretion may, execute, and
upon its request the Trustee shall authenticate
and deliver, a new Debenture in exchange and
substitution for the mutilated Debenture, or in
lieu of and substitution for the Debenture so
destroyed, lost or stolen, or, if any such
Debenture shall have matured or shall be about
to mature, instead of issuing a substituted
Debenture, the Company may pay the same without
surrender thereof. In every case the applicant
for a substituted Debenture 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 Debenture
and of the ownership thereof. The Trustee may
authenticate any such substituted Debenture 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 Debenture, 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 and in addition a
further sum not exceeding two dollars for each
Debenture so issued in substitution.
<PAGE>
To the extent lawful every substituted
Debenture issued pursuant to the provisions of
this Section 2.07 in substitution for any
destroyed, lost or stolen Debenture shall
constitute an additional contractual obligation
of the Company, whether or not the destroyed,
lost or stolen Debenture 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 Debentures duly issued
hereunder.
To the full extent legally
enforceable, all Debentures 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 Debentures and shall
preclude 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 their
surrender.
SECTION 2.08. Debentures surrendered
for the purpose of payment, redemption,
conversion into Common Stock, exchange,
substitution or registration of transfer, shall,
if surrendered to the Company of any paying or
conversion agent or registrar, be delivered to
the Trustee and the same, together with
Debentures surrendered to the Trustee for
cancellation, shall be canceled by it, and no
Debentures shall be issued in lieu thereof
except as expressly permitted by any of the
provisions of this Indenture. The Trustee shall,
at the request of the Company, destroy canceled
Debentures and deliver a certificate of
destruction thereof to the Company. If the
Company shall purchase or otherwise acquire any
of the Debentures, however, such purchase or
acquisition shall not operate as a payment,
redemption or satisfaction of the indebtedness
represented by such Debentures unless and until
the Company, at its option, shall deliver or
surrender the same to the Trustee for
cancellation.
<PAGE>
ARTICLE 3.
Subordination of Debentures
SECTION 3.01. The Company, for
itself, its successors and assign covenants and
agrees, and each holder of Debentures by his
acceptance thereof, likewise covenants and
agrees, that the payment of the principal of and
premium, if any, and interest on each and all of
the Debentures is hereby expressly subordinated
to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment
in full of all Senior Indebtedness.
SECTION 3.02. Upon any distribution
of assets of 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 Debentures
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,
premium, if any, and the interest due thereon
before the holders of the Debentures are
entitled to receive any payment upon the
principal of and premium, if any, or interest on
indebtedness evidenced by the Debentures;
(b) any payment or distribution
of assets of the Company of any kind of
character, whether in cash, property or
securities, to which the holders of the
Debentures or the Trustee 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
<PAGE>
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,
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 Debentures 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.
Subject to the payment in full of all
Senior Indebtedness, the holders of the
Debentures 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,
premium, if any, and interest on the Debentures
shall be paid in full and no such payments or
distributions to the holders of the Debentures
of cash, property or securities otherwise
distributable to the Senior Indebtedness shall,
as between the Company, its creditors, other
than the holders of Senior Indebtedness, and the
holders of the Debentures, be deemed to be a
payment by the Company to or on account of the
Debentures. It is understood that the provisions
of this Article Three are and are intended
solely for the purpose of defining the relative
<PAGE>
rights of the holders of the Debentures, on the
one hand, and the holders of the Senior
Indebtedness, on the other hand. Nothing
contained in this Article Three or elsewhere in
this Indenture or in the Debentures is intended
to or shall impair, as between the Company, its
creditors, other than the holders of Senior
Indebtedness, and the holders of the Debentures,
the obligation of the Company, which is
unconditional and absolute, to pay to the
holders of the Debentures the principal of,
premium, if any, and interest on the Debentures
as and when the same shall become due and
payable in accordance with their terms or to
affect the relative rights of the holders of the
Debentures and creditors of the Company, other
than the holders of the Senior Indebtedness, nor
shall anything herein or in the Debentures
prevent the Trustee or the holder of any
Debenture 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 9.01, and the
holders of the Debentures 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 Debentures 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 or any other
contractual obligation or account hereof
(whether such claim is as a third-party
beneficiary or otherwise) 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
Debentures or the Company moneys or assets to
which any holders of Senior Indebtedness shall
be entitled by virtue of this Article Three.
<PAGE>
SECTION 3.03. In the event and during
the continuation of any default in the payment
of principal of, or premium, if any, or interest
on, 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, premium, if
any, or interest on the Debentures shall be made
by the Company.
SECTION 3.04. Nothing contained in
this Indenture or in any of the Debentures shall
(a) affect the obligation of the Company to
make. or prevent the Company from making, at any
time except as provided in Sections 3.0 and
3.03, payments of principal of, premium, if any,
or interest on the Debentures, 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, premium, if any,
or interest on the Debentures, if, at the time
of such deposit, the Trustee did not have
written notice of any event prohibiting the
making of such deposit by the Company from the
Company or from the holder of any Senior
Indebtedness or from the representatives of any
such holder.
SECTION 3.05. Each holder of
Debentures by his acceptance therefor 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. Notwithstanding the
provisions of this Article or any other
provisions of the 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
<PAGE>
and until the Trustee 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.
ARTICLE 4.
Conversion of Debentures.
SECTION 4.01. Subject to and upon
compliance with the provisions of this Article
Four, at the option of the holder, any Debenture
or any portion of the principal amount thereof
which is $1,000 or a whole multiple thereof,
may, at any time on or before February 1, 2004,
or in case such Debenture or some portion
thereof, shall be called for redemption prior to
such date, then, with respect to such Debenture
or portion thereof so called for redemption,
until and including, but not after, the close of
business on the second business day next
preceding the date fixed for such redemption, be
converted at the principal amount thereof into
Common Stock at the conversion price in effect
at the date of conversion.
SECTION 4.02. In order to exercise
the conversion privilege, the holder of any
Debenture to he converted shall surrender such
Debenture to the Company at its office or agency
in El Paso, Texas, together with the conversion
notice in the form provided on the Debentures
duly executed, and, if so required by the
Company, the Debenture shall also be accompanied
by proper assignments thereof to the Company or
in blank for transfer and any requisite Federal
and State transfer tax stamps. Debentures so
surrendered during the period from the close of
business on the record date preceding an
interest payment date to the opening of business
on such interest payment date shall (unless any
such Debenture or the portion thereof being
converted shall have been called for redemption)
also be accompanied by payment in New York
Clearing House funds or other funds acceptable
to the Company of an amount equal to the
interest payable on such interest payment date
on the principal amount of such Debenture then
being converted. As promptly as practicable
after the surrender of such Debenture for
conversion as aforesaid, the Company shall issue
<PAGE>
and shall deliver at said office or agency to
such holder, or on his written order, a
certificate or certificates for the number of
full shares issuable upon the conversion of such
Debenture or portion thereof and a check or cash
in respect of any fraction of a share of Common
Stock issuable upon such conversion, all as
provided in this Article Four, together with a
Debenture or Debentures in principal amount
equal to the unconverted and unredeemed portion,
if any, of the Debenture so converted. Such
conversion shall be deemed to have been effected
on the date on which such notice shall has been
received at said office or agency and such
Debenture shall have been surrendered as
aforesaid, and the person or persons in whose
name or names any certificate or certificates
for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have
become on said date the holder or holders of
record of the shares represented thereby,
provided, however, that any such surrender on
any date when the stock transfer books of the
Company shall be closed shall constitute the
person or persons in whose name or names the
certificates are to be issued as the record
holder or holders thereof for all purposes on
the next succeeding date on which such stock
transfer books are open, but such conversion
shall be at the conversion price in effect on
such next succeeding day on which such transfer
books are open. Subject to the foregoing, no
adjustment shall be made for interest accrued on
any Debenture that shall be converted or for
dividends on any Common Stock that shall be
issued upon the conversion of such Debenture.
SECTION 4.03. The Company shall not
be required to issue fractions of shares of
Common Stock upon conversion of Debentures. If
more than one Debenture shall be surrendered for
conversion at one time be the same holder, the
number of full shares which shall be issuable
upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the
Debentures so surrendered. If any fractional
interest in a share of Common Stock would be
deliverable upon the conversion of any Debenture
or Debentures, the Company shall make an
adjustment therefor in cash equal to the current
market value or such fractional interest
computed to the nearest thousandth of a share
<PAGE>
either on the basis of the last reported sale
price of Common Stock on the New York Stock
Exchange (or, if not listed on the New York
Stock Exchange, then on such other exchange on
which the Common Stock is listed as the Company
may designate) on the last business day prior to
the date of conversion or if there shall not
have been a sale on such last business day, on
the basis of the average of the bid and asked
quotations therefor on such exchange on such
last business day, or if the Common Stock shall
not then be listed on any exchange, at the
highest bid quotation in the over-the-counter
market on such last business day as reported by
National Quotation Bureau, Inc.
SECTION 4.04. The conversion price
shall be as specified in the form of Debenture
hereinabove set forth or, after adjustment as
provided in this Article Four, the conversion
price as so adjusted.
SECTION 4.05. The conversion price
shall be adjusted from time to time as follows:
(a) In case the Company shall,
at any time or from time to time while any of
the Debentures are outstanding, (i) pay a
dividend in shares of its Common Stock, (ii)
subdivide its outstanding shares of Common
Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or
(iv) issue by reclassification of its shares of
Common Stock any shares of stock of the Company,
the conversion price in effect immediately prior
thereto shall be adjusted so that the holder of
any Debenture thereafter surrendered for
conversion shall be entitled to receive the
number of shares of Common Stock or other
securities of the Company which he would have
owned or have been entitled to receive after the
happening of any of the events described above,
had such Debenture been converted immediately
prior to the happening of such event. An
adjustment made pursuant to this subdivision (a)
shall become effective, in the case of a
dividend, on the payment date retroactively to
immediately after the opening of business on the
day following the record date for the
determination of shareholders entitled to
receive such dividend, subject to the provisions
of subdivision (f) of this Section 4.05, and
<PAGE>
shall become effective in the case of a
subdivision, combination or reclassification
immediately after the opening of business on the
day following the day when such subdivision,
combination or reclassification, as the case may
be, becomes effective.
(b) In case the Company shall,
at any time or from time to time while any of
the Debentures are outstanding, issue rights or
warrants to all holders of shares of its Common
Stock entitling them (for a period expiring
within 45 days of the record date mentioned
below) to subscribe for or purchase shares of
Common Stock at a price per share less than the
current market price per share of Common Stock
(as defined in subdivision (d) below) at such
record date, the conversion price in effect
immediately prior to the issuance of such rights
or warrants shall be adjusted as follows: the
number of shares of Common Stock into which
$1,000 principal amount of Debentures was
theretofore convertible shall be multiplied by a
fraction, of which the numerator shall be the
number of shares of Common Stock outstanding
immediately prior to such record date plus the
number of additional shares of Common Stock
offered for subscription or purchase, and of
which the denominator shall be the number of
shares of Common Stock outstanding immediately
prior to such record date plus the number of
shares which the aggregate offering price of the
total number of shares so offered would purchase
at such current market price; and the conversion
price shall be adjusted by dividing $1,000 by
the new number of shares into which $1,000
principal amount of Debentures shall be
convertible as aforesaid. Such adjustment shall
become effective on the date of such issuance
retroactively to immediately after the opening
of business on the day following the record date
for the determination of shareholders entitled
to receive such rights or warrants, subject to
the provisions of subdivision (f) of this
Section 4.05.
(c) In case the Company shall,
at any time or from time to time while any of
the Debentures are outstanding, distribute to
all holders of shares of its Common Stock
evidences of its indebtedness or securities or
assets (excluding cash dividends or cash
<PAGE>
distributions payable out of consolidated
earnings or earned surplus, or dividends payable
in shares of Common Stock) or rights to
subscribe (excluding those referred to in
subdivision (b) above), the conversion price in
effect immediately prior to such distribution
shall be adjusted by multiplying the number of
shares of Common Stock into which $1,000
principal amount of Debentures was theretofore
convertible by a fraction, of which the
numerator shall be the current market price per
share of Common Stock (as defined in subdivision
(d) below) on the record date for such
distribution, and of which the denominator shall
be such current market price per share of the
Common Stock, less the then fair market value
(as determined by the Board of Directors of the
Company, whose determination shall be
conclusive) of the portion of the assets or
securities or evidences of indebtedness so
distributed or of such subscription rights
applicable to one share of Common Stock; and the
conversion price shall be adjusted by dividing
$1,000 by the new number of shares into which
$1,000 principal amount of Debentures shall be
convertible as aforesaid. Such adjustment shall
become effective on the date of such
distribution retroactively to immediately after
the opening of business on the day following the
record date for the determination of
shareholders entitled to receive such
distribution, subject to the provisions of
subdivision (f) of this Section 4.05. For the
purposes of this subdivision (c) consolidated
earnings or earned surplus shall be computed by
adding thereto all charges against earned
surplus on account of dividends paid in shares
of Common Stock in respect of which the
conversion price has been adjusted, all as
determined by the independent public accountants
then regularly auditing the accounts of the
Company, whose determination shall be
conclusive.
