<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number ___0-11402___
TELXON CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 74-1666060
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3330 West Market Street, Akron, Ohio 44333
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code ____(216) 867-3700____
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_. No ___.
At December 31, 1995, there were 16,046,668 outstanding shares of the
registrant's Common Stock, $.01 par value per share ("Common Stock").
<PAGE> 2
TELXON CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page No.
--------
PART I. FINANCIAL INFORMATION:
<S> <C> <C> <C>
Item 1: Consolidated Financial Statements
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 6-10
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 11-14
PART II. OTHER INFORMATION:
Item 1: Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 6: Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 15-21
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1995
----------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash (including cash equivalents of $2,443
and $21,872) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,305 $ 31,364
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,349 --
Accounts receivable, net of allowance for
doubtful accounts of $2,010 and $1,832 . . . . . . . . . . . . . . . . . . . 131,772 84,468
Notes and other accounts receivable . . . . . . . . . . . . . . . . . . . . . . . 23,079 6,256
Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,549 935
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,890 72,078
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,088 10,192
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 284,032 205,293
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,631 45,887
Intangible and other assets, net . . . . . . . . . . . . . . . . . . . . . . . . 27,986 24,947
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $363,649 $276,127
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,735 $ 25,395
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 2,227 1,343
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,728 33,466
Capital lease obligations due within one
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 801 769
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,730 8,315
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,817 34,388
-------- -------
Total current liabilities 94,038 103,676
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,703 1,729
Convertible subordinated debentures . . . . . . . . . . . . . . . . . . . . . . . 107,224 24,734
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,241 5,246
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,299 2,164
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 210,505 137,549
-------- --------
Stockholders' equity:
Preferred Stock, $1.00 par value per share;
500,000 shares authorized, none issued . . . . . . . . . . . . . . . . . . . -- --
Common Stock, $.01 par value per share;
50,000,000 shares authorized, 16,046,668
and 15,623,249 shares outstanding . . . . . . . . . . . . . . . . . . . . . 160 156
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,952 78,548
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,031 62,954
Equity adjustment for foreign currency
translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,097) (1,525)
Unearned compensation relating to restricted
stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (902) (1,555)
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 153,144 138,578
-------- --------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $363,649 $276,127
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except shares and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended December 31, Ended December 31,
1995 1994 1995 1994
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Revenues:
Product . . . . . . . . . . . . . . . . . . . . . $113,247 $84,129 $291,382 $237,716
Customer service . . . . . . . . . . . . . . . . . . . 17,783 14,067 50,205 39,799
-------- ------- -------- --------
Total revenues 131,030 98,196 341,587 277,515
Cost of revenues:
Product . . . . . . . . . . . . . . . . . . . . . 68,461 49,946 171,935 139,835
Customer service . . . . . . . . . . . . . . . . . . 10,078 8,407 28,518 22,788
-------- ------- -------- --------
Total cost of revenues . . . . . . . . . . . . . 78,539 58,353 200,453 162,623
-------- ------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . . . 52,491 39,843 141,134 114,892
-------- ------- -------- --------
Operating expenses:
Selling expenses . . . . . . . . . . . . . . . . . . 21,257 16,614 59,673 49,559
Product development and
engineering expenses . . . . . . . . . . . . . . . 12,704 9,193 34,318 25,782
General and administrative
expenses . . . . . . . . . . . . . . . . . . . 10,750 8,297 28,991 26,033
-------- ------- -------- --------
Total operating expenses . . . . . . . . . . . . 44,711 34,104 122,982 101,374
Income from operations . . . . . . . . . . . . . 7,780 5,739 18,152 13,518
Interest income . . . . . . . . . . . . . . . . . . . 157 135 451 396
Interest expense . . . . . . . . . . . . . . . . . . . (1,948) (1,209) (4,646) (3,483)
Other non-operating income . . . . . . . . . . . . . . . . 787 -- 1,142 --
-------- ------- -------- --------
Income before income taxes . . . . . . . . . . . 6,776 4,665 15,099 10,431
Provision for income taxes . . . . . . . . . . . . . . . . 2,571 2,201 5,854 5,075
-------- ------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . $ 4,205 $ 2,464 $ 9,245 $ 5,356
======== ======= ======== ========
Earnings per common and common
equivalent share:
Net income per share . . . . . . . . . . . . . . $ .26 $ .16 $ .57 $ .34
======== ======= ======== ========
Average number of common and
common equivalent shares
outstanding . . . . . . . . . . . . . . 16,302,000 15,620,000 16,301,000 15,788,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
4
<PAGE> 5
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended December 31,
------------------------------
1995 1994
-------- ------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,245 $ 5,356
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 16,334 15,923
Non-cash compensation related to
restricted stock awards . . . . . . . . . . . . . . . . . . . . . . 653 538
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . 1,427 936
Provision for inventory obsolescence . . . . . . . . . . . . . . . . . 4,919 5,444
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . (1,034) (70)
Gain on sale of subsidiary stock . . . . . . . . . . . . . . . . . . . (355) --
Loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . . 213 671
Gain on investment . . . . . . . . . . . . . . . . . . . . . . . . . . (787) --
Changes in assets and liabilities:
Short-term investments . . . . . . . . . . . . . . . . . . . . . (1,349) --
Accounts and notes receivable . . . . . . . . . . . . . . . . . . (65,497) (6,374)
Refundable income taxes . . . . . . . . . . . . . . . . . . . . . (1,614) 1,070
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,784) 89
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . 1,217 299
Intangible and other assets . . . . . . . . . . . . . . . . . . . (1,471) 8
Accounts payable and accrued
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 4,979 (10,786)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . (559) 2,885
Other long-term liabilities . . . . . . . . . . . . . . . . . . . 768 (1,201)
-------- -------
Total adjustments . . . . . . . . . . . . . . . . . . . (65,940) 9,432
-------- -------
Net cash (used in) provided by operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56,695) 14,788
Cash flows from investing activities:
Additions to property and equipment . . . . . . . . . . . . . . . . . . . . . (16,231) (11,249)
Payments for acquisitions, net of cash
acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,401) (1,092)
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (37)
Software investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (808) (576)
-------- -------
Net cash used in investing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,440) (12,954)
Cash flows from financing activities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,475) 2,641
Principal payments on capital leases . . . . . . . . . . . . . . . . . . . . (660) (453)
Principal payments for long-term borrowing . . . . . . . . . . . . . . . . (190) (179)
Debt issue costs paid . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,063) --
Proceeds from issuance of convertible
subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,500 --
Proceeds from exercise of stock options
(includes tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . 5,230 1,545
-------- -------
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . 69,342 3,554
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . (266) 343
-------- -------
Net (decrease) increase in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,059) 5,731
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,364 24,041
-------- -------
Cash and cash equivalents at end of
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,305 $29,772
======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
TELXON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Management Representation
The consolidated financial statements of Telxon Corporation and its
subsidiaries (the "Company") have been prepared without audit. In the opinion
of the Company all adjustments, consisting of normal recurring adjustments
necessary for a fair statement of results for the interim periods have been
made. The statements, which do not include all of the information and notes
required by generally accepted accounting principles for complete financial
statements, should be read in conjunction with the audited consolidated
financial statements as contained in the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1995.
2. Short-term Investments
Short-term investments consist of trading securities.
3. Earnings Per Share
Computations of earnings per common and common equivalent share of common
stock are based on the weighted average number of common shares outstanding
during the period increased by the net shares issuable on the assumed exercise
of stock options using the treasury stock method. All securities having a
dilutive effect on earnings per share and convertible securities for which the
conversion price for dilution has not been attained have been excluded from
such computations. Common stock purchase rights outstanding under the
Company's stockholder rights plan, which potentially have a dilutive effect,
have been excluded from the weighted common shares computation as preconditions
to the exercisability of such rights were not satisfied.
4. Inventories
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31, 1995
(Unaudited) March 31, 1995
----------------- --------------
<S> <C> <C>
Purchased components . . . . . . . . . . $47,000 $40,958
Work-in-process . . . . . . . . . . . . . 21,907 16,376
Finished goods . . . . . . . . . . . . . 21,983 14,744
------- -------
$90,890 $72,078
======= =======
</TABLE>
5. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31, 1995
(Unaudited) March 31, 1995
----------------- --------------
<S> <C> <C>
Accrued payroll and other employee
compensation . . . . . . . . . . . . . $7,585 $10,130
Accrued commissions . . . . . . . . . . . . 3,289 2,355
Accrued taxes other than payroll
and income taxes . . . . . . . . . . . 4,459 2,570
Deferred customer service revenues . . . . 12,319 11,924
Accrued royalties . . . . . . . . . . . . . 1,944 2,280
Other accrued liabilities . . . . . . . . . 5,221 5,129
------- -------
$34,817 $34,388
======= =======
</TABLE>
6
<PAGE> 7
6. Supplemental Cash Flow Information
<TABLE>
<CAPTION>
Nine Months Ended December 31,
1995 1994
-------- ------
(Unaudited)
(In thousands)
<S> <C> <C>
Cash paid during the period for:
Interest $4,557 $3,770
Income taxes 4,432 1,053
</TABLE>
Capital lease additions are non-cash transactions and, accordingly, $666
and $2,157 has been excluded from property and equipment additions in the
fiscal 1996 and fiscal 1995 Statement of Cash Flows, respectively.
7. Litigation and Contingencies
In December 1992, four class action suits were filed in the United States
District Court, Northern District of Ohio, by certain alleged stockholders
of the Company on behalf of themselves and purported classes consisting of
Telxon stockholders, other than defendants and their affiliates, who
purchased the Company's common stock between May 20, 1992 and
January 19, 1993. The named defendants are the Company, former President
and Chief Executive Officer Raymond D. Meyo, and then current President,
Chief Operating Officer and Chief Financial Officer Dan R. Wipff. On
February 1, 1993, the plaintiffs filed their Amended and Consolidated Class
Action Complaint related to the four actions, alleging claims for fraud on
the market and negligent misrepresentation, arising from alleged
misrepresentations and omissions with respect to the Company's financial
performance and prospects, and alleged trading activities of the named
individual defendants. The Amended Complaint seeks certification of the
purported class, unspecified compensatory damages, the imposition of a
constructive trust on certain of the defendants' assets and other
unspecified extraordinary equitable and/or injunctive relief, interest,
attorneys' fees and costs. The defendants, including the Company, filed a
Motion to Dismiss which was denied by the court on June 3, 1993.
On April 16, 1993, the Plaintiffs filed their Motion for Class
Certification. The defendants, including the Company, filed their briefs in
opposition to Class Certification on October 13, 1993. On December 17,
1993, the District Court certified the class, consisting of Telxon
stockholders, other than defendants and their affiliates, who purchased
Telxon common stock between May 20, 1992 and December 14, 1992.
Following the completion of discovery (other than of experts), each
defendant filed a Motion for Summary Judgment on May 19, 1995, all of which
were opposed by the plaintiffs. On September 14, 1995, the Court granted
each defendant summary judgment on all counts. The plaintiffs have
appealed the granting of summary judgment to the defendants to the United
States Sixth Circuit Court of Appeals, and the Company presently expects
that the parties' briefing of the appeal may be completed during the fourth
quarter of fiscal 1996. No date for oral argument of the appeal has been
set. The defendants intend to continue vigorously defending the
Consolidated Class Action. Though there can be no assurance that the
Company's summary judgment
7
<PAGE> 8
will be upheld on appeal on all counts or as to the ultimate outcome of
any portion of the case with respect to which the summary judgment may be
reversed, no provision has been made in the accompanying consolidated
financial statements for any liability that may result to the Company in
such an event.
On September 21, 1993, a derivative Complaint was filed in the Court of
Chancery of the State of Delaware, in and for Newcastle County, by an
alleged stockholder of Telxon derivatively on behalf of Telxon. The named
defendants are the Company; Robert F. Meyerson, Chairman of the Board and
Chief Executive Officer; Dan R. Wipff, then President, Operating Officer
and Chief Financial Officer and director; Robert A. Goodman, Corporate
Secretary and outside director; Norton W. Rose, outside director and Dr.
Raj Reddy, outside director. The Complaint alleges breach of fiduciary duty
to the Company and waste of the Company's assets in connection with certain
transactions entered into by Telxon and compensation amounts paid by the
Company. The Complaint seeks an accounting, injunction, rescission,
attorneys' fees and costs. While the Company is nominally a defendant in
this derivative action, no monetary relief is sought by the plaintiff from
the Company; accordingly, no provision for any loss has been made in the
accompanying financial statements. Nor has any provision been made for
any related insurance recovery for any such loss. On November 12, 1993,
Telxon and the individual director defendants filed a Motion to Dismiss.
The plaintiff filed his brief in opposition to the Motion on May 2, 1994,
and the defendants filed a final responsive brief. The Motion was argued
before the Court on March 29, 1995, and on July 18, 1995, the Court issued
its ruling. The Court dismissed all of the claims relating to the
plaintiff's allegations of corporate waste. The claims relating to breach
of fiduciary duty survived the Motion to Dismiss and are now the subject of
discovery, which is in its early stages. The defendants believe that the
remaining claims lack merit, and they intend to vigorously defend this
action. While the ultimate outcome of this action cannot presently be
determined, the Company does not anticipate that this matter will have a
material adverse effect on the Company's consolidated financial position,
results of operations or cash flows.
In the normal course of its operations, the Company is subject to
performance under contracts, and has various legal actions and certain
contingencies pending, including a claim made by the owner of a
manufacturing facility formerly leased by the Company that the Company
caused and should remediate alleged soil contamination at the facility.
The Company, with professional assistance, is investigating the existence,
scope, nature and cause of the claimed contamination. Information necessary
to support a reasonable estimate of the scope of loss, if any, is not
presently available and, accordingly, no provision has been made in
accompanying financial statements. The Company, while not conceding denial
of coverage, has been advised by its insurers that coverage is not
available concerning this matter. While the Company, based on its initial
assessment of the situation, believes the matter's ultimate resolution will
not have a material adverse effect on the Company's business or financial
condition, if the Company were ultimately required to remediate such
contamination, the associated costs could have a material adverse effect
on results of operations for one or more quarters in which the associated
charge(s) would be taken. In management's opinion, all other such out-
standing matters have either been reflected in the consolidated financial
statements, are covered by insurance or would not have a material adverse
effect on the Company's business, consolidated financial position or
results of operations or cash flows.
8. Short-Term and Long-Term Financing
Effective March 31, 1995, the Company amended and restated its revolving
credit, term loan and security agreement with two banks. This agreement
expires on March 31, 1996 and includes a provision for the extension of
the agreement in one-year increments. The agreement provides the Company
with a maximum revolving credit facility of $50,000, subject to
availability on qualifying accounts receivable and inventory, reduced by
the $5,500 term loan exercised by the Company, and bears interest at LIBOR
plus 2.5% or the higher of the banks' prime lending rate plus 1% or
Federal Funds Rate plus 1.5%. The facility is collateralized by
substantially all of the Company's domestic assets. The agreement also
contains restrictive covenants, certain of which require the Company
8
<PAGE> 9
to maintain specified levels of net worth and working capital and to meet
certain current ratios, debt to net worth ratios, and fixed charge
coverages. At December 31 and March 31, 1995, the Company had $178 and
$25,395 of short-term borrowings outstanding under the revolving credit
facility and was in compliance with all restrictive covenants contained in
the agreement.
Principal amounts due under the term loan are funded as revolving credit
advances. The funding of $272 in principal due for the quarter ended
December 31, 1995 has been treated as non-cash transactions and,
accordingly, has been excluded from the 1996 Statement of Cash Flows.
Effective September 8, 1995, the Company entered into an unsecured
revolving credit facility with a third bank maturing April 30, 1996. The
agreement provided a maximum credit facility of $20,000 with interest
at the bank's Money Market Rate plus 1.75% or LIBOR plus 1.75%, as
elected by the Company. Effective November 24, 1995,this revolving credit
facility was replaced with an unsecured revolving credit facility with the
same bank maturing January 31, 1996. The agreement provided the Company
with a maximum credit facility of $30,000 at the same interest rates. As
of December 31, 1995, the Company had $10,557 outstanding under this
revolving credit facility. On January 31, 1996, this facility was
extended to March 1, 1996 with interest at the bank's Money Market
Rate plus 1.75%
Effective December 12, 1995, the Company issued $82,500 of 5 3/4%
Convertible Subordinated Notes ("the Notes") due January 1, 2003. The
conversion price for the Notes is $27.50 per common share and is subject
to adjustment in certain events. Interest is payable on January 1 and
July 1 in each year, commencing July 1, 1996. On or after January 5,
1999, the Notes are redeemable at any time at the option of the Company,
in whole or in part, at the following prices for the following
calendar years: 1999, 103.286%; 2000, 102.464%; 2001, 101.643% and
2002, 100.821%.
9. Minority Interests
The difference between the proceeds resulting from the sale of stock by a
subsidiary and the Company's carrying value of such stock is recorded as
non-operating gains or losses at the time of the sale. Minority interests
then represent the unaffiliated shareholders' interest in the cumulative
earnings of such subsidiary subsequent to that time.
10. Other Transactions and Events
During the quarter ended September 30, 1995, the Company sold a minority
interest in a subsidiary to certain key employees and a third-party
business partner. The resulting pre-tax gain of $355 was recorded as
other non-operating income.
Additionally, during the quarter ended September 30, 1995, the Company
sold software licenses and manufacturing rights to a third-party business
partner. The sale of these rights has been recorded as product revenues.
The Company also reduced its estimates of future warranty costs. Revenues
recorded under the non-exclusive software licenses and manufacturing
rights agreement and the benefit of
9
<PAGE> 10
reduced estimates for warranty costs combined to improve gross profit
margins for such quarter, as a percentage of revenues, by approximately
1%.
During the quarter ended December 31, 1995, the Company sold software
licenses and certain manufacturing rights to a third-party business
partner. The sale of these rights has been recorded as product revenues.
Revenues recorded under the software licenses and the exclusive
manufacturing rights agreement increased gross profit margins for such
quarter, as a percentage of revenues, by approximately 1%.
During the quarter ended December 31, 1995, the outstanding shares of a
minority equity investment held by the Company were exchanged for publicly
traded shares of an acquiring company. Previously, such investment had
been recorded on the cost method as the fair value was not determinable.
As a result of this transaction and subsequent changes in fair value of the
underlying stock, the Company recorded a net non-operating gain of $787
related to the revaluation of the shares of the acquiring company to fair
value, as required by Statement of Financial Accounting Standards No. 115 -
"Accounting for Certain Debt and Equity Investments". This investment has
been classified as a trading security and has been presented under the
caption of short-term investments on the consolidated balance sheet.
11. Acquisition
Effective July 13, 1995, the Company acquired the assets and assumed
certain liabilities of Virtual Vision, Inc. for $1,900 cash plus a $1,000
promissory note and other obligations of $200. This acquisition was
accounted for as a purchase and the resulting goodwill of $3,100 will be
amortized over a useful life of 7 years. Virtual Vision is a leading
developer of certain "augmented reality" head-mounted systems technology.
12. Reclassifications
Certain items in the fiscal 1995 consolidated financial statements and
notes thereto have been reclassified to conform to the fiscal 1996
presentation.
10
<PAGE> 11
TELXON CORPORATION AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Revenues
--------
Total consolidated revenues for the third quarter and first
nine months of fiscal 1996 increased $32.8 million or 33% and $64.1
million or 23% as compared to the same periods in fiscal 1995. Product
revenues increased $29.1 million or 35% and $53.7 million or 23% over
those same periods. Product revenues include the sale of Portable
Tele-Transaction Computer ("PTC") units, pen-based and touch-screen
workslates, hardware accessories, custom application software and
software license fees. These increases in product revenues were in part
due to increases in average selling price per PTC due to the sales mix
trending towards more products and systems. Contributing to this
increase in average selling price was the increase in revenues at the
Company's Itronix subsidiary due to the initial production quantity
shipment of a significant number of X-C6000s, which are ruggedized field
service notebook computers, to two major customers during the quarter.
Revenues at this subsidiary increased $12.9 million for the third quarter
of fiscal 1996 as compared to the same period in fiscal 1995.
Customer service revenues for the third third and first nine months of
fiscal 1996 increased $3.7 million or 26% and $10.4 million or 26% as
compared to the same periods in fiscal 1995. These revenue increases
were primarily due to volume increases and growth in the installed base
of the Company's products.
Revenues for the Company's international operations (including Canada)
for the third quarter and first nine months of fiscal 1996 increased $1.1
million or 3% and $7.6 million or 10% as compared to the same periods in
fiscal 1995. Changes in currency exchange rates and intercompany hedging
activities did not materially affect the results of the Company's
international operations.
The Company anticipates increased consolidated revenues for fiscal 1996
as compared to fiscal 1995.
Costs of Revenues
-----------------
Cost of product revenues as a percentage of product revenues increased to
60.5% for the third quarter of fiscal 1996 as compared to 59.4% the same
period in fiscal 1995. Cost of product revenues as a percentage of
product revenues for the first nine months of fiscal 1996 remained
substantially unchanged at 59% as compared to the comparable period in
fiscal 1995. Included in the third quarter of fiscal 1996 results were
revenues related to the sale of software licenses and manufacturing
rights to a third-party business partner. These revenues combined to
reduce the third quarter fiscal 1996 cost percentage by approximately 1%.
Cost of customer service revenues as a percentage of customer service
revenues decreased to 56.7% for the quarter ended December 31, 1995
compared to 59.8% for the same period in the previous fiscal year. This
decrease was primarily due to increased labor efficiencies.
11
<PAGE> 12
Cost of customer service revenues as a percentage of customer service revenues
remained essentially unchanged at 57% for the first nine months of fiscal
1996 as compared the same period in the previous fiscal year.
Inventory valuation accounts for the third quarter of fiscal 1996 were
increased to cover the risk of obsolescence due to new product introductions
and continuing technological change. As of December 31, 1995 inventory
valuation accounts increased to $14.7 million or 14% of gross inventory as
compared to $10.9 million or 13% or gross inventory as March 31, 1995. The
Company anticipates additional provisions for obsolescence as revenues
from new product offerings replace revenue from older products.
Operating Expenses
- ------------------
Selling expenses for the third quarter and first nine months of fiscal 1996
increased $4.6 million or 28% and $10.1 million or 20% as compared to the same
periods in fiscal 1995. These increases primarily reflect the increased
revenues and related variable expenses.
Product development and engineering expenses for the third quarter and first
nine months of fiscal 1996 increased $3.5 million or 38% and $8.5 million or
33% as compared to the same periods in fiscal 1995. These increases are
primarily attributable to research and development activities related to new
product development including wireless data communications and spread spectrum
technology, pen-based technology and other product improvements. During the
first quarter of fiscal 1996, the Company recognized $1.0 million of
development expense reimbursement funding related to a large order from a major
customer. The expense reimbursement was offset against the related development
expenses incurred, resulting in the net research and development expense amount
shown in the Statement of Income.
General and administrative expenses for the third quarter and first nine months
of fiscal 1996 increased $2.5 million or 30% and $3.0 million or 11% as
compared to the same periods in fiscal 1995. As a percentage of revenues,
general and administrative remained substantially unchanged at 8% during the
third quarter of fiscal 1996 as compared to the same period in fiscal 1995 as
legal expenses, executive corporate resources and international resources were
increased to support the Company's continued growth.
Non-Operating Income
- --------------------
During the quarter ended December 31, 1995, the outstanding shares of a
minority equity investment held by the Company were exchanged for publicly
traded shares of an acquiring company. Previously, such investment had been
recorded on the cost method as the fair value was not determinable. As a result
of this transaction and subsequent changes in fair value of the underlying
stock, the Company recorded a net non-operating gain of $787 related to the
revaluation of the shares of acquiring company to fair
value.
Income Taxes
- ------------
The Company's consolidated effective income tax rate for the third quarter and
first nine months of fiscal 1996 was 37.8% and 38.8%, respectively. The
consolidated effective income tax rate reflects income before taxes plus
nondeductible goodwill amortization, which sum is multiplied by the United
States statutory rate and increased by International rate differentials and
partially offset by research and development credits.
12
<PAGE> 13
Liquidity
- ---------
At December 31, 1995, the Company had cash and cash equivalents of $24.3
million, as compared to $31.4 million at March 31, 1995. The Company's current
ratio (current assets divided by current liabilities) was 3.0:1 at December 31,
1995 as compared to 2.0:1 at March 31, 1995. The Company's current ratio
increased as working capital (current assets less current liabilities)
increased for the changes in accounts and notes receivable of $64.1 million,
inventories of $18.8 million, notes payable of $14.7 million and other current
assets and liabilities of $3.6 million. These working capital increases were
offset by a decrease to working capital as a result of the decrease to cash and
cash equivalents of $7.0 million and increases in accounts payable of $4.3
million and current portion of long-term debt and other of $1.5 million.
Inventory levels, in total, increased at December 31, 1995 as compared to those
recorded at March 31, 1995 as purchased components were procured and
work-in-process inventories increased for anticipated increased production
levels in future periods. Investments in accounts receivable increased due
to the high revenue volumes experienced in the later half of the third
quarter. Days sales outstanding increased to 93 days at December 31, 1995
as compared to 77 days at March 31, 1995. The decrease in notes payable and
other current liabilities was primarily due to the use of proceeds from the
issuance of $82.5 million of convertible subordinated notes.
The Company believes that available cash and cash equivalents, internally
generated funds and credit availability (as discussed under "Financing
Activities" below), will be sufficient to meet working capital requirements
for the next twelve months.
Cash Flows from Operating Activities
- ------------------------------------
Net cash used in operating activities was $56.7 million for the nine months
ended December 31, 1995 as compared to net cash provided by operating
activities of $14.8 million for the same period in fiscal 1995. Cash flows for
first nine months of fiscal 1996, as compared to the same period in fiscal
1995, were negatively impacted by the change in cash flow impact of accounts
and notes receivable of $59.1 million, inventories of $23.9 million, income
taxes payable of $3.4 million, refundable income taxes of $2.7 million,
intangible and other assets of $1.5 million, trading securities of $1.3 million
and other items aggregating $3.1 million.
These negative impacts were offset by positive cash flow impacts in net income
of $3.9 million, accounts payable and accrued liabilities of $15.8 million,
other long-term liabilities of $2.0 million and other positive cash flow impact
items aggregating $2.0 million.
Investing Activities
- --------------------
The Company invested $16.2 million in capital equipment during the first nine
months of fiscal 1996, an increase of $5.0 million as compared to the same
period of fiscal 1995. Payments related to acquisitions increased $1.3 million
to $2.4 million due to the acquisition of Virtual Vision, a leading developer
of certain "augmented reality" head-mounted systems technology during the
second quarter.
13
<PAGE> 14
Financing Activities
- --------------------
Cash flows from financing activities increased $65.8 million during the first
nine months of fiscal 1996 as compared with the same period in fiscal 1995.
This increase was primarily due to the issuance of 5-3/4% convertible
subordinated notes of $82.5 million and increased proceeds from the exercise of
stock options of $3.7 million. These increases were offset by the decrease in
notes payable and other decreases of $20.4 million.