(d) For the purpose of any
computation under subdivisions (b) and (c)
above, the current market price per share of
Common Stock at any date shall be deemed to be
the average of the market values of the Common
Stock for the ten consecutive business days
immediately preceding the day in question. The
market value of the Common Stock for each day
<PAGE>
shall be determined as provided in Section 4.03
hereof.
(e) Accept as herein otherwise
provided, no adjustment in the conversion price
shall be made by reason of the issuance in
exchange for cash, property or services, of
shares of Common Stock, or any securities
convertible into or exchangeable for shares of
Common Stock, or carrying the right to purchase
any of the foregoing.
(f) If the Company shall take a
record of the holders of its Common Stock for
the purpose of entitling them to receive any
dividend for any subscription or purchase rights
or any distribution and shall, thereafter and
before the distribution to stockholders of any
such dividend, subscription or purchase rights
or distribution, legally abandon its plan to pay
or deliver such dividend, subscription or
purchase rights or distribution, then no
adjustment of the conversion price shall be
required by reason of the taking of such record.
(g) No adjustment in the
conversion price shall be required unless such
adjustment would require an increase or decrease
of at least 1% in such price: provided, however,
that any adjustments which by reason of this
subdivision (g) are not required to be made
shall be carried forward and taken into account
in any subsequent adjustment. All calculations
under this Article Four shall be made to the
nearest cent or to the nearest one-hundredth of
a share, as the case may be.
(h) Whenever the conversion
price is adjusted as herein provided, the
Company shall (i) forthwith place on file at the
principal office of the Trustee a statement
signed by the President or a Vice President of
the Company and by its Treasurer or an Assistant
Treasurer showing in detail the facts requiring
such adjustment and the conversion price after
such adjustment and shall exhibit the same from
time to time to any debenture-holder desiring an
inspection thereof, and (ii) cause a notice
<PAGE>
stating that such adjustment has been effected
and the adjusted conversion price, to be mailed
to the holders of Debentures at their last
addresses as they shall appear on the registry
books.
SECTION 4.06. In case of any
reclassification or change of outstanding shares
of Common Stock issuable upon conversion of the
Debentures (other than a change in par value, or
from par value to no par value, or from no par
value to par value, or as a result of a
subdivision or combination), or in case of any
consolidation of the Company with one or more
other corporations (other than a consolidation
in which the Company is the continuing
corporation and which does not result in any
reclassification or change of outstanding shares
of Common Stock issuable upon conversion of the
Debentures), or in case of the merger of the
Company into another corporation, or in case of
any sale or conveyance to another corporation of
the property of the Company as an entirety or
substantially as an entirety, the Company, or
such successor or purchasing corporation, as the
case may be, shall execute with the Trustee a
supplemental indenture providing that the holder
of each Debenture then outstanding shall have
the right to convert such Debenture into the
kind and amount of shares of stock and other
securities and property receivable upon such
reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of
shares of Common Stock into which such Debenture
might have been converted immediately prior to
such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental
indenture shall provide for adjustments which
shall be as nearly equivalent as may be
practicable to the adjustments provided for in
this Article Four.
As evidence of the kind and amount of
shares of stock or other securities or property
into which Debentures may properly be
convertible after any such reclassification,
change, consolidation, merger, sale or
conveyance, or as to the appropriate adjustments
of the conversion prices applicable with respect
thereto, the Trustee, subject to the provisions
of Section 9.01, may accept a Certificate of a
Firm of Independent Public Accountants with
respect thereto, and, in the absence of bad
<PAGE>
faith upon the part of the Trustee, the Trustee
may conclusively rely thereon, and shall not be
responsible or accountable to any holder of
Debentures for any provisions in conformity
therewith, or approved in such certificate,
which may be contained in any such supplemental
indenture. The above provisions of this Section
shall similarly apply to successive
reclassifications and changes of shares of
Common Stock and to successive consolidations,
mergers, sales or conveyances.
SECTION 4.07. The issue of stock
certificates on conversion of Debentures shall
be made without charge to the converting
debentureholder for any issue tax in respect of
the issue thereof. The Company shall not,
however, be required to pay any tax which may be
payable in respect of any transfer involved in
the issue and delivery of shares in any name
other than that of the holder of any Debenture
converted, and the Company shall not be required
to issue or deliver any such stock certificate
unless and until the person or persons
requesting the issue thereof shall have paid to
the Company the amount of such tax or shall have
established to the satisfaction of the Company
that such tax has been paid.
SECTION 4.08. The Company shall at
all times reserve and keep available out of its
authorized but unissued shares, for the purpose
of effecting the conversion of the Debentures,
such number of its duly authorized shares of
Common Stock as shall from time to time be
sufficient to effect the conversion of all
outstanding Debentures.
If any shares of Common Stock reserved
or to be reserved for the purpose of conversion
of Debentures hereunder require registration
with or approval of any governmental authority
under any Federal or State law before such
shares may be validly issued upon conversion,
then the Company covenants that it will in good
faith and as expeditiously as possible endeavor
to secure such registration or approval, as the
case may be.
The Company covenants that all shares
of Common Stock which may be issued upon
conversion of Debentures shall upon issue be
fully paid and non-assessable by the Company and
<PAGE>
free from all taxes, liens and charges with
respect to the issue thereof.
SECTION 4.09. Neither the Trustee nor
any conversion agent shall at any time be under
any duty or responsibility to any holder of
Debentures to determine whether any facts exist
which may require any adjustment of the
conversion price, or with respect to the nature
or extent of any such adjustment when made, or
with respect to the method employed, or herein
or in any supplemental indenture provided to be
employed, in making the same, subject, however,
to the provisions of Section 9.01 of this
Indenture. Neither the Trustee nor any
conversion agent shall be accountable with
respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any
securities or property, which may at any time be
issued or delivered upon the conversion of any
Debenture; and neither of them makes any
representation with respect thereto. Neither
the Trustee nor any conversion agent shall be
responsible for any failure of the Company to
make any cash payment or to issue, transfer or
deliver any shares of Common Stock or stock
certificates or other securities or property
upon the surrender of any Debenture for the
purpose of conversion or, subject to Section
9.01, to comply with any of the covenants of the
Company contained in this Article Four.
SECTION 4.10. In the event
(1) that the Company shall pay
any dividend or make any distribution
to the holders of Common Stock
otherwise than in cash out of its
retained earnings; or
(2) that the Company shall offer
for subscription, pro rata, to the
holders of Common Stock any additional
shares of stock of any class or any
other right; or
(3) that the Company shall
effect any reclassification or change
of outstanding shares of the Common
Stock issuable upon the conversion of
the Debentures (other than a change in
<PAGE>
par value, or from par value to no par
value, or from no par value to par
value, or as a result of a subdivision
or combination), or any consolidation
of the Company with, or merger of the
Company into, another corporation
(other than a consolidation in which
the Company is the continuing
corporation and which does not result
in any reclassification or change of
outstanding shares of Common Stock
issuable upon conversion of the
Debentures), or any sale or conveyance
to another corporation of the property
of the Company as an entirety or
substantially as an entirety,
then, and in any one or more of such events, the
Company will give to the Trustee and any
conversion agent written notice thereof at least
ten days prior to (i) the record date fixed with
respect to any of the events specified in (1)
and (2) above, and (ii) the effective date of
any of the events specified in (3) above; and
shall mail a copy of such notice to the holders
of Debentures at their last addresses as they
shall appear upon the registry books.
ARTICLE 5.
Redemption of Debentures.
Section 5.01. The Company may, at its
option, redeem at any time all or from time to
time any part of the Debentures, on any date
prior to maturity, specified in the form of
Debenture hereinbefore set forth for redemption,
together with interest accrued and unpaid
thereon to the date fixed for redemption.
Section 5.02. In case the Company
shall desire to exercise such right to redeem
all or, as the case may be, any part of the
Debentures in accordance with the right reserved
so to do, it shall give notice of such
redemption to holders of the Debentures to be
redeemed as hereinafter in this Section 5.02
provided.
Notice of redemption shall be given to
the holders of Debentures to be redeemed as a
whole or in part by mailing by first-class mail
<PAGE>
a notice of such redemption not less than thirty
nor more than sixty 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 in the
manner herein provided to the holder of any
Debenture 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 Debentures.
Any notice which is mailed in the
manner herein provided shall be conclusively
presumed to have been duly given, whether or not
the holder receives the notice.
The notice of redemption to each
holder of Debentures to be redeemed shall
specify the principal amount of Debentures to be
redeemed, shall state the date fixed for
redemption and the redemption price at which
Debentures are to be redeemed, and shall state
that payment of the redemption price of the
Debentures to be redeemed will be made at the
office or agency to be maintained by the Company
in accordance with the provisions of Section
6.0, upon presentation and surrender of such
Debentures, 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, and each
such notice shall state the current conversion
price and that the right to convert Debentures
shall terminate as provided in this Indenture.
If less than all the Debentures are to be
redeemed, the notice of redemption to each
holder shall specify such holder's Debentures to
be redeemed as a whole or in part. In case any
Debenture is to be redeemed in part only, the
notice which relates to such Debenture shall
state the portion of the principal amount
thereof to be redeemed (which shall be $1,000 or
a whole multiple thereof), and shall state that
on and after the redemption date, upon surrender
of such Debenture, the holder will receive the
redemption price in respect of the principal
amount thereof called for redemption and,
without charge, a new Debenture or Debentures of
authorized denominations for the principal
amount thereof remaining unredeemed.
If less than all the Debentures are to
be redeemed the Company shall give the Trustee,
at least forty-five days in advance of the date
fixed for redemption, notice of the aggregate
<PAGE>
principal amount of Debentures to be redeemed,
and thereupon the Trustee shall select in such
manner as it shall deem appropriate and fair, in
its discretion, the numbers of Debentures to be
redeemed as a whole or in part and shall
thereafter promptly notify the Company in
writing of the numbers of Debentures or portions
thereof to be redeemed. For the purpose of any
redemption of less than all the Debentures, the
Company and the Trustee may treat as outstanding
Debentures surrendered for conversion during the
period of fifteen days immediately preceding the
mailing of the notice of redemption.
If any Debenture selected for
redemption in part is surrendered for conversion
in part on or before the close of business on
the second business day next preceding the date
fixed for redemption, the part of such Debenture
converted shall be applied first to the part to
be redeemed.
Section 5.03. If the giving of notice
of redemption shall have been completed as above
provided, the Debentures or portions of
Debentures specified in such notice shall,
unless theretofore converted into Common Stock,
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
Company shall default in the payment of such
Debentures at the redemption price, together
with interest accrued to the date fixed for
redemption) interest on the Debentures or
portion of Debentures so called for redemption
shall cease to accrue, and any right to convert
the principal of the Debentures or portions of
Debentures so called for redemption shall
terminate at the close of business on the second
business day next preceding said date. On
presentation and surrender of such Debentures at
said place of payment in said notice specified,
the said Debentures shall be paid and redeemed
by the Company at the applicable redemption
price together with interest accrued to the date
fixed for redemption.
Section 5.04. All Debentures
surrendered to the Trustee, pursuant to the
provisions of this Article Five, shall be
forthwith canceled by it, and, at the request of
<PAGE>
the Company, shall be destroyed by the Trustee,
which shall deliver its certificate thereof to
the Company.
ARTICLE 6.
Article Covenants of the Company.
The Company covenants as follows:
Section 6.01. The Company will duly
and punctually pay or cause to be paid the
principal of (and premium, if any) and interest
on each of the Debentures at the time and place
and in the manner provided herein and in the
Debentures. Each instalment of interest on the
Debentures may be paid by mailing checks for
such interest payable to or upon the written
order of the person entitled thereto pursuant to
Section 2.03 to the address of such person as it
appears on the registry books of the Company.
Section 6.02. So long as any of the
Debentures shall remain outstanding, the Company
will maintain an office or agency in El Paso,
Texas, where the Debentures may be presented for
registration, exchange and registration of
transfer and conversion as in this Indenture
provided, and where notices and demands to or
upon the Company in respect of the Debentures or
of this Indenture may be served, and where the
Debentures may be presented for payment. The
Company will give to the Trustee notice of the
location of such office or agency and of any
change of location thereof. In case the Company
shall fail to maintain such office or agency or
shall fail to give such notice of the location
or of any change in the location thereof,
presentations and demands may be made and
notices may be served at the principal office of
the Trustee.
Section 6.03. So long as any of the
Debentures shall remain outstanding, the Company
will not, except as provided below in this
Section 6.03, (a) declare or pay any dividend or
make any distribution on any stock of the
Company or to its stockholders (other than
dividends or distributions payable in shares of
stock of the Company), or (b) purchase, redeem
or otherwise acquire or retire for value any
<PAGE>
shares of its stock, or (c) permit any
Subsidiary to purchase, redeem or otherwise
acquire for value any shares of stock of the
Company, or pay any dividend to any minority
interest if, upon giving effect thereto, the sum
of such dividends, distributions, purchases,
redemptions, acquisitions and retirements after
November 5, 1993 (hereinafter referred to as
"Stock Payments"), exceeds Consolidated Net
Income, plus (i) $5,000,000, (ii) the net
proceeds (in cash or if other than cash, the
fair value hereof as determined by the Board of
Directors) of the issue or sale after November
5, 1993 of stock of the Company, and (iii) the
principal amount of convertible securities
issued or sold after November 5, 1993 which have
been converted. In the event that the net
proceeds of the issue or after November 5, 1993
of stock of the Company consist, in whole or in
part, of all or substantially all of the assets
of a going concern business or such amount of
stock of a corporation constituting a going
concern business as would make such corporation
a Subsidiary as defined herein, the fair value
of such net proceeds (as determined by the Board
of Directors) for the purposes of this Section
shall not exceed the sum of the capital and
surplus of such going concern business or
corporation or the proportion of the capital and
surplus of such corporation as shall be
applicable to the proportion of stock acquired
by the Company.
The provisions of this Section 6.03
shall not prevent (A) the payment of any
dividend within 60 days after the date of
declaration thereof, if at said date such
declaration complied with the provisions of this
Section 6.03, or (B) the retirement of any
shares of the Company's stock by exchange for,
or out of the proceeds of the substantially
concurrent sale of, other shares of its stock.
Section 6.04. The Company will insure
and keep insured, and will cause every
Subsidiary to insure and keep insured, to a
reasonable amount with reputable insurance
companies, so much of their respective
properties as companies engaged in a similar
business and to the extent such companies in
accordance with good business practice
customarily insure properties of a similar
character against loss by fire and from other
<PAGE>
causes or, in lieu thereof, in the case of
itself or of any one or more of its
Subsidiaries, the Company will maintain or cause
to be maintained a system or systems of
self-insurance which will accord with the
approved practices of companies owning or
operating properties of a similar character and
maintaining such systems.
Section 6.05. The Company, whenever
necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner
provided in Section 9.10, a Trustee, so that
there shall at all times be a Trustee hereunder.
Section 6.06. (a) 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 this Section 6.06 and
Section 14.04,
(1) that it will hold all sums
held by it as such agent for the
payment of the principal of (and
premium, if any) or interest on the
Debentures (whether such sums have
been paid to it by the Company or by
any other obligor on the Debentures)
in trust for the benefit of the
holders of the Debentures and will
notify the Trustee of the receipt of
sums to be so held,
(2) that it will give the
Trustee notice of any failure by the
Company (or by any other obligor on
the Debentures) to make any payment of
the principal of (and premium, if any)
or interest on the Debentures when the
same shall be due and payable, and
(3) that it will at any time
during the continuance of any Event of
Default specified in subsections (a)
or (b) of Section 8.01, upon the
written request of the Trustee,
deliver to the Trustee all sums so
held in trust by it.
<PAGE>
(b) If the Company shall act as its
own paying agent, it will, on or before each due
date of the principal of (and premium, if any)
or interest on the Debentures, set aside,
segregate and hold in trust for the benefit of
the holders of the Debentures, a sum sufficient
to pay such principal (and premium, if any) or
interest so becoming due and will notify the
Trustee of such action, or any failure by it or
any other obligor on the Debentures to take such
action and will at any time during the
continuance of any Event of Default specified in
subsections (a) or (b) of Section 8.01, upon the
written request of the Trustee, deliver to the
Trustee all sums so held in trust by it.
(c) Anything in this Section 6.06 to
the contrary notwithstanding, the Company may,
at any time, for the purpose of obtaining a
satisfaction and discharge of this Indenture, 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 6.06, such sums to be held by the
Trustee upon the trusts herein contained.
(d) Anything in this Section 6.06 to
the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section
6.06 is subject to the provisions of Sections
14.03 and 14.04.
Section 6.07. (a) The Company will
endeavor to, and will endeavor to cause each
Subsidiary to, (i) pay all taxes, assessments
and governmental charges lawfully levied or
assessed upon it, its property, or upon any part
thereof or upon its income or profits, or any
part thereof, before the same shall become
delinquent, and (ii) duly observe and conform to
all lawful requirements of any governmental
authority relative to any of its property, and
all covenants, terms and conditions upon or
under which any of its property is held;
provided that nothing in this Section 6.07 or
elsewhere in this Indenture contained shall
require the Company or any Subsidiary to observe
or conform to any requirement of governmental
authority or to pay any such tax, assessment or
governmental charge so long as the validity
thereof shall be contested in good faith.
<PAGE>
(b) The Company will, and will cause
each Subsidiary to, keep and maintain all
buildings, plants and other property owned by it
in such good condition, repair and working order
and supplied with all such necessary equipment
as in the judgment of the Company may be
necessary so that the business carried on in
connection therewith may be properly and
advantageously conducted at all times; provided,
however, that nothing in this Section 6.07 or,
subject to the provisions of Sections 13.01 and
13.02, elsewhere in this Indenture or in the
Debentures contained shall present the Company
or a Subsidiary from selling, abandoning or
otherwise disposing of any property, real or
personal, tangible or intangible, whenever in
the judgment of the Company or such Subsidiary
it is advisable or desirable to do so.
Section 6.08. From time to time
whenever reasonably demanded by the Trustee the
Company will make, execute and deliver or cause
to be made, executed and delivered any and all
such further and other instruments and
assurances and take all such further action as
may be reasonably necessary or proper to carry
out the intention of or to facilitate the
performance of the terms of this Indenture or to
secure the rights and remedies hereunder of the
holders of the Debentures.
Section 6.09. The Company will, so
long as any of the Debentures are outstanding:
(1) deliver to the Trustee,
forthwith upon becoming aware of any
default or defaults in the performance
of any covenant, agreement or
condition contained in this Indenture
which has not been cured or waived, an
Officers' Certificate specifying such
default or defaults, and
(2) deliver to the Trustee
within 120 days after the end of each
fiscal year of the Company, beginning
with the year 1994, an Officers'
Certificate stating that in the course
of the performance by the signers of
their duties as officers of the
Company they would normally obtain
knowledge of any default by the
<PAGE>
Company in the performance of any
covenant, agreement or condition
contained in this Indenture, stating
whether or not they have obtained
knowledge of any such default, and if
so, specifying each such default of
which the signers have knowledge and
the nature and status thereof.
ARTICLE 7.
Debentureholders Lists and Reports by the Company
and the Trustee
Section 7.01. The Company will furnish
or cause to be furnished to the Trustee
(a) semi-annually, not more than 15
days after each January 15 and July 15
beginning July 15, 1994, a list, in such
form as the Trustee may reasonably require,
of the names and addresses of the
debentureholders as of such January 15 and
July 15, as the case may be (or if such
January 15 or July 15 is not a business
day, as of the business day next preceding
such January 15 or July 15), and
(b) at such other times as the
Trustee may request in writing, within 30
days after the receipt by the Company of
any such request, a list of similar form
and content as of a date not more than 15
days prior to the time such list is
furnished,
provided, however, that so long as the Trustee
is the Debenture registrar, no such list shall
be required to be furnished.
Section 7.02. (a) The Trustee shall
preserve, in as current a form as is reasonably
practicable, all information as to the names and
addresses of the holders of Debentures contained
in the most recent list furnished to it as
provided in Section 7.01 or received by it in
the capacity of paying agent (if so acting) and
Debenture registrar.
The Trustee may destroy any list
furnished to it as provided in Section 7.01 upon
receipt of a new list so furnished.
<PAGE>
(b) In case three or more holders
of Debentures (hereinafter referred to as
"applicants") apply in writing to the Trustee,
and furnish to the Trustee reasonable proof that
each such applicant has owned a Debenture for a
period of at least six months preceding the date
of such application, and such application states
that the applicants desire to communicate with
other holders of Debentures with respect to
their rights under this Indenture or under the
Debentures, and is accompanied by a copy of the
form of proxy or other communication which such
applicants propose to transmit, then the Trustee
shall, within five business days after the
receipt of such application, at its election
either
(1) afford such applicants
access to the information preserved at
the time by the Trustee in accordance
with the provisions of subsection (a)
of this Section 7.02, or
(2) inform such applicants as to
the approximate number of holders of
Debentures whose names and addresses
appear in the information preserved at
the time by the Trustee in accordance
with the provisions of subsection (a)
of this Section 7.02, and as to the
approximate cost of mailing to such
debentureholders the form of proxy or
other communication, if any, specified
in such application.
If the Trustee shall elect not to
afford such applicants access to such
information, the Trustee shall, upon the written
request of such applicants, mail to each
debentureholder whose name and address appears
in the information preserved at the time by the
Trustee in accordance with the provisions of
subsection (a) of this Section 7.02, a copy of
the form of proxy or other communication which
is specified in such request, with reasonable
promptness after a tender to the Trustee of the
material to be mailed and of payment, or
provision for the payment, of the reasonable
expenses of mailing, unless within five days
after such tender, the Trustee shall mail to
such applicants and file with the Securities and
Exchange Commission, together with a copy of the
<PAGE>
material to be mailed, a written statement to
the effect that, in the opinion of the Trustee,
such mailing would be contrary to the best
interests of the holders of Debentures or would
be in violation of applicable law. Such written
statement shall specify the basis of such
opinion. If said Commission, after opportunity
for a hearing upon the objections specified in
the written statement so filed, shall enter an
order refusing to sustain any of such objections
or if, after the entry of an order sustaining
one or more of such objections, said Commission
shall find, after notice and opportunity for
hearing, that all the objections so sustained
have been met and shall enter an order so
declaring, the Trustee shall mail copies of such
material to all such debentureholders with
reasonable promptness after the entry of such
order and the renewal of such tender; otherwise
the Trustee shall be relieved of any obligation
or duty to such applicants respecting their
application.
(c) Each and every holder of the
Debentures, by receiving and holding the same,
agrees with the Company and the Trustee that
neither the Company nor the Trustee nor any
paying agent nor the Debenture registrar shall
be held accountable by reason of the disclosure
of any such information as to the names and
addresses of the holders of Debentures in
accordance with the provisions of subsection (b)
of this Section 7.02, regardless of the source
from which such information was derived, and
that the Trustee shall not be held accountable
by reason of mailing any material pursuant to a
request made under said subsection (b).
Section 7.03. (a) The Company
covenants and agrees to file with the Trustee
within fifteen days after the Company is
required to file the same with the Securities
and Exchange Commission, copies of the annual
reports and of the information, documents and
other report (or copies of such portions of any
of the foregoing as said Commission may from
time to time by rules and regulations prescribe)
which the Company may be required to file with
said Commission pursuant to Section 13 or
Section 1(d) of the Securities Exchange Act of
1934 or, if the Company is not required to file
information, documents or reports pursuant to
<PAGE>
either of such sections then to file with the
Trustee and said Commission, in accordance with
rules and regulations prescribed from time to
time by said Commission, 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 Securities and
Exchange Commission, in accordance with the
rules and regulations prescribed from time to
time by said Commission, 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 Debentures within
thirty days after the filing thereof with the
Trustee in the manner and to the extent provided
in subsection (c) of Section 7.04 with respect
to reports pursuant to subsection (a) of said
Section 7.04, such summaries of any information,
documents and reports required to be filed by
the Company pursuant to subsections (a) and (b)
of this Section 7.03 as may be required by rules
and regulations prescribed from time to time by
the Securities and Exchange Commission.
Section 7.04. (a) On or before
November 15, 1994, and on or before November 15
in every year thereafter, so long as any
Debentures are outstanding hereunder, the
Trustee shall transmit to the debentureholders
as hereinafter in this Section 7.04 provided, a
brief report dated as of September 15 of the
year in which such report is made with respect
to:
(1) its eligibility under
Section 9.09, and its qualifications
under Section 9.08, or in lieu
thereof, if to the best of its
knowledge it has continued to be
eligible and qualified under such
<PAGE>
actions, a written statement to such
effect;
(2) the character and amount of
any advances (and if the Trustee
elects so to state, the circumstances
surrounding the making thereof) made
by the Trustee (as such) which remain
unpaid on the date of such report, and
for the reimbursement of which it
claims or may claim a lien or charge,
prior to that of the Debentures, on
any property or funds held or
collected by it as Trustee, except
that the Trustee shall not be required
(but may elect) to state such advances
if such advances so remaining unpaid
aggregate not more than one-half of
one per cent of the principal amount
of the Debentures outstanding on the
date of such report;
(3) the amount, interest rate,
and maturity date of all other
indebtedness owing by the Company (or
by any other obligor on the
Debentures) to the Trustee in its
individual capacity, on the date of
such report, with a brief description
of any property held as collateral
security therefor, except any
indebtedness based upon a creditor
relationship arising in any manner
described in paragraphs (2), (3), (4),
or (6) of subsection (b) of Section
9.13;
(4) the property and funds, if
any, physically in the possession of
the Trustee as such on the date of
such report; and
(5) any action taken by the
Trustee in the performance of its
duties under this Indenture which it
has not previously reported and which
in its opinion materially affects the
Debentures, except action in respect
of a default, notice of which has been
or is to be withheld by it in
accordance with the provisions of
Section 8.07.