Effective March 31, 1995, the Company amended and restated its revolving
credit, term loan and security agreement with two banks which expires March 31,
1996. The agreement calls for a credit limit of $50 million subject to
availability on qualifying accounts receivable and inventory and bears interest
at LIBOR plus 2.5% or the higher of the banks' prime rate plus 1% or the
Federal Funds Rate plus 1.5%. At December 31, 1995, the Company had $4.1
million outstanding under this agreement.
Effective September 8, 1995, the Company entered into an unsecured
revolving credit facility with a third bank maturing April 30, 1996. The
agreement provided a maximum credit facility of $20 million with interest at
the bank's Money Market Rate plus 1.75% or LIBOR plus 1.75%, as elected by the
Company. Effective November 24, 1995, this revolving credit facility was
replaced with an unsecured revolving credit facility with the same bank
maturing January 31, 1996. The agreement provided the Company with a maximum
credit facility of $30 million at the same interest rates. As of December 31,
1995, the Company had $10.6 million outstanding under this revolving credit
facility. On January 31, 1996, this facility was extended to March 1, 1996 with
interest at the bank's Money Market Rate plus 1.75%
The Company has entered into a commitment letter and is presently negotiating
with a bank (affiliated with one of the Company's current secured lenders) for
a new, 5-year unsecured credit facility for up to $100 million being arranged
with a syndicate of prospective participating lenders to replace its exiting
secured credit facility and anticipates entering into such new credit
arrangements prior to the expiration of the Company's current unsecured credit
facility. The Company is also engaged in discussions with its current
unsecured lender toward a continuing, unsecured guidance facility for up to
$20 million to supplement the proposed new unsecured credit facility. However,
there can be no assurance that the Company will be able to consummate either
of such new credit facilities in amounts and on terms satisfactory to it.
Effective December 12, 1995, the Company issued $82.5 million of 5-3/4%
Convertible Subordinated Notes ("the Notes") due January 1, 2003. The
conversion price for the Notes is $27.50 and is subject to adjustment in
certain events. Interest is payable on January 1 and July 1 in each year,
commencing July 1, 1996. On or after January 5, 1999, the Notes are redeemable
at any time at the option of the Company, in whole or in part, at the following
prices for the following calendar years: 1999, 103.286%; 2000, 102.464%;
2001, 101.643% and 2002, 100.821%.
14
<PAGE> 15
TELXON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
See Note 7 to the consolidated financial statements included in Part
I of this Quarterly Report on Form 10-Q for a discussion of the material
pending legal proceedings to which the Company is a party, which footnote
discussion is incorporated in this Part II by this reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits
--------
3.1 Restated Certificate of Incorporation of
Registrant, incorporated herein by reference to
Exhibit No. 3.1 to Registrant's Form 10-K filed for
the year ended March 31, 1993.
3.2 Amended and Restated By-Laws of Registrant,
as amended, incorporated herein by reference to
Exhibit No. 2(b) to Registrant's Registration
Statement on Form 8-A with respect to its Common
Stock filed pursuant to Section 12(g) of the
Securities Exchange Act, as amended by
Amendment No. 1 thereto filed under cover of a
Form 8.
4.1 Portions of the Restated Certificate of
Incorporation of Registrant pertaining to the
rights of holders of Registrant's Common Stock,
par value $.01 per share incorporated herein by
reference to Exhibit 3.1 to Registrant's
Form 10-K for the year ended March 31, 1993.
4.2 Text of form of Certificate for the Registrant's
Common Stock, par value $.01 per share, and
description of graphic and image material appearing
thereon, incorporated herein by reference to
Exhibit 4.2 to the Registrant's Form 10-Q filed for
the quarter ended June 30, 1995.
4.3 Rights Agreement between Registrant and AmeriTrust
Company National Association, as Rights Agent,
dated as of August 25, 1987, incorporated herein by
reference to Exhibit 2(c) to Amendment No. 1, dated
May 21, 1992, to Registrant's Registration
Statement on Form 8-A, filed December 19, 1983,
with respect to Registrant's Common Stock.
4.3.1 Form of Rights Certificate (included as
Exhibit A to the Rights Agreement
included as Exhibit 4.3 above). Until
the Distribution Date (as defined in the
Rights Agreement), the Rights Agreement
provides that the common stock purchase
rights created thereunder are evidenced
by the certificates for Registrant's
Common Stock (the text of which and
description thereof is included as
Exhibit 4.2 above, which stock
certificates are
15
<PAGE> 16
deemed also to be certificates for such
common stock purchase rights) and not by
separate Rights Certificates; as soon as
practicable after the Distribution Date,
Rights Certificates will be mailed to
each holder of Registrant's Common Stock
as of the close of business on the
Distribution Date.
4.4 Indenture by and between the Registrant and
AmeriTrust Company National Association, as
Trustee, dated as of June 1, 1987, regarding
Registrant's 7-1/2% Convertible Subordinated
Debentures Due 2012, incorporated herein by
reference to Exhibit 4.2 to Registrant's
Registration Statement on Form S-3, Registration
No. 33-14348, filed May 18, 1987.
4.4.1 Form of Registrant's 7-1/2%
Convertible Subordinated Debentures
Due 2012 (set forth in the Indenture
included as Exhibit 4.4 above).
4.5 Indenture by and between the Registrant and
Bank One Trust Company, N.A., as Trustee, dated
as of December 1, 1995, regarding Registrant's
5-3/4% Convertible Subordinated Notes due 2003,
filed herewith.
4.5.1 Form of Registrant's 5-3/4%
Convertible Subordinated Notes due 2003
issued under the Indenture included as
Exhibit 4.5 above, filed herewith.
4.5.2 Registration Rights Agreement by and
among the Registrant and Hambrecht &
Quist LLC and Prudential Securities
Incorporated, as the Initial Purchasers
of Registrant's 5-3/4% Convertible
Subordinated Notes due 2003, with
respect to the registration of said
Notes under applicable securities laws,
filed herewith.
10.1 Compensation and Benefits Plans of the Registrant.
10.1.1 Amended and Restated Retirement and Uniform
Matching Profit-Sharing Plan of Registrant,
effective July 1, 1993, incorporated herein by
reference to Exhibit 10.1.1 to Registrant's
Form 10-K filed for the year ended March 31, 1994.
10.1.1.a Amendment, dated January 1, 1994,
incorporated herein by reference to
Exhibit 10.1.1.a to Registrant's
Form 10-K filed for the year ended
March 31, 1994.
10.1.1.b Amendment, dated April 1, 1994,
incorporated herein by reference to
Exhibit 10.1.1.b to Registrant's
Form 10-K filed for the year ended
March 31, 1994.
16
<PAGE> 17
10.1.1.c Amendment, dated January 1, 1994,
incorporated herein by reference to
Exhibit 10.1.1.c to Registrant's
Form 10-Q filed for the quarter ended
December 31, 1994.
10.1.2 1988 Stock Option Plan of Registrant, incorporated
herein by reference to Exhibit 10.1.2 to Registrant's
Form 10-K filed for the year ended March 31, 1994.
10.1.2.a Amendment, dated January 31, 1990,
incorporated herein by reference to
Exhibit 10.1.2.a to Registrant's
Form 10-K filed for the year ended
March 31, 1994.
10.1.3 1990 Stock Option Plan for employees of the
Registrant, as amended, incorporated herein by
reference to Exhibit 10.1.3 to Registrant's
Form 10-Q filed for the quarter ended September 30,
1995.
10.1.4 1990 Stock Option Plan for Non-Employee Directors of
the Registrant, as amended, incorporated herein by
reference to Exhibit 10.1.4 to Registrant's Form 10-Q
filed for the quarter ended September 30, 1995.
10.1.5 Non-Qualified Stock Option Agreement between the
Registrant and Raj Reddy, dated as of October 17, 1988,
incorporated herein by reference to Exhibit 10.1.6
to Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.5.a Description of amendment extending
option term, incorporated herein by
reference to Exhibit 10.1.6.a to
Registrant's Form 10-Q filed for the
quarter ended September 30, 1994.
10.1.6 1992 Restricted Stock Plan of the Registrant,
incorporated herein by reference to Exhibit 10.1.17
to the Registrant's Form 10-Q filed for the quarter
ended December 31, 1993.
10.1.6.a Amendment, dated December 7, 1993,
incorporated herein by reference to
Exhibit 10.1.17.a to the Registrant's
Form 10-Q filed for the quarter ended
December 31, 1993.
10.1.6.b Amendment, dated July 18, 1994,
incorporated herein by reference to
Exhibit 10.1.17.b to Registrant's
Form 10-Q filed for the quarter ended
September 30, 1994.
17
<PAGE> 18
10.1.7 1995 Employee Stock Purchase Plan of the Registrant,
as amended, incorporated herein by reference to
Exhibit 10.1.7 to Registrant's Form 10-Q filed for
the quarter ended September 30, 1995.
10.1.8 Description of compensation arrangements between
the Registrant and Robert F. Meyerson, Chairman of
the Board of Registrant, incorporated herein by
reference to 10.1.7 to Registrant's Form 10-Q filed
for the quarter ended June 30, 1995.
10.1.9 Employment Agreement between Telxon Products, Inc.,
a wholly owned subsidiary of the Registrant, and Dan
R. Wipff, dated September 29, 1994, incorporated
herein by reference to Exhibit 10.1.8 to
Registrant's Form 10-Q filed for the quarter ended
September 30, 1994.
10.1.10 Consulting Agreement between the Registrant and
Accipiter Corporation, dated March 6, 1992,
incorporated herein by reference to Exhibit 10.17 to
the Registrant's Form 10-K filed for the year ended
March 31, 1992.
10.1.11 Services and Non Competition Agreement, dated as
of January 18, 1993, among Accipiter Corporation,
Robert F. Meyerson and the Registrant, incorporated
herein by reference to Exhibit 10.28 to the
Registrant's Form 10-Q filed for the quarter ended
December 31, 1992.
10.1.12 Employment Agreement between the Registrant and
John H. Cribb effective as of April 1, 1993,
incorporated herein by reference to Exhibit 10.1.11
to Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.13 Employment Agreement between the Registrant and
D. Michael Grimes, dated as of February 25, 1993,
incorporated herein by reference to Exhibit 10.1.14
to the Registrant's Form 10-K filed for the year
ended March 31, 1993.
10.1.14 Employment Agreement between the Registrant and
William J. Murphy, dated as of March 12, 1993,
incorporated herein by reference to Exhibit 10.1.15
to the Registrant's Form 10-K filed for the year
ended March 31, 1993.
10.1.15 Employment Agreement between the Registrant and
Frank Brick, effective as of October 15, 1993,
incorporated herein by reference to Exhibit 10.1.16
on Registrant's Form 10-Q filed for the quarter
ended September 30, 1994.
18
<PAGE> 19
10.1.16 Employment Agreement between the Registrant and
David B. Swank, effective as of August 22, 1994,
incorporated herein by reference to Exhibit 10.1.18
to Registrant's Form 10-Q filed for the quarter
ended September 30, 1994.
10.2 Material Leases of the Registrant.
10.2.1 Lease between Registrant and 3330 W. Market
Properties, dated as of December 30, 1986,
incorporated herein by reference to Exhibit 10.2.1
to Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.2.2 Lease between Itronix Corporation, a wholly owned
subsidiary of the Registrant, and Hutton Settlement,
Inc., dated as of April 5, 1993, incorporated
herein by reference to Exhibit 10.2.3 to the
Registrant's Form 10-K filed for the year ended
March 31, 1993.
10.2.3 Commercial Lease and Condominium Lease Agreement
between Itronix Corporation, a wholly owned
subsidiary of the Registrant, and Metropolitan
Mortgage & Securities Company, Inc., dated May 26,
1994, incorporated herein by reference to
Exhibit 10.2.3 to Registrant's Form 10-K for the
year ended March 31, 1995.
10.3 Credit Agreements of the Registrant.
10.3.1 Amended.and Restated Revolving Credit, Term Loan
and Security Agreement between the Registrant and
the Bank of New York Commercial Corporation, dated
as of March 31, 1995, incorporated herein by
reference to Exhibit 10.3 to Registrant's Form 10-K
for the year ended March 31, 1995.
10.3.1.a Amendment No. 1, dated as of June 16,
1995, to the Amended and Restated
Revolving Credit, Term Loan and Security
Agreement between the Registrant and the
Bank of New York Commercial Corporation,
incorporated herein by reference to
Exhibit 10.3.1 to Registrant's Form 10-K
for the year ended March 31, 1995.
10.3.1.b Amendment No. 2, dated as of December
1, 1995, to the Amended and Restated
Revolving Credit, Term Loan and Security
Agreement between the Registrant and the
Bank of New York Commercial Corporation,
filed herewith.
19
<PAGE> 20
10.3.2 Business Purpose Revolving Promissory Note made by
the Registrant in favor of Bank One, Akron, N.A.,
dated September 8, 1995, and related Letter
Agreement between them of even date, incorporated
herein by reference to Exhibit 10.3.2 to
Registrant's Form 10-Q filed for the quarter
ended September 30, 1995.
10.3.3 Business Purpose Revolving Promissory Note made by
the Registrant in favor of Bank One, Akron, N.A.,
dated November 24, 1995, and related Letter
Agreement between them dated November 22, 1995, filed
herewith.
10.3.4 Business Purpose Revolving Promissory Note made by
the Registrant in favor of Bank One, Akron, N.A.,
dated January 31, 1996, and related Letter Agreement
between them dated of even date, filed herewith.
10.4 Amended and Restated Agreement between the Registrant and
Symbol Technologies, Inc., dated as of September 30, 1992,
incorporated herein by reference to Exhibit 10.4 to
Registrant's Form 10-K for the year ended March 31, 1993.
10.5 Plan and Agreement of Merger, dated as of January 18, 1993,
among the Registrant, WSACO, Inc. and Tele-transaction, Inc.,
incorporated herein by reference to Exhibit 10.29 to the
Registrant's Form 10-Q filed for the quarter ended
December 31, 1992.
10.5.1 Notice of Termination by WSACO, Inc., as
contemplated by Section 5.7 of the Plan and
Agreement of Merger, of Amended and Restated
Consulting Agreement between Accipiter Corporation
and Teletransaction, Inc., incorporated herein by
reference to Exhibit 10.7.1 to Registrant's
Form 10-K for the year ended March 31, 1993.
10.6 Agreement for Sale and Licensing of Assets between AST
Research, Inc. and PenRight! Corporation, a wholly owned
subsidiary of the Registrant, dated as of January 26, 1994,
incorporated herein by reference to Exhibit 10.11 to the
Registrant's Form 10-Q for the quarter ended December 31, 1993.
10.7 Agreement of Purchase and Sale of Assets by and among Vision
Newco, Inc., a wholly owned subsidiary of the Registrant,
Virtual Vision, Inc., as debtor and debtor in possession, and
the Official Unsecured Creditors' Committee, on behalf of the
bankruptcy estate of Virtual Vision, dated as of July 13,
1995, incorporated herein by reference to Exhibit 10.8 to
Registrant's Form 10-Q filed for the quarter ended June 30,
1995.
20
<PAGE> 21
10.8 Subscription Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the Registrant, and
certain officers of the Registrant as Purchasers, dated as of
September 19, 1995, incorporated herein by reference to
Exhibit 10.8 to Registrant's Form 10-Q, filed for the quarter
ended September 30, 1995.
10.9 Shareholder Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the Registrant, and
its Shareholders, including the officers of the Registrant
party to the Subscription Agreement included as Exhibit 10.8
above, dated as of September 29, 1995, incorporated herein by
reference to Exhibit 10.9 to Registrant's Form 10-Q, filed for
the quarter ended September 30, 1995.
10.9.1 First Amendment, dated as of September 29, 1995,
to the Shareholder Agreement included as Exhibit
10.9 above, filed herewith.
10.9.2 Second Amendment, dated as of January 31, 1996, to
the Shareholder Agreement included as Exhibit 10.9
above, filed herewith.
11 Computation of Common Shares outstanding and earnings per share
for the nine months ended December 31, 1995 and 1994, filed
herewith.
27 Financial Data Sch.dule as of December 31, 1995, filed herewith.
(b) Reports on Form 8-K
During the fiscal quarter ended December 31, 1995 for which this
Quarterly Report on Form 10-Q is filed, the Registrant filed the following
Current Reports on Form 8-K:
Current Report on Form 8-K, dated November 27, 1995, with respect to
the press release issued by the Registrant on such date describing
its then intended private placement of convertible subordinated
notes; and
Current Report on Form 8-K, dated December 7, 1995, with respect to
the press release issued by the Registrant on such date announcing the
terms of its private placement of convertible subordinated notes.
The private placement of convertible subordinated notes described in both
of said Current Reports on Form 8-K was subsequently consummated on
December 12, 1995 through the issuance of $82,500,000 in principal amount
of the Registrant's 5-3/4% Convertible Subordinated Notes due 2003 under
the Indenture included as Exhibit 4.5 to this Quarterly Report on Form
10-Q.
21
<PAGE> 22
TELXON CORPORATION AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 13, 1996
TELXON CORPORATION
------------------
(Registrant)
/s/ Kenneth W. Haver
--------------------------
Kenneth W. Haver
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
and Treasurer
22
<PAGE> 23
TELXON CORPORATION
EXHIBITS TO
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1995
23
<PAGE> 24
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
When
Filed
- -----
<S> <C> <C>
* 3.1 Restated Certificate of Incorporation of Registrant,
incorporated herein by reference to Exhibit No. 3.1 to
Registrant's Form 10-K filed for the year ended March 31, 1993.
* 3.2 Amended and Restated By-Laws of Registrant, as amended,
incorporated herein by reference to Exhibit No. 2(b) to
Registrant's Registration Statement on Form 8-A with respect to
its Common Stock filed pursuant to Section 12(g) of the
Securities Exchange Act, as amended by Amendment No. 1 thereto
filed under cover of a Form 8.
* 4.1 Portions of the Restated Certificate of Incorporation of
Registrant pertaining to the rights of holders of Registrant's
Common Stock, par value $.01 per share incorporated herein by
reference to Exhibit 3.1 to Registrant's Form 10-K for the
year ended March 31, 1993.
* 4.2 Text of form of Certificate for the Registrant's Common Stock,
par value $.01 per share, and description of graphic and image
material appearing thereon, incorporated herein by reference to
Exhibit 4.2 to the Registrant's Form 10-Q filed for the quarter
ended June 30, 1995.
* 4.3 Rights Agreement between Registrant and AmeriTrust Company
National Association, as Rights Agent, dated as of August 25,
1987, incorporated herein by reference to Exhibit 2(c) to
Amendment No. 1, dated May 21, 1992, to Registrant's
Registration Statement on Form 8-A, filed December 19, 1983,
with respect to Registrant's Common Stock.
* 4.3.1 Form of Rights Certificate (included as Exhibit A to
the Rights Agreement included as Exhibit 4.3 above).
Until the Distribution Date (as defined in the Rights
Agreement), the Rights Agreement provides that the
common stock purchase rights created thereunder are
evidenced by the certificates for Registrant's Common
Stock (the text of which and description thereof is
included as Exhibit 4.2 above, which stock
certificates are deemed also to be certificates for
such common stock purchase rights) and not by separate
Rights Certificates; as soon as practicable after the
Distribution Date, Rights Certificates will be mailed
to each holder of Registrant's Common Stock as of the
close of business on the Distribution Date.
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
When
Filed
- -----
<S> <C> <C>
* 4.4 Indenture by and between the Registrant and AmeriTrust Company
National Association, as Trustee, dated as of June 1, 1987,
regarding Registrant's 7-1/2% Convertible Subordinated Debentures
Due 2012, incorporated herein by reference to Exhibit 4.2 to
Registrant's Registration Statement on Form S-3, Registration No.
33-14348, filed May 18, 1987.
* 4.4.1 Form of Registrant's 7-1/2% Convertible Subordinated
Debentures Due 2012 (set forth in the Indenture included
as Exhibit 4.4 above).
** 4.5 Indenture by and between the Registrant and Bank One Trust
Company, N.A., as Trustee, dated as of December 1, 1995,
regarding Registrant's 5- 3/4% Convertible Subordinated Notes
due 2003, filed herewith.
** 4.5.1 Form of Registrant's 5-3/4% Convertible Subordinated
Notes due 2003 issued under the Indenture included as
Exhibit 4.5 above, filed herewith.
** 4.5.2 Registration Rights Agreement by and among the
Registrant and Hambrecht & Quist LLC and Prudential
Securities Incorporated, as the Initial Purchasers of
Registrant's 5-3/4% Convertible Subordinated Notes due
2003, with respect to the registration of said Notes
under applicable securities laws, filed herewith.
10.1 Compensation and Benefits Plans of the Registrant.
* 10.1.1 Amended and Restated Retirement and Uniform Matching
Profit-Sharing Plan of Registrant, effective July 1,
1993, incorporated herein by reference to Exhibit 10.1.1
to Registrant's Form 10-K filed for the year ended March
31, 1994.
* 10.1.1.a Amendment, dated January 1, 1994,
incorporated herein by reference to Exhibit
10.1.1.a to Registrant's Form 10-K filed for
the year ended March 31, 1994.
* 10.1.1.b Amendment, dated April 1, 1994, incorporated
herein by reference to Exhibit 10.1.1.b to
Registrant's Form 10-K filed for the year
ended March 31, 1994.
* 10.1.1.c Amendment, dated January 1, 1994,
incorporated herein by reference to Exhibit
10.1.1.c to Registrant's Form 10-Q filed for
the quarter ended December 31, 1994.
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
<S> <C> <C>
When
Filed
- -----
* 10.1.2 1988 Stock Option Plan of Registrant, incorporated
herein by reference to Exhibit 10.1.2 to Registrant's
Form 10-K filed for the year ended March 31, 1994.
* 10.1.2.a Amendment, dated January 31, 1990,
incorporated herein by reference to Exhibit
10.1.2.a to Registrant's Form 10-K filed for
the year ended March 31, 1994.
* 10.1.3 1990 Stock Option Plan for employees of the Registrant,
as amended, incorporated herein by reference to Exhibit
10.1.3 to Registrant's Form 10-Q filed for the quarter
ended September 30, 1995.
* 10.1.4 1990 Stock Option Plan for Non-Employee Directors of the
Registrant, as amended, incorporated herein by reference
to Exhibit 10.1.4 to Registrant's Form 10-Q filed for
the quarter ended September 30, 1995.
* 10.1.5 Non-Qualified Stock Option Agreement between the
Registrant and Raj Reddy, dated as of October 17, 1988,
incorporated herein by reference to Exhibit 10.1.6 to
Registrant's Form 10-K filed for the year ended March
31, 1994.
* 10.1.5.a Description of amendment extending option
term, incorporated herein by reference to
Exhibit 10.1.6.a to Registrant's Form 10-Q
filed for the quarter ended September 30,
1994.
* 10.1.6 1992 Restricted Stock Plan of the Registrant,
incorporated herein by reference to Exhibit 10.1.17 to
the Registrant's Form 10-Q filed for the quarter ended
December 31, 1993.
* 10.1.6.a Amendment, dated December 7, 1993,
incorporated herein by reference to Exhibit
10.1.17.a to the Registrant's Form 10-Q
filed for the quarter ended December 31,
1993.
* 10.1.6.b Amendment, dated July 18, 1994, incorporated
herein by reference to Exhibit 10.1.17.b to
Registrant's Form 10-Q filed for the quarter
ended September 30, 1994.
* 10.1.7 1995 Employee Stock Purchase Plan of the Registrant,
as amended, incorporated herein by reference to
Exhibit 10.1.7 to Registrant's Form 10-Q filed for
the quarter ended September 30, 1995.
</TABLE>
26
<PAGE> 27
<TABLE>
<CAPTION>
When
Filed
- -----
<S> <C> <C>
* 10.1.8 Description of compensation arrangements between the
Registrant and Robert F. Meyerson, Chairman of the Board
of Registrant, incorporated herein by reference to
Exhibit 10.1.7 to Registrant's Form 10-Q filed for the
quarter ended June 30, 1995.
* 10.1.9 Employment Agreement between Telxon Products, Inc., a
wholly owned subsidiary of the Registrant, and Dan R.
Wipff, dated September 29, 1994, incorporated herein by
reference to Exhibit 10.1.8 to Registrant's Form 10-Q
filed for the quarter ended September 30, 1994.
* 10.1.10 Consulting Agreement between the Registrant and
Accipiter Corporation, dated March 6, 1992, incorporated
herein by reference to Exhibit 10.17 to the Registrant's
Form 10-K filed for the year ended March 31, 1992.
* 10.1.11 Services and Non Competition1Agreement, dated as of
January 18, 1993, among Accipiter Corporation, Robert F.
Meyerson and the Registrant, incorporated herein by
reference to Exhibit 10.28 to the Registrant's Form 10-Q
filed for the quarter ended December 31, 1992.
* 10.1.12 Employment Agreement between the Registrant and John H.
Cribb effective as of April 1, 1993, incorporated herein
by reference to Exhibit 10.1.11 to Registrant's Form
10-K filed for the year ended March 31, 1994.
* 10.1.13 Employment Agreement between the Registrant and D.
Michael Grimes, dated as of February 25, 1993,
incorporated herein by reference to Exhibit 10.1.14 to
the Registrant's Form 10-K filed for the year ended
March 31, 1993.
* 10.1.14 Employment Agreement between the Registrant and William
J. Murphy, dated as of March 12, 1993, incorporated
herein by reference to Exhibit 10.1.15 to the
Registrant's Form 10-K filed for the year ended March
31, 1993.
* 10.1.15 Employment Agreement between the Registrant and Frank
Brick, effective as of October 15, 1993, incorporated
herein by reference to Exhibit 10.1.16 on Registrant's
Form 10-Q filed for the quarter ended September 30,
1994.
* 10.1.16 Employment Agreement between the Registrant and David B.
Swank, effective as of August 22, 1994, incorporated
herein by reference to Exhibit 10.1.18 to Registrant's
Form 10-Q filed for the quarter ended September 30,
1994.
</TABLE>
27
<PAGE> 28
<TABLE>
<CAPTION>
When
Filed
- -----
<S> <C> <C> <C>
10.2 Material Leases of the Registrant.
* 10.2.1 Lease between Registrant and 3330 W. Market Properties,
dated as of December 30, 1986, incorporated herein by
reference to Exhibit 10.2.1 to Registrant's Form 10-K
filed for the year ended March 31, 1994.
* 10.2.2 Lease between Itronix Corporation, a wholly owned
subsidiary of the Registrant, and Hutton Settlement,
Inc., dated as of April 5, 1993, incorporated herein by
reference to Exhibit 10.2.3 to the Registrant's Form
10-K filed for the year ended March 31, 1993.
* 10.2.3 Commercial Lease and Condominium Lease Agreement between
Itronix Corporation, a wholly owned subsidiary of the
Registrant, and Metropolitan Mortgage & Securities
Company, Inc., dated May 26, 1994, incorporated herein
by reference to Exhibit 10.2.3 to Registrant's Form 10-K
for the year ended March 31, 1995.
10.3 Credit Agreements of the Registrant.
* 10.3.1 Amended and Restated Revolving Credit, Term Loan and
Security Agreement between the Registrant and the Bank
of New York Commercial Corporation, dated as of March
31, 1995, incorporated herein by reference to Exhibit
10.3 to Registrant's Form 10-K for the year ended March
31, 1995.