<PAGE>
(b) The Trustee shall transmit to the
debentureholders, as hereinafter provided, a
brief report with respect to the character and
amount of any advances (and if the Trustee
elects so to state, the circumstances
surrounding the making thereof) made by the
Trustee (as such) since the date of the last
report transmitted pursuant to the provisions of
subsection (a) of this Section 7.04 (or if no
such report has yet been so transmitted, since
the date of execution of this Indenture), for
the reimbursement of which it claims or may
claim a lien or charge prior to that of the
Debentures on property or funds held or
collected by it as Trustee, and which it has not
previously reported pursuant to this subsection,
except that the Trustee shall not be required
(but may elect) to report such advances if such
advances remaining unpaid at any time aggregate
ten per cent or less of the principal amount of
Debentures outstanding at such time, such report
to be transmitted within ninety days after such
time.
(c) Reports pursuant to this Section
7.04 shall be transmitted by mail to all holders
of Debentures, as the names and addresses of
such holders shall appear upon the registration
books of the Company.
(d) A copy of each such report shall,
at the time of such transmission to
debentureholders, be filed by the Trustee with
each stock exchange upon which the Debentures
are listed and also with the Securities and
Exchange Commission. The Company agrees to
notify the Trustee where and as the Debentures
become listed on any stock exchange and the
Trustee shall have no duty to file copies of any
reports as aforesaid until so notified.
ARTICLE 8.
Remedies of the Trustee and Debentureholders
in Event of Default.
Section 8.01. In case one or more of
the following Events of Default shall have
occurred and be continuing, that is to say:
<PAGE>
(a) default in the payment, whether
or not prohibited by the provisions of
Article Three, of any instalment of
interest upon any of the Debentures as and
when the same shall become due and payable,
and continuance of such default for a
period of thirty days; or
(b) default in the payment, whether
or not prohibited by the provisions of
Article Three, of the principal of (and
premium, if any, on) any of the Debentures
as and when the same shall become due and
payable either at maturity, 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, conditions or agreements on the
part of the Company in the Debentures or in
this Indenture contained, for a period of
sixty 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 twenty-five per cent in principal
amount of the Debentures at the time
outstanding under this Indenture; or
(d) an event of default as defined in
any mortgage, indenture or instrument,
under which there may be issued, or by
which there may be secured or evidenced,
any indebtedness of the Company, whether
such indebtedness now exists or shall
hereafter be created, shall happen and such
indebtedness shall be due or such default
shall result in such indebtedness becoming
or being declared due and payable prior to
the date on which it would otherwise become
due and payable, and such acceleration
shall not be rescinded or annulled within
ten days after written notice to the
Company from the Trustee or to the Company
and to the Trustee from the holders of not
less than twenty-five percent in principal
amount of the Debentures then outstanding
under this Indenture; or
<PAGE>
(e) a decree or order by a court
having jurisdiction in the premises shall
have been entered adjudging the Company a
bankrupt or insolvent, or approving as
properly filed a petition seeking
reorganization of the Company under the
National Bankruptcy Act or any other
similar applicable Federal or State law,
and such decree or order shall have
continued undischarged or unstayed for a
period of ninety days; or a decree or order
of a court having jurisdiction in the
premises for the appointment of a receiver
or trustee or assignee in bankruptcy or
insolvency of the Company or of its
property, or for the winding up or
liquidation of its affairs, shall have been
entered, and such decree or order shall
have remained in force undischarged and
unstayed for a period of ninety days; or
(f) the Company shall institute
proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the
institution of a bankruptcy proceeding
against it, or shall file a petition or
answer or consent seeking reorganization
under the National Bankruptcy Act or any
other similar applicable Federal or State
law, or shall consent to the filing of any
such petition, or shall consent to the
appointment of a receiver or trustee or
assignee in bankruptcy or insolvency of it
or of its property, or shall make an
assignment for the benefit of creditors, or
shall admit in writing its inability to pay
its debts generally as they become due, or
corporate action shall be taken by the
Company in furtherance of any of the
aforesaid purposes:
Then and in each and every such case,
unless the principal of all the Debentures shall
have already become due and payable, either the
Trustee or the holders of not less than
twenty-five per cent in aggregate principal
amount of the Debentures then outstanding
hereunder, by notice in writing to the Company
(and to the Trustee if given by
debentureholders), may declare the principal of
all the Debentures to be due and payable
immediately, and upon any such declaration the
<PAGE>
same shall become and shall be immediately due
and payable, anything in this Indenture or in
the Debentures contained to the contrary
notwithstanding. This provision, however, is
subject to the condition that if, at any time
after the principal of the Debentures shall have
been so declared due and payable, and before any
judgment or decree for the payment of the 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 Debentures and the principal of (and
premium, if any, on) any and all Debentures
which shall have become due otherwise than by
declaration (with interest on overdue
installments of interest to the extent permitted
by law, and on such principal and premium, if
any, at the rate of interest borne by the
Debentures to the date of such payment or
deposit) and the amounts payable to the Trustee
under Section 9.06, and any and all defaults
under the Indenture, other than the non-payment
of principal of and accrued interest on
Debentures 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 Debentures
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 holders of the
Debentures shall be restored respectively to
their former positions and rights hereunder, and
all rights, remedies and powers of the Company
and the Trustee and the holders of the
Debentures shall continue as though no such
proceedings had been taken.
Section 8.02. The Company covenants
that (1) in case default shall be made in the
<PAGE>
payment of any installment of interest on any of
the Debentures, as and when the same shall
become due and payable, and such default shall
have continued for a period of thirty days, or
(2) in case default shall be made in the payment
of the principal of (and premium, if any, on)
any of the Debentures when the same shall have
become due and payable, whether upon maturity of
the Debentures or 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 holders of the
Debentures, the whole amount that then shall
have become due and payable on all such
Debentures for principal (and premium, if any),
or interest, or both, as the case may be, with
interest upon the overdue principal (and
premium, if any) and installments of interest
(to the extent permitted by law) at the rate of
interest borne by the Debentures; and in
addition thereto, such further amount as shall
be sufficient to cover the costs and expenses of
collection, including a reasonable compensation
to the Trustee, its agents, attorneys and
counsel, and any expenses or liabilities
incurred, and all advances made, by the Trustee
hereunder.
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
Debentures, and collect in the manner provided
by law out of the property of the Company or any
other obligor upon the Debentures wherever
situated the monies 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 Debentures under the National
Bankruptcy Act or any other applicable law or in
connection with the insolvency of the Company or
any other obligor upon the Debentures or in case
a receiver or trustee shall have been appointed
for its property, or in case of any other
<PAGE>
judicial proceedings relative to the Company or
any other obligor upon the Debentures or to
creditors or property of the Company or such
other obligor, the Trustee, irrespective of
whether the principal of the Debentures shall
then be due and payable as therein expressed or
by declaration or otherwise and irrespective of
whether the Trustee shall have made demand
pursuant to the provisions of this Section 8.02,
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, premium, if any, and interest owing
and unpaid in respect of the Debentures, 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
debentureholders allowed in any judicial
proceeding relative to the Company or any other
obligor upon the Debentures, 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 the amounts payable to
the Trustee under Section 9.06; and any
receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of
the debentureholders 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 debentureholders, to pay to the
Trustee any amount due it under Section 9.06.
To the extent that payment of such amounts out
of the estate in any such proceedings shall be
denied for any reason, payment of the same 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
holders of the Debentures may be entitled to
receive in such proceedings, whether in
liquidation or under any plan of reorganization
or arrangement or otherwise.
All rights of action and of asserting
claims under this Indenture, or under any of the
Debentures, may be enforced by the Trustee
without the possession of any of the Debentures,
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
<PAGE>
the ratable benefit of the holders of the
Debentures.
Section 8.03. Subject to the
provisions of Article Three, any moneys
collected by the Trustee pursuant to Section
8.02 shall be applied in the order following, at
the date or dates filed by the Trustee for the
distribution of such moneys, upon presentation
of the several Debentures, and stamping thereon
the payment, if only partially paid, and upon
surrender thereof if fully paid:
First: To the payment of costs and
expenses of collection, and of all
amounts payable to the Trustee under
Section 9.06;
Second: In case the principal of
the outstanding Debentures shall not
have become due and be unpaid, to the
payment of interest on the Debentures,
in the order of the maturity of the
installments of such interest, with
interest upon the overdue 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 Debentures, such payment to be
made ratably to the persons entitled
thereto, without discrimination or
preference;
Third: In case the principal of
the outstanding Debenture shall have
become due, by declaration or
otherwise to the payment of the whole
amount then owing and unpaid upon the
Debentures for principal (and premium,
if any) 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 Debentures;
and in case such moneys shall be
insufficient to pay in full the whole
amount so due and unpaid upon the
Debentures, then to the payment of
such principal (and premium, if any)
<PAGE>
and interest, without preference or
priority of principal (and premium, if
any) over interest or of interest over
principal (and premium, if any) or of
an instalment of interest over any
other instalment 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 8.04. Except as otherwise
expressly provided in Section 8.09, no holder of
any Debenture shall have any right by virtue or
by availing 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 an other remedy
hereunder, unless such holder previously shall
have given to the Trustee written notice of
default and of the continuance thereof as
hereinbefore provided, and unless also the
holders of not less than twenty-five per cent,
in aggregate principal amount of the Debenture
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 reasonable indemnity as it may require
against the costs, expenses and liabilities to
be incurred therein or thereby, and the Trustee,
for sixty 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 8.06; it being understood and intended,
and being expressly covenanted by the taker and
holder of every Debenture with every other taker
and holder and the Trustee, that no one or more
holders of Debentures shall have any right in
any manner whatever by virtue or by availing of
any provision of this Indenture to affect,
disturb or prejudice the rights of the holders
<PAGE>
of any other of such Debentures, or to obtain or
seek to obtain priority over or preference to
any other such holder, or to enforce any right
under this Indenture, except in the manner
herein provided and for the equal, ratable and
common benefit of all holders of Debentures.
For the protection and enforcement of the
provisions of this Section 8.04, each and every
debentureholder and the Trustee shall be
entitled to such relief as can be given either
at law or in equity.
Notwithstanding any other provisions
in this Indenture, but subject to the provisions
of Article Three, however, the right of any
holder of any Debenture to receive payment of
the principal of (and premium, if any) and
interest on such Debenture, on or after the
respective due dates expressed in such
Debenture, 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 8.05. 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 Eight to the
Trustee or to the debentureholders 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 holders of the Debentures, 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
holder of any of the Debentures 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
<PAGE>
an acquiescence therein; and, subject to the
provisions of Section 8.04, every power and
remedy given by this Article Eight or by law to
the Trustee or to the debentureholders may be
exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by
the debentureholders
Section 8.06. The holders of a
majority in aggregate principal amount of the
Debentures at the time outstanding (determined
as provided in Section 10.04) 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 Section
9.01, the Trustee shall have the right to
decline to follow any such direction if the
Trustee being advised by counsel determines that
the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by
a responsible officer or officers of the
Trustee, determine that the proceedings so
directed would be illegal or involve it in
personal liability, 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
debentureholders. Prior to the declaration of
the maturity of the Debentures as provided in
Section 8.01 hereof, the holders of a majority
in aggregate principal amount of the Debentures
at the time outstanding (determined as provided
in Section 10.04) may on behalf of the holders
of all of the Debentures waive any past default
hereunder and its consequences, except a default
in the payment of interest or premium on, or the
principal of, any of the Debentures. In the
case of any such waiver the Company, the Trustee
and the holders of the Debentures 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 8.07. The Trustee shall,
within ninety days after the occurrence of any
default hereunder, give to the debentureholders
in the manner and to the extent provided in
subsection (c) of Section 7.04 with respect to
<PAGE>
reports pursuant to subsection (a) of said
Section 7.04, notice of such default known to
the Trustee unless such default shall have been
cured or waived before the giving of such notice
(the term "default" for the purposes of this
Section 8.07 being hereby defined to be the
events specified in clauses (a), (b), (c), (d),
(e) and (f) of Section 8.01, not including any
periods of grace provided for in clauses (a),
(c), (d) and (e), respectively, and irrespective
of the giving of notice specified in clauses (c)
and (d)); provided, that, except in the case of
default in the payment of the principal of (and
premium, if any) or interest on any of the
Debentures, 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
debentureholders.
Section 8.08. All parties to this
Indenture agree, and each holder of any
Debenture by his acceptance thereof shall be
deemed to have agreed, that any court may in its
discretion require, in any suit for the
enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee
for any action taken or omitted by it as
Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of
such suit, and that such court may in its
discretion assess reasonable costs, including
reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the
merits and good faith of the claims or defenses
made by such party litigant; but the provisions
of this Section 8.08 shall not apply to any suit
instituted by the Trustee, to any suit
instituted by any debentureholder, or group of
debentureholders, holding in the aggregate more
than ten per cent in aggregate principal amount
of the Debentures outstanding, or to any suit
instituted by any debentureholder for the
enforcement of the payment of the principal of
(and premium, if any) or interest on any
Debenture, on or after the due date expressed in
such Debenture or for the enforcement of his
right to convert his Debenture as provided in
Article Four.
<PAGE>
Section 8.09. Anything in this
Indenture to the contrary notwithstanding, the
holder of any Debenture, without reference to
and without the consent of either the Trustee or
the holder of any other Debenture, in his own
behalf and for his own benefit may enforce, and
may institute and maintain any proceedings
suitable to enforce, his right to convert his
Debenture into Common Stock as provided in
Article Four.
ARTICLE 9.
Concerning the Trustee.
Section 9.01. 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.
No provision 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
<PAGE>
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 provision
hereof are specifically required
to be furnished to the Trustee,
the Trustee shall be under a duty
to examine the same to determine
whether or not they conform to
the 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
(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 Debentures at the time outstanding
(determined as provided in Section
10.04) 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.
(d) the Trustee shall not be
deemed to have knowledge of any
occurrence or event which would
constitute or with notice of the lapse
of time or both, would constitute and
Event of Default pursuant to Section
<PAGE>
8.01(c), (d), (e) or (f), unless and
until it has actual knowledge or has
received written notification of such
occurrence or event from the Company
or a Debentureholder.
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 there is reasonable
ground for believing that the repayment of such
funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
Section 9.02. Except as otherwise
provided in Section 9.01:
(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, debenture 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 an Assistant
Secretary or the Treasurer or an
Assistant Treasurer (unless other
evidence in respect thereof be herein
specifically prescribed); 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 an 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
<PAGE>
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
debentureholders, pursuant to the
provisions of this Indenture, unless
such debentureholders shall have
offered to the Trustee reasonable
security or indemnity against the
costs, expenses and liabilities which
may be incurred therein or thereby;
(e) The Trustee shall not be
liable for any action taken or omitted
by it in good faith and believed by it
to be authorized or within the
discretion or rights or powers
conferred upon it by this Indenture;
(f) Prior to the occurrence of
an Event of Default hereunder and
after the curing 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, debenture or other paper or
document, unless requested in writing
so to do by the holders of not less
than a majority in aggregate principal
amount of the Debentures then
outstanding; provided, however, that
if the payment within a reasonable
time to the Trustee of the costs,
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 against such costs, expenses
or liabilities as a condition to so
proceeding; and provided further, that
nothing in this subparagraph (f) shall
<PAGE>
require the Trustee to give the
debentureholders any notice other than
that required by Section 8.07. 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;
(g) The Trustee may execute any
of the trusts or powers hereunder or
perform any duties hereunder either
directly or by or through agents or
attorneys and the Trustee shall not be
responsible for any misconduct or
negligence on the part of any agent or
attorney appointed with due care
hereunder; and
(h) The Trustee shall be under
no responsibility for the approval by
it in good faith of any expert for any
of the purposes expressed in this
Indenture.
Section 9.03. The recitals contained
herein and in the Debentures (other than the
certificate of authentication on the Debentures)
shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes
no representations as to the validity or
sufficiency of this Indenture or of the
Debentures. The Trustee shall not be
accountable for the use or application by the
Company of any of the Debentures or of the
proceeds of such Debentures, or for the use or
application of any moneys paid over by the
Trustee in accordance with any provision of this
Indenture, or for the use or application of any
moneys received by any paying agent other than
the Trustee.
Section 9.04. The Trustee or any
paying agent, conversion agent or Debenture
registrar, in its individual or any other
capacity, may become the owner or pledgee of
Debentures with the same rights it could have if
it were not Trustee, paying agent, conversion
agent or Debenture registrar.
The Trustee shall be entitled to all
the rights set forth in Article Three in respect
<PAGE>
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 9.13
or elsewhere in this Indenture shall be
construed to deprive the Trustee of any of its
rights as such holder.
Section 9.05 Subject to the
provisions of Section 14.04 hereof, all moneys
received by the Trustee shall, until used or
applied as 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 with the Company to pay thereon.
So long as no Event of Default shall have
occurred and be continuing, all interest allowed
on any such moneys shall be paid from time to
time upon the written order of the Company,
signed by its President or any Vice President or
its Treasurer or an Assistant Treasurer.
Section 9.06 The Company covenants
and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to,
reasonable compensation (which shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust)
for all services rendered by it in the execution
of the trusts hereby created and in the exercise
and performance of the powers and duties
hereunder of the Trustee, 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
reasonable compensation and the expenses and
disbursements of its counsel and of all persons
not regularly in its employ) except any such
expense, disbursement or advance as may arise
from its negligence or bad faith. The Company
also covenants to indemnify 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 and arising out of or
in connection with the acceptance or
administration of this trust, including the
costs and expenses of defending itself against
any claim of liability in the premises. The
<PAGE>
obligations of the Company under this Section
9.06 to compensate the Trustee and to pay or
reimburse the Trustee for expenses,
disbursements and advances shall constitute
additional indebtedness hereunder and shall
survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be
secured by a lien prior to that of the
Debentures 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 Debentures.
Section 9.07. Except as otherwise
provided in Section 9.01, 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 Certificate,
in the absence of negligence or bad faith on the
part of the Trustee, shall be full warrant to
the Trustee for an action taken, suffered or
omitted by it under the provisions of this
Indenture upon the faith thereof.
Section 9.08. (a) If the Trustee has
or shall acquire any conflicting interest, as
defined in this Section 9.08, it shall,within
ninety days after ascertaining that it has such
conflicting interest, either eliminate such
conflicting interest or resign in the manner and
with the effect specified in Section 9.10, such
resignation to become effective upon the
appointment of a successor trustee and such
successor's acceptance of such appointment, and
the Company shall take prompt steps to have a
successor appointed in the manner provided in
Section 9.10.
(b) In the event that the Trustee
shall fail to comply with the provisions of
subsection (a) of this Section 9.08, the Trustee
shall, within ten days after the expiration of
such ninety-day period, transmit notice of such
failure to the debentureholders in the manner
<PAGE>
and to the extent provided in subsection (c) of
Section 7.04 with respect to reports pursuant to
subsection (a) of said Section 7.04.
(c) For the purposes of this Section
9.08 the Trustee shall be deemed to have a
conflicting interest if
(1) the Trustee is trustee under
another indenture under which any
other securities, or certificates of
interest or participation in any other
securities of the Company, are
outstanding, unless such other
indenture is a collateral trust
indenture under which the only
collateral consists of Debentures
issued under this Indenture, provided
that there shall be excluded from the
operation of this paragraph any other
indenture or indentures under which
other securities, or certificates of
interest or participation in other
securities, of the Company are
outstanding if (i) this Indenture and
such other indenture or indentures are
wholly unsecured and such other
indenture or indentures are hereafter
qualified under the Trust Indenture
Act of 1939, as amended, unless the
Securities and Exchange Commission
shall have found and declared by order
pursuant to subsection (b) of Section
305 or subsection (c) of Section 307
of the Trust Indenture Act of 1939, as
amended, that differences exist
between the provisions of this
Indenture and the provisions of such
other indenture or indentures which
are so likely to involve a material
conflict of interest as to make it
necessary in the public interest or
for the protection of investors to
disqualify the Trustee from acting as
such under this Indenture and such
other indenture or indentures, or (ii)
the Company shall have sustained the
burden of proving, on application to
the Securities and Exchange Commission
and after opportunity for hearing
thereon, that the trusteeship under
this Indenture and such other
<PAGE>
indenture or indentures is not so
likely to involve a material conflict
of interest as to make it necessary in
the public interest or for the
protection of investors to disqualify
the Trustee from acting as such under
one of such indentures;
(2) the Trustee or any of its
directors or executive officers is an
obligor upon the Debentures or an
underwriter for the Company;
(3) the Trustee directly or
indirectly controls or is directly or
indirectly controlled by or is under
direct or indirect common control with
the Company or an underwriter for the
Company;
(4) the Trustee or any of its
directors or executive officers is a
director, officer, partner, employee,
appointee, or representative of the
Company, or of an underwriter (other
than the Trustee itself) for the
Company who is currently engaged in
the business of underwriting, except
that (A) one individual may be a
director and/or an executive officer
of the Trustee and a director and/or
an executive officer of the Company,
but may not be at the same time an
executive officer of both the Trustee
and the Company; (B) if and so long as
the number of directors of the Trustee
in office is more than nine, one
additional individual may be a
director and/or an executive officer
of the Trustee and a director of the
Company; and (C) the Trustee may be
designated by the Company or by an
underwriter for the Company to act in
the capacity of transfer agent,
registrar, custodian, paying agent,
fiscal agent, escrow agent, or
depositary, or in any other similar
capacity, or, subject to the
provisions of paragraph (1) of this
subsection (c), to act as trustee
whether under an indenture or
otherwise;
<PAGE>
(5) ten per cent or more of the
voting securities of the Trustee is
beneficially owned by the Company or
by any director, partner, or executive
officer thereof, or twenty per cent or
more of such voting securities is
beneficially owned, collectively, by
any two or more of such persons; or
ten per cent or more of the voting
securities of the Trustee is
beneficially owned either by an
underwriter for the Company or by any
director, partner, or executive
officer thereof, or is beneficially
owned, collectively, by any two or
more such persons;
(6) the Trustee is the
beneficial owner of, or holds as
collateral security for an obligation
which is in default, (A) five per cent
or more of the voting securities, or
ten per cent or more of any other
class of security, of the Company, not
including the Debentures issued under
this Indenture and securities issued
under any other indenture under which
the Trustee is also trustee, or (B)
ten per cent or more of any class of
security of an underwriter for the
Company;
(7) the Trustee is the
beneficial owner of, or holds as
collateral security for an obligation
which is in default, five per cent or
more of the voting securities of any
person who, to the knowledge of the
Trustee, owns ten per cent or more of
the voting securities of, or controls
directly or indirectly or is under
direct or indirect common control
with, the Company;
(8) the Trustee is the
beneficial owner of, or holds as
collateral security for an obligation
which is in default, ten per cent or
more of any class of security of any
person who, to the knowledge of the
Trustee, owns fifty per cent or more
<PAGE>
of the voting securities of the
Company; or
(9) the Trustee owns on May 15
in any calendar year, in the capacity
of executor, administrator,
testamentary or inter vivos trustee,
guardian, committee or conservator, or
in any other similar capacity, an
aggregate of twenty-five per cent or
more of the voting securities or of
any class of security, of any person,
the beneficial ownership of a
specified percentage of which could
have constituted a conflicting
interest under paragraph (6), (7), or
(8) of this subsection (c). As to any
such securities of which the Trustee
acquired ownership through becoming
executor, administrator, or
testamentary trustee of an estate
which included them, the provisions of
the preceding sentence shall not
apply, for a period of two years from
the date of such acquisition, to the
extent that such securities included
in such estate do not exceed
twenty-five per cent of such voting
securities or twenty-five per cent of
any such class of security. Promptly
after May 15, in each calendar year,
the Trustee shall make a check of its
holdings of such securities in any of
the above-mentioned capacities as of
May 15. If the Company fails to make
payment in full of principal of or
interest on any of the Debentures when
and as the same become due and payable
and such failure continues for thirty
days thereafter, the Trustee shall
make a prompt check of its holdings of
such securities in any of the
above-mentioned capacities as of the
date of the expiration of such
thirty-day period, and after such
date, notwithstanding the foregoing
provisions of this paragraph (9), all
such securities so held by the
Trustee, with sole or joint control
over such securities vested in it,
shall but only so long as such failure
shall continue, be considered as
<PAGE>
though beneficially owned by the
Trustee for the purposes to paragraphs
(6), (7) and (8) of this subsection
(c).
The specifications of percentages in
paragraphs (5) to (9), inclusive, of this
subsection (c) shall not be construed as
indicating that the ownership of such
percentages of the securities of a person is or
is not necessary or sufficient to constitute
direct or indirect control of the purposes of
paragraphs (3) or (7) of this subsection (c).