* 10.3.1.a Amendment No. 1, dated as of June 16, 1995, to
the Amended and Restated Revolving Credit,
Term Loan and Security Agreement between the
Registrant and the Bank of New York Commercial
Corporation, incorporated herein by reference
to Exhibit 10.3.1 to Registrant's Form 10-K
for the year ended March 31, 1995.
** 10.3.1.b Amendment No. 2, dated as of December 1, 1995,
to the Amended and Restated Revolving Credit,
Term Loan and Security Agreement between the
Registrant and the Bank of New York Commercial
Corporation, filed herewith.
* 10.3.2 Business Purpose Revolving Promissory Note made by the
Registrant in favor of Bank One, Akron, N.A., dated
September 8, 1995, and related Letter Agreement between
them of even date, incorporated herein by reference to
Exhibit 10.3.2 to Registrant's Form 10-Q filed for the
quarter ended September 30, 1995.
</TABLE>
[CAPTION]
28
<PAGE> 29
<TABLE>
<CAPTION>
When
Filed
- -----
<S> <C> <C> <C>
** 10.3.3 Business Purpose Revolving Promissory Note made by the
Registrant in favor of Bank One, Akron, N.A., dated
November 24, 1995, and related Letter Agreement between
them dated November 22, 1995, filed herewith.
** 10.3.4 Business Purpose Revolving Promissory Note made by the
Registrant in favor of Bank One, Akron, N.A., dated
January 31, 1996, and related Letter Agreement between
them dated of even date, filed herewith.
* 10.4 Amended and Restated Agreement between the Registrant and Symbol
Technologies, Inc., dated as of September 30, 1992, incorporated
herein by reference to Exhibit 10.4 to Registrant's Form 10-K for
the year ended March 31, 1993.
* 10.5 Plan and Agreement of Merger, dated as of January 18, 1993, among
the Registrant, WSACO, Inc. and Tele-transaction, Inc.,
incorporated herein by reference to Exhibit 10.29 to the
Registrant's Form 10-Q filed for the quarter ended December 31,
1992.
* 10.5.1 Notice of Termination by WSACO, Inc., as contemplated by
Section 5.7 of the Plan and Agreement of Merger, of
Amended and Restated Consulting Agreement between
Accipiter Corporation and Teletransaction, Inc.,
incorporated herein by reference to Exhibit 10.7.1 to
Registrant's Form 10-K for the year ended March 31,
1993.
* 10.6 Agreement for Sale and Licensing of Assets between AST Research,
Inc. and PenRight! Corporation, a wholly owned subsidiary of the
Registrant, dated as of January 26, 1994, incorporated herein by
reference to Exhibit 10.11 to the Registrant's Form 10-Q for the
quarter ended December 31, 1993.
* 10.7 Agreement of Purchase and Sale of Assets by and among Vision
Newco, Inc., a wholly owned subsidiary of the Registrant, Virtual
Vision, Inc., as debtor and debtor in possession, and the
Official Unsecured Creditors' Committee, on behalf of the
bankruptcy estate of Virtual Vision dated as of July 13, 1995,
incorporated herein by reference to Exhibit 10.8 to Registrant's
Form 10-Q filed for the quarter ended June 30, 1995.
* 10.8 Subscription Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the Registrant, and
certain officers of the Registrant as Purchasers, dated as of
September 29, 1995, incorporated herein by reference to Exhibit
10.8 to Registrant's Form 10-Q filed for the quarter ended
September 30, 1995.
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
When
Filed
- -----
<S> <C> <C> <C>
* 10.9 Shareholder Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the Registrant, and its
Shareholders, including the officers of the Registrant party to
the Subscription Agreement included as Exhibit 10.8 above, dated
as of September 29, 1995, incorporated herein by reference to
Exhibit 10.9 to Registrant's Form 10-Q filed for the quarter
ended September 30, 1995.
** 10.9.1 First Amendment, dated as of September 29, 1995, to the
Shareholder Agreement included as Exhibit 10.9 above,
filed herewith.
** 10.9.2 Second Amendment, dated as of January, 1996, to the
Shareholder Agreement included as Exhibit 10.9 above,
filed herewith.
** 11 Computation of Common Shares outstanding and earnings per share
for the nine months ended December 31, 1995 and 1994, filed
herewith.
** 27 Financial Data Schedule as of December 31, 1995, filed herewith.
<FN>
- ---------------------
* Previously filed
** Filed herewith
</TABLE>
30
<PAGE> 1
EXHIBIT 4.5
INDENTURE
INDENTURE dated as of December 1, 1995, between Telxon Corporation, a
Delaware corporation (hereinafter sometimes called the "Company", as more fully
set forth in Section 1.1), and Bank One Trust Company, N.A., a national banking
association duly organized and existing under the laws of the United States, as
trustee hereunder (hereinafter sometimes called the "Trustee", as more fully set
forth in Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the issue of its 5 3/4% Convertible Subordinated Notes due 2003 (hereinafter
sometimes called the "Notes"), in an aggregate principal amount not to exceed
$86,250,000 and, to provide the terms and conditions upon which the Notes are to
be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by the
Notes, a form of assignment, a form of option to elect repurchase upon a
Repurchase Event, a form of conversion notice and a certificate of transfer to
be borne by the Notes are to be substantially in the forms hereinafter provided
for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes are,
and are to be, authenticated, issued and delivered, and in consideration of the
premises and of the purchase and acceptance of the Notes by the holders thereof,
the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. The terms defined in this Section 1.1 (except as
herein 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 1.1. All other
terms used in this Indenture that are defined in the Trust Indenture Act or
which are by reference therein defined in the Securities Act (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 in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as
the singular.
AFFILIATE: The term "Affiliate" of any specified Person shall mean any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any specified Person means the
power to direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
BANK ONE NOTE: The term "Bank One Note" means that certain Business
Purpose Revolving Promissory Note, dated November 24, 1995, between the Company
and Bank One, Akron, N.A.
BOARD OF DIRECTORS: The term "Board of Directors" shall mean the Board of
Directors of the Company or a committee of such Board duly authorized to act for
it hereunder.
BUSINESS DAY: The term "Business Day" means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which the banking
institutions in The City of New York or the city in which the Corporate Trust
Office is located are authorized or obligated by law or executive order to close
or be closed.
CLOSING PRICE: The term "Closing Price" shall have the meaning specified
in Section 15.5(g)(1).
COMMISSION: The term "Commission" shall mean the Securities and Exchange
Commission.
-2-
<PAGE> 3
COMMON STOCK: The term "Common Stock" shall mean any stock of any class of
the Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company and which is not subject to redemption by the Company.
Subject to the provisions of Section 15.6, however, shares issuable on
conversion of Notes shall include only shares of the class designated as common
stock of the Company at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which are not subject to redemption by the Company; provided
that if at any time there shall be more than one such resulting class, the
shares of each such class then so issuable shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
COMPANY: The term "Company" shall mean Telxon Corporation, a Delaware
corporation, and subject to the provisions of Article XII, shall include its
successors and assigns.
CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 15.4.
CORPORATE TRUST OFFICE: The term "Corporate Trust Office" or other similar
term, shall mean the office of the Trustee at which at any particular time its
corporate trust business shall be principally administered, which office is, at
the date as of which this Indenture is dated, located at 100 E. Broad Street,
8th Floor, Columbus, Ohio, 43271, Attention: Corporate Trust Division (Telxon
Corporation, 5 3/4% Convertible Subordinated Notes due 2003).
CREDIT AGREEMENT: The term "Credit Agreement" means that certain Amended
and Restated Credit, Term Loan and Security Agreement, dated March 31, 1995,
among Telxon Corporation, the Retail Technology Group, Inc., Teletransaction,
Inc., Itronix Corporation, Microoffice Systems Technology, Inc., and PTC Airco,
Inc., as borrowers (the "Borrowers"), the financial institutions named therein
(the "Lenders"), and The Bank of New York Commercial Corporation, as agent (the
"Agent"), as amended by Amendment 1 to the Amended and Restated Credit, Term
Loan and Security Agreement, dated June 16, 1995, among the Borrowers, Lenders
and Agent and Amendment 2 to the Amended and Restated Credit, Term Loan and
Security Agreement, dated December 12, 1995, among the Borrowers, Lenders and
Agent, as amended, amended and restated, supplemented or otherwise modified from
time to time.
CUSTODIAN: The term "Custodian" shall mean Bank One Trust Company, N.A.,
as custodian with respect to the Notes in global form, or any successor entity
thereto.
-3-
<PAGE> 4
DEFAULT: The term "default" shall mean any event that is, or after notice
or passage of time, or both, would be, an Event of Default.
DEPOSITARY: The term "Depositary" means, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to such Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.
DESIGNATED SENIOR INDEBTEDNESS: The term "Designated Senior Indebtedness"
means the Credit Agreement, the Bank One Note and any other Senior Indebtedness
if the instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such Indebtedness shall be "Designated Senior
Indebtedness" for purposes of this Indenture (provided that such instrument,
agreement or other document may place limitations and conditions on the right of
such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness).
EXCHANGE ACT: The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
as in effect from time to time.
EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 7.1(a), (b), (c), (d), (e) or (f).
INDEBTEDNESS: The term "Indebtedness" means, with respect to any Person,
and without duplication, (a) all indebtedness, obligations and other liabilities
(contingent or otherwise) of such Person for borrowed money (including
obligations of the Company in respect of overdrafts, foreign exchange contracts,
currency exchange agreements, interest rate protection agreements, and any loans
or advances from banks, whether or not evidenced by notes or similar
instruments) or evidenced by bonds, debentures, notes or similar instruments
(whether or not the recourse of the lender is to the whole of the assets of such
Person or to only a portion thereof) (other than any account payable or other
accrued current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services), (b) all
reimbursement obligations and other liabilities (contingent or otherwise) of
such Person with respect to letters of credit, bank guarantees or bankers'
acceptances, (c) all obligations and liabilities (contingent or otherwise) in
respect of leases of such Person as lessee required, in conformity with
generally accepted accounting principles, to be accounted for as capitalized
lease obligations on the balance sheet of such Person, and all obligations and
other liabilities (contingent or otherwise) under any lease or related document
(including a purchase agreement) in connection with any lease of real property
which provides that such Person is contractually obligated to purchase or cause
a third party to purchase the
-4-
<PAGE> 5
leased property and thereby guarantee a minimum residual value of the
leased property to the lessor and the obligations of such Person under such
lease or related document to purchase or to cause a third party to purchase such
leased property, (d) all obligations of such Person (contingent or otherwise)
with respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all direct or indirect guaranties or
similar agreements by such Person in respect of, and obligations or liabilities
(contingent or otherwise) of such Person to purchase or otherwise acquire or
otherwise assure a creditor against loss in respect of, indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations described in clauses
(a) through (d) secured by any mortgage, pledge, lien or other encumbrance
existing on property which is owned or held by such Person, regardless of
whether the indebtedness or other obligation secured thereby shall have been
assumed by such Person and (g) any and all deferrals, renewals, extensions and
refundings of, or amendments, modifications or supplements to, any indebtedness,
obligation or liability of the kind described in clauses (a) through (f).
INDENTURE: The term "Indenture" shall mean this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented.
INITIAL PURCHASERS: The term "Initial Purchasers" means Hambrecht & Quist
LLC and Prudential Securities Incorporated.
NEW RIGHTS PLAN: The term "New Rights Plan" has the meaning specified in
Section 15.5(d).
NOTE or NOTES: The terms "Note" or "Notes" shall mean any Note or Notes,
as the case may be, authenticated and delivered under this Indenture.
NOTEHOLDER or HOLDER: The terms "Noteholder" or "holder" as applied to any
Note, or other similar terms (but excluding the term "beneficial holder"), shall
mean any person in whose name at the time a particular Note is registered on the
Note registrar's books.
NOTE REGISTER: The term "Note register" shall have the meaning specified
in Section 2.5.
OFFICERS' CERTIFICATE: The term "Officers' Certificate," when used with
respect to the Company, shall mean a certificate signed by both (a) the
President, the Chief Executive Officer, Executive or Senior Vice President or
any Vice President (whether or not designated by a number or numbers or word or
words added before or after the title "Vice President") and (b) by the Treasurer
or any Assistant Treasurer or Secretary or any Assistant Secretary of the
Company.
-5-
<PAGE> 6
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 counsel to the
Company, or other counsel acceptable to the Trustee.
OUTSTANDING: The term "outstanding," when used with reference to Notes,
shall, subject to the provisions of Section 9.4, mean, as of any particular
time, all Notes authenticated and delivered by the Trustee under this Indenture,
except
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, for the redemption of which monies in
the necessary amount shall have been deposited in trust with the Trustee or
with any paying agent (other than the Company) or shall have been set aside
and segregated in trust by the Company (if the Company shall act as its own
paying agent); provided that if such Notes are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in
Article III provided, or provision satisfactory to the Trustee shall have
been made for giving such notice;
(c) Notes in lieu of which, or in substitution for which, other Notes
shall have been authenticated and delivered pursuant to the terms of
Section 2.6 unless proof satisfactory to the Trustee is presented that any
such Notes are held by bona fide holders in due course; and
(d) Notes converted into Common Stock pursuant to Article XV and Notes
deemed not outstanding pursuant to Article III or Article XVI.
PAYMENT BLOCKAGE NOTICE: The term "Payment Blockage Notice" has the
meaning specified in Section 4.2.
PERSON: The term "Person" shall mean a corporation, an association, a
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
PORTAL MARKET: The term "PORTAL Market" shall mean the Private Offerings,
Resales and Trading through Automated Linkages Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note shall
mean every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition, any
Note authenticated and delivered under Section 2.6 in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the lost, destroyed
or stolen Note that it replaces.
-6-
<PAGE> 7
QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
REGISTRATION RIGHTS PLAN: The term "Registration Rights Plan" means that
certain Registration Rights Plan, dated as of December 1, 1995, between the
Company and the Initial Purchasers.
REGULATION S: The term "Regulation S" shall mean Regulation S as
promulgated under the Securities Act.
REPURCHASE EVENT: The term "Repurchase Event" has the meaning specified in
Section 16.4.
RESPONSIBLE OFFICER: The term "Responsible Officer," when used with
respect to the Trustee, shall mean an officer of the Trustee in the Corporate
Trust Office assigned and duly authorized by the Trustee to administer its
corporate trust matters.
RESTRICTED SECURITIES: The term "Restricted Securities" has the meaning
specified in Section 2.5.
RIGHTS PLAN: The term "Rights Plan" means that certain Rights Plan, dated
as of August 25, 1987, between the Company and Society National Bank, as
successor in interest to AmeriTrust Company National Association, as amended,
supplemented or otherwise modified from time to time.
RIGHTS: The term "Rights" shall mean "Rights" as such term is defined in
the Rights Plan.
RULE 144A: The term "Rule 144A" shall mean Rule 144A as promulgated under
the Securities Act.
SECURITIES ACT: The term "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
SENIOR INDEBTEDNESS: The term "Senior Indebtedness" means the principal of,
premium, if any, interest (including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim for
post-petition interest is allowable as a claim in any such proceeding) and rent
payable on or in connection with, and all fees, costs, expenses and other
amounts accrued or due on or in connection with, Indebtedness of the Company,
whether outstanding on the date of this Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company (including
all deferrals, renewals, extensions or refundings of, or amendments,
modifications or supplements to the foregoing), unless in the case of any
particular
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Indebtedness the instrument creating or evidencing the same or the assumption
or guarantee thereof expressly provides that such Indebtedness shall not be
senior in right of payment to the Notes or expressly provides that such
Indebtedness is "pari passu" or "junior" to the Notes. Notwithstanding the
foregoing, the term Senior Indebtedness shall not include (i) any Indebtedness
of the Company to any subsidiary of the Company, a majority of the voting stock
of which is owned, directly or indirectly, by the Company or (ii) the Company's
7 1/2% Convertible Subordinated Notes Due 2012.
SUBSIDIARY: The term "subsidiary" means, with respect to any person, (i)
any corporation, association or other business entity of which more than 50% of
the total voting power of shares of capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such person or one or more of the other subsidiaries of that
person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or managing general partner of which is such person or a subsidiary of
such person or (b) the only general partners of which are such person or of one
or more subsidiaries of such person (or any combination thereof).
TRADING DAY: The term "Trading Day" shall have the meaning specified in
Section 15.5(g)(5).
TRIGGER EVENT: The term "Trigger Event" shall have the meaning specified
in Section 15.5(d).
TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the Trust
Indenture Act of 1939, as amended, as it was in force at the date of execution
of this Indenture, except as provided in Sections 11.3 and 15.6; PROVIDED,
HOWEVER, that in the event the Trust Indenture Act of 1939 is amended after the
date hereof, the term "Trust Indenture Act" shall mean, to the extent required
by such amendment, the Trust Indenture Act of 1939 as so amended.
TRUSTEE: The term "Trustee" shall mean Bank One Trust Company, N.A. and
its successors and any corporation resulting from or surviving any consolidation
or merger to which it or its successors may be a party and any successor trustee
at the time serving as successor trustee hereunder.
The definitions of certain other terms are as specified in Sections 2.5,
Article XV and Article XVI.
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ARTICLE II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
Section 2.1 DESIGNATION, AMOUNT AND ISSUE OF NOTES. The Notes shall be
designated as "5 3/4% Convertible Subordinated Notes due 2003." Notes not to
exceed the aggregate principal amount of $75,000,000 (or $86,250,000 if the
over-allotment option set forth in Section 3(c) of the Placement Agreement dated
December 6, 1995 (as amended from time to time by the parties thereto) by and
between the Company and the Initial Purchasers is exercised in full) (except
pursuant to Sections 2.5, 2.6, 3.3, 15.2 and 16.2 hereof) upon the execution of
this Indenture, or from time to time thereafter, may be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Notes to or upon the written order of the Company,
signed by its (a) Chairman of the Board, President, Executive or Senior Vice
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title "Vice President") and
(b) Treasurer or Assistant Treasurer or its Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
Section 2.2 FORM OF NOTES. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Note in global form shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Note in global form to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Custodian, at the direction of the Trustee,
in such manner and upon instructions given by the holder of such Notes in
accordance with this Indenture. Payment of principal of and interest and
premium, if any, on any Note in global form shall be made to the holder of such
Note.
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The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Every Note shall be
dated the date of its authentication, shall bear interest from the applicable
date in each case as specified on the face of the form of Note attached as
Exhibit A hereto.
The person in whose name any Note (or its Predecessor Note) is registered
at the close of business on any record date with respect to any interest payment
date (including any Note that is converted after the record date and on or
before the interest payment date) shall be entitled to receive the interest
payable on such interest payment date notwithstanding the cancellation of such
Note upon any transfer, exchange or conversion subsequent to the record date and
on or prior to such interest payment date; provided, that in the case of any
Note, or portion thereof, called for redemption on a redemption date or
repurchased in connection with a Repurchase Event on a Repurchase Date that is
after a record date and prior to (but excluding) the next succeeding interest
payment date, interest shall not be paid to the person in whose name the Note,
or portion thereof, is registered on the close of business on such record date
and the Company shall have no obligation to pay interest on such Note or such
portion except to the extent required to be paid upon redemption or repurchase
of such Note or portion thereof, as the case may be, pursuant to Section 3.3 or
16.2 hereof. Interest may, at the option of the Company, be paid by check
mailed to the address of such person on the registry kept for such purposes;
PROVIDED that, with respect to any holder of Notes with an aggregate principal
amount equal to or in excess of $5,000,000, at the request of such holder in
writing to the Company (who shall then furnish written notice to such effect to
the Trustee), interest on such holder's Notes shall be paid by wire transfer
(the costs of such wire transfer to be borne by the Company) in immediately
available funds in accordance with the wire transfer instructions supplied by
such holder to the Trustee and paying agent (if different from the Trustee). The
term "record date" with respect to any interest payment date shall mean the
December 15 or June 15 preceding said January 1 or July 1, respectively.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any said January 1 or July 1 (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of his having been such Noteholder; and such Defaulted
Interest shall be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
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(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a special record date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest to be paid on each Note and the date of the
payment (which shall be not less than twenty-five (25) days after the
receipt by the Trustee of such notice, unless the Trustee shall consent to
an earlier date), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment,
such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date for the payment of
such Defaulted Interest which shall be not more than fifteen (15) days and
not less than ten (10) days prior to the date of the proposed payment and
not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class
postage prepaid, to each Noteholder as of such special record date at his
address as it appears in the Note register, not less than ten (10) days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Notes (or their respective Predecessor Notes) were registered at the
close of business on such special record date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange and automated quotation system on which the Notes may
be listed or designated for issuance, and upon such notice as may be
required by such exchange and automated quotation system, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to
this clause, such manner of payment shall be deemed practicable by the
Trustee.
Section 2.4 EXECUTION OF NOTES. The Notes shall be signed in the name and
on behalf of the Company by the facsimile signature of its Chairman of the
Board, President, any Executive or Senior Vice President or any Vice President
(whether or not designated by a number or numbers or word or words added before
or after the title "Vice President") and attested by the facsimile signature of
its Secretary or any of its Assistant Secretaries (which may be printed,
engraved or otherwise reproduced thereon, by facsimile or otherwise). Only such
Notes as shall bear thereon a certificate of authentication
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substantially in the form set forth on the form of Note attached as Exhibit A
hereto, manually executed by the Trustee (or an authenticating agent appointed
by the Trustee as provided by Section 17.11), shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate
by the Trustee (or such an authenticating agent) upon any Note executed by the
Company shall be conclusive evidence that the Note so authenticated has been
duly authenticated and delivered hereunder and that the holder is entitled to
the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES: RESTRICTIONS
ON TRANSFER: DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which,
subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Notes and of transfers of Notes. The
Note register shall be in written form or in any form capable of being
converted into written form within a reasonably prompt period of time. The
Trustee is hereby appointed "Note registrar" for the purpose of registering
Notes and transfers of Notes as herein provided. The Company may change
the Note register or appoint one or more co-registrars in accordance with
Section 5.2 without any prior notice to any holders, provided that a Note
register shall be at all times maintained at the Corporate Trust Office.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for
such transfer set forth in this Section 2.5, the Company shall execute, and
the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant
to
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Section 5.2. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Notes which the Noteholder making the exchange is entitled to receive
bearing registration numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption or conversion shall (if so required by the Company or
the Note registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company,
and the Notes shall be duly executed by the Noteholder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Notes.
Neither the Company nor the Trustee nor any Note registrar or any
Company-registrar shall be required to exchange or register a transfer of
(a) any Notes for a period of fifteen (15) days next preceding any
selection of Notes to be redeemed or (b) any Notes or portions thereof
called for redemption pursuant to Article III or (c) any Notes or portion
thereof surrendered for conversion pursuant to Article XV.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, unless otherwise required by law, all Notes to be traded on
the PORTAL Market or to a Person who is not a U.S. Person (as defined in
Regulation S) who is acquiring the Note in an offshore transaction (a
"Non-U.S. Person") in accordance with Regulation S shall be represented by
a Note in global form registered in the name of the Depositary or the
nominee of the Depositary. The transfer and exchange of beneficial
interests in such Note in global form, which does not involve the issuance
of a Note in definitive form, shall be effected through the Depositary, in
accordance with this Indenture (including the restrictions on transfer set
forth herein) and the procedures of the Depositary therefor.
At any time at the request of the beneficial holder of an interest in
a Note in global form to obtain a Note in definitive form, such beneficial
holder shall be entitled to obtain a definitive Note upon written request
to the Trustee and the Custodian in accordance with the standing
instructions and procedures existing
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between the Custodian and Depositary for the issuance thereof. Upon
receipt of any such request, the Trustee, or the Custodian at the direction
of the Trustee, will cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Custodian, the
aggregate principal amount of the Note in global form to be reduced by the
principal amount of the definitive Note issued upon such request to such
beneficial holder and, following such reduction, the Company will execute
and the Trustee will authenticate and deliver to such beneficial holder (or
its nominee) a definitive Note or Notes in the appropriate aggregate
principal amount in the name of such beneficial holder (or its nominee) and
bearing such restrictive legends as may be required by this Indenture.
Any transfer of a beneficial interest in a Note in global form which
cannot be effected through book-entry settlement must be effected by the
delivery to the transferee (or its nominee) of a definitive Note or Notes
registered in the name of the transferee (or its nominee) on the books
maintained by the Note registrar in accordance with the transfer
restrictions set forth herein. With respect to any such transfer, the
Trustee, or the Custodian at the direction of the Trustee, will cause, in
accordance with the standing instructions and procedures existing between
the Depositary and the Custodian, the aggregate principal amount of the
Note in global form to be reduced by the principal amount of the beneficial
interest in the Note in global form being transferred and, following such
reduction, the Company will execute and the Trustee will authenticate and
deliver to the transferee (or such transferee's nominee, as the case may
be), a Note or Notes in the appropriate aggregate principal amount in the
name of such transferee (or its nominee) and bearing such restrictive
legends as may be required by this Indenture.
(c) So long as the Notes are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Note to
a QIB in accordance with Rule 144A or a Non-U.S. Person in accordance with
Regulation S, and upon receipt of the definitive Note or Notes being so
transferred, together with a certification from the transferor that the
transferee is a QIB or a Non-U.S. Person (or other evidence satisfactory to
the Trustee), the Trustee shall make, or direct the Custodian to make, an
endorsement on the Note in global form to reflect an increase in the
aggregate principal amount of the Notes represented by the Note in global
form, and the Trustee shall cancel such definitive Note or Notes and cause,
or direct the Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Custodian, the aggregate principal amount of Notes represented by the Note
in global form to be increased accordingly; provided that no definitive
Note, or portion thereof, in respect of which the Company or an Affiliate
of the Company held any beneficial interest shall be included in such Note
in global form until such definitive Note is freely tradable in accordance
with Rule 144(k); PROVIDED FURTHER that the Trustee shall
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issue Notes in definitive form upon any transfer of a beneficial
interest in the Note in global form to the Company or an Affiliate of the
Company.
Any Note in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Indenture as may be required by the Custodian, the
Depositary or by the National Association of Securities Dealers, Inc. in
order for the Notes to be tradeable on the PORTAL Market, or as may be
required for the Notes to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or Regulation S under the
Securities Act or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange or automated quotation system upon which the Notes may be listed
or traded, or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Notes are subject.
(d) Every Note that bears or is required under this Section 2.5(d) to
bear the legend set forth in this Section 2.5(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend
set forth in Section 2.5(e), collectively, the "Restricted Securities" or
each individually, a "Restricted Security") shall be subject to the
restrictions on transfer set forth in this Section 2.5(d) (including those
set forth in the legend set forth below) unless such restrictions on
transfer shall be waived by written consent of the Company, and the holder
of each such Restricted Security, by such Noteholder's acceptance thereof,
agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale,
pledge, transfer or other disposition whatsoever of any legal or beneficial
interest in any Restricted Security.