For the purposes of paragraphs (6),
(7), (8), and (9) of this subsection (c) only,
(A) the terms "security" and "securities" shall
include only such securities as are generally
known as corporate securities, but shall not
include any note or other evidence of
indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more
banks, trusts companies or banking firms, or any
certificate of interest or participation in any
such note or evidence of indebtedness (B) an
obligation shall be deemed to be in default when
a default in payment of principal shall have
continued for thirty days or more and shall not
have been cured; and (C) the Trustee shall not
be deemed to be the owner or holder of (i) any
security which it holds as collateral security
(as trustee or otherwise) for an obligation
which is not in default as defined in clause (B)
above, or (ii) any security which it holds as
collateral security under this Indenture,
irrespective of any default hereunder, or (iii)
any security which it holds as agent for
collection or as custodian, escrow agent, or
depositary, or in any similar representative
capacity.
(d) For the purposes of this Section
9.08:
(1) The term "underwriter" when
used with reference to the Company
shall mean every person, who, within
three years prior to the time as of
which the determination is made, has
purchased from the Company with a view
to, or has offered or sold for the
Company in connection with, the
distribution of any security of the
<PAGE>
Company outstanding at such time, or
has participated or has had a direct
or indirect participation in any such
undertaking, or has participated or
has had a participation in the direct
or indirect underwriting of any such
undertaking but such term shall not
include a person whose interest was
limited to a commission from an
underwriter or dealer not in excess of
the usual and customary distributors'
or sellers' commission.
(2) The term "director" shall
mean any director of a corporation or
any individual performing similar
functions with respect to any
organization whether incorporated or
unincorporated.
(3) The term "person" shall mean
an individual, a corporation a
partnership, an association, a
joint-stock company, a trust, an
unincorporated organization, or a
government or political subdivision
thereof. As used in this paragraph,
the term "trust" shall include only a
trust where the interest or interests
of the beneficiary or beneficiaries
are evidenced by a security.
(4) The term "voting security"
shall mean any security presently
entitling the owner or holder thereof
to vote in the direction or management
of the affairs of a person, or any
security issued under or pursuant to
any trust, agreement or arrangement
whereby a trustee or trustees or agent
or agents for the owner or holder of
such security are presently entitled
to vote in the direction or management
of the affairs of a person.
(5) The term "Company" shall
mean any obligor upon the Debentures.
(6) The term "executive officer"
shall mean the president, every
vice-president, every trust officer,
the cashier, the secretary, and the
<PAGE>
treasurer of a corporation, and any
individual customarily performing
similar functions with respect to any
organization whether incorporated or
unincorporated, but shall not include
the chairman of the board of
directors.
The percentages of voting securities
and other securities specified in this Section
9.08 shall be calculated in accordance with the
following provisions:
(A) A specified percentage of
the voting securities of the Trustee,
the Company or any other person
referred to in this Section 9.08 (each
of whom is referred to as a "person"
in this paragraph) means such amount
of the outstanding voting securities
of such person as entitles the holder
or holders thereof to cast such
specified percentage of the aggregate
votes which the holders of all the
outstanding voting securities of such
person are entitled to cast in the
direction or management of the affairs
of such person.
(B) A specified percentage of a
class of securities of a person means
such percentage of the aggregate
amount of securities of the class
outstanding.
(C) The term "amount", when used
in regard to securities means the
principal amount if relating to
evidences of indebtedness, the number
of shares if relating to capital
shares, and the number of units if
relating to any other kind of
security.
(D) The term "outstanding" means
issued and not held by or for the
account of the issuer. The following
securities shall not be deemed
outstanding within the meaning of this
definition:
<PAGE>
(i) Securities of an issuer
held in a sinking fund relating
to securities of the issuer of
the same class;
(ii) Securities of an issuer
held in a sinking fund relating
to another class of securities of
the issuer, if the obligation
evidenced by such other class of
securities is not in default as
to principal or interest or
otherwise
(iii) Securities pledged by
the issuer thereof as security
for an obligation of the issuer
not in default as to principal or
interest or otherwise;
(iv) Securities held in
escrow if placed in escrow by the
issuer thereof;
provided, however, that any voting
securities of an issuer shall be
deemed outstanding if any person other
than the issuer is entitled to
exercise the voting rights thereof.
(E) A security shall be deemed
to be of the same class as another
security if both securities confer
upon the holder or holders thereof
substantially the same rights and
privileges, provided, however, that,
in the case of secured evidences of
indebtedness, all of which are issued
under a single indenture, differences
in the interest rates or maturity
dates of various series thereof shall
not be deemed sufficient to constitute
such series different classes, and
provided, further, that, in the case
of unsecured evidences of
indebtedness, differences in the
interest rate or maturity dates
thereof shall not be deemed sufficient
to constitute them securities of
different classes, whether or not they
are issued under a single indenture.
<PAGE>
Section 9.09. The Trustee hereunder
shall at all times be a corporation organized
and doing business under the laws of the United
States or any State or territory thereof or of
the District of Columbia authorized under such
laws to exercise corporate trust powers, having
a combined capital and surplus of at least five
million dollars, subject to supervision or
examination by Federal, State, Territorial, or
District of Columbia authority and having its
principal office and place of business in El
Paso, Texas. If such corporation publishes
reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid
supervising or examining authority, then for the
purposes of this Section 9.09, the combined
capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as
set forth in its most recent report of condition
so published. In case at any time the Trustee
shall cease to be eligible in accordance with
the provisions of this Section 9.09, the Trustee
shall resign immediately in the manner and with
the effect specified in Section 9.10.
Section 9.10. (a) The Trustee, or
any trustee hereafter appointed may at any time
resign by giving written notice of such
resignation to the Company and by giving to the
debentureholders notice thereof in the manner
and to the extent provided in subsection (c) of
Section 7.04 with respect to reports pursuant to
subsection (a) of said Section 7.04. Upon
receiving such notice of resignation and if the
Company shall deem it appropriate evidence
satisfactory to it of such mailing the Company
shall promptly 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 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 debentureholder who has been a
bona fide holder of a Debenture or Debentures
for at least six months may, subject to the
provisions of Section 8.08 on behalf of himself
and all others similarly situated, petition any
<PAGE>
such court for the appointment of a successor
trustee. Such court may thereupon after such
notice, if any, as it may deem proper, appoint a
successor trustee.
(b) In case at any time any of the
following shall occur--
(1) the Trustee shall fail to
comply with the provisions of
subsection (a) of Section 9.08 after
written request therefor by the
Company or by any debentureholder who
has been a bona fide holder of a
Debenture or Debentures for at least
six months or
(2) the Trustee shall cease to
be eligible in accordance with the
provisions of Section 9.09 and shall
fail to resign after written request
therefor by the Company or by any such
debentureholder, or
(3) 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 8.08, any debentureholder who has
been a bona fide holder of a Debenture or
Debentures 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 prescribe, remove the
Trustee and appoint a successor trustee.
<PAGE>
(c) The holders of a majority in
aggregate principal amount of the Debentures at
the time outstanding (determined as provided in
Section 10.04) 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
permanent chairman and secretary of a meeting of
the debentureholders evidencing the vote upon a
resolution or resolutions submitted thereto with
respect to such removal and appointment (as
provided in Article Eleven), 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 a successor trustee
pursuant to any of the provisions of this
Section 9.10 shall become effective upon
acceptance of appointment by the successor
trustee as provided in Section 9.11.
Section 9.11. Any successor trustee
appointed as provided in Section 9.10 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 as 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 9.06, 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 9.06.
<PAGE>
No successor trustee shall accept
appointment as provided in this Section 9.11
unless at the time of such acceptance such
successor trustee shall be qualified under the
provisions of Section 9.08 and eligible under
the provisions of Section 9.09.
Upon acceptance of appointment by a
successor trustee as provided in this Section
9.11, the successor trustee shall at the expense
of the Company transmit notice of the succession
of such trustee hereunder to the
debentureholders in the manner and to the extent
provided in subsection (c) of Section 7.04 with
respect to reports pursuant to subsection (a) of
said Section 7.04.
Section 9.12. 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 business of the Trustee, shall be the
successor of the Trustee hereunder, provided
such corporation shall be qualified under the
provisions of Section 9.08 and eligible under
the provisions of Section 9.09, without the
execution or filing of any paper or any further
act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to
the Trustee shall succeed to the trusts created
by this Indenture any of the Debentures 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 Debentures so
authenticated; and in case at that time any of
the Debentures shall not have been
authenticated, any successor to the Trustee may
authenticate such Debentures either in the name
of any predecessor hereunder or in the name of
the successor Trustee; and in any such case such
certificate shall have the full force which it
is anywhere in the Debentures 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
Debentures in the name of an predecessor trustee
shall apply only to its successor or successors
by merger, conversion or, consolidation.
<PAGE>
Section 9.13 (a) Subject to the
provision of subsection (b) of this Section
9.13, if the Trustee shall be or shall become a
creditor, directly or indirectly, secured or
unsecured, of the Company or of any other
obligor on the Debentures within four months
prior to a default, as defined in subsection (c)
of this Section 9.13, or subsequent to such a
default, then, unless and until such default
shall be cured, the Trustee shall set apart and
hold in a special account for the benefit of the
Trustee individually, the holders of the
Debentures, and the holders of other indenture
securities (as defined in subsection (c) of this
Section 9.13)
(1) an amount equal to any and
all reductions in the amount due and
owing upon any claim as such creditor
in respect of principal or interest,
effected after the beginning of such
four months' period, and valid as
against the Company and its other
creditors, except any such reduction
resulting from the receipt or
disposition of any property described
in paragraph (2) of this subsection,
or from the exercise of any right of
set-off which the Trustee could have
exercised if a petition in bankruptcy
had been filed by or against the
Company upon the date of such default;
and
(2) all property received by the
Trustee in respect of any claims as
such creditor, either as security
therefor, or in satisfaction or
composition thereof, or otherwise,
after the beginning of such four
months' period, or an amount equal to
the proceeds of any such property if
disposed of, subject, however, to the
rights, if any, of the Company and its
other creditors in such property or
such proceeds.
Nothing herein contained, however,
shall affect the right of the Trustee
(A) to retain for its own
account (i) payments made on account
<PAGE>
of any such claim by any person (other
than the Company) who is liable
thereon, and (ii) the proceeds of the
bona fide sale of any such claim by
the Trustee to a third person, and
(iii) distributions made in cash,
securities, or other property in
respect of claims filed against the
Company in bankruptcy or receivership
or in proceedings for reorganization
pursuant to the National Bankruptcy
Act or applicable State laws;
(B) to realize, for its own
account, upon any property held by it
as security for any such claim, if
such property was so held prior to the
beginning of such four months' period;
(C) to realize, for its own
account, but only to the extent of the
claim hereinafter mentioned, upon any
property held by it as security for
any such claim, if such claim was
created after the beginning of such
four months' period and such property
was received as security therefor
simultaneously with the creation
thereof, and if the Trustee shall
sustain the burden of proving that at
the time such property was so
received, the Trustee had no
reasonable cause to believe that a
default, as defined in subsection (c)
of this Section 9.13, would occur
within four months; or
(D) to receive payment on any
claim referred to in paragraph (B) or
(C), against the release of any
property held as security for such
claim as provided in such paragraph
(B) or (C), as the case may be, to the
extent of the fair value of such
property.
For the purposes of paragraphs (B),
(C), and (D), property substituted after the
beginning of such four months' period for
property held as security at the time of such
substitution shall, to the extent of the fair
value of the property released, have the same
<PAGE>
status as the property released, and to the
extent that any claim referred to in any of such
paragraphs is created in renewal of or in
substitution for or for the purpose of repaying
or refunding any pre-existing claim of the
Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to
account, the funds and property held in such
special account and the proceeds thereof shall
be apportioned between the Trustee, the
debentureholders and the holders of other
indenture securities in such manner that the
Trustee, the debentureholders and the holders of
other indenture securities realize, as a result
of payments from such special account and
payments of dividends on claims filed against
the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the
National Bankruptcy Act or applicable State law,
the same percentage of their respective claims,
figured before crediting to the claim of the
Trustee anything on account of the receipt by it
from the Company of the funds and property in
such special account and before crediting to the
respective claims of the Trustee, the
debentureholders, and the holders of other
indenture securities dividends on claims filed
against the Company in bankruptcy or
receivership or in proceedings for
reorganization pursuant to the National
Bankruptcy Act or applicable State law, but
after crediting thereon receipts on account of
the indebtedness represented by their respective
claims from all sources other than from such
dividends and from the funds and property so
held in such special account. As used in this
paragraph, with respect to any claim, the term
"dividends" shall include any distribution with
respect to such claim in bankruptcy or
receivership or in proceedings for
reorganization pursuant to the National
Bankruptcy Act or applicable State law, whether
such distribution is made in cash, securities,
or other property, but shall not include any
such distribution with respect to the secured
portion, if any of such claim. The court in
which such bankruptcy, receivership or
proceeding for reorganization is pending shall
have jurisdiction (i) to apportion between the
Trustee, the debentureholders, and the holders
of other indenture securities, in accordance
<PAGE>
with the provisions of this paragraph, the funds
and property held in such special account and
the proceeds thereof, or (ii) in lieu of such
apportionment, in whole or in part, to give to
the provisions of this paragraph due
consideration in determining the fairness of the
distributions to be made to the Trustee, the
debentureholders and the holders of other
indenture securities with respect to their
respective claims, in which event it shall not
be necessary to liquidate or to appraise the
value of any securities or other property held
in such special account or as security for any
such claim or to make a specific allocation of
such distributions as between the secured and
unsecured portions of such claims, or otherwise
to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee who has resigned or been
removed after the beginning of such four months'
period shall be subject to the provisions of
this subsection (a) as though such resignation
or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning
of such four months' period, it shall be subject
to the provisions of this subsection (a) if and
only if the following conditions exist:
(i) the receipt of property or
reduction of claim which would have
given rise to the obligation to
account, if such Trustee had continued
as trustee, occurred after the
beginning of such four months' period;
and
(ii) such receipt of property or
reduction of claim occurred within
four months after such resignation or
removal.