Until three (3) years after the original issuance date of any Note,
any certificate evidencing such Note (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued
upon conversion thereof, which shall bear the legend set forth in Section
2.5(e), if applicable) shall bear a legend in substantially the following
form, unless otherwise agreed by the Company in writing, with written
notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR
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(B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION (2) AGREES THAT
IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED
HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE
EXCEPT (A) TO TELXON CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO BANK ONE TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR
TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE SUCH TRUSTEE OR SUCCESSOR TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 2(F) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED
HEREBY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO BANK ONE
TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO BANK ONE TRUST
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COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS NOTE EVIDENCED HEREBY
PURSUANT TO CLAUSE 2(F) ABOVE OR THE EXPIRATION OF THREE YEARS FROM
THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
Any Note (or security issued in exchange or substitution therefor) as
to which such restrictions on transfer shall have expired in accordance
with their terms may, upon surrender of such Note for exchange to the Note
registrar in accordance with the provisions of this Section 2.5, be
exchanged for a new Note or Notes, of like tenor and aggregate principal
amount, which shall not bear the restrictive legend required by this
Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.5(d)), a Note in global form may not
be transferred as a whole or in part except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company
to act as Depositary with respect to the Notes in global form. Initially,
the global Note shall be issued to the Depositary, registered in the name
of Cede & Co., as the nominee of the Depositary, and deposited with the
Custodian for Cede & Co.
If at any time the Depositary for the Note in global form notifies the
Company that it is unwilling or unable to continue as Depositary for the
Note, the Company may appoint a successor Depositary with respect to such
Note. If a successor Depositary is not appointed by the Company within
ninety (90) days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for the
authentication and delivery of Notes, will authenticate and deliver, Notes
in definitive form, in an aggregate principal
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amount equal to the principal amount of the Note in global form, in
exchange for such Note in global form.
If a definitive Note is issued in exchange for any portion of a Note
in global form after the close of business at the office or agency where
such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date,
interest will not be payable on such interest payment date in respect of
such Note, but will be payable on such interest payment date only to the
person to whom interest in respect of such portion of such Note in global
form is payable in accordance with the provisions of this Indenture.
Definitive Notes issued in exchange for all or a part of a Note in
global form pursuant to this Section 2.5 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Notes to the persons in whose names such definitive
Notes are so registered.
At such time as all interests in a Note in global form have been
redeemed, converted, repurchased, canceled, exchanged for definitive Notes,
or transferred to a transferee who receives definitive Notes thereof, such
Note in global form shall, upon receipt thereof, be canceled by the Trustee
in accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such cancellation,
if any interest in a global Note is exchanged for definitive Notes,
redeemed, converted, repurchased or canceled or transferred to a transferee
who receives definitive Notes therefor or any definitive Note is exchanged
or transferred for part of a Note in global form, the principal amount of
such Note in global form shall, in accordance with the standing procedures
and instructions existing between the Depositary and the Custodian, be
appropriately reduced or increased, as the case may be, and an endorsement
shall be made on such Note in global form, by the Trustee or the Custodian,
at the direction of the Trustee, to reflect such reduction or increase.
(e) Until three (3) years after the original issuance date of any
Note, any stock certificate representing Common Stock issued upon
conversion of such Note shall bear a legend in substantially the following
form, unless such Common Stock has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and
which continues to be effective at the time of such transfer) or such
Common Stock has been issued upon conversion of Notes that have been
transferred pursuant to a registration statement that has been declared
effective under the Securities Act, or unless otherwise agreed by the
Company in writing with written notice thereof to the transfer agent:
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THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT, UNTIL THE
EXPIRATION OF THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE UPON
THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED,
(1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK
EVIDENCED HEREBY EXCEPT (A) TO TELXON CORPORATION OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN
COMPLIANCE WITH RULE 144A, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO SOCIETY NATIONAL BANK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE)), (D) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), (2) PRIOR TO
SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE),
IT WILL FURNISH SOCIETY NATIONAL BANK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE
COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER THAN
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A TRANSFER PURSUANT TO CLAUSE 1(F) ABOVE) A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT
TO CLAUSE 1(E) OR CLAUSE 1(F) ABOVE OR THE EXPIRATION OF THREE YEARS
FROM THE ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH
THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED OR UPON THE EARLIER
SATISFACTION OF SOCIETY NATIONAL BANK, AS TRANSFER AGENT (OR A
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), THAT THE COMMON STOCK HAS
BEEN OR IS BEING OFFERED AND SOLD IN COMPLIANCE WITH RULE 904 UNDER
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER
THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms may, upon surrender of the
certificates representing such shares of Common Stock for exchange in
accordance with the procedures of the transfer agent for the Common Stock,
be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend
required by this Section 2.5(e).
(f) Any certificate evidencing a Note that has been transferred to an
Affiliate of the Company within three years after the original issuance
date of the Note, as evidenced by a notation on the Assignment Form for
such transfer or in the representation letter delivered in respect thereof,
shall, until three years after the last date on which the Company or any
Affiliate of the Company was an owner of such Note, bear a legend in
substantially the following form, unless otherwise agreed by the Company
(with written notice thereof to the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO TELXON CORPORATION
OR ANY SUBSIDIARY THEREOF, (B) IN A TRANSACTION REGISTERED UNDER THE
SECURITIES ACT OR (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED
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<PAGE> 21
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (2) THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS
LEGEND SHALL BE REMOVED UPON THE TRANSFER OF THE NOTE EVIDENCED HEREBY
OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE PURSUANT TO
THE IMMEDIATELY PRECEDING SENTENCE. IF THE PROPOSED TRANSFER IS
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH
BANK ONE TRUST COMPANY, N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any stock certificate representing Common Stock issued upon conversion
of such Note shall also bear a legend in substantially the form indicated
above, unless otherwise agreed by the Company (with written notice thereof
to the Trustee).
(g) Notwithstanding any provision of Section 2.5 to the contrary, in
the event Rule 144(k) as promulgated under the Securities Act (or any
successor rule) is amended to shorten the three-year period under Rule
144(k) (or the corresponding period under any successor rule), then in that
event, from and after receipt by the Trustee of the Officers' Certificate
and Opinion of Counsel provided for in this Section 2.5(g), (i) the
references in the first sentence of the second paragraph of Section 2.5(d)
to "three (3) years" and in the restrictive legend set forth in such
paragraph to "THREE YEARS" shall be deemed for all purposes hereof to be
references to such shorter period, (ii) the references in the first
paragraph of Section 2.5(e) to "three (3) years" and in the restrictive
legend set forth in such paragraph to "THREE YEARS" shall be deemed for all
purposes hereof to be references to such shorter period and (iii) all
corresponding references in the Notes and the restrictive legends thereon
(including the restrictive legends on any Common Stock issuable upon
conversion of the Notes) shall be deemed for all purposes hereof to be
references to such shorter period, provided that such changes shall not
become effective if they are otherwise prohibited by, or would otherwise
cause a violation of, the then-applicable federal securities laws. As soon
as practicable after the Company has knowledge of the effectiveness of any
such amendment to shorten the three-year period under Rule 144(k) (or the
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corresponding period under any successor rule), unless such changes would
otherwise be prohibited by, or would otherwise cause a violation of, the
then-applicable securities laws, the Company shall provide to the Trustee
an Officers' Certificate and Opinion of Counsel informing the Trustee of
the effectiveness of such amendment and the effectiveness of the foregoing
changes to Sections 2.5(d) and 2.5(e) and the Notes. This Section 2.5(g)
shall apply to successive amendments to Rule 144(k) (or any successor rule)
shortening the holding period thereunder.
Section 2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case any Note
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request the Trustee or an authenticating
agent appointed by the Trustee shall authenticate and deliver, a new Note,
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Note, or in lieu of and in substitution for the Note so
destroyed, lost or stolen. In every case the applicant for a substituted Note
shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless for any loss, liability, cost or expense caused by or
connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company may
require from the holder of such Note the payment of a sum sufficient to cover
The Company's reasonable out-of-pocket expenses and any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Note which has matured or is about to
mature or has been called for redemption or is about to be converted into Common
Stock shall become mutilated or be destroyed, lost or stolen, the Company may,
instead of issuing a substitute Note, pay or authorize the payment of or convert
or authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such payment
or conversion shall furnish to the Company, to the Trustee and, if applicable,
to such authenticating agent such security or indemnity as may be required by
them to save each of them harmless for any loss, liability, cost or expense
caused by or connected with such substitution, and, in case of destruction, loss
or theft, evidence satisfactory to the Company, the Trustee and, if applicable,
any paying agent or conversion agent of the destruction, loss or theft of such
Note and of the ownership thereof.
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Every substitute Note issued pursuant to the provisions of this Section 2.6
by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes 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 or conversion of negotiable
instruments or other securities without their surrender.
Section 2.7 TEMPORARY NOTES. Pending the preparation of definitive Notes,
the Company may execute and the Trustee or an authenticating agent appointed by
the Trustee shall, upon the written request of the Company, authenticate and
deliver temporary Notes (printed or lithographed). Temporary Notes shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Notes, but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company. Every
such temporary Note shall be executed by the Company and authenticated by the
Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Notes. Without unreasonable delay the Company will execute and deliver to the
Trustee or such authenticating agent definitive Notes (other than in the case of
Notes in global form) and thereupon any or all temporary Notes (other than any
such Note in global form) may be surrendered in exchange therefor, at each
office or agency maintained by the Company pursuant to Section 5.2 and the
Trustee or such authenticating agent shall authenticate and deliver in exchange
for such temporary Notes an equal aggregate principal amount of definitive
Notes. Such exchange shall be made by the Company at its own expense and
without any charge therefor. Until so exchanged, the temporary Notes shall in
all respects be entitled to the same benefits and subject to the same
limitations under this Indenture as definitive Notes authenticated and delivered
hereunder.
Section 2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for
the purpose of payment, redemption, conversion, exchange or registration of
transfer, shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it (provided that in the case of any Note or portion thereof
submitted for repurchase, the Trustee shall not cancel such Note or portion
thereof until after the Repurchase Date), or, if surrendered to the Trustee,
shall be promptly canceled by it, and no Notes shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee shall destroy canceled Notes (unless the Company directs it to do
otherwise) and, after such destruction, shall, if requested by the Company,
deliver a certificate of such destruction to
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the Company. If the Company shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Notes unless and until the same are delivered to the
Trustee for cancellation.
ARTICLE III
REDEMPTION OF NOTES
Section 3.1 REDEMPTION PRICES. The Company may not redeem the Notes prior
to January 5, 1999. At any time on or after January 5, 1999, the Company may,
at its option, redeem all or from time to time any part of the Notes on any date
prior to maturity, upon notice as set forth in Section 3.2, and at the optional
redemption prices set forth in the form of Note attached as Exhibit A hereto,
together with accrued interest to, but excluding, the date fixed for redemption.
Section 3.2 NOTICE OF REDEMPTION: SELECTION OF NOTES. In case the Company
shall desire to exercise the right to redeem all or, as the case may be, any
part of the Notes pursuant to Section 3.1, it shall fix a date for redemption
and it or, at its request, the Trustee in the name of and at the expense of the
Company, shall mail or cause to be mailed a notice of such redemption at least
30 and not more than 60 days prior to the date fixed for redemption to the
holders of Notes so to be redeemed as a whole or in part at their most recent
available addresses as the same appear on the Note register (provided that if
the Company shall give such notice, it shall also give written notice, and
written notice of the Notes to be redeemed, to the Trustee). Such mailing shall
be by first class mail. The notice if mailed in the manner herein provided
shall be conclusively presumed to have been duly given, whether or not the
holder receives such notice. In any case, failure to give such notice by mail
or any defect in the notice to the holder of any Note designated for redemption
as a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Note.
Each such notice of redemption shall specify the aggregate principal amount
of Notes to be redeemed, the date fixed for redemption, the redemption price at
which Notes are to be redeemed, the place or places of payment, that payment
will be made upon presentation and surrender of such Notes, that interest
accrued to the date fixed for redemption will be paid as specified in said
notice, and that on and after said date interest thereon or on the portion
thereof to be redeemed will cease to accrue. Such notice shall also state the
current Conversion Price and the date on which the right to convert such Notes
or portions thereof into Common Stock will expire. If fewer than all the Notes
are to be redeemed, the notice of redemption shall identify the Notes to be
redeemed. In case any Note is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date
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fixed for redemption, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued.
On or prior to the redemption date specified in the notice of redemption
given as provided in this Section 3.2, the Company will deposit with the Trustee
or with one or more paying agents (or, if the Company is acting as its own
paying agent, set aside, segregate and hold in trust as provided in Section 5.4)
an amount of money sufficient to redeem on the redemption date all the Notes (or
portions thereof) so called for redemption (other than those theretofore
surrendered for conversion into Common Stock) at the appropriate redemption
price, together with accrued interest to, but excluding, the date fixed for
redemption; PROVIDED that if such payment is made on the redemption date it must
be received by the Trustee or paying agent, as the case may be, by 10:00 a.m.
New York City time, on such date. If any Note called for redemption is
converted pursuant hereto, any money deposited with the Trustee or any paying
agent or so segregated and held in trust for the redemption of such Note shall
be paid to the Company upon its written request, or, if then held by the
Company, shall be discharged from such trust. If fewer than all the Notes are
to be redeemed, the Company will give the Trustee written notice in the form of
an Officers' Certificate not fewer than forty-five (45) days (or such shorter
period of time as may be acceptable to the Trustee) prior to the redemption date
as to the aggregate principal amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed (in principal amounts of $1,000 or
integral multiples thereof), by lot. If any Note selected for partial
redemption is converted in part after such selection, the converted portion of
such Note shall be deemed (so far as may be) to be the portion to be selected
for redemption. The Notes (or portions thereof) so selected shall be deemed
duly selected for redemption for all purposes hereof, notwithstanding that any
such Note is converted as a whole or in part before the mailing of the notice of
redemption.
Upon any redemption of less than all Notes, the Company and the Trustee may
(but need not) treat as outstanding any Notes surrendered for conversion during
the period of fifteen (15) days next preceding the mailing of a notice of
redemption and may (but need not) treat as outstanding any Note authenticated
and delivered during such period in exchange for the unconverted portion of any
Note converted in part during such period.
Section 3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the redemption
date and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the
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Company shall default in the payment of such Notes at the redemption price,
together with interest accrued to said date) interest on the Notes or portion
of Notes so called for redemption shall cease to accrue and such Notes shall
cease after the close of business on the Business Day next preceding the date
fixed for redemption to be convertible into Common Stock and, except as
provided in Sections 8.5 and 13.4, to be entitled to any benefit or security
under this Indenture, and the holders thereof shall have no right in respect of
such Notes except the right to receive the redemption price thereof and unpaid
interest to (but excluding) the date fixed for redemption. On presentation and
surrender of such Notes at a place of payment in said notice specified, the
said Notes or the specified portions thereof shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to (but excluding) the date fixed for redemption; PROVIDED that, if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the holder thereof, at
the expense of the Company, a new Note or Notes, of authorized denominations, in
principal amount equal to the unredeemed portion of the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any Notes or
mail any notice of optional redemption during the continuance of a default in
payment of interest or premium on the Notes or of any Event of Default of which,
in the case of any Event of Default other than under Sections 7.1(a) or 7.1(b),
a Responsible Officer of the Trustee has knowledge. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, shall have been paid or duly provided for.
Section 3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection
with any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers or
other purchasers to purchase such Notes by paying to the Trustee in trust for
the Noteholders, on or before the date fixed for redemption, an amount not less
than the applicable redemption price, together with interest accrued to (but
excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article III, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders
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thereof may, at the option of the Company, be deemed, to the fullest extent
permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article XV) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the date fixed for redemption (and the right to convert any such
Notes shall be extended through such time), subject to payment of the above
amount as aforesaid. At the direction of the Company, the Trustee shall hold
and dispose of any such amount paid to it in the same manner as it would monies
deposited with it by the Company for the redemption of Notes. Without the
Trustee's prior written consent, no arrangement between the Company and such
purchasers for the purchase and conversion of any Notes shall increase or
otherwise affect any of the powers, duties, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and hold it harmless against, any loss, liability or expense
arising out of or in connection with any such arrangement for the purchase and
conversion of any Notes between the Company and such purchasers to which the
Trustee has not consented in writing, including the costs and expenses,
including reasonable legal fees, incurred by the Trustee in the defense of any
claim or liability arising out of or in connection with the exercise or
performance of any of its powers, duties, responsibilities or obligations under
this Indenture.
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1 AGREEMENT OF SUBORDINATION. The Company covenants and agrees,
and each holder of Notes issued hereunder by his acceptance thereof likewise
covenants and agrees, that all Notes shall be issued subject to the provisions
of this Article IV; and each Person holding any Note, whether upon original
issue or upon transfer, assignment or exchange thereof, accepts and agrees to be
bound by such provisions.
The payment of the principal of, premium, if any, and interest on all Notes
(including, but not limited to, the redemption price with respect to the Notes
called for redemption in accordance with Section 3.2 or submitted for repurchase
in accordance with Section 16.2, as the case may be, as provided in the
Indenture) issued hereunder shall, to the extent and in the manner hereinafter
set forth, be subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter incurred.
No provision of this Article IV shall prevent the occurrence of any default
or Event of Default hereunder.
Section 4.2 PAYMENTS TO NOTEHOLDERS. No payment shall be made with
respect to the principal of, or premium, if any, or interest on the Notes
(including, but not limited to,
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the redemption price with respect to the Notes to be called for redemption in
accordance with Section 3.2 or submitted for repurchase in accordance with
Section 16.2, as the case may be, as provided in the Indenture), except
payments and distributions made by the Trustee as permitted by the first or
second paragraph of Section 4.5, if:
(i) a default in the payment of principal, premium, interest, rent or
other obligations due on any Senior Indebtedness occurs and is continuing
(or, in the case of Senior Indebtedness for which there is a period of
grace, in the event of such a default that continues beyond the period of
grace, if any, specified in the instrument or lease evidencing such Senior
Indebtedness), unless and until such default shall have been cured or
waived or shall have ceased to exist; or
(ii) a default, other than a payment default, on a Designated Senior
Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Person who may give it pursuant to Section 4.5 hereof.
If the Trustee receives any Payment Blockage Notice pursuant to clause (ii)
above, no subsequent Payment Blockage Notice shall be effective for purposes of
this Section unless and until (A) at least 365 days shall have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice, and (B) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions in respect
of the Notes upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in clause (ii) above, 179 days
pass after notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated,
unless this Article IV otherwise prohibits the payment or distribution at the
time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all
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amounts due or to become due upon all Senior Indebtedness shall first be paid
in full in cash or other payment satisfactory to the holders of such Senior
Indebtedness, or payment thereof in accordance with its terms shall be provided
for in cash or other payment satisfactory to the holders of such Senior
Indebtedness before any payment is made on account of the principal of,
premium, if any, or interest on the Notes (except payments made pursuant to
Article XIII from monies deposited with the Trustee pursuant thereto prior to
commencement of proceedings for such dissolution, winding-up, liquidation or
reorganization); and upon any such dissolution or winding-up or liquidation or
reorganization of the Company or bankruptcy, insolvency, receivership or other
proceeding, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the holders of the Notes or the Trustee would be entitled, except for the
provision of this Article IV, shall (except as aforesaid) be paid by the
Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the holders of the
Notes or by the Trustee under this Indenture if received by them or it,
directly to the holders of Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, or
as otherwise required by law or a court order) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full, in cash or other payment satisfactory to the
holders of such Senior Indebtedness, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness, before
any payment or distribution is made to the holders of the Notes or to the
Trustee.
For purposes of this Article IV, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment, the payment of which is
subordinated at least to the extent provided in this Article IV with respect to
the Notes to the payment of all Senior Indebtedness which may at the time be
outstanding; PROVIDED that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XII shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 4.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article XII.
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In the event of the acceleration of the Notes because of an Event of
Default, no payment or distribution shall be made to the Trustee or any holder
of Notes in respect of the principal of, premium, if any, or interest on the
Notes (including, but not limited to, the redemption price with respect to the
Notes called for redemption in accordance with Section 3.2 or submitted for
repurchase in accordance with Section 16.2, as the case may be, as provided in
the Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, until all Senior
Indebtedness has been paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness or such acceleration is rescinded in accordance
with the terms of this Indenture. If payment of the Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Indebtedness of the acceleration.
In the event that, notwithstanding the foregoing provisions, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities (including, without limitation, by way of setoff or
otherwise), prohibited by the foregoing, shall be received by the Trustee or the
holders of the Notes before all Senior Indebtedness is paid in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness, or
provision is made for such payment thereof in accordance with its terms in cash
or other payment satisfactory to the holders of such Senior Indebtedness, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 8.6. This Section 4.2 shall be subject to
the further provisions of Section 4.5.
Section 4.3 SUBROGATION OF NOTES. Subject to the payment in full of all
Senior Indebtedness, the rights of the holders of the Notes shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article IV (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Notes are subordinated and is entitled to like rights of
subrogation) 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, premium, if any, and
interest on the Notes shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to
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the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article IV, and no payments pursuant to the provisions of
this Article IV, to or for the benefit of the holders of Senior Indebtedness by
holders of the Notes or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness; and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article IV, which would otherwise have been paid to the
holders of Senior Indebtedness shall be deemed to be a payment by the Company
to or for the account of the Notes. It is understood that the provisions of
this Article IV are and are intended solely for the purposes of defining the
relative rights of the holders of the Notes, on the one hand, and the holders
of the Senior Indebtedness, on the other hand.
Nothing contained in this Article IV or elsewhere in this Indenture or in
the Notes is intended to or shall impair, as among the Company, its creditors
other than the holders of Senior Indebtedness, and the holders of the Notes, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the holders of
the Notes and creditors of the Company other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or the
holder of any Note from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article IV 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 IV, the Trustee, subject to the provisions of Section 8.1, and the
holders of the Notes shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which such bankruptcy, dissolution,
winding-up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, delivered to the Trustee or
to the holders of the Notes, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article IV.
Section 4.4 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of a Note
by the holder's acceptance thereof authorizes and directs the Trustee on the
holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article IV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof
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of debt in the form required in any proceeding referred to in the third
paragraph of Section 7.2 hereof at least 30 days before the expiration of the
time to file such claim, the holders of any Senior Indebtedness or their
representatives are hereby authorized to file an appropriate claim for and on
behalf of the holders of the Notes.
Section 4.5 NOTICE TO TRUSTEE. The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company which would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article IV.
Notwithstanding the provisions of this Article IV or any other provision of this
Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of monies to or by the
Trustee in respect of the Notes pursuant to the provisions of this Article IV,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company or a
holder or holders of Senior Indebtedness or from any trustee thereof; and before
the receipt of any such written notice, the Trustee, subject to the provisions
of Section 8.1, shall be entitled in all respects to assume that no such facts
exist; PROVIDED that if on a date not fewer than one Business Day prior to the
date upon which by the terms hereof any such monies may become payable for any
purpose (including, without limitation, the payment of the principal of, or
premium, if any, or interest on any Note) the Trustee shall not have received,
with respect to such monies, the notice provided for in this Section 4.5, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received, and shall not be affected by any
notice to the contrary which may be received by it on or after such prior date.
Notwithstanding anything in this Article IV to the contrary, nothing shall
prevent (a) any payment by the Company or the Trustee to the Trustee or
Noteholders of amounts in connection with a redemption of Notes (including a
redemption pursuant to Section 3.5) if (i) notice of such redemption has been
given pursuant to Article III prior to the receipt by the Trustee of written
notice as aforesaid, and (ii) such notice of redemption is given not earlier
than sixty (60) days before the redemption date or (b) any payment by the
Trustee to the Noteholders of monies deposited with it pursuant to Section 13.1,
and any such payment shall not be subject to the provisions of Section 4.1 or
4.2.
The Trustee, subject to the provisions of Section 8.1, shall be entitled to
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Indebtedness (or a trustee on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article IV, the Trustee may
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request such person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such person, the extent
to which such person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such person under this Article
IV, and if such evidence is not furnished the Trustee may defer any payment to
such person pending judicial determination as to the right of such person to
receive such payment.
Section 4.6 TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. The Trustee in its
individual capacity shall be entitled to all the rights set forth in this
Article IV in respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and nothing in Section
8.13 or elsewhere in this Indenture shall deprive the Trustee of any of its
rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee undertakes
to perform or to observe only such of its covenants and obligations as are
specifically set forth in this Article IV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness if it shall pay over or deliver to holders of Notes, the
Company or any other person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article IV or otherwise.
Section 4.7 NO IMPAIRMENT OF SUBORDINATION. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or otherwise be charged with.
Section 4.8 CERTAIN CONVERSIONS DEEMED PAYMENT. For the purposes of this
Article IV only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article XV shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest on Notes or on account of the purchase or other acquisition
of Notes, and (2) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion of a Note shall be
deemed to constitute payment on account of the principal of such Note. For the
purposes of this Section 4.8, the term "junior securities" means (a) shares of
any stock of any class of the Company, or (b) securities of the Company which
are subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Notes are so
subordinated as provided in this Article. Nothing contained
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in this Article IV or elsewhere in this Indenture or in the Notes is intended
to or shall impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Noteholders, the right, which is absolute and
unconditional, of the Holder of any Note to convert such Note in accordance
with Article XV.
Section 4.9 ARTICLE APPLICABLE TO PAYING AGENTS. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article in addition to or in
place of the Trustee; PROVIDED, HOWEVER, that the first paragraph of Section 4.5
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as paying agent.
Section 4.10 SENIOR INDEBTEDNESS ENTITLED TO RELY. The holders of Senior
Indebtedness (including, without limitation, Designated Senior Indebtedness)
shall have the right to rely upon this Article IV, and no amendment or
modification of the provisions contained herein shall diminish the rights of
such holders unless such holders shall have agreed in writing thereto.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual
interest payment date may be paid by mailing checks for the interest payable to
or upon the written order of the holders of Notes entitled thereto as they shall
appear on the registry books of the Company; provided, that; with respect to any
holder of Notes with an aggregate principal amount equal to or in excess of
$5,000,000, at the request of such holder in writing to the Company (who shall
then furnish notice to such effect to the Trustee), interest on such holder's
Notes shall be paid by wire transfer (the cost of such wire transfer to be borne
by the Company) in immediately available funds in accordance with the wire
transfer instructions supplied by such holder to the Trustee and paying agent
(if different from the Trustee).
Section 5.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in
the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in
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respect of the Notes and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency not designated or appointed by the Trustee.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office or agency of the Trustee in the Borough of Manhattan,
The City of New York.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York, for such purposes. The Company will give prompt written notice to
any such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar, Custodian and conversion agent, and the Corporate Trust Office of the
Trustee and the agency of the Trustee in the Borough of Manhattan, The City of
New York (which shall initially be First Chicago Trust Company of New York,
located at 14 Wall Street, 8th Floor, New York, New York, 10005), one such
office or agency of the Company for each of the aforesaid purposes.
So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notices set forth in Section 8.10(a) and the third
paragraph of Section 8.11.
Section 5.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, 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 5.4:
(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
Notes (whether such sums have been paid to it by the Company or by any
other obligor on the Notes) in trust for the benefit of the holders of
the Notes;
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(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of
the principal of and premium, if any, or interest on the Notes when
the same shall be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the
Trustee all sums so held in trust.