(b) There shall be excluded from the
operation of subsection (a) of this Section 9.13
a creditor relationship arising from
(1) the ownership or acquisition
of securities issued under any
indenture, or any security or
securities having a maturity of one
year or more at the time of
acquisition by the Trustee;
<PAGE>
(2) advances authorized by a
receivership or bankruptcy court of
competent jurisdiction, or by this
Indenture, for the purpose of
preserving any property which shall at
any time be subject to the lien of
this Indenture or of discharging tax
liens or other prior liens or
encumbrances thereon, if notice of
such advance and of the circumstances
surrounding the making thereof is
given to the debentureholders at the
time and in the manner provided in
Section 7.04 (c) with respect to
reports pursuant to subsections (a)
and (b) thereof, respectively;
(3) disbursements made in the
ordinary course of business in the
capacity of trustee under an
indenture, transfer agent, registrar,
custodian, paying agent, conversion
agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a
result of services rendered or
premises rented; or an indebtedness
created as a result of goods or
securities sold in a cash transaction
as defined in such subsection (c) of
this Section 913;
(5) the ownership of stock or of
other securities of a corporation
organized under the provisions of
Section 25(a) of the Federal Reserve
Act, as amended, which is directly or
indirectly a creditor of the Company;
or
(6) the acquisition, ownership,
acceptance or negotiation of any
drafts, bills of exchange, acceptance
or obligations which fall within the
classification of self-liquidating
paper as defined in subsection (c) of
this Section 9.13.
(c) As used in this Section 9.13
<PAGE>
(1) The term "default" shall
mean any failure to make payment in
full of the principal of or interest
upon any of the Debentures or upon the
other indenture securities when and as
such principal or interest becomes due
and payable.
(2) The term "other indenture
securities" shall mean securities upon
which the Company is an obligor (as
defined in the Trust Indenture Act of
1939, as amended) outstanding under
any other indenture (A) under which
the Trustee is also trustee, (B) which
contains provisions substantially
similar to the provisions of
subsection (a) of this Section 9.13,
and (C) under which a default exists
at the time of the apportionment of
the funds and property held in said
special account.
(3) The term "cash transaction"
shall mean any transaction in which
full payment for goods or securities
sold is made within several days after
delivery of the goods or securities in
currency or in checks or other orders
drawn upon banks or bankers and
payable upon demand.
(4) The term "self-liquidating
paper" shall mean any draft, bill of
exchange, acceptance or obligation
which is made, drawn, negotiated or
incurred by the Company for the
purpose of financing the purchase,
processing, manufacture, shipment,
storage or sale of goods, wares or
merchandise and which is secured by
documents evidencing title to,
possession of, or a lien upon, the
goods, wares or merchandise or the
receivables or proceeds arising from
the sale of the goods, wares or
merchandise previously constituting
the security, provided the security is
received by the Trustee simultaneously
with the creation of the creditor
relationship with the Company arising
from the making, drawing, negotiating
<PAGE>
or incurring of the draft, bill of
exchange, acceptance or obligation.
(5) The term "Company" shall
mean any obligor upon the Debentures.
ARTICLE 10.
Concerning the Debentureholders
Section 10.01. Whenever in this
Indenture it is provided that the holders of a
specified percentage in aggregate principal
amount of the Debentures 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 at
the time of taking any such action the holders
of such specified percentage have joined therein
may be evidenced (a) by any instrument or any
number of instruments of similar tenor executed
by debentureholders in person or by agent or
proxy appointed in writing, or (b) by the record
of the holders of Debentures voting in favor
thereof at any meeting of debentureholders duly
called and held in accordance with the
provisions of Article Eleven, or (c) by a
combination of such instrument or instruments
and any such record of such a meeting of
debentureholders.
Section 10.02. Subject to the
provisions of Section 9.01, 9.02 and 11.05,
proof of the execution of any instrument by a
debentureholder or his agent or proxy and proof
of the holding by any person of any of the
Debentures shall be sufficient if made in the
following manner:
The fact and date of the execution by
any such person of any instrument may be proved
by the certificate of any notary public or other
officer authorized to take acknowledgments of
deeds to be recorded in any State within the
United States, that the person executing such
instrument acknowledged to him the execution
thereof, or by an affidavit of a witness to such
execution sworn to before any such notary or
other such officers or in any other manner which
the Trustee may deem sufficient. If such
execution is by an officer of a corporation,
association or trust, trustee of a trust or a
<PAGE>
member of a partnership on behalf of such
corporation, association, trust or partnership,
such certificate or affidavit shall also
constitute sufficient proof of his authority.
The ownership of Debentures shall be
proved by the registers of such Debentures, or
by a certificate of the registrar thereof.
The Trustee shall not be bound to
recognize any person as a debentureholder unless
and until his title to the Debentures held by
him is proved in the manner in this Article Ten
provided.
The record of any debentureholders'
meeting shall be proved in the manner provided
in Section 11.06.
The Trustee may accept such other
proof or require such additional proof of any
matter referred to in this Section 10.02 as it
shall deem reasonable.
Section 10.03. Prior to due
presentment for registration of transfer of any
Debenture, the Company, the Trustee, any paying
or conversion agent and any Debenture registrar
may deem and treat the person in whose name such
Debenture shall be registered upon the books of
the Company as the absolute owner of such
Debenture (whether or not such Debenture shall
be overdue and notwithstanding any notation of
ownership or other writing thereon made by
anyone other than the Company or any Debenture
registrar) for the purpose of receiving payment
of or on account of the principal of, premium,
if any, and interest on such Debenture and for
all other purposes; and neither the Company nor
the Trustee nor any paying or conversion agent
nor any Debenture registrar shall be affected by
any notice to the contrary. All such payments so
made to any such holder for the time being, or
upon his order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to
satisfy and discharge the liability of moneys
payable upon any such Debenture.
Section 10.04. In determining whether
the holders of the requisite aggregate principal
amount of Debentures have concurred in any
demand, direction, request, notice, consent,
waiver or other action under this Indenture,
Debentures which are owned by the Company or any
other obligor on the Debentures or by any person
directly or indirectly controlling or controlled
<PAGE>
by or under direct or indirect common control
with the Company or any other obligor on the
Debentures 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 direction,
consent or waiver, only Debentures which the
Trustee knows are so owned shall be so
disregarded. Debentures so owned which have
been pledged in good faith may be regarded as
outstanding for the purposes of this Section
10.04, if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right
to vote such Debentures 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 10.05. At any time prior to
(but not after) the evidencing to the Trustee,
as provided in Section 10.01, of the taking of
any action by the holders of the percentage in
aggregate principal amount of the Debentures
specified in this Indenture in connection with
such action, any holder of a Debenture the
serial number of which is shown by the evidence
to be included in the Debentures the holders of
which have consented to such action may, by
filing written notice with the Trustee at its
principal office and upon proof of holding as
provided in Section 10.02, revoke such action so
far as concerns such Debenture. Except as
aforesaid any such action taken by the holder of
any Debenture and any direction, demand,
request, waiver, consent, vote or other action
of the holder of any Debenture 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 Debenture, and of any
Debenture issued in lieu thereof, irrespective
of whether or not any notation in regard thereto
is made upon such Debenture. Any action taken
by the holders of the percentage in aggregate
principal amount of the Debentures specified in
this Indenture in connection with such action
shall be conclusively binding upon the Company,
<PAGE>
the Trustee and the holders of all the
Debentures subject, however, to the provisions
of Section 9.01 hereof.
ARTICLE 11.
Debentureholders' Meetings.
Section 11.01. A meeting of
debentureholders may be called at any time and
from time to time pursuant to the provisions of
this Article Eleven 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 consequences, or to take any other
action authorized to be taken by
debentureholders pursuant to any of the
provisions of Article Eight;
(2) to remove the Trustee and appoint
a successor trustee pursuant to the
provisions of Article Nine.
(3) To consent to the execution of an
indenture or indentures supplemental hereto
pursuant to the provisions of Section
12.02; 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 Debentures under
any other provision of this Indenture or
under applicable law.
Section 11.02. The Trustee may at any
time call a meeting of debentureholders to take
any action specified in Section 11.01, to be
held at such time and at such place in El Paso,
Texas, as the Trustee shall determine. Notice
of every meeting of the debentureholders,
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 to
the holders of Debentures, at their last
addresses as they shall appear upon the register
or registers provided for in Section 2.05, not
<PAGE>
less than twenty nor more than sixty days prior
to the date fixed for the meeting.
Section 11.03. In case at any time the
Company, pursuant to a resolution of its Board
of Directors, or the holders of at least ten per
cent in aggregate principal amount of the
Debentures then outstanding, shall have
requested the Trustee to call a meeting of
debentureholders to take any action authorized
in Section 11.01 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 twenty days after receipt of such
request, then the Company or the holders of
Debentures in the amount above specified may
determine the time and the place in said El
Paso, Texas for such meeting and may call such
meeting to take any action authorized in Section
11.01 by mailing notice thereof as provided in
Section 11.02.
Section 11.04. To be entitled to vote
at any meeting of debentureholders a person
shall (a) be a holder of one or more Debentures;
or (b) be a person appointed by an instrument in
writing as proxy by a holder of one or more
Debentures. The only persons who shall be
entitled to be present or to speak at any
meeting of debentureholders shall be the persons
entitled to vote at such meeting and their
counsel and any representatives of the Trustee
and its counsel and any representatives of the
Company and its counsel.
Section 11.05. Notwithstanding any
other provisions of this Indenture the Trustee
may make such reasonable regulations as it may
deem advisable for any meeting of
debentureholders, in regard to proof of the
holding of Debentures 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 Debentures shall be
proved in the manner specified in Section 10.02
and the appointment of any proxy shall be proved
<PAGE>
in the manner specified in said Section 10.02;
provided however, that such regulations may
provide that written instruments appointing
proxies regular on their face, may be presumed
valid and genuine without the proof hereinabove
or in said Section 10.02 specified.
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 debentureholders as
provided in Section 11.03, in which case the
Company or the debentureholders calling the
meeting, as the case maybe, shall in like manner
appoint a temporary chairman. A permanent
chairman and a permanent secretary of the
meeting, shall be elected by a majority in
aggregate principal amount of Debentures
represented at the meeting.
Subject to the provisions of Section
10.04, at any meeting each debentureholder or
proxy shall be entitled to one vote for each
$1,000 principal amount of Debentures held or
represented by him, provided, however, that no
vote shall be cast or counted at any meeting in
respect of any Debenture 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 Debentures held by him or
instruments in writing as aforesaid duly
designating him as the person to vote on behalf
of other debentureholders. Any meeting of
debentureholders duly called pursuant to the
provisions of Section 11.02 or 11.03 may be
adjourned from time to time, and the meeting
maybe held as so adjourned without further notice.
At any meeting of debentureholders,
the presence of persons holding or representing
Debentures in an aggregate principal amount
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 Debentures 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 11.06. The vote upon any
resolution submitted to any meeting of
debentureholders shall be by written ballots on
<PAGE>
which shall be subscribed the signatures of the
holders of Debentures or of their
representatives by proxy and the serial number
or numbers of the Debentures held or represented
by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall
count all votes cast at the meeting for or
against any resolution and who shall make and
file with the secretary of the meeting their
verified written reports in duplicate of all
votes cast at the meeting. A record in
duplicate of the proceedings of each meeting of
debentureholders shall be prepared by the
secretary of 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 11.02. The record shall show the
serial numbers of the Debentures voting in favor
of or against any resolution. The record shall
be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting
and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be
preserved by the Trustee.
Any record so signed and verified
shall be conclusive evidence of the matters
therein stated.
Section 11.07. Nothing in this Article
Eleven contained shall be deemed or construed to
authorize or permit, by reason of any call of a
meeting of debentureholders or any rights
expressly or impliedly conferred hereunder to
make such call, any hindrance or delay in the
exercise of any right or rights conferred upon
or reserved to the Trustee or to the
debentureholders under any of the provisions of
this Indenture or of the Debentures.
ARTICLE 12.
Supplemental Indentures.