The Company shall, on or before each due date of the principal of,
premium, if any, or interest on the Notes, deposit with the paying agent a
sum sufficient to pay such principal, premium, if any, or interest, and
(unless such paying agent is the Trustee) the Company will promptly notify
the Trustee of any failure to take such action; provided that if such
deposit is made on the due date, such deposit shall be received by the
paying agent by 10:00 a.m. New York City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of, premium, if any, or interest on
the Notes, set aside, segregate and hold in trust for the benefit of the
holders of the Notes a sum sufficient to pay such principal, premium, if
any, or interest so becoming due and will notify the Trustee of any failure
to take such action and of any failure by the Company (or any other obligor
under the Notes) to make any payment of the principal of, premium, if any,
or interest on the Notes when the same shall become due and payable.
(c) Anything in this Section 5.4 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 the Company or any paying
agent hereunder as required by this Section 5.4, such sums to be held by
the Trustee upon the trusts herein contained and upon such payment by the
Company or any paying agent to the Trustee, the Company or such paying
agent shall be released from all further liability with respect to such
sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
Section 5.5 CORPORATE EXISTENCE. Subject to Article XII, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence.
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Section 5.6 RULE 144A INFORMATION REQUIREMENT. During the period
beginning on the latest date of the original issuance of the Notes and ending on
the date that is three years from such date, the Company covenants and agrees
that it shall, during any period in which it is not subject to Section 13 or
15(d) under the Exchange Act, make available to any holder or beneficial holder
of Notes or any Common Stock issued upon conversion thereof which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of Notes or such Common Stock from such holder or beneficial holder,
the information required pursuant to Rule 144A(d)(4) under the Securities Act
upon the request of any holder or beneficial holder of the Notes or such Common
Stock and it will take such further action as any holder or beneficial holder of
such Notes or such Common Stock may reasonably request, all to the extent
required from time to time to enable such holder or beneficial holder to sell
its Notes or Common Stock without registration under the Securities Act within
the limitation of the exemption provided by Rule 144A, as such Rule may be
amended from time to time. Upon the request of any holder or any beneficial
holder of the Notes or such Common Stock, the Company will deliver to such
holder a written statement as to whether it has complied with such requirements.
Section 5.7 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter
in force, or which may affect the covenants or the performance of this Indenture
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
Section 5.8 RESALE OF CERTAIN NOTES. During the period beginning on the
original issuance date of the Notes and ending on the date that is three years
from such date, the Company will not resell, and will use its reasonable efforts
to prevent any of its Affiliates from reselling, (x) any Notes which constitute
"restricted securities" under Rule 144 and (y) any securities into which such
Notes have been converted under this Indenture which constitute "restricted
securities" under Rule 144.
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Section 5.9 COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on March 31, 1996) an Officers'
Certificate stating whether or not the signers know of any Event of Default that
occurred during such period. If such signers know of any Event of Default that
occurred during such period, such Officers' Certificate shall describe the Event
of Default and its status.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY
THE COMPANY AND THE TRUSTEE
Section 6.1 NOTEHOLDERS' LISTS. The Company covenants and agrees that it
will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each December 15 and June 15 in each year beginning
with June 15, 1996, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished so long as the Trustee is acting as Note registrar.
Section 6.2 PRESERVATION AND DISCLOSURE OF LISTS.
(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 Notes contained in the most recent list furnished to it as provided in
Section 6.1 or maintained by the Trustee in its capacity as Note registrar,
if so acting. The Trustee may destroy any list furnished to it as provided
in Section 6.1 upon receipt of a new list so furnished.
(b) The rights of Noteholders to communicate with other holders of
Notes with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as
provided by the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of
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information as to names and addresses of holders of Notes made pursuant to
the Trust Indenture Act.
Section 6.3 REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the year
1996, the Trustee shall transmit to holders of Notes such reports dated as
of May 15 of the year in which such reports are made concerning the Trustee
and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of such report shall, at the time of such transmission to
holders of Notes, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Notes are listed and with the
Company. The Company will notify the Trustee within a reasonable time when
the Notes are listed on any stock exchange and automated quotation system.
Section 6.4 REPORTS BY COMPANY. The Company shall file with the Trustee
(and the Commission if at any time after the Indenture becomes qualified under
the Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act; PROVIDED that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act shall be filed with the Trustee within 15 days after the same is so
required to be filed with the Commission.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON AN EVENT OF DEFAULT
Section 7.1 EVENTS OF DEFAULT. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest (including,
without limitation, any interest payable as liquidated damages under the
Registration Rights Agreement) upon any of the Notes as and when the same
shall become due and payable, and continuance of such default for a period
of thirty (30) days, whether or not such payment is permitted under Article
IV hereof; or
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(b) default in the payment of the principal of and premium, if any, on
any of the Notes as and when the same shall become due and payable either
at maturity or in connection with any redemption pursuant to Article III or
repurchase pursuant to Article XVI, by acceleration or otherwise, whether
or not such payment is permitted under Article IV hereof; or
(c) an event of default under the Indenture, dated June 1, 1987,
between the Company and Society National Bank, as successor by merger to
AmeriTrust Company National Association, that results in the Company's 7
1/2% Convertible Subordinated Debentures due 2012 (the "Debentures")
becoming due and payable prior to the scheduled maturity of the Debentures.
(d) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Notes or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is elsewhere in this Section 7.1
specifically dealt with) continued for a period of sixty (60) days after
the date on which written notice of such failure, requiring the Company to
remedy the same, shall have been given to the Company by the Trustee, or to
the Company and a Responsible Officer of the Trustee by the holders of at
least 25 percent in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4; or
(e) the Company shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due; or
(f) an involuntary case or other proceeding shall be commenced against
the Company seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of ninety
(90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(e) or (f)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than 25 percent in aggregate
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principal amount of the Notes then outstanding hereunder determined in
accordance with Section 9.4, by notice in writing to the Company (and to the
Trustee if given by Noteholders), may declare the principal of all the Notes
and the interest accrued thereon to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due and
payable, anything in this Indenture or in the Notes contained to the contrary
notwithstanding. In the event a declaration of acceleration because of an
Event of Default specified in Section 7.1(c) hereof has occurred and is
continuing, such declaration of acceleration shall be automatically annulled if
such default is cured or waived or the holders of the Debentures have rescinded
their declaration of acceleration in respect of such indebtedness within 60
days thereof and the Trustee has received written notice of such cure, waiver
or rescission and no other Event of Default described in Section 71(c) hereof
has occurred that has not been cured or waived within 60 days of the
declaration of such acceleration in respect thereof. If an Event of Default
specified in Section 7.1(e) or (f) occurs, the principal of all the Notes and
the interest accrued thereon shall be immediately and automatically due and
payable without necessity of further action. This provision, however, is
subject to the conditions that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the monies 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 Notes and
the principal of and premium, if any, on any and all Notes which shall have
become due otherwise than by acceleration (with interest on overdue
installments of interest (to the extent that payment of such interest is
enforceable under applicable law) and on such principal and premium, if any, at
the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 8.6, and if any and all defaults
under this Indenture, other than the nonpayment of principal of and premium, if
any, and accrued interest on Notes which shall have become due by acceleration,
shall have been cured or waived pursuant to Section 7.7 -- then and in every
such case the holders of a majority in aggregate principal amount of the Notes
then outstanding, by written notice to the Company and to the Trustee, may
waive all defaults or Events of Default 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 Event of Default, or shall
impair any right consequent thereon. The Company shall notify a Responsible
Officer of the Trustee, promptly upon becoming aware thereof, of any Event of
Default.
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 waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes, and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes, and the Trustee shall continue as
though no such proceeding had been taken.
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Section 7.2 PAYMENTS OF NOTES ON DEFAULT: SUIT THEREFOR. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Notes as and when the same shall become
due and payable, and such default shall have continued for a period of thirty
(30) days, or (b) in case default shall be made in the payment of the principal
of or premium, if any, on any of the Notes as and when the same shall have
become due and payable, whether at maturity of the Notes or in connection with
any redemption, by or under this Indenture declaration or otherwise -- then,
upon demand of the Trustee, the Company will pay to the Trustee, for the benefit
of the holders of the Notes, the whole amount that then shall have become due
and payable on all such Notes 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 (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest at the rate borne by
the Notes; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including reasonable compensation
to the Trustee, its agents, attorneys and counsel, and any expenses or
liabilities incurred by the Trustee hereunder other than through its negligence
or bad faith. Until such demand by the Trustee, the Company may pay the
principal of and premium, if any, and interest on the Notes to the registered
holders, whether or not the Notes are overdue.
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 on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under Title
11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, 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 Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
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as may be necessary or advisable in order to have the claims of the Trustee and
of the Noteholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Notes, its or their creditors, or its or their
property, and to collect and receive any monies or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of any amounts due the Trustee under Section 8.6; and any receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, custodian or similar
official is hereby authorized by each of the Noteholders to make such payments
to the Trustee, and, in the event that the Trustee shall consent to the making
of such payments directly to the Noteholders, to pay to the Trustee any amount
due it for reasonable compensation, expenses, advances and disbursements,
including counsel fees incurred by it up to the date of such distribution. To
the extent that such payment of reasonable compensation, expenses, advances and
disbursements 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, monies, securities and other
property which the holders of the Notes 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 Notes, may be enforced by the Trustee without the possession of any
of the Notes, or the production thereof on any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party) the Trustee shall be held to represent all the holders of the Notes,
and it shall not be necessary to make any holders of the Notes parties to any
such proceedings.
Section 7.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies
collected by the Trustee pursuant to this Article VII shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section
8.6;
Second: Subject to the provisions of Article IV, in case the
principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on the Notes in default in the order of the
maturity of the installments of such interest, with interest (to the extent
that such interest has been collected by
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the Trustee) upon the overdue installments of interest at the rate borne by
the Notes, such payments to be made ratably to the persons entitled
thereto;
Third: Subject to the provisions of Article IV, in case the principal
of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid, to the payment of the whole amount then owing and
unpaid upon the Notes for principal and premium, if any, and interest, with
interest on the overdue principal and premium, if any, and (to the extent
that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Notes; and in case such
monies shall be insufficient to pay in full the whole amounts so due and
unpaid upon the Notes, then to the payment of such principal and premium,
if any, 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 any installment of interest over any other installment of
interest, or of any Note over any other Note, ratably to the aggregate of
such principal and premium, if any, and accrued and unpaid interest; and
Fourth: Subject to the provisions of Article IV, to the payment of
the remainder, if any, to the Company or any other person lawfully entitled
thereto.
Section 7.4 PROCEEDINGS BY NOTEHOLDER. No holder of any Note shall have
any right by virtue of 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, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than 25 percent in aggregate
principal amount of the Notes then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for sixty (60) days after its
receipt of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the Trustee
pursuant to Section 7.7; it being understood and intended, and being expressly
covenanted by the taker and holder of every Note with every other taker and
holder and the Trustee, that no one or more holders of Notes shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other holder of
Notes, 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
Notes (except as otherwise provided herein). For the protection and enforcement
of this
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Section 7.4, each and every Noteholder and the Trustee shall be entitled to
such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of and premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, his rights of
conversion as provided herein.
Section 7.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default 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.
Section 7.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in
Section 2.6, all powers and remedies given by this Article VII to the Trustee or
to the Noteholders shall, to the extent permitted by law, be deemed cumulative
and not exclusive of any thereof or of any other powers and remedies available
to the Trustee or the holders of the Notes, 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 Notes to exercise any right or power accruing
upon any default or Event of 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 any acquiescence therein; and, subject to the provisions of Section
7.4, every power and remedy given by this Article VII or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF
NOTEHOLDERS. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 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
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(a) such direction shall not be in conflict with any rule of law or with this
Indenture, and (b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction. The holders of a
majority in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 9.4 may on behalf of the holders of all
of the Notes waive any past default or Event of Default hereunder and its
consequences except (i) a default in the payment of interest or premium, if
any, on, or the principal of, the Notes, (ii) a failure by the Company to
convert any Notes into Common Stock, (iii) a default in the payment of
redemption price pursuant to Article III or (iv) a default in respect of a
covenant or provisions hereof which under Article XI cannot be modified or
amended without the consent of the holders of all Notes then outstanding. Upon
any such waiver the Company, the Trustee and the holders of the Notes shall be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by this Section 7.7, said default
or Event of Default shall for all purposes of the Notes and this Indenture be
deemed to have been cured and to be not continuing; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
Section 7.8 NOTICE OF DEFAULTS. The Trustee shall, within ninety (90)
days after it has knowledge of the occurrence of a default, mail to all
Noteholders, as the names and addresses of such holders appear upon the Note
register, notice of all defaults known to a Responsible Officer, unless such
defaults shall have been cured or waived before the giving of such notice; and
PROVIDED that, except in the case of default in the payment of the principal of,
or premium, if any, or interest on any of the Notes, the Trustee shall be
protected in withholding such notice if and so long as a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the Noteholders.
Section 7.9 UNDERTAKING TO PAY COSTS. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
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; PROVIDED that the provisions of this Section 7.9 (to the extent
permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or group of Noteholders, holding in the
aggregate more than ten percent in principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4, or to any suit instituted
by any Noteholder for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note
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on or after the due date expressed in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the provisions
of Article XV.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE. The Trustee, prior to
the occurrence of an Event of Default and after the curing 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, except 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
Trust Indenture Act, and the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Indenture and no implied covenants or obligations shall
be read into this Indenture and the Trust Indenture Act against the
Trustee; and
(2) in the absence of bad faith and willful misconduct on the
part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture; but, in the case
of any such certificates or opinions which by any provisions hereof
are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether 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 the
Trustee was negligent in ascertaining the pertinent facts;
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(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the holders of not less than a majority in principal amount of the Notes
at the time outstanding determined as provided in Section 9.4 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; and
(d) whether or not therein provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this
Section.
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 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 8.2 RELIANCE ON DOCUMENTS, OPINIONS. ETC. Except as otherwise
provided in Section 8.1:
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon or other paper or
document believed by it in good faith 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 Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and
any resolution of the Board of Directors 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 any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith and in
accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
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(e) 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, direction, consent, order,
bond, debenture or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney; 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 expenses or liability as a condition to so
proceeding; the reasonable expenses of every such examination shall be paid
by the Company or, if paid by the Trustee or any predecessor Trustee, shall
be repaid by the Company upon demand; and
(f) 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 by it with due
care hereunder.
Section 8.3 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
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
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN
NOTES. The Trustee, any paying agent, any conversion agent or Note registrar,
in its individual or any other capacity, may become the owner or pledgee of
Notes with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note registrar.
Section 8.5 MONIES TO BE HELD IN TRUST. Subject to the provisions of
Section 13.4, all monies received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received.
Money held by the Trustee in trust hereunder 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 money received by it hereunder except as may be
agreed from time to time by the Company and the Trustee.
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Section 8.6 COMPENSATION AND EXPENSES OF TRUSTEE. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust), and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of 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, willful misconduct, recklessness or
bad faith. The Company also covenants to indemnify the Trustee in any capacity
under this Indenture and its agents and any authenticating agent for, and to
hold them harmless against, any loss, liability or expense incurred without
negligence, willful misconduct, recklessness, or bad faith on the part of the
Trustee or such agent or authenticating agent, as the case may be, and arising
out of or in connection with the acceptance or administration of this trust or
in any other capacity hereunder, including the reasonable costs and expenses of
defending themselves against any claim of liability in the premises, PROVIDED
that (i) each of the Trustee or such agent or authenticating agent, as the case
may be, shall notify the Company promptly of any claim or liability asserted
against such party for which it may seek indemnification, (ii) the Company shall
defend such claim and each of the Trustee, such agent or authenticating agent,
as the case may be, shall cooperate with the Company's defense of such claim or
liability, (iii) the Trustee, such agent and authenticating agent may hire
separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel, but (A) the Company will not be required to pay such fees and
expenses if it assumes such parties' defense and there is no conflict of
interest between the Company and such parties in connection with such defense
and (B) the Company shall not be liable, in connection with any such claim or
laibility or substantially similar or related claims or liabilities, at any
time, for the fees and expenses of more than one separate firm of attorneys (in
addition to local counsel). The Company need not pay for any settlement made
without its writen consent. The obligations of the Company under this Section
8.6 to compensate or indemnify the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall be secured by a lien prior to
that of the Notes upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the benefit of the holders of particular
Notes. The obligation of the Company under this Section shall survive the
satisfaction and discharge of this Indenture.
When the Trustee and its agents and any authenticating agent incur expenses
or render services after an Event of Default specified in Section 7.1(e) or (f)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any bankruptcy, insolvency or
similar laws.
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Section 8.7 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise
provided in Section 8.1, 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 or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness,
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.
Section 8.8 CONFLICTING INTERESTS OF TRUSTEE. If the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either eliminate such interest or resign, to the extent and in
the manner provided by, and subject to the provisions of, the Trust Indenture
Act and this Indenture.
Section 8.9 ELIGIBILITY OF TRUSTEE. There shall at all times be a Trustee
hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has, together with its parent, a combined
capital and surplus of at least $50,000,000. If such person publishes reports
of condition at least annually, pursuant to law or to the requirements of any
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 8.10 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company and to the holders of Notes. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument, in duplicate, executed by order of
the Board of Directors, one copy of which instrument shall be delivered to
the resigning Trustee and one copy to the successor trustee. If no
successor trustee shall have been so appointed and have accepted
appointment sixty (60) days after the mailing of such notice of resignation
to the Noteholders, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Noteholder who has been a bona fide holder of a Note or Notes for at least
six months may, subject to the provisions of Section 7.9, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
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(1) the Trustee shall fail to comply with Section 8.8 after
written request therefor by the Company or by any Noteholder who has
been a bona fide holder of a Note or Notes for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; 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, 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 7.9, any Noteholder who has been a bona fide
holder of a Note or Notes for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, remove the Trustee and appoint a
successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless within ten (10) days after notice to the Company of such
nomination the Company objects thereto, in which case the Trustee so
removed or any Noteholder, upon the terms and conditions and otherwise as
in Section 8.10(a) provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 8.11.
Section 8.11 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee
appointed as provided in Section 8.10 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
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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 8.6, execute and deliver an instrument transferring to
such successor trustee all the rights and powers of the trustee so ceasing to
act. Upon reasonable request of any such successor trustee, the Company shall
execute such instruments in writing as necessary for 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
and funds held or collected by such trustee as such, except for funds held in
trust for the benefit of holders of particular Notes, to secure any amounts
then due it pursuant to the provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, either the Company or the former trustee shall mail or cause to be
mailed notice of the succession of such trustee hereunder to the holders of
Notes at their addresses as they shall appear on the Note register. If the
Company or the former Trustee fails to mail such notice within ten (10) days
after acceptance of appointment by the successor trustee, the successor trustee
shall mail or cause such notice to be mailed to the holders of Notes.
Section 8.12 SUCCESSION BY MERGER, ETC. 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, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the trust business of the Trustee, shall be the successor to the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that in the case of any corporation
succeeding to all or substantially all of the trust business of the Trustee such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this
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Indenture provided that the certificate of the Trustee shall have; provided,
however, that the right to adopt the certificate of authentication of any
predecessor Trustee or authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion
or consolidation.
Section 8.13 LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR. If and when
the Trustee shall be or become a creditor of the Company (or any other obligor
upon the Notes), the Trustee shall be subject to the provisions of the Trust
Indenture Act regarding the collection of the claims against the Company (or any
such other obligor).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1 ACTION BY NOTEHOLDERS. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that 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 Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
holders of Notes voting in favor thereof at any meeting of Noteholders duly
called and held in accordance with the provisions of Article X, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the Company or the Trustee solicits the taking
of any action by the holders of the Notes, the Company or the Trustee may fix in
advance of such solicitation, a date as the record date for determining holders
entitled to take such action. The record date shall be not more than fifteen
(15) days prior to the date of commencement of solicitation of such action.
Section 9.2 PROOF OF EXECUTION BY NOTEHOLDERS. Subject to the provisions
of Sections 8.1, 8.2 and 10.5, proof of the execution of any instrument by a
Noteholder or his agent or proxy shall be sufficient if made in accordance with
such reasonable rules and regulations as may be prescribed by the Trustee or in
such manner as shall be satisfactory to the Trustee. The holding of Notes shall
be proved by the registry of such Notes or by a certificate of the Note
registrar.
The record of any Noteholders' meeting shall be proved in the manner
provided in Section 10.6.
Section 9.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the Trustee, any
paying agent, any conversion agent and any Note registrar may deem the person in
whose
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name such Note shall be registered upon the Note register to be, and may treat
him as, the absolute owner of such Note (whether or not such Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of,
premium, if any, and interest on such Note, for conversion of such Note and for
all other purposes; and neither the Company nor the Trustee nor any paying
agent nor any conversion agent nor any Note registrar shall be affected by any
notice to the contrary. All such payments so made to any 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 fully satisfy and discharge the liability for monies
payable upon any such Note.
Section 9.4 COMPANY-OWNED NOTES DISREGARDED. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any other obligor on the Notes shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; PROVIDED that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, consent, waiver or other
action only Notes which a Responsible Officer knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or 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
the 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. Upon request of
the Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Notes, if any, known by the Company to
be owned or held by or for the account of any of the above described persons;
and, subject to Section 8.1, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth and
of the fact that all Notes not listed therein are outstanding for the purpose of
any such determination.
Section 9.5 REVOCATION OF CONSENTS: FUTURE HOLDERS BOUND. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note
shall be conclusive and binding upon such holder and upon all future holders and
owners of such
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Note and of any Notes issued in exchange or substitution therefor, irrespective
of whether any notation in regard thereto is made upon such Note or any Note
issued in exchange or substitution therefor.
ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1 PURPOSE OF MEETINGS. A meeting of Noteholders may be called
at any time and from time to time pursuant to the provisions of this Article X
for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or to give any
directions to the Trustee permitted under this Indenture, or to consent to
the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Noteholders pursuant to any of the provisions of Article VII;
(2) to remove the Trustee and nominate a successor trustee pursuant to
the provisions of Article VIII;
(3) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or on behalf of
the holders of any specified aggregate principal amount of the Notes under
any other provision of this Indenture or under applicable law.
Section 10.2 CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place at a location within 10 miles of the
Corporate Trust Office or the Borough of Manhattan, The City of New York, as the
Trustee shall determine. Notice of every meeting of the Noteholders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting and the establishment of any record date
pursuant to Section 9.1, shall be mailed to holders of Notes at their addresses
as they shall appear on the Note register. Such notice shall also be mailed to
the Company. Such notices shall be mailed not less than twenty (20) nor more
than ninety (90) days prior to the date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are
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either present by duly authorized representatives or have, before or after the
meeting, waived notice.
Section 10.3 CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place at any location within
10 miles of the Corporate Trust Office or the Borough of Manhattan, The City of
New York for such meeting and may call such meeting to take any action
authorized in Section 10.1, by mailing notice thereof as provided in Section
10.2.
Section 10.4 QUALIFICATIONS FOR VOTING. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 10.5 REGULATIONS. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each Noteholder or
proxyholder shall be entitled to one vote for each $1,000 principal amount of
Notes held or represented by him; PROVIDED, HOWEVER, that no vote shall be cast
or counted at any meeting in respect of any Note challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Notes held by
him or instruments in writing as aforesaid duly
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designating him as the proxy to vote on behalf of other Noteholders. Any
meeting of Noteholders duly called pursuant to the provisions of Section 10.2
or 10.3 may be adjourned from time to time by the holders of a majority of the
aggregate principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
Section 10.6 VOTING. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the principal amount of the Notes 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 Noteholders 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 10.2. The record shall show the principal amount of the Notes 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, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 NO DELAY OF RIGHTS BY MEETING. Nothing in this Article X
contained shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders 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 Noteholders under
any of the provisions of this Indenture or of the Notes.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. The
Company, when authorized by the resolutions of the Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
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(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6;
(b) subject to Article IV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;
(c) 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 XII;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; PROVIDED, HOWEVER, that in
respect of any such additional covenant, restriction or condition such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the
case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to
provide for exchangeability of such Notes with the Notes issued hereunder
in fully registered form and to make all appropriate changes for such
purpose;
(f) 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 which shall not
materially adversely affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualifications of this
Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
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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 and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any 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
11.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.2.
Section 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. With
the consent (evidenced as provided in Article IX) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or any supplemental indenture or of modifying in any manner the
rights of the holders of the Notes; PROVIDED, HOWEVER, that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate or
extend the time of payment of interest thereon, or reduce the principal amount
thereof or premium, if any, thereon, or reduce any amount payable on redemption
thereof, or impair the right of any Noteholder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Notes, or modify
the provisions of this Indenture with respect to the subordination of the Notes
in a manner adverse to the Noteholders in any material respect, or change the
obligation of the Company to repurchase any Note upon the happening of a
Repurchase Event in a manner adverse to the holder of Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth herein,
including Section 15.6, in each case without the consent of the holder of each
Note so affected, or (ii) reduce the aforesaid percentage of Notes, the holders
of which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding.
Upon the request of the Company, accompanied by a copy of the resolutions
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Noteholders as aforesaid,
the Trustee shall join with the Company in the execution of such supplemental
indenture 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 is discretion, but shall not be obligated to, enter into such
supplemental indenture.
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It shall not be necessary for the consent of the Noteholders under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 EFFECT OF SUPPLEMENTAL INDENTURE. Any supplemental
indenture executed pursuant to the provisions of this Article XI shall comply
with the Trust Indenture Act, as then in effect; PROVIDED that this Section 11.3
shall not require such supplemental indenture or the Trustee to be qualified
under the Trust Indenture Act prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act, nor shall it constitute any admission
or acknowledgment by any party to such supplemental indenture that any such
qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article XI, 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 Notes 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.
Section 11.4 NOTATION ON NOTES. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article XI may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company or the Trustee
shall so determine, new Notes so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 17.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section 11.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE
FURNISHED TRUSTEE. The Trustee, subject to the provisions of Sections 8.1 and
8.2, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article XI.
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ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1 COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS. Subject to
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other corporation or corporations (whether or not affiliated with the
Company), or successive consolidations or mergers in which the Company or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance or lease (or successive sales, conveyances or leases) of all or
substantially all of the property of the Company, to any other corporation
(whether or not affiliated with the Company), authorized to acquire and operate
the same and which shall be organized under the laws of the United States of
America, any state thereof or the District of Columbia; PROVIDED, that upon any
such consolidation, merger, sale, conveyance or lease, the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes, 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, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the corporation (if other than the Company) formed by such consolidation, or
into which the Company shall have been merged, or by the corporation which shall
have acquired or leased such property, and such supplemental indenture shall
provide for the applicable conversion rights set forth in Section 15.6.
Section 12.2 SUCCESSOR CORPORATION TO BE SUBSTITUTED. In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor corporation, by supplemental indenture, executed and delivered to
the Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of and premium, if any, and interest on all of the
Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party of the first part. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of Telxon Corporation any or all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor corporation
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes which previously shall
have been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes which such successor corporation thereafter shall
cause to be signed and delivered to the Trustee for that purpose. All the Notes
so issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
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terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the person named as the "Company" in the first paragraph
of this Indenture or any successor which shall thereafter have become such in
the manner prescribed in this Article XII may be dissolved, wound up and
liquidated at any time thereafter and such person shall be released from its
liabilities as obligor and maker of the Notes and from its obligations under
this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form (but not in substance) may be made in the Notes
thereafter to be issued as may be appropriate.
Section 12.3 OPINION OF COUNSEL TO BE GIVEN TRUSTEE. The Trustee,
subject to Sections 8.1 and 8.2, shall receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance or lease and any such assumption complies with the provisions
of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1 DISCHARGE OF INDENTURE. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes which have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled, or (b) all the Notes 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 within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes which shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) 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 this Indenture shall
cease to be of further effect (except as to (i) remaining rights of registration
of transfer, substitution and exchange and conversion of Notes, (ii) rights
hereunder of Noteholders to receive payments of principal of and premium, if
any, and interest on, the Notes and the other rights, duties and obligations of
Noteholders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee and (iii) the rights, obligations and immunities of
the Trustee hereunder), and the Trustee, on demand of the
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Company accompanied by an Officers' Certificate and an Opinion of Counsel as
required by Section 17.5 and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture; the Company, however, hereby agreeing to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the
Trustee and to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Notes.
Section 13.2 DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE. Subject to
Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1 and
not in violation of Article IV shall be held in trust for the sole benefit of
the Noteholders and not to be subject to the subordination provisions of Article
IV, and such monies shall be applied by the Trustee to the payment, either
directly or through any paying agent (including the Company if acting as its own
paying agent), to the holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Trustee, of all
sums due and to become due thereon for principal and interest and premium, if
any.
Section 13.3 PAYING AGENT TO REPAY MONIES HELD. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
Section 13.4 RETURN OF UNCLAIMED MONIES. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on demand and all liability of the Trustee shall thereupon cease with
respect to such monies; and the holder of any of the Notes shall thereafter look
only to the Company for any payment which such holder may be entitled to collect
unless an applicable abandoned property law designates another Person.
Section 13.5 REINSTATEMENT. If the Trustee or the paying agent is unable
to apply any money in accordance with Section 13.2 by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
PROVIDED, HOWEVER, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall
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be subrogated to the rights of the holders of such Notes to receive such
payment from the money held by the Trustee or paying agent.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, or director or subsidiary,
as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or 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; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
Section 15.1 RIGHT TO CONVERT. Subject to and upon compliance with the
provisions of this Indenture, the holder of any Note shall have the right, at
his option, at any time after sixty (60) days following the latest date of
original issuance of the Notes and prior to the close of business on January 1,
2003 (except that, with respect to any Note or portion of a Note which shall be
called for redemption, such right shall terminate, except as provided in Section
15.2 or Section 3.4, at the close of business on the Business Day next preceding
the date fixed for redemption of such Note or portion of a Note unless the
Company shall default in the payment due upon redemption thereof or that, with
respect to a Note or portion of a Note submitted for repurchase, such right
shall terminate at the close of business on the Repurchase Date unless the
Company shall default in the payment due on repurchase) to convert the principal
amount of any such Note, or any portion of such principal amount which is $1,000
or an integral multiple thereof, into that number of fully paid and
non-assessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the principal amount of the Note or portion thereof
surrendered for conversion by the Conversion Price in effect at such time, by
surrender of the Note so to be converted in whole or in part in the manner
provided,
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together with any required funds, in Section 15.2. A holder of Notes is not
entitled to any rights of a holder of Common Stock until such holder has
converted his Notes to Common Stock, and only to the extent such Notes are
deemed to have been converted to Common Stock under this Article XV.
Section 15.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK
ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to exercise
the conversion privilege with respect to any Note in definitive form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion in
the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
the portion thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any interest
in a Note in global form, the beneficial holder must complete the appropriate
instruction form for conversion pursuant to the Depository's book-entry
conversion program, deliver by book-entry delivery an interest in such Note in
global form to the Trustee, furnish appropriate endorsements and transfer
documents if required by the Company or the Trustee or conversion agent, and pay
the funds, if any, required by this Section 15.2 and any transfer taxes if
required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such holder at the office or agency maintained by the Company for such purpose
pursuant to Section 5.2, a certificate or certificates for the number of full
shares of Common Stock issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article and a check or cash in
respect of any fractional interest in respect of a share of Common Stock arising
upon such conversion, as provided in Section 15.3. In case any Note of a
denomination greater than $1,000 shall be surrendered for partial conversion,
and subject to Section 2.3, the Company shall execute and the Trustee shall
authenticate and deliver to the holder of the Note so
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surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 15.2 have been satisfied as to such Note (or portion thereof), and
the person in whose name any certificate or certificates for shares of Common
Stock shall be issuable upon such conversion shall be deemed to have become on
said date the holder of record of the shares represented thereby; PROVIDED,
HOWEVER, that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes on
the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date to
the close of business on the Business Day next preceding the following interest
payment date shall (unless such Note or portion thereof being converted shall
have been called for redemption during the period from the close of business on
such record date to the close of business on the Business Day next preceding the
following interest payment date) be accompanied by payment, in New York Clearing
House funds or other funds acceptable to the Company, of an amount equal to the
interest otherwise payable on such interest payment date on the principal amount
being converted; PROVIDED, HOWEVER, that no such payment need be made if there
shall exist at the time of conversion a default in the payment of interest on
the Notes. Except as provided above in this Section 15.2, no adjustment shall
be made for interest accrued on any Note converted or for dividends on any
shares issued upon the conversion of such Note as provided in this Article.
Upon the conversion of an interest in a Note in global form, the Trustee,
or the Custodian at the direction of the Trustee, shall make a notation on such
Note in global form as to the reduction in the principal amount represented
thereby.
Section 15.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market value thereof to
the holder of Notes. The current market value of a share of Common Stock shall
be the
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Closing Price on the first Business Day immediately preceding the day on which
the Notes (or specified portions thereof) are deemed to have been converted.
Section 15.4 CONVERSION PRICE. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article XV.
Section 15.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of
Common Stock, the Conversion Price in effect at the opening of business on
the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day following
the date fixed for such determination. The Company will not pay any
dividend or make any distribution on shares of Common Stock held in the
treasury of the Company. If any dividend or distribution of the type
described in this Section 15.5(a) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such dividend or distribution had not been
declared.
(b) In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them (for a period
expiring within 45 days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for
or purchase shares of Common Stock at a price per share less than the
Current Market Price (as defined below) on the date fixed for determination
of stockholders entitled to receive such rights or warrants, the Conversion
Price shall be adjusted so that the same shall equal the price determined
by multiplying the Conversion Price in effect immediately prior to the date
fixed for determination of stockholders entitled to receive such rights or
warrants by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed for
determination of stockholders entitled to receive such rights and warrants
plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at such Current Market Price,
and of which the nominiator shall be the number of shares of Common Stock
outstanding on the date fixed for determination of stockholders entitled to
receive such rights and
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warrants plus the total number of additional shares of Common Stock offered
for subscription or purchase. Such adjustment shall be successively made
whenever any such rights and warrants are issued, and shall become
effective immediately after the opening of business on the day following
the date fixed for determination of stockholders entitled to receive such
rights or warrants. To the extent that shares of Common Stock are not
delivered after the expiration of such rights or warrants, the Conversion
Price shall be readjusted to the Conversion Price which would then be in
effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. In the event that such rights or warrants
are not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights or warrants
had not been fixed. In determining whether any rights or warrants entitle
the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering
price of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants, the
value of such consideration, if other than cash, to be determined by the
Board of Directors.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 15.5(a)
applies) or evidences of its indebtedness or assets (including securities,
but excluding any rights or warrants referred to in Section 15.5(b), and
excluding any dividend or distribution (x) in connection with the
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, (y) paid exclusively in cash or (z) referred to in Section
15.5(a) (any of the foregoing hereinafter in this Section 15.5(d) called
the "Securities")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Noteholders upon the
conversion of the Notes so that any such holder converting Notes will
receive upon such conversion, in addition to the shares of Common Stock to
which such holder is entitled, the amount and kind of such Securities which
such holder would
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have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(g) for
such distribution of the Securities)), the Conversion Price shall be
reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect on the Record Date with respect
to such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on such Record Date less
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the
Board of Directors) on the Record Date of the portion of the Securities so
distributed applicable to one share of Common Stock and the denominator
shall be the Current Market Price per share of the Common Stock, such
reduction to become effective immediately prior to the opening of business
on the day following such Record Date; PROVIDED, HOWEVER, that in the event
the then fair market value (as so determined) of the portion of the
Securities so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Noteholder shall have the right to receive upon
conversion the amount of Securities such holder would have received had
such holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for purposes
of this Section 15.5(d) by reference to the actual or when issued trading
market for any securities, it must in doing so consider the prices in such
market over the same period used in computing the Current Market Price of
the Common Stock.
Each share of Common Stock issued upon conversion of Notes pursuant to
this Article XV shall be entitled to receive the appropriate number of
Rights, and the certificates representing the Common Stock issued upon such
conversion shall bear such legends, in each case as provided by and subject
to the terms of the Rights Plan as in effect at the time of such conversion
(whether or not such Rights have separated from the Common Stock at the
time of conversion). In the event that the Company implements any new
stockholders' rights plan, as amended, supplemented or modified from time
to time (a "New Rights Plan"), such New Rights Plan shall provide that upon
conversion of the Notes the holders will receive, in addition to the Common
Stock issuable upon such conversion, the rights (whether or not such rights
have separated from Common Stock at the time of the conversion) issuable
pursuant to the New Rights Plan.
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of
the Company's capital stock (either initially or under certain
circumstances), which
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rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of
Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have
been distributed for purposes of this Section 15.5 (and no adjustment to
the Conversion Price under this Section 15.5 will be required) until the
occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under
this Section 15.5(d). If any such right or warrant, including any such
existing rights or warrants distributed prior to the date of this
Indenture, are subject to events, upon the occurrence of which such rights
or warrants become exercisable to purchase different securities, evidences
of indebtedness or other assets, then the date of the occurrence of any and
each such event shall be deemed to be the date of distribution and record
date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without
exercise by any of the holders thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Trigger
Event or other event (of the type described in the preceding sentence) with
respect thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this Section
15.5 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders
thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Trigger
Event, as the case may be, as though it were a cash distribution, equal to
the per share redemption or repurchase price received by a holder or
holders of Common Stock with respect to such rights or warrants (assuming
such holder had retained such rights or warrants), made to all holders of
Common Stock as of the date of such redemption or repurchase, and (2) in
the case of such rights or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Conversion Price
shall be readjusted as if such rights and warrants had not been issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and (b), any
dividend or distribution to which this Section 15.5(d) is applicable that
also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed instead
to be (1) a dividend or distribution of the evidences of indebtedness,
assets or shares of capital stock other than such shares of Common Stock or
rights or warrants (and any Conversion Price reduction required by this
Section 15.5(d) with respect to such dividend or distribution shall then be
made) immediately followed by (2) a dividend or distribution of such shares
of Common Stock or such rights or warrants (and any further Conversion
Price reduction required by Sections 15.5(a) and (b) with respect to such
dividend or distribution shall then be made), except (A) the Record
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Date of such dividend or distribution shall be substituted as "the date
fixed for the determination of stockholders entitled to receive such
dividend or other distribution" and "the date fixed for such determination"
within the meaning of Sections 15.5(a) and (b) and (B) any shares of Common
Stock included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding (x) any quarterly cash
dividend on the Common Stock to the extent the aggregate cash dividend per
share of Common Stock in any fiscal quarter does not exceed the greater of
(A) the amount per share of Common Stock of the next preceding quarterly
cash dividend on the Common Stock to the extent that such preceding
quarterly dividend did not require any adjustment of the Conversion Price
pursuant to this Section 15.5(e) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (B) 3.75% of the arithmetic average
of the Closing Price (determined as set forth in Section 15.5(g)) during
the ten Trading Days (as defined in Section 15.5(g)) immediately prior to
the date of declaration of such dividend, and (y) any dividend or
distribution in connection with the liquidation, dissolution or winding up
of the Company, whether voluntary or involuntary), then, in such case, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such Record Date by a fraction of which the
numerator shall be the Current Market Price of the Common Stock on the
Record Date less the amount of cash so distributed (and not excluded as
provided above) applicable to one share of Common Stock and the denominator
shall be such Current Market Price of the Common Stock, such reduction to
be effective immediately prior to the opening of business on the day
following the Record Date; PROVIDED, HOWEVER, that in the event the portion
of the cash so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Noteholder shall have the right to receive upon
conversion the amount of cash such holder would have received had such
holder converted each Note on the Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such dividend or distribution had not been declared. If any adjustment
is required to be made as set forth in this Section 15.5(e) as a result of
a distribution that is a quarterly dividend, such adjustment shall be based
upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an
adjustment is required to be made as set forth in this Section 15.5(e)
above as a result of a distribution that is not a quarterly dividend, such
adjustment shall be based upon the full amount of the distribution.
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(f) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per
share of Common Stock having a fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described
in a resolution of the Board if Directors) that, as of the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such tender
or exchange offer (as it may be amended) exceeds the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time,
the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the Expiration Time by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding (including any tendered or
exchanged shares) on the Expiration Time multiplied by the Current Market
Price of the Common Stock on the Trading Day next succeeding the Expiration
Time and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
outstanding (less any Purchased Shares) on the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time. In
the event that the Company is obligated to purchase shares pursuant to any
such tender or exchange offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender or exchange
offer had not been made.
(g) For purposes of this Section 15.5, the following terms shall have
the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New
York Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the
average of the closing bid and asked prices of such security on
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the over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors for that purpose, or a price
determined in good faith by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof,
whose determination shall be conclusive.
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question; PROVIDED,
HOWEVER, that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance or distribution or Repurchase Event
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.5(a), (b), (c), (d), (e) or
(f) occurs during such ten consecutive Trading Days, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result
of such other event, (2) if the "ex" date for any event (other than
the issuance, distribution or Repurchase Event requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 15.5(a), (b), (c), (d), (e) or (f) occurs on or
after the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for
each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted
as a result of such other event, and (3) if the "ex" date for the
issuance, distribution or Repurchase Date requiring such computation
is prior to the day in question, after taking into account any
adjustment required pursuant to clause (1) or (2) of this proviso, the
Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for purposes of
Section 15.5(d) or (f), whose determination shall be conclusive and
described in a resolution of the Board of Directors or such duly
authorized committee thereof, as the case may be) of the evidences of
indebtedness, shares of capital stock or assets being distributed
applicable to one share of Common Stock as of the close of business on
the day before such "ex" date. For purposes of any computation under
Section 15.5(f), the Current Market Price of the Common Stock on any
date shall be deemed to be the average of the daily Closing Prices per
share of Common Stock for such day and the next two succeeding Trading
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Days; PROVIDED, HOWEVER, that if the "ex" date for any event (other
than the tender or exchange offer requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and
prior to the day in question, the Closing Price for each Trading Day
on and after the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the reciprocal of the fraction by
which the Conversion Price is so required to be adjusted as a result
of such other event. For purposes of this paragraph, the term "ex"
date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular way on
the relevant exchange or in the relevant market from which the Closing
Price was obtained without the right to receive such issuance or
distribution, (2) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the time at which such subdivision or combination becomes
effective, and (3) when used with respect to any tender or exchange
offer means the first date on which the Common Stock trades regular
way on such exchange or in such market after the Expiration Time of
such offer.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security)
is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of shareholders
entitled to receive such cash, securities or other property (whether
such date is fixed by the Board of Directors or by statute, contract
or otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or
another national security exchange, a day on which the New York Stock
Exchange or another national security exchange is open for business or
(y) if the applicable security is quoted on the Nasdaq National
Market, a day on which trades may be made on thereon or (z) if the
applicable security is not so listed, admitted for trading or quoted,
any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by
law or executive order to close.
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(h) The Company may make such reductions in the Conversion Price, in
addition to those required by Sections 15.5 (a), (b), (c), (d), (e) and (f)
as the Board of Directors considers to be advisable to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time to
time may reduce the Conversion Price by any amount for any period of time
if the period is at least twenty (20) days, the reduction is irrevocable
during the period and the Board of Directors shall have made a
determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail
to holders of record of the Notes a notice of the reduction at least
fifteen (15) days prior to the date the reduced Conversion Price takes
effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.
(i) 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
Section 15.5(i) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Article XV shall be made by the Company and shall be made to the
nearest cent or to the nearest one hundredth of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest. To
the extent the Notes become convertible into cash, assets, property or
securities (other than capital stock of the Company), no adjustment need be
made thereafter as to the cash, assets, property or such securities.
Interest will not accrue on the cash.
(j) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment. Promptly after delivery of such
certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date
on which each adjustment becomes effective and shall mail such notice of
such adjustment of the Conversion Price to the holder of each Note at his
last address appearing on the Note register provided for in Section 2.5 of
this Indenture, within 20 days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of any such
adjustment.
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(k) In any case in which this Section 15.5 provides that an adjustment
shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to the
holder of any Note converted after such record date and before the
occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such holder any amount in cash
in lieu of any fraction pursuant to Section 15.3.
(l) For purposes of this Section 15.5, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury
of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Company.
Section 15.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
or (iii) any sale or conveyance of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive stock, securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock, then the Company or the successor or purchasing corporation, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock and other securities or property or
assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, statutory exchange, sale or conveyance is not the same
for each share of Common Stock in respect of which such rights of election shall
not have been exercised ("nonelecting share")), then for the purposes of this
Section 15.6 the kind and amount of securities, cash or other property
receivable upon such consolidation, merger,
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statutory exchange, sale or conveyance for each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares. Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on the
Note register provided for in Section 2.5 of this Indenture, within twenty (20)
days after execution thereof. Failure to deliver such notice shall not affect
the legality or validity of such supplemental indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, changes, consolidations, mergers, combinations, sales and
conveyances.
If this Section 15.6 applies to any event or occurrence, Section 15.5
shall not apply.
Section 15.7 TAXES ON SHARES ISSUED. The issue of stock certificates
on conversions of Notes shall be made without charge to the converting
Noteholder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of stock in any name other than that
of the holder of any Note 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 15.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK. The Company
shall provide, free from preemptive rights, out of its authorized but unissued
shares or shares held in treasury, sufficient shares of Common Stock to provide
for the conversion of the Notes from time to time as such Notes are presented
for conversion.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free from all taxes, liens and charges with respect to the
issue thereof.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of Notes hereunder require registration with or
approval of any
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governmental authority under any federal or state law before such shares may be
validly issued upon conversion, the Company will in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.
The Company further covenants that if at any time the Common Stock shall
be listed on the Nasdaq National Market or any other national securities
exchange or automated quotation system the Company will, if permitted by the
rules of such exchange or automated quotation system, list and keep listed, so
long as the Common Stock shall be so listed on such exchange or automated
quotation system, all Common Stock issuable upon conversion of the Notes.
Section 15.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent or
calculation 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. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at any time
be issued or delivered upon the conversion of any Note; and the Trustee and any
other conversion agent make no representations with respect thereto. Subject to
the provisions of Section 8.1, neither the Trustee nor any conversion agent
shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 15.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in
the Conversion Price pursuant to Section 15.5; or
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(b) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any
share of any class or any other rights or warrants (other than the
Rights granted pursuant to the Rights Plan, provided that the holders of
the Notes receive the same notice received by all holders of Common
Stock regarding such grant in accordance with the applicable notice
provisions of the Rights Plan); or
(c) of any reclassification or reorganization of the Common Stock
of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value to
no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or of the sale
or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at
least fifteen (15) days prior to the applicable date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution or rights are to be determined, or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or
occur, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up.
ARTICLE XVI
REPURCHASE OF NOTES AT THE
OPTION OF THE HOLDER UPON REPURCHASE EVENT
Section 16.1 RIGHT TO REQUIRE REPURCHASE. In the event that a
Repurchase Event (as hereinafter defined) shall occur, then each holder shall
have the right, at the holder's option, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
holder's Notes, or any portion of the principal amount thereof that is an
integral multiple of U.S.$1,000 (provided that no single Note
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may be repurchased in part unless the portion of the principal amount of such
Note to be outstanding after such repurchase is equal to U.S.$1,000 or integral
multiples of U.S.$1,000), on the date (the "Repurchase Date") that is 30 days
after the date of the Company Notice (as defined in Section 16.2) for cash at a
purchase price equal to 100% of the principal amount plus interest accrued and
unpaid interest to, but excluding, the Repurchase Date (the "Repurchase
Price"); provided that if the Repurchase Date is January 1 or July 1, then the
interest payable on such date shall be paid to the holder of record of the Note
on the next preceding December 15 or June 15, respectively. Whenever in this
Indenture there is a reference, in any context, to the principal of any Note as
of any time, such reference shall be deemed to include reference to the
Repurchase Price payable in respect of such Note to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made.
Section 16.2 NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for
redemption all of the outstanding Notes pursuant to Article III, on or
before the 30th day after the occurrence of a Repurchase Event, the
Company or, at the request of the Company on or before the 15th day
after such occurrence, the Trustee shall give to all holders of Notes
notice (the "Company Notice") of the occurrence of the Repurchase Event
and of the repurchase right set forth herein arising as a result
thereof. The Company shall also deliver a copy of such notice of a
repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a holder must follow to
exercise a repurchase right,
(5) that on the Repurchase Date the Repurchase Price will become due and
payable upon each such Note designated by the holder to be repurchased, and that
interest thereon shall cease to accrue on and after said date,
(6) the Conversion Price, the date on which the right to convert the
Notes to be repurchased will terminate and the places where such Notes may be
surrendered for conversion, and
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(7) the place or places where such Notes are to be surrendered for
payment of the Repurchase Price and accrued interest, if any.
No failure of the Company to give the foregoing notices or defect
therein shall limit any holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Notes.
If any of the foregoing provisions or other provisions of this Article
are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a holder shall deliver to the
Trustee or any paying agent on or before the 30th day after the date of
the Company Notice (i) written notice of the holder's exercise of such
right, which notice shall set forth the name of the holder, the
principal amount of the Notes to be repurchased (and, if any Note is to
repurchased in part, the serial number thereof, the portion of the
principal amount thereof to be repurchased and the name of the Person in
which the portion thereof to remain outstanding after such repurchase is
to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and (ii) the Notes with respect
to which the repurchase right is being exercised.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be
paid to the Trustee or the paying agent the Repurchase Price in cash,
for payment to the holder on the Repurchase Date, together with accrued
and unpaid interest to, but excluding, the Repurchase Date payable with
respect to the Notes as to which the purchase right has been exercised.
(d) If any Note (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of
such Note (or portion thereof, as the case may be) shall, until paid,
bear interest from the Repurchase Date at the rate of 5 3/4% per annum,
and each Note shall remain convertible into Common Stock until the
principal of such Note (or portion thereof, as the case may be) shall
have been paid or duly provided for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver to
the holder of such Note without service charge, a new Note or Notes,
containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for
the unrepurchased portion of the principal of the Note so surrendered.
Section 16.3 CERTAIN DEFINITIONS. For purposes of this Article XVI,
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(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3 promulgated by the Commission pursuant to the Exchange
Act; and
(b) the term "Person" shall include any syndicate or group which
would be deemed to be a "person" under Section 13(d)(3) of the Exchange
Act.
Section 16.4 REPURCHASE EVENT. A "Repurchase Event" shall be deemed
to have occurred at such time as:
(a) any Person, other than the Company, any subsidiary of the
Company, or any employee benefit plan of the Company or any such
subsidiary, is or becomes the beneficial owner, directly or indirectly,
through a purchase or other acquisition transaction or series of
transactions (other than a merger or consolidation involving the
Company), of shares of capital stock of the Company entitling such
Person to exercise in excess of 50% of the total voting power of all
shares of capital stock of the Company entitled to vote generally in the
election of directors; or
(b) there occurs any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another Person into
the Company, or any sale or transfer of all or substantially all of the
assets of the Company to another Person (other than (i) any such
transaction pursuant to which the holders of the Common Stock
immediately prior to such transaction have, directly or indirectly,
shares of capital stock of the continuing or surviving corporation
immediately after such transaction which entitle such holders to
exercise in excess of 50% of the total voting power of all shares of
capital stock of the continuing or surviving corporation entitled to
vote generally in the election of directors and (ii) any merger (1)
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock or (2) which is
effected solely to change the jurisdiction of incorporation of the
Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock);
provided, however, that a Repurchase Event shall not be deemed to have occurred
if either (a) the Closing Price per share of the Common Stock for any five
Trading Days within the period of ten consecutive Trading Days ending
immediately before the Repurchase Event shall equal or exceed 105% of the
Conversion Price in effect on each such trading day, or (b) at least 90% of the
consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Repurchase Event consists of
shares of common stock traded on a national securities exchange or quoted on
the Nasdaq National Market (or which will be so traded or quoted when issued or
exchanged in such connection with such Repurchase Event) and as a result of
such transaction or transactions such Notes become convertible solely into such
common stock.
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ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 17.2 OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 17.3 ADDRESSES FOR NOTICES, ETC. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Notes on the Company shall be deemed
to have been sufficiently given or made, for all purposes, if given or served by
being deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Telxon Corporation, 3330 West Market Street, Akron, Ohio, 44333,
Attention: Chief Financial Officer. Any notice, direction, request or demand
hereunder to or upon the Trustee shall be deemed to have been sufficiently given
or made, for all purposes, if given or served by being deposited postage prepaid
by registered or certified mail in a post office letter box addressed to the
Corporate Trust Office, which office is, at the date as of which this Indenture
is dated, located at 100 E. Broad Street, 8th Floor, Columbus, Ohio, 43271,
Attention: Corporate Trust Division (Telxon Corporation 5 3/4% Convertible
Subordinated Notes due 2003).
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail, postage prepaid, at his address as it appears on the
Note register and shall be sufficiently given to him if so mailed within the
time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 17.4 GOVERNING LAW. This Indenture and each Note shall be
deemed to be a contract made under the laws of New York, and for all purposes
shall be construed in accordance with the laws of New York.
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Section 17.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT;
CERTIFICATES TO TRUSTEE. Upon any application or demand 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.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture shall include (1) a statement that the person making such
certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statement or opinion contained in such certificate or opinion is
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.
Section 17.6 LEGAL HOLIDAYS. In any case where the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 17.7 TRUST INDENTURE ACT. This Indenture is hereby made
subject to, and shall be governed by, the provisions of the Trust Indenture Act
required to be part of and to govern indentures qualified under the Trust
Indenture Act; provided, however, that, unless otherwise required by law,
notwithstanding the foregoing, this Indenture and the Notes issued hereunder
shall not be subject to the provisions of subsections (a)(1), (a)(2), and (a)(3)
of Section 314 of the Trust Indenture Act as now in effect or as hereafter
amended or modified; provided, further, that this Section 17.7 shall not require
this Indenture or the Trustee to be qualified under the Trust Indenture Act
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act, nor shall it constitute any admission or acknowledgment by
any party to such supplemental indenture that any such qualification is required
prior to the time such qualification is in fact required under the terms of the
Trust Indenture Act. If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in an indenture
qualified under the Trust Indenture Act, such required provision shall control.