Section 12.01. 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
<PAGE>
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 to Article Thirteen
hereof;
(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 holders of
Debentures, to surrender any right or power
herein reserved to or conferred upon the
Company and to make the occurrence, or the
occurrence and continuance, of a default in
an 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 an 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; and
(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 which shall not be inconsistent
with this Indenture or any indenture
supplemental hereto and which shall not
adversely affect the interests of the
holders of the Debentures.
<PAGE>
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, but the
Trustee shall not be obligated to enter into any
such supplemental indenture which affects the
Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Any supplemental indenture authorized
by the provisions of this Section 12.01 may be
executed by the Company and the Trustee without
the consent of the holders of any of the
Debentures at the time outstanding,
notwithstanding any of the provisions of Section
12.02.
Section 12.02. With the consent
(evidenced as provided in Section 10.01) of the
holders of not less than 66 2/3% in aggregate
principal amount of the Debentures at the time
outstanding (determined as provided in Section
10.04), 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
of modifying in any manner the rights of the
holders of the Debentures; provided, however,
that no such supplemental indenture shall (i)
extend the maturity of any Debentures, or reduce
the rate or extend the time of payment of
interest thereon, or reduce the principal amount
thereof, or reduce any premium payable upon the
redemption thereof, or alter the provisions of
this Indenture so as to affect adversely the
terms of conversion of the Debentures into
Common Stock, without the consent of the holder
of each Debenture so affected, or (ii) reduce
the aforesaid percentage of Debentures, the
holders of which are required to consent to any
supplemental indenture, without the consent of
the holders of all Debentures then outstanding;
and provided further that no change or
modification shall directly or indirectly modify
<PAGE>
or eliminate the provisions of Article Three in
any manner which might terminate or impair the
subordination of the Debentures to Senior
Indebtedness without the prior written consent
of the holders of the Senior Indebtedness.
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
debentureholders as aforesaid, the Trustee shall
join with the Company in the execution of such
supplemental indenture unless such supplemental
indenture affects the Trustee's own rights,
duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its
discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the
consent of the debentureholders under this
Section 12.02 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 12.02, the Company shall mail a notice
to the debentureholders, 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 12.03. Upon the execution of
any supplemental indenture pursuant to the
provisions of this Article Twelve, this
Indenture shall be and be deemed to be modified
and amended in accordance therewith and the
respective rights, limitation of rights,
obligations, duties and immunities under this
Indenture of the Trustee, the Company and the
holders of Debentures 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 and
be deemed to be part of the terms and conditions
of this Indenture for any and all purposes.
<PAGE>
The Trustee, subject to the provisions
of Section 9.01, may rely on an Opinion of
Counsel as conclusive evidence that any such
supplemental indenture complies with the
provisions of this Article Twelve.
Section 12.04. Debentures
authenticated and delivered after the execution
of any supplemental indenture pursuant to the
provisions of this Article Twelve, or after any
action taken at a debentureholders' meeting
pursuant to Article Eleven, may bear a notation
in form approved by the Trustee 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 Debentures so modified as to conform, in the
opinion of the Trustee and the Board of
Directors of the Company, 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 Debentures then
outstanding.
ARTICLE 13.
Consolidation, Merger, Sale or Conveyance.
Section 13.01. The Company covenants
that it will not merge or consolidate with any
other corporation or sell or convey all or
substantially all of its assets to any person,
firm or corporation, unless (i) either the
Company shall be the continuing corporation, or
the successor corporation (if other than the
Company) shall be a corporation organized and
existing under the laws of the United States of
America or a State thereof and such corporation
shall expressly assume the due and punctual
payment of the principal of and premium, if any,
and interest on all the Debentures, according to
their tenor, and the due and punctual
performance and observance of all of the
covenants and conditions of this Indenture to be
performed by the Company by supplemental
indenture satisfactory to the Trustee, executed
and delivered to the Trustee by such
corporation, and (ii) the Company or such
successor corporation, as the case may be, shall
not, immediately after such merger or
<PAGE>
consolidation, or such sale or conveyance, be in
default in the performance of any such covenant
or condition.
Section 13.02. In case of any such
consolidation, merger, sale or conveyance and
upon any such assumption by the successor
corporation, 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 Farah Incorporated, any or all of
the Debentures issuable hereunder which
theretofore shall not have been 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 Debentures
which previously shall have been signed and
delivered by the officers of the Company to the
Trustee, and any Debentures which such successor
corporation thereafter shall cause to be signed
and delivered to the Trustee. All the
Debentures so issued shall in all respects have
the same legal rank and benefit under this
Indenture as the Debentures theretofore or
thereafter issued in accordance with the terms
of this Indenture as though all of such
Debentures 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 Debentures thereafter to be
issued as may be appropriate.
Section 13.03. The Trustee, subject to
the provisions of Sections 9.01 and 9.02, may
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 and
that it is proper for the Trustee under the
provisions of Article Twelve and of this Article
Thirteen to join in the execution of the
supplemental indenture provided for in Section
13.01.
<PAGE>
ARTICLE 14.
Satisfaction and Discharge of Indenture; Unclaimed
Moneys.
Section 14.01. If (a) the Company
shall deliver to the Trustee for cancellation
all Debentures theretofore authenticate (other
than any Debentures 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 canceled, or (b) all
the Debentures not theretofore canceled 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 pursuant to
Article Five 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 the
entire amount sufficient to pay at maturity or
upon redemption all of such Debentures not
theretofore canceled or delivered to the Trustee
for cancellation, including principal (and
premium, if any) 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
Company shall also pay or cause to be paid all
other sums payable hereunder by the Company,
then except as to the remaining rights of
conversion of any Debenture this Indenture shall
cease to be of further effect, and the Trustee,
on demand of the Company, accompanied by an
Officers' Certificate and an Opinion of Counsel,
and at the cost and expense of the Company,
shall execute proper instruments acknowledging
satisfaction of and discharging this Indenture.
The Company hereby agrees to reimburse the
Trustee for any costs or expenses theretofore
and thereafter reasonable and properly incurred
by the Trustee in connection with this Indenture
or the Debentures.
Section 14.02. All moneys deposited
with the Trustee pursuant to Section 14.01 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
Debentures, for the payment or redemption of
<PAGE>
which such moneys have been deposited with the
Trustee, of all sums due and to become due
thereon for principal and interest and premium,
if any.
Section 14.03. 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 14.04. Any moneys deposited
with the Trustee or any paying agent for the
payment of the principal of, premium, if any, or
interest on any Debentures and not applied but
remaining unclaimed by the holders of Debentures
for six years after the date upon which no
Debentures shall have been outstanding shall be
repaid to the Company by the Trustee or by such
paying agent on demand; and the holder of any of
the Debentures entitled to receive such payment
shall thereafter look only to the Company for
the payment thereof; provided, however that the
Trustee or such paying agent, before being
required to make any such repayment, may at the
expense of the Company cause to be published
once a week for two successive weeks (in each
case on any day of the week) in an Authorized
Newspaper, a notice that said moneys have not
been so applied and that after a date named
therein any unclaimed balance of said moneys
then remaining will be returned to the Company.
Except as otherwise provided in
Section 5.05, if at any time any Debentures for
the payment or redemption of which moneys shall
have been deposited with the Trustee shall be
converted as provided in Article Four, the
moneys then on deposit for the payment or
redemption of such Debenture shall be repaid to
the Company.
ARTICLE 15.
Immunity of Incorporators, Stockholders, Officers and
Directors
Section 15.01. No recourse under or
upon any obligation, covenant or agreement of
<PAGE>
this Indenture, or of any Debenture, or for any
claim based thereon or otherwise in respect
thereof, shall be had against any incorporator,
stockholder, officer or 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 any
successor corporation or any of them, because of
the creation of the indebtedness hereby
authorized, or under or by reason of the
obligations, covenants or agreements contained
in this Indenture or in any of the Debentures 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 Debentures 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 Debentures.
ARTICLE 16.
Miscellaneous Provisions.
Section 16.01. 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 16.02. 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
<PAGE>
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 16.03. 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 holders of Debentures to
or on the Company may be given or served by
being deposited postage prepaid in a post office
letter box addressed (until another address is
filed by the Company with the Trustee for such
purpose), as follows: Farah Incorporated, 8889
Gateway West, El Paso, Texas 79985. Any notice,
direction, request or demand by any
debentureholder to or upon the Trustee shall be
deemed to have been sufficiently given or made,
for all purposes, if given or made at the
principal office of the Trustee.
Section 16.04. This Indenture and each
Debenture shall be deemed to be a contract made
under the laws of the State of Texas, and for
all purposes shall be construed in accordance
with the laws of said State.
Section 16.05. 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 (other than those
provided for in Section 6.09) 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
<PAGE>
statement as to the nature and scope of the
examination or investigation upon which the
statements or opinions contained in such
certificate or opinion are based; (3) a
statement that, in the opinion of such person,
he has made such examination or investigation as
is necessary to enable him to express an
informed opinion as to whether or not such
covenant or condition has been complied with;
and (4) a statement as to whether or not, in the
opinion of 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 representations by
counsel, unless 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, information with respect to
which is in the possession of the Company, upon
the certificate, statement or opinion of or the
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, in so far as it relates to accounting
matters, upon a certificate or opinion of or
representations by an accountant or firm of
accountants in the employ of the Company, unless
such officer or counsel, as the ease 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.
<PAGE>
Section 16.06. In any case where the
date of payment of interest on or principal of
the Debentures or the date fixed for redemption
of any Debenture shall be a Saturday or a Sunday
or shall be in El Paso, Texas a day on which
banking institutions are authorized by law to
close, 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 day
not in El Paso, Texas a day on which banking
institutions are authorized by law to close,
with the same force and effect as if made on the
date of the payment of interest on or principal
of the Debentures or the date fixed for
redemption of any Debentures, and no interest
shall accrue for the period after such date.
Section 16.07. Nothing in this
Indenture or in the Debentures, expressed or
implied, shall be construed to constitute a
security interest under the Uniform Commercial
Code or similar legislation, as now or hereafter
enacted and in effect, in any jurisdiction where
property of the Company or its Subsidiaries is
located.
Section 16.08. If and to the extent
that any provision of this Indenture limits,
qualifies or conflicts with another provision
which is required to be included in this
Indenture by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939,
as amended, such required provision shall
control.
Section 16.09. Nothing in this
Indenture or in the Debentures, expressed or
implied, shall give or be construed to give any
person, firm or corporation, other than the
parties hereto and the holders of the
Debentures, any legal or equitable right, remedy
or claim under or in respect of this Indenture,
or under any covenant, condition and provision
herein contained; all its covenants, conditions
and provisions being for the sole benefit of the
parties hereto and of the holders of the
Debentures.
Section 16.10. This Indenture may be
executed in any number of counterparts, each of
which shall be an original; but such
<PAGE>
counterparts shall together constitute but one
and the same instrument.
Texas Commerce Bank, N.A., the party
of the second part, hereby accepts the trusts in
this Indenture declared and provided, upon the
terms and conditions hereinabove set forth.
In Witness Whereof, Farah Incorporated, the
party of the first part, has caused this
Indenture to be signed and acknowledged by its
President or Vice President, and its corporate
seal to be affixed hereunto, and the same to be
attested by its Secretary or an Assistant
Secretary; and Texas Commerce Bank, N.A., the
party of the second part, has caused this
Indenture to be signed and acknowledged by one
of its Trust Officers, has caused its corporate
seal to be affixed hereunto, and the same to be
attested by one of its Assistant Secretaries,
all as of the day and year first written above.
Farah Incorporated
BY /s/ James C. Swaim
Executive Vice President
Texas Commerce Bank, N.A.
BY /s/ Sarah Wilson
Trust Officer
<PAGE>
State of Texas )
) ss.:
County of El Paso )
On the 1st day of February, 1994
before me personally came James C. Swaim to me
known, who, being by me duly sworn, did depose
and say that he resides at 6313 Camino Fuente,
El Paso, Texas; that he is Executive Vice President
of Farah Incorporated, one of the corporations
described in and which executed the above instrument;
that he knows the corporate seal of said corporation;
that the seal affixed to the said instrument bearing the
corporate name of said corpOration is such
corporate seal; that it was so affixed by
authority of the board of Directors of said
corporation, and that he signed his name thereto
by like authority.
/s/ Karen S. Castillo
Notary Public [Notarial Seal]
State of Texas )
) ss.:
County of El Paso )
On the 2nd day of February 1994
before me personally came Sarah Wilson, to me
known, who, being by me duly sworn, did depose
and say that she works at 201 E. Main, El Paso, TX;
that he is Trust Officer of Texas Commerce Bank,
N.A., one of the corporations described in and
which executed the above instrument; that he
knows the corporate seal of said corporation;
that the seal affixed to the said instrument
bearing the corporate name of said corporation
is such corporate seal; that it was so affixed
by authority of the Board of Directors of said
corporation, and that he signed his name thereto
by like authority.
/s/ Marcia A. Wilson
Notary Public [Notarial Seal]