Section 17.8 NO SECURITY INTEREST CREATED. Nothing in this Indenture
or in the Notes, whether expressed or implied, shall be construed to constitute,
create or perfect a
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<PAGE> 86
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 17.9 BENEFITS OF INDENTURE. Nothing in this Indenture
or in the Notes, whether expressed or implied, shall give to any Person, other
than the parties hereto, any paying agent, any authenticating agent, any Note
registrar and their successors hereunder, the holders of Notes and the holders
of Senior Indebtedness, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
Section 17.10 TABLE OF CONTENTS, HEADINGS, ETC. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of the
terms or provisions hereof.
Section 17.11 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent which shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 16.2, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to the corporate trust business
of any authenticating agent, shall be the successor of the authenticating agent
hereunder, if such successor corporation is otherwise eligible under this
Section 17.11, without the execution or filing of any paper or any further act
on the part of the parties hereto or the authenticating agent or such successor
corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any authenticating agent by giving written
notice of termination to such authenticating agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any authenticating agent shall cease to be eligible under this
Section, the Trustee shall promptly appoint a successor authenticating
-86-
<PAGE> 87
agent (which may be the Trustee), shall give written notice of such appointment
to the Company and shall mail notice of such appointment to all holders of
Notes as the names and addresses of such holders appear on the Note register.
The Trustee agrees to pay to the authenticating agent from time to
time reasonable compensation for its services (to the extent pre-approved by
the Company in writing), and the Trustee shall be entitled to be reimbursed for
such pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section 17.11
shall be applicable to any authenticating agent.
Section 17.12 EXECUTION IN COUNTERPARTS. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Bank One Trust Company, N.A. hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
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<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed, all as of the date first written above.
TELXON CORPORATION
By: /s/ Kenneth W. Haver
----------------------------------------------
Name: Kenneth W. Haver
--------------------------------------------
Title: Senior Vice President, Chief Financial
-------------------------------------------
Officer and Treasurer
BANK ONE TRUST COMPANY, N.A., as Trustee
By: /s/ John Rothrock
----------------------------------------------
Name: John Rothrock
--------------------------------------------
Title: Senior Trust Officer
-------------------------------------------
<PAGE> 1
EXHIBIT 4.5.1
[For global Note only:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY," WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY FOR THE
CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. (OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS,
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES
THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO TELXON
CORPORATION OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO BANK ONE TRUST COMPANY,
N.A., AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN
<PAGE> 2
BE OBTAINED FROM SUCH TRUSTEE OR SUCCESSOR TRUSTEE, AS APPLICABLE), (D)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND
WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER), AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE) A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THE NOTE EVIDENCED HEREBY WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF
SUCH NOTE (OTHER THAN A TRANSFER PURSUANT TO CLAUSE 2(F) ABOVE), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS NOTE TO BANK ONE TRUST COMPANY, N.A.,
AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A
U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO BANK ONE
TRUST COMPANY, N.A. (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), AS TRUSTEE, SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER
OF THIS NOTE EVIDENCED HEREBY PURSUANT TO CLAUSE 2(F) ABOVE OR THE EXPIRATION
OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
-2-
<PAGE> 3
TELXON CORPORATION
5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2003
No. __ CUSIP 879700 AB 8
Telxon Corporation, a corporation duly organized and validly existing under
the laws of the State of Delaware (herein called the "Company"), which term
includes any successor corporation under the Indenture referred to on the
reverse hereof, for value received hereby promises to pay to [for global Note,
insert: CEDE & CO.] or registered assigns, the principal sum of
_______________ ($____________) on January 1, 2003, at the office or agency of
the Company maintained for that purpose in the Borough of Manhattan, The City
of New York, or, at the option of the holder of this Note, at the Corporate
Trust Office, in such coin or currency of the United States of America as at
the time of payment shall be legal tender for the payment of public and private
debts, and to pay interest, semi-annually on January 1 and July 1 of each year,
commencing July 1, 1996, on said principal sum at said office or agency, in
like coin or currency, at the rate per annum of 5 3/4%, from January 1 or July
1, as the case may be, next preceding the date of this Note to which interest
has been paid or duly provided for, unless the date hereof is a date to which
interest has been paid or duly provided for, in which case from the date of
this Note, or unless no interest has been paid or duly provided for on the
Notes, in which case from December 12, 1995, until payment of said principal
sum has been made or duly provided for. Notwithstanding the foregoing, if the
date hereof is after any December 15 or June 15, as the case may be, and before
the following January 1 or July 1, this Note shall bear interest from such
January 1 or July 1; PROVIDED, HOWEVER, that if the Company shall default in
the payment of interest due on such January 1 or July 1, then this Note shall
bear interest from the next preceding January 1 or July 1 to which interest has
been paid or duly provided for or, if no interest has been paid or duly
provided for on such Note, from December 12, 1995. The interest payable on the
Note pursuant to the Indenture on any January 1 or July 1 will be paid to the
person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on the record date, which shall be the December 15 or
June 15 (whether or not a Business Day) next preceding such January 1 or July
1, as provided in the Indenture; PROVIDED that any such interest not punctually
paid or duly provided for shall be payable as provided in the Indenture.
Interest may, at the option of the Company, be paid by check mailed to the
registered address of such person.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions subordinating the
payment of principal of and premium, if any, and interest on the Notes to the
prior payment in full of all Senior Indebtedness, as defined in the Indenture,
and provisions giving the holder of this Note the right to convert this Note
into Common Stock of the Company on the terms and subject to the limitations
referred to on the reverse hereof and as more fully specified in the Indenture.
Such further provisions shall for all purposes have the same effect as though
fully set forth at this place.
-3-
<PAGE> 4
This Note shall be deemed to be a contract made under the laws of the State of
New York, and for all purposes shall be construed in accordance with and
governed by the laws of said State.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed under
its corporate seal.
Dated: December 12, 1995 TELXON CORPORATION
By:
----------------------------------
Attest:
----------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the
within-named Indenture.
BANK ONE TRUST COMPANY, N.A., as Trustee
By:
---------------------------------------------------
Authorized Signatory
By:
---------------------------------------------------
As Authenticating Agent (if different from Trustee)
-4-
<PAGE> 5
[FORM OF REVERSE OF NOTE]
TELXON CORPORATION
5 3/4% CONVERTIBLE SUBORDINATED NOTE DUE 2003
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5 3/4% Convertible Subordinated Notes due 2003 (herein called
the "Notes"), limited to the aggregate principal amount of $86,250,000 all
issued or to be issued under and pursuant to an indenture dated as of December
1, 1995 (herein called the "Indenture"), between the Company and Bank One Trust
Company, N.A., as trustee (herein called the "Trustee"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Notes.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of and accrued interest on all Notes
may be declared, and upon said declaration shall become, due and payable, in
the manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes 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 Notes; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, or impair the right of any Noteholder to
institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Note, or modify the provisions of the Indenture with
respect to the subordination of the Notes in a manner adverse to the
Noteholders in any material respect, or change the obligation of the Company to
make repurchase of any Note upon the happening of a Repurchase Event in a
manner adverse to the holder of the Notes, or impair the right to convert the
Notes into Common Stock subject to the terms set forth in the Indenture,
including Section 15.6 thereof, without the consent of the holder of each Note
so affected or (ii) reduce the aforesaid percentage of Notes, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of all Notes then outstanding. It is also provided in
the Indenture that, prior to any declaration accelerating the maturity of the
Notes, the holders of a majority in aggregate principal amount of the Notes at
the time outstanding may on behalf of the holders of all of the Notes waive any
past default or Event of Default under the
-5-
<PAGE> 6
Indenture and its consequences except a default in the payment of interest or
any premium on or the principal of any of the Notes, a default in the payment
of redemption price pursuant to Article III or a failure by the Company to
convert any Notes into Common Stock of the Company. Any such consent or waiver
by the holder of this Note (unless revoked as provided in the Indenture) shall
be conclusive and binding upon such holder and upon all future holders and
owners of this Note and any Notes which may be issued in exchange or substitute
hereof, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.
The indebtedness evidenced by the Notes is, to the extent and in the
manner provided in the Indenture, expressly subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
as defined in the Indenture, whether outstanding at the date of the Indenture
or thereafter incurred, and this Note is issued subject to the provisions of
the Indenture with respect to such subordination. Each holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination so provided and appoints the
Trustee his attorney-in-fact for such purpose.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and
interest on this Note at the place, at the respective times, at the rate and in
the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a year of
twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.
The Notes will not be redeemable at the option of the Company prior to
January 5, 1999. At any time on or after January 5, 1999, and prior to
maturity, the Notes may be redeemed at the option of the Company as a whole, or
from time to time in part, upon mailing a notice of such redemption not less
than 30 nor more than 60 days before the date fixed for redemption to the
holders of Notes at their last registered addresses, all as provided in the
Indenture, at the following optional redemption prices (expressed as
percentages of the principal amount), together in each case with accrued
interest to, but excluding, the date fixed for redemption.
-6-
<PAGE> 7
If redeemed during the 12-month period beginning January 1:
<TABLE>
<CAPTION>
Year Percentage Year Percentage
-------------------- ---------- ------------------ ----------
<S> <C> <C> <C>
1999 . . . . . . . . . . . . . . . 103.2857% 2001 . . . . . . . . . . . . 101.6429%
2000 . . . . . . . . . . . . . . . 102.4643% 2002 . . . . . . . . . . . . 100.8214%
</TABLE>
and 100% at January 1, 2003; provided that if the date fixed for redemption is
on January 1 or July 1, then the interest payable on such date shall be paid to
the holder of record on the next preceding December 15 or June 15,
respectively.
The Notes are not subject to redemption through the operation of any
sinking fund.
If a Repurchase Event (as defined in the Indenture) occurs prior to
January 1, 2003, the holder of this Note shall have the right, in accordance
with the provisions of the Indenture, to require the Company to repurchase this
Note for cash at a Repurchase Price equal to 100% of the principal amount plus
accrued and unpaid interest to, but excluding, the Repurchase Date; provided
that if such Repurchase Date is January 1 or July 1, then the interest payable
on such date shall be to the holder of record of the Note on the next preceding
December 15 or June 15, respectively. Within 30 days after the occurrence of a
Repurchase Event, the Company is obligated to give all holders of record of
Notes notice of the occurrence of such Repurchase Event and of the repurchase
right arising as a result thereof.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 60 days following original issuance of
the Notes and prior to the close of business on January 1, 2003, or, as to all
or any portion hereof called for redemption, prior to the close of business on
the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
the principal hereof or any portion of such principal which is $1,000 or an
integral multiple thereof, into that number of shares of Company's Common
Stock, as said shares shall be constituted at the date of conversion, obtained
by dividing the principal amount of this Note or portion thereof to be
converted by the Conversion Price of $27.50 or such Conversion Price as
adjusted from time to time as provided in the Indenture, upon surrender of this
Note, together with a conversion notice as provided in the Indenture, to the
Company at the office or agency of the Company maintained for that purpose in
the Borough of Manhattan, The City of New York, or at the option of such
holder, the Corporate Trust Office, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by, or
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by, the holder or by his duly authorized attorney. No adjustment in
respect of interest or dividends will be made upon any conversion; PROVIDED,
HOWEVER,
that if this Note shall be surrendered for conversion during the
period from the close of business on any record date for
-7-
<PAGE> 8
the payment of interest to the close of business on the Business Day preceding
the interest payment date, this Note (unless it or the portion being converted
shall have been called for redemption during the period from the close of
business on any record date for the payment of interest to the close of
business on the Business Day preceding the interest payment date) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted. No fractional shares
will be issued upon any conversion, but an adjustment in cash will be made, as
provided in the Indenture, in respect of any fraction of a share which would
otherwise be issuable upon the surrender of any Note or Notes for conversion.
Any Notes called for redemption, unless surrendered for conversion on
or before the close of business on the date fixed for redemption, may be deemed
to be purchased from the holder of such Notes at an amount equal to the
applicable redemption price, together with accrued interest to, but excluding,
the date fixed for redemption, by one or more investment bankers or other
purchasers who may agree with the Company to purchase such Notes from the
holders thereof and convert them into Common Stock of the Company and to make
payment for such Notes as aforesaid to the Trustee in trust for such holders.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust
Office, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note
shall be overdue and notwithstanding any notation of ownership or other writing
hereon made by anyone other than the Company or any Note registrar), for the
purpose of receiving payment hereof, or on account hereof, for the conversion
hereof and for all other purposes, and neither the Company nor the Trustee nor
any other authenticating agent nor any paying agent nor any other conversion
agent nor any Note registrar shall be affected by any notice to the contrary.
All payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, satisfy and discharge liability for monies
payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, employee, agent, officer or
director or subsidiary, as such, past, present or future, of the Company or of
any
-8-
<PAGE> 9
successor corporation, either directly or through the Company or 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.
Terms used in this Note and defined in the Indenture are used herein
as therein defined.
-9-
<PAGE> 10
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT -- ________ Custodian_________
TEN ENT -as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to Minors
JT TEN -as joint tenants with Act ______________________________________
right of survivorship (State)
and not as tenants in
common
Additional abbreviations may also be used
though not in the above list.
-10-
<PAGE> 11
CONVERSION NOTICE
To: TELXON CORPORATION
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Telxon Corporation in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes 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 or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
check the appropriate box below and pay all transfer taxes payable with respect
thereto. Any amount required to be paid to the undersigned on account of
interest accompanies this Note.
Dated: ________________________
_____________________________
_____________________________
Signature(s)
Signature(s) must be
guaranteed by a commercial
bank or trust company or a
member firm of a major
stock exchange if shares of
Common Stock are to be
issued, or Notes to be
delivered, other than to and
in the name of the registered
holder.
_____________________________
Signature Guarantee
-11-
<PAGE> 12
Fill in for registration of
shares of Common Stock if to be issued, and
Notes if to be delivered,
other than to and in the name
of the registered holder:
_______________________________
(Name)
_______________________________
(Street Address)
_______________________________
(City, State and Zip Code)
Please print name and address
Principal amount to be converted
(if less than all): $__________
________________________________
Social Security or Other Taxpayer
Identification Number
-12-
<PAGE> 13
OPTION TO ELECT REPURCHASE
UPON A REPURCHASE EVENT
To: TELXON CORPORATION
The undersigned registered owner of this Note hereby acknowledges
receipt of a notice from Telxon Corporation (the "Company") as to the
occurrence of a Repurchase Event with respect to the Company and requests and
instructs the Company to repay the entire principal amount of this Note, or the
portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the repurchase price, together with accrued interest to, but excluding,
such date, to the registered holder hereof.
Dated: ________________________ ________________________________________
________________________________________
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond with
the name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
Principal amount to be converted (if
less than all):
$__________
________________________________________
Social Security or Other Taxpayer
Identification Number
-13-
<PAGE> 14
ASSIGNMENT
For value received ____________________________ hereby sell(s),
assign(s) and transfer(s) unto ____________________________ (Please insert
social security or other Taxpayer Identification Number of assignee) the within
Note, and hereby irrevocably constitutes and appoints ________________________
attorney to transfer the said Note on the books of the Company, with full power
of substitution in the premises.
In connection with any transfer of the within Note within three years
of the date of original issuance of such Note, the undersigned confirms that
such Note is being transferred:
[ ] To Telxon Corporation or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated: ____________________ _______________________________________
_______________________________________
Signature(s)
Signature(s) must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange
if shares of Common Stock are to be
issued, or Notes to be delivered, other
than to or in the name of the
registered holder.
_______________________________________
Signature Guarantee
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<PAGE> 1
EXHIBIT 4.5.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of December 1,
1995, by and among Telxon Corporation, a Delaware corporation (the "Company"),
and Hambrecht & Quist LLC and Prudential Securities Incorporated (the "Initial
Purchasers") who have purchased or have the right to purchase up to $86,250,000
in aggregate principal amount of 5 3/4% Convertible Subordinated Notes due 2003
(the "Notes") of the Company pursuant to the Placement Agreement (as such term
is defined below).
This Agreement is made pursuant to the Placement Agreement, dated December 6,
1995, among the Company and the Initial Purchasers (the "Placement Agreement").
In order to induce the Initial Purchasers to enter into the Placement
Agreement, the Company has agreed to provide the registration rights provided
for in this Agreement to the Initial Purchasers and their respective direct and
indirect transferees (i) for the benefit of the Initial Purchasers, (ii) for
the benefit of the holders from time to time of the Notes (including the
Initial Purchasers) and the holders from time to time of the Common Stock
issuable or issued upon conversion of the Notes and (iii) for the benefit of
the securities constituting the Transfer Restricted Securities. The execution
of this Agreement is a condition to the closing of the transactions
contemplated by the Placement Agreement.
The parties hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
ADVICE: As defined in the last paragraph of Section 4(r) hereof.
AFFILIATE: An affiliate of any specified person shall mean any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the purposes
of this definition, "control," when used with respect to any person, means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
AGREEMENT: This Registration Rights Agreement, as the same may
be amended, supplemented or modified from time to time in accordance with
the terms hereof.
BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
CLOSING DATE: December 12, 1995.
COMMON STOCK: Common Stock, $.01 par value per share, of the
Company and any other shares of common stock as may constitute "Common Stock"
for purposes of the Indenture, in each case, as issuable or issued upon
conversion of the Notes.
<PAGE> 2
COMPANY: Telxon Corporation, a Delaware corporation, and any
successor corporation thereto.
CONTROLLING PERSON: As defined in Section 6(a) hereof.
DAMAGES PAYMENT DATE: Each of the semi-annual interest payment
dates provided in the Indenture.
EFFECTIVENESS PERIOD: As defined in Section 2(a) hereof.
EFFECTIVENESS TARGET DATE: The 150th day following the Closing
Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC pursuant thereto.
FILING DATE: The 90th day after the Closing Date.
HOLDER: Each registered holder of any Transfer Restricted
Securities.
INDEMNIFIED PERSON: As defined in Section 6(a) hereof.
INDENTURE: The Indenture, dated the date hereof, between the
Company and the Trustee thereunder, pursuant to which the Notes are being
issued, as amended, modified or supplemented from time to time in accordance
with the terms thereof.
INITIAL PURCHASERS: As defined in the first paragraph hereof.
LIQUIDATED DAMAGES: As defined in Section 3(a) hereof.
NOTES: The $75,000,000 aggregate principal amount of 5 3/4%
Convertible Subordinated Notes due 2003 of the Company being issued pursuant to
the Indenture (together with the up to $11,250,000 aggregate principal amount
of such Notes, if, and to the extent the Initial Purchasers' over allotment
option is exercised).
PLACEMENT AGREEMENT: As defined in the second paragraph hereof.
PROCEEDING: An action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as
disposition), whether commenced or threatened.
PROSPECTUS: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Transfer
Restricted
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<PAGE> 3
Securities covered by such Registration Statement, and all other amendments and
supplements to any such prospectus, including post-effective amendments, and
all materials incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
RECORD HOLDER: (i) with respect to any Damages Payment Date relating
to any Note as to which any such Liquidated Damages have accrued, the
registered Holder of such Note on the record date with respect to the interest
payment date under the Indenture on which such Damages Payment Date shall occur
and (ii) with respect to any Damages Payment Date relating to any Common Stock
as to which any such Liquidated Damages have accrued, the registered holder of
such Common Stock 15 days prior to the next succeeding Damages Payment Date.
REGISTRATION DEFAULT: As defined in Section 3(a) hereof.
REGISTRATION STATEMENT: Any registration statement of the Company that
covers any of the Notes pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.
RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
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<PAGE> 4
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
SHELF REGISTRATION STATEMENT: As defined in Section 2 hereof.
SPECIAL COUNSEL: Any special counsel to the holders of Transfer
Restricted Securities, for which holders of Transfer Restricted Securities
will be reimbursed pursuant to Section 5 hereof.
TIA: The Trust Indenture Act of 1939, as amended.
TRANSFER RESTRICTED SECURITIES: The Notes and the shares of Common
Stock into which the Notes are converted or convertible (including any shares
of Common Stock issued or issuable thereon upon any stock split, stock
combinations, stock dividend or the like), upon original issuance thereof, and
at all times subsequent thereto, and associated related rights, if any, until,
in the case of any such Note or share (and associated rights) (i) the date on
which it has been registered effectively pursuant to the Securities Act and
disposed of in accordance with the Registration Statement relating to it, (ii)
the date on which either such Note or the shares of Common Stock issued upon
conversion of such Note are distributed to the public pursuant to Rule 144 (or
any similar provisions then in effect) or are saleable pursuant to Rule 144(k)
promulgated by the SEC pursuant to the Securities Act or (iii) the date on
which it ceases to be outstanding.
TRUSTEE: The Trustee under the Indenture.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration Statement.
References herein to the term "Holders of a majority in aggregate
principal amount of Transfer Restricted Securities" or words to a similar
effect shall mean, with respect to any request, notice, demand, objection or
other action by the holders of Transfer Restricted Securities hereunder or
pursuant hereto (each, an "Act"), registered holders of a number of shares of
then outstanding Common Stock constituting Transfer Restricted Securities and
an aggregate principal amount of then outstanding Notes constituting Transfer
Restricted Securities, such that the sum of such shares of Common Stock and the
shares of Common Stock issuable upon conversion of such Notes constitute in
excess of 50% of the sum of all of the then outstanding shares of Common Stock
constituting Transfer Restricted Securities and the number of shares of Common
Stock issuable upon conversion of then outstanding Notes constituting Transfer
Restricted Securities. For purposes of the immediately preceding sentence, any
Holder may elect to take any Act with respect to all or any portion of Transfer
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<PAGE> 5
Restricted Securities held by it and only the portion as to which such Act is
taken shall be included in the numerator of the fraction described in the
preceding sentence.
2. Shelf Registration Statement
----------------------------
(a) The Company agrees to file with the SEC as soon as practicable
after the Closing Date, but in no event later than the Filing Date, a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Transfer Restricted Securities (the
"Shelf Registration Statement"). The Shelf Registration Statement shall be on
Form S-3 under the Securities Act or another appropriate form permitting
registration of such Transfer Restricted Securities for resale by the Holders
in the manner or manners reasonably designated by them (including, without
limitation, one or more underwritten offerings). The Company shall not permit
any securities other than the Transfer Restricted Securities to be included in
the Shelf Registration Statement. The Company shall use its reasonable efforts
to cause the Shelf Registration Statement to be declared effective pursuant to
the Securities Act as promptly as practicable following the filing thereof, but
in no event later than the Effectiveness Target Date, and to keep the Shelf
Registration Statement continuously effective under the Securities Act for 36
months after the date on which all the Notes are sold (including those sold
pursuant to the over-allotment option granted to the Initial Purchasers in the
Placement Agreement) to the Initial Purchasers (subject to extension pursuant
to Sections 2(b) and 2(d) hereof) (the "Effectiveness Period"), or such shorter
period ending when there cease to be outstanding any Transfer Restricted
Securities.
(b) SUPPLEMENTS AND AMENDMENTS. The Company shall use its reasonable
efforts to keep the Shelf Registration Statement continuously effective by
supplementing and amending the Shelf Registration Statement if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration Statement, if required by the Securities Act, or if
reasonably requested by the Holders of a majority in aggregate principal amount
of the Transfer Restricted Securities or by any underwriter of such Transfer
Restricted Securities; provided that the Effectiveness Period shall be extended
to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174 and as otherwise provided herein.
(c) SELLING SECURITYHOLDER INFORMATION. The Company may require each
Holder of Transfer Restricted Securities as to which any registration is being
effected to furnish to the Company, within 20 Business Days after written
request therefor has been made by the Company, such information regarding the
distribution of such Transfer Restricted Securities as is required by law to be
disclosed in the applicable Registration Statement (the "Requisite
Information").
The Company shall file, within two Business Days of the receipt of
notice from any Holder which includes the Requisite Information with respect to
such Holder, a Prospectus supplement pursuant to Rule 424 to amend or
supplement such Registration Statement to include in the Registration Statement
the Requisite Information as to such
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<PAGE> 6
Holder (and the Transfer Restricted Securities held by such Holder), and the
Company shall provide such Holder and the Special Counsel within two Business
Days of such notice with a copy of such Prospectus as so amended or
supplemented containing the Requisite Information in order to permit such
holder to comply with the Prospectus delivery requirements of the Securities
Act in a timely manner with respect to any proposed disposition of such
Holder's Transfer Restricted Securities.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder
shall have the right to require (i) the insertion therein of language, in form
and substance reasonably satisfactory to such Holder and the Company, to the
effect that the holding by such Holder of such securities is not to be
construed as a recommendation by such Holder of the investment quality of the
Company's securities covered thereby and that such holding does not imply that
such Holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such Holder by name or
otherwise is not required by the Securities Act or any similar Federal statute
then in force, the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
No Holder shall be entitled to use the Prospectus unless and until such
Holder shall have furnished the information required by this Section 2(c) in
accordance with the first or second paragraph hereof.
(d) CERTAIN NOTICES; SUSPENSION OF SALES. Each Holder of Transfer
Restricted Securities agrees by acquisition of such Transfer Restricted
Securities that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 4(c)(ii), 4(c)(iii), 4(c)(v) or
4(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Transfer Restricted Securities covered by such Registration Statement or
Prospectus (other than in transactions exempt from the registration
requirements under the Securities Act) until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 4(i)
hereof, or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed, and, in either case, has
received copies of any additional or supplemental filings that are incorporated
or deemed to be incorporated by reference in such Prospectus. If the Company
shall give any such notice, the Effectiveness Period shall be extended by the
number of days during such period from and including the date of the giving of
such notice to and including the date when each Holder shall have received (x)
the copies of the supplemented or amended Prospectus contemplated by Section
4(i) hereof or (y) the Advice, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.
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<PAGE> 7
3. Liquidated Damages
(a) The Company and the Initial Purchasers agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Section 2 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, the Company
hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder
of Transfer Restricted Securities under the circumstances and to the extent set
forth below:
(i) if the Shelf Registration Statement has not
been filed with the SEC on or prior to the Filing Date; or
(ii) if the Shelf Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness
Target Date; or
(iii) if the Shelf Registration Statement has been
declared effective by the SEC and such Shelf Registration
Statement ceases to be effective or usable at any time during
the Effectiveness Period (without being succeeded on the same
day immediately by a post-effective amendment to such
Registration Statement that cures such failure and that is
itself immediately declared effective) for a period of time
which shall exceed 90 days in the aggregate per year;
(any of the foregoing, a "Registration Default"). In the event of any such
Registration Default, the Company shall pay Liquidated Damages to each Holder
of Transfer Restricted Securities during the first 90-day period immediately
following the occurrence of such Registration Default in an amount equal to
$.05 per week per $1,000 principal amount of Notes and, if applicable, $.01 per
week per share (subject to adjustment in the event of stock splits, stock
recombinations, stock dividends and the like) of Common Stock constituting
Transfer Restricted Securities held by such holder for each week or portion
thereof that the Registration Default continues. The amount of such Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal
amount of Notes and $.01 per week per share (subject to adjustment as set forth
above) of Common Stock constituting Transfer Restricted Securities for each
subsequent 90-day period until all Registration Defaults have been cured;
Provided, However, that Liquidated Damages shall not at any time exceed $.25
per week per $1,000 principal amount of Notes and $.05 per week per share
(subject to adjustment as set forth above) of Common Stock constituting
Transfer Restricted Securities. Following the cure of all Registration
Defaults relating to any Transfer Restricted Securities, the accrual of
Liquidated Damages with respect to such Transfer Restricted Securities will
cease (without in any way limiting the effect of any subsequent Registration
Default). A Registration Default under clause (i) above shall be cured on the
date that the Shelf Registration Statement is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that
the Shelf Registration Statement is declared effective by the SEC; and a
Registration Default under clause (iii) above shall be cured on the date the
Shelf Registration Statement is declared effective or usable.
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<PAGE> 8
(b) The Company shall notify the Trustee within one
Business Day after each and every date on which a Registration Default occurs.
Liquidated Damages shall be paid by the Company to the Record Holders on each
Damages Payment Date by wire transfer of immediately available funds to the
accounts specified by them or by mailing checks to their registered addresses
as they appear in the Note register (as defined in the Indenture), in the case
of the Notes, and in the register of the Company for the Common Stock, in the
case of the Common Stock, if no such accounts have been specified on or before
the Damage Payment Date; provided, however, that any Liquidated Damages accrued
with respect to any Note or portion thereof called for redemption on a
redemption date, repurchased in connection with a Repurchase Event (as defined
in the Indenture) on a repurchase date, or converted into Common Stock on a
conversion date prior to the Damages Payment Date, shall, in any such event, be
paid instead to the holder who submitted such Note or portion thereof for
redemption, repurchase or conversion on the applicable redemption date,
repurchase date or conversion date, as the case may be, on such date (promptly
following the conversion date, in the case of conversion of a Note). Each
obligation to pay Liquidated Damages shall be deemed to commence accruing on
the date of the applicable Registration Default and to cease accruing when all
Registration Defaults have been cured. In no event shall the Company be
required to pay Liquidated Damages in excess of the applicable maximum weekly
amount set forth above, regardless of whether one or multiple Registration
Defaults exist.
(c) All of the Company's obligations set forth in this
Section 3 which are outstanding with respect to any Transfer Restricted
Securities at the time such security ceases to be a Transfer Restricted
Security shall survive until such time as all such obligations with respect to
such security have been satisfied in full.
(d) Any payments due and payable pursuant to this Section
3 shall be subject to the provisions of Article IV of the Indenture as if such
payments were additional interest on the Notes.
4. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall effect such registrations
on the appropriate form available for the sale of the Transfer Restricted
Securities to permit the sale of Transfer Restricted Securities in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as possible:
(a) No fewer than five Business Days prior to the initial
filing of a Registration Statement or Prospectus and no fewer than two Business
Days prior to the filing of any amendment or supplement thereto (but, with
respect to any document that would be incorporated or deemed to be incorporated
therein by reference, substantially concurrently with, but not prior to, filing
thereof), furnish to the Holders of the Transfer Restricted Securities, their
Special Counsel and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents (including, but not prior to
filing, those incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders, their Special Counsel and such
underwriters, if any, and cause the officers and
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<PAGE> 9
directors of the Company, counsel to the Company and independent certified
public accountants to the Company to respond to such inquiries as shall be
necessary in connection with such Registration Statement, in the opinion of
respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act; provided
that any supplement or amendment to the Registration Statement or Prospectus
filed pursuant to the second paragraph of Section 2(c) hereof need only be
furnished in accordance with time periods set forth in such paragraph;
provided, further, however, that the Company shall not be deemed to have kept a
Registration Statement effective during the applicable period if it voluntarily
takes or fails to take any action that results in selling Holders of the
Transfer Restricted Securities covered thereby not being able to sell such
Transfer Restricted Securities pursuant to Federal securities laws during that
period (and the time period during which such Registration Statement is
required to remain effective hereunder shall be extended by the number of days
during which such selling Holders of Transfer Restricted Securities are not
able to sell Transfer Restricted Securities). The Company shall not file any
such Registration Statement or related Prospectus or any amendments or
supplements thereto to which the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities, their Special Counsel, or the
managing underwriters, if any, shall reasonably object on a timely basis;
(b) Prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
applicable time period set forth in Section 3(a) hereof; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) under the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such Registration Statement as so amended or in
such Prospectus as so supplemented (including, without limitation, the filing
of any Prospectus supplement pursuant to Rule 424 in order to add or change any
selling security holder information (including any such supplements or
amendments pursuant to Section 2(c) hereof, provided such holder of Transfer
Restricted Securities to which such change applies complies with the
information requirements of the first or second paragraph of Section 2(c)
hereof));
(c) Notify the Holders of Transfer Restricted Securities
to be sold or their Special Counsel and the managing underwriters, if any,
promptly (and in the case of an event specified by clause (i)(A) of this
paragraph in no event fewer than two Business Days prior to such filing), and
(if requested by any such person), confirm such notice in writing, (i)(A) when
a Prospectus or any Prospectus supplement or post-effective amendment is
proposed to be filed, and, (B) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request of the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or related Prospectus or
for additional information related thereto, (iii) of the issuance by the SEC,
any state securities commission, any other governmental agency or any court of
any stop order,
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<PAGE> 10
order or injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 4(m) hereof cease to be true and correct in all material respects,
(v) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Transfer Restricted Securities for sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, and (vi) of the existence of
any fact and the happening of any event that makes any statement made in such
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect,
or that requires the making of any changes in such Registration Statement,
Prospectus or document so that in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading and that, in the case of the Prospectus, such Prospectus
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(d) Use its reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of any order enjoining or suspending the
use or effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Transfer Restricted Securities for sale in any jurisdiction, at the earliest
practicable moment;
(e) If requested by the managing underwriters, if any, or
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold in connection with such offering, (i) promptly
incorporate in a Prospectus supplement or post- effective amendment such
information as the managing underwriters, if any, and such Holders agree should
be included therein, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 4(e)
that would, in the opinion of counsel for the Company, violate applicable law
or to include information to which the Company reasonably objects;
(f) Furnish to each Holder, their Special Counsel and
each managing underwriter, if any, without charge, at least one conformed copy
of each Registration Statement and each amendment thereto, including financial
statements (but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits, unless requested in writing
by such Holder, counsel or managing underwriter);
(g) Deliver to each Holder, their Special Counsel, and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto to such persons reasonably request;
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<PAGE> 11
and the Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities and the underwriters, if any, in connection with the
offering and sale of the Transfer Restricted Securities covered by such
Prospectus and any amendment or supplement thereto, provided that no Holder
shall be entitled to use the Prospectus unless and until such Holder shall have
furnished to the Company any required information pursuant to the first or
second paragraph of Section 2(c) hereof;
(h) Prior to any public offering of Transfer Restricted
Securities, use its reasonable efforts to register or qualify, or cooperate
with the Holders of Transfer Restricted Securities to be sold or tendered for,
the underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Transfer Restricted Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions within the United States
as any Holder or underwriter reasonably requests in writing, keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject;
(i) In connection with any sale or transfer of Transfer
Restricted Securities that will result in such securities no longer being
Transfer Restricted Securities, cooperate with the Holders and the managing
underwriters, if any, to (A) facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends, shall bear a CUSIP number
different from the CUSIP number for the Transfer Restricted Securities and
shall be in a form eligible for deposit with The Depository Trust Company and
(B) enable such Transfer Restricted Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or Holders may
request at least two Business Days prior to any sale of Transfer Restricted
Securities;
(j) Use its reasonable efforts to cause the offering of
the Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
within the United States, except as may be required as a consequence of the
nature of such selling Holder's business, in which case the Company will
cooperate in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Transfer Restricted Securities; provided, however, that the
Company shall not be required to register the Transfer Restricted Securities in
any jurisdiction that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
tax in any such
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<PAGE> 12
jurisdiction where it is not then so subject or to require the Company to
qualify to do business in any jurisdiction where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by
Section 4(c)(vi) hereof, as promptly as practicable, prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to each
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and
file any other required document so that, as thereafter delivered, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(l) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, to provide a CUSIP
number for the Transfer Restricted Securities to be sold pursuant to the
Registration Statement;
(m) Enter into such agreements (including an underwriting
agreement in form, scope and substance to is customary in underwritten
offerings) and take all such other reasonable actions in connection therewith
(including those reasonably requested by the managing underwriters, if any, or
the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold) in order to expedite or facilitate the
disposition of such Transfer Restricted Securities, and in such connection,
whether or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, (i) make such representations and
warranties to the Holders of such Transfer Restricted Securities and the
underwriters, if any, with respect to the business of the Company and its
subsidiaries (including with respect to businesses or assets acquired or to be
acquired by any of them), and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in underwritten offerings, and confirm the same if and
when requested; (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters, if any, and Special
Counsel to the Holders of the Transfer Restricted Securities being sold
(provided that such counsel may be any of the counsel identified in Section
9(f)(ii) hereof)), addressed to each selling Holder of Transfer Restricted
Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) use its reasonable efforts to obtain customary "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data is, or is
required to be, included in the Registration Statement), addressed (where
reasonably possible) to each selling Holder of Transfer Restricted Securities
and each of the underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters
-12-
<PAGE> 13
in connection with underwritten offerings; (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable to the selling Holders of Transfer Restricted Securities and
the underwriters, if any, than those set forth in Section 6 hereof (or such
other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities covered by
such Registration Statement and the managing underwriters); and (v) deliver
such documents and certificates as may be reasonably requested by the Holders
of majority in aggregate principal amount of the Transfer Restricted Securities
being sold, their Special Counsel or the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) of this Section 4(m) and to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company;
(n) Make available for inspection by a representative of
the Holders of Transfer Restricted Securities being sold, any underwriter
participating in any such disposition of Transfer Restricted Securities, if
any, and any attorney, consultant or accountant retained by such selling
Holders or underwriter, at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries as they may reasonably
request (including with respect to business and assets acquired or to be
acquired to the extent that such information is available to the Company), and
cause the officers, directors, agents and employees of the Company and its
subsidiaries (including with respect to business assets acquired or to be
acquired to the extent that such information is available to the Company) to
supply all information in each case reasonably requested by any such
representative, underwriter, attorney, consultant or accountant in connection
with such Registration Statement, provided, however, that such persons shall
first agree in writing with the Company that any information that is reasonably
and in good faith designated by the Company in writing as confidential at the
time of delivery of such information shall be kept confidential by such
persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities, (ii) disclosure of such information is required by law (including
any disclosure requirements pursuant to Federal securities laws in connection
with the filing of any Registration Statement or the use of any prospectus
referred to in this Agreement), (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by any such person or (iv) such information becomes available to any
such person from a source other than the Company and such source is not bound
by a confidentiality agreement.
(o) Cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement relating to
the Transfer Restricted Securities; and in connection therewith, cooperate with
the Trustee under the Indenture and the holders of the Transfer Restricted
Securities to effect such changes to the Indenture, if any, as may be required
for such Indenture to be so qualified in accordance with the terms of the TIA;
and execute, and use its reasonable best efforts to cause such trustee to
execute, all customary documents as may be required to effect such changes, and
all other forms and documents
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<PAGE> 14
(including the Form T-1) required to be filed with the SEC to enable the
Indenture to be so qualified under the TIA in a timely manner.
(p) Comply with applicable rules and regulations of the
SEC and make generally available to its security holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act), no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or reasonable efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter after the effective date of a
Registration Statement, which statement shall cover said period, consistent
with the requirements of Rule 158; and
(q) (i) list all Common Stock covered by such
Registration Statement on any securities exchange on which the Common Stock is
then listed or (ii) authorize for quotation on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq") or the National Market
System of Nasdaq all Common Stock covered by such Registration Statement if the
Common Stock is then so authorized for quotation.
5. Registration Expenses
---------------------
(a) All reasonable fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by it whether or not any Registration Statement is filed or becomes effective
and whether or not any securities are issued or sold pursuant to any
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filings
fees (including without limitation, fees and expenses (A) with respect to
filings required to be made with the National Association of Securities
Dealers, Inc. and (B) in compliance with securities or Blue Sky laws
(including, without limitation and in addition to that provided for in (b)
below, fees and disbursements of counsel for the underwriters or Special
Counsel for the Holders in connection with Blue Sky qualifications of the
Transfer Restricted Securities and determination of the eligibility of the
Transfer Restricted Securities for investment under the laws of such
jurisdictions as the managing underwriters, if any, or Holders of a majority in
aggregate principal amount of Transfer Restricted Securities, may designate)),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Transfer Restricted Securities in a form eligible for deposit
with The Depository Trust Company and of printing Prospectuses if the printing
of Prospectuses is reasonably required by the managing underwriters, if any, or
by the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities included in or tendered for in connection with any
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel for the
Holders (plus any local counsel, deemed appropriate by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities)
in accordance with the provisions of Section 5(b) hereof, (v) fees and
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<PAGE> 15
disbursements of all independent certified public accountants referred to in
Section 4(m)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) Securities Act liability insurance, if the Company so desires such
insurance, and (vii) fees and expenses of all other persons retained by the
Company. In addition, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of an annual audit, and the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange. Notwithstanding the foregoing or
anything in this Agreement to the contrary, each Holder shall pay all
underwriting discounts and commissions of any underwriters with respect to any
Transfer Restricted Securities sold by it.
(b) In connection with any registration hereunder, the
Company shall reimburse the Holders of the Transfer Restricted Securities being
registered or tendered for in such registration for the reasonable fees and
disbursements of not more than one firm of attorneys representing the selling
Holders (in addition to any local counsel), which firm shall be chosen by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities. Wilson Sonsini Goodrich & Rosati, P.C., shall be Special Counsel
for all purposes hereof unless and until another Special Counsel shall have
been selected by a majority in aggregate principal amount of the Transfer
Restricted Securities and notice hereof shall have been given to the Company.
6. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless (i)
each of the Initial Purchasers, (ii) each Holder of Transfer Restricted
Securities, (iii) each person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) any of the
foregoing (any of the persons referred to in this clause (iii) being
hereinafter referred to as a "controlling person"), and (iv) the respective
officers, directors, partners, employees, representatives and agents of the
Initial Purchasers, each Holder of Transfer Restricted Securities, or any
controlling person (any person referred to in clause (i), (ii), (iii) or (iv)
may hereinafter be referred to as an "Indemnified Person"), from and against
any and all losses, claims, damages, liabilities, expenses and judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or form of Prospectus or in
any amendment or supplement thereto or in any preliminary Prospectus, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case
of any Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except insofar as
such losses, claims, damages, liabilities, expenses or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Indemnified Person furnished in writing
to the Company by or on behalf of such Indemnified Person expressly for use
therein; provided that the foregoing indemnity with respect to any preliminary
Prospectus shall not inure to the benefit of any Indemnified Person from whom
the
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<PAGE> 16
person asserting such losses, claims, damages, liabilities, expenses and
judgments purchased securities if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary Prospectus is eliminated
or remedied in the Prospectus and a copy of the Prospectus shall not have been
furnished to such person in a timely manner due to the wrongful action or
wrongful inaction of such Indemnified Person, whether as a result of negligence
or otherwise.
(b) In case any action shall be brought against any
Indemnified Person, based upon any Registration Statement or any such
Prospectus or any amendment or supplement thereto and with respect to which
indemnity may be sought against the Company, such Indemnified Person shall
promptly notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such
Indemnified Person and payment of all reasonable fees and expenses. Any
Indemnified Person shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person, unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the Company, (ii) the Company shall have failed to assume the defense and
employ counsel or (iii) such Indemnified Person or Persons shall have been
advised by counsel that there may be a conflict between the positions of the
indemnifying party or parties and of the indemnified party or parties in
conducting the defense of such action or proceeding or that there may be legal
defenses available to such Indemnified Person or Persons different from or in
addition to those available to the indemnifying party or parties (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Indemnified Person, it being understood, however, that the
Company shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Indemnified Persons, which firm shall be
designated in writing by such Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred). The Company shall not be
liable for any settlement of any such action effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Indemnified Person from and against
any loss or liability by reason of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(c) In connection with any Registration Statement in
which the Holder of Transfer Restricted Securities is participating, such
Holder of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers and any
person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the
foregoing indemnity
-16-
<PAGE> 17
from the Company to each Indemnified Person but only with reference to
information relating to such Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use in such Registration
Statement. In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based on such
Registration Statement and in respect of which indemnity may be sought against
any Indemnified Person, the Indemnified Person shall have the rights and duties
given to the Company (except that if the Company shall have assumed the defense
thereof, such Indemnified Person shall not be required to do so, but may employ
separate counsel therein and participate in defense thereof but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person),
and the Company, its directors, any such officers and any person controlling
the Company shall have the rights and duties given to the Indemnified Person by
Section 6(b) hereof.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities, expenses or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, expenses and judgments (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and each Indemnified Person on the other hand from
the offering of the Transfer Restricted Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and each such
Indemnified Person in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities, expenses or judgments,
as well as any other relevant equitable considerations. The relative fault of
the Company and each such Indemnified Person shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Company or such Indemnified Person and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Indemnified Person were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities, expenses or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no Indemnified Person shall be required to contribute any amount in
excess of the amount by which the total net profit received by it in connection
with the sale of the Transfer Restricted Securities pursuant to this Agreement
exceeds the amount of any damages which such Indemnified Person has otherwise
been required to pay by reason of such
-17-
<PAGE> 18
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Indemnified Persons'
obligations to contribute pursuant to this Section 6(d) are several in
proportion to the respective amount of Transfer Restricted Securities included
in and sold pursuant to any such Registration Statement by each Indemnified
Person and not joint.
7. Rules 144 and 144A
------------------
The Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but
in the past had been required to or did file such reports, it will, upon the
request of any Holder, make available other information as required by, and so
long as necessary to permit sales of, its Transfer Restricted Securities
pursuant to Rule 144 and Rule 144A . Notwithstanding the foregoing, nothing in
this Section 7 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
8. Underwritten Registrations
--------------------------
If any of the Transfer Restricted Securities covered by any
Shelf Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of such Transfer Restricted Securities included in
such offering, subject to the consent of the Company (which will not be
unreasonably withheld or delayed).
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
9. Miscellaneous
-------------
(a) REMEDIES. In the event of a breach by the Company,
or by a holder of Transfer Restricted Securities, of any of their obligations
under this Agreement, each holder of Transfer Restricted Securities or the
Company, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each holder of Transfer
Restricted Securities agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby
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<PAGE> 19
further agree that, in the event of any action for specific performance in
respect of such breach, they shall waive the defense that a remedy at law would
be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the holders of Transfer Restricted Securities in
this Agreement or otherwise conflicts with the provisions hereof. The Company
is not currently a party to any agreement granting any registration rights with
respect to any of its securities to any person which conflicts with the
Company's obligations hereunder or gives any other party the right to include
any securities in any Registration Statement filed pursuant hereto. Without
limiting the generality of the foregoing, without the written consent of the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities, the Company shall not grant to any person the right to request it
to register any of its securities under the Securities Act unless the rights so
granted are subject in all respect to the prior rights of the holders of
Transfer Restricted Securities set forth herein, and are not otherwise in
conflict or inconsistent with the provisions of this Agreement.
(c) NO ADVERSE ACTION AFFECTING THE TRANSFER RESTRICTED
SECURITIES. The Company will not take any action with respect to the Transfer
Restricted Securities which would adversely affect the ability of any of the
Holders of Transfer Restricted Securities to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement.
(d) NO PIGGYBACK ON REGISTRATIONS. The Company shall not
grant to any of its security holders (other than the Holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement other than Transfer Restricted
Securities.
(e) AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof, may not be given, without the written consent of the Holders
of a majority of the then outstanding Transfer Restricted Securities on a fully
converted basis; provided, however, that, for the purposes of this Agreement,
Transfer Restricted Securities that are owned. directly or indirectly, by
either the Company or an Affiliate of the Company are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Transfer Restricted Securities whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
may be given by Holders of a majority of the Transfer Restricted Securities (on
a fully converted basis) being sold by such Holders pursuant to such
Registration Statement; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.
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<PAGE> 20
(f) NOTICES. All notices and other communications
provided for herein shall be made in writing by hand-delivery, next day air
courier, certified first-class mail, return receipt requested or telecopy:
(i) if to a Holder of Transfer Restricted
Securities, to the address of such Holder as
it appears in the Note or Common Stock
register of the Company, as applicable; and
(ii) if to the Company, to:
Telxon Corporation
3330 West Market Street
Akron, Ohio 44333
Attention: Legal Department
Telecopy No.: (216) 873-2083
with a copy to:
Goodman Weiss Miller
100 Erieview Plaza
27th Floor
Cleveland, Ohio 44114
Attention: Robert A. Goodman, Esq.
Telecopy No.: (216) 363-5835
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 3rd Avenue
New York, New York 10022
Attention: Mark C. Smith, Esq.
Telecopy No.: (212) 735-2000; and
(iii) if to the Special Counsel, to:
Wilson, Sonsini, Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: John A. Fore, Esq.
Telecopy No.: (415) 493-6811
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<PAGE> 21
or such other Special Counsel at such other
address and telecopy number as a majority in
aggregate principal amount of the Transfer
Restricted Securities shall have given notice
to the Company as contemplated by Section
5(b) hereof.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given, when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier, five Business Days after being deposited in the mail,
postage prepaid, if mailed; and when receipt is acknowledged by the recipient's
telecopier machine, if telecopied.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each existing and future
Holder of Transfer Restricted Securities. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder of Transfer Restricted Securities.
(h) COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same Agreement.
(i) Governing Law; Submission to Jurisdiction
-----------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY
OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
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<PAGE> 22
(j) SEVERABILITY. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
(k) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.
(l) ATTORNEYS' FEES. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
court, shall be entitled to recover its reasonable attorneys' fees in addition
to any other available remedy.
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<PAGE> 23
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
TELXON CORPORATION
By:/s/ Kenneth W. Haver
-----------------------------------
Name: Kenneth W. Haver
Title: Senior Vice President,
Chief Financial Officer
and Treasurer
The foregoing Registration Rights
Agreement is hereby confirmed and
agreed to as of the date first above
written:
HAMBRECHT & QUIST LLC
PRUDENTIAL SECURITIES INCORPORATED
By Hambrecht & Quist LLC
/s/ S. N. Machtinger
- --------------------------------------
<PAGE> 1
Exhibit 10.3.1.b
AMENDMENT NO. 2
TO
AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 2 ("Amendment") is entered into as of December 1,
1995, by and among TELXON CORPORATION ("Telxon"), a corporation organized
under the laws of the State of Delaware, THE RETAIL TECHNOLOGY GROUP, INC.
("Retail"), a corporation organized under the laws of the State of Delaware,
TELETRANSACTION, INC. ("Teletransaction"), a corporation organized under the
laws of the State of Delaware, ITRONIX CORPORATION ("Itronix"), a corporation
organized under the laws of the State of Washington, MICROOFFICE SYSTEMS
TECHNOLOGY, INC. ("MicroOffice"), a corporation organized under the laws of the
State of Delaware, PTC AIRCO, INC. ("PTC"), a corporation organized under the
laws of the State of Delaware (Telxon, Retail, Teletransaction, Itronix,
MicroOffice and PTC, each a "Borrower" and, jointly and severally, the
"Borrowers"), the undersigned financial institutions (collectively the
"Lenders") and THE BANK OF NEW YORK COMMERCIAL CORPORATION ("BNYCC"), a
corporation organized under the laws of the State of New York, as agent for
Lenders (BNYCC in such capacity, the "Agent").
BACKGROUND
----------
Borrowers, Lenders and Agent are parties to an Amended and Restated
Revolving Credit, Term Loan and Security Agreement dated as of March 31, 1995
(as amended, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lenders provide Borrowers with certain financial
accommodations.
Borrowers have requested that Agent and Lenders amend the Loan
Agreement and Agent and Lenders are willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance of grant of
credit heretofore of hereafter made to or for the account of Borrowers by
Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings given to them in the Loan Agreement.
<PAGE> 2
2. AMENDMENT TO LOAN AGREEMENT. Subject to satisfaction of the
conditions precedent set forth in Section 3 below, the Loan Agreement is bereby
amended as follows:
(a) The following definition in Section 1.2 of the Loan Agreement
is hereby amended in its entirety to provide as follows:
"Subordinated Debt Documentation" shall mean, collectively,
Indenture A and Indenture B.
(b) The following defined terms are hereby added to Section 1.2 of
the Loan Agreement in their appropriate alphabetical order:
"Amendment Date" shall mean December 1, 1995.
"Indenture A" shall mean the Indenture dated as of June 1,
1987 between Telxon and AmeriTrust Company National Association, the 7 1/2%
Convertible Subordinated Debentures Due 2012 dated as of the date of their
respective authentication, in the aggregate principal amount of $46,000,000
issued by Telxon and all agreements, documents and instruments executed in
connection therewith.
"Indenture B" shall mean the Indenture dated as of
December 1, 1995 between Telxon and Bank One Trust Company, N.A., the [5-3/4]%
Convertible Subordinated Debentures Due 2003 dated as of the date of their
respective authentication, in the aggregate original principal amount not to
exceed $86,250,000 issued by Telxon and all agreements, documents and
instruments executed in connection therewith.
(c) Section 6.8 of the Loan Agreement is hereby amended in its
entirety to provide as follows:
"Indebtedness to Tangible Net Worth Ratio. Cause to be
maintained as of the end of each fiscal quarter of Borrowers a ratio of
Indebtedness of Telxon and its Subsidiaries on a Consolidated Basis (excluding
the Indebtedness of Telxon evidenced by Indenture B) to (a) the sum of Tangible
Net Worth plus (b) the Subordinated Indebtedness (excluding the Indebtedness of
Telxon evidenced by Indenture B) no greater than 1.45 to 1.00."
(d) Section 7.17 of the Loan Agreement is hereby amended in its
entirety to provide as follows:
"Prepayment of Indebtedness. At any time, directly or indirectly,
prepay any Indebtedness for borrowed money (other than to Lenders), or
repurchase, redeem, retire or otherwise acquire any Indebtedness of any
Borrower except for regularly scheduled sinking fund and interest payments
permitted pursuant
-2-
<PAGE> 3
to the terms of (x) Indenture A as in effect on the Closing Date and (y)
Indenture B as in effect on the Amendment Date."
(3) Conditions of Effectiveness. This Amendment shall become
effective upon satisfaction of the following conditions precedent: (i) Agent
shall have received complete copies of Indenture B (including all exhibits,
schedules and disclosure letters referred to therein or delivered pursuant
thereto, if any) and all amendments thereto, waivers relating thereto and other
side letters or agreements affecting the terms thereof and (ii) Agent shall
have received six (6) copies of this Amendment executed by Borrowers and
Lenders and consented and agreed to by Guarantors, and such other certificates,
instruments, documents, agreements and opinions of counsel as may be required
by Agent, Lenders or their counsel, each of which shall be in form and
substance satisfactory to Agent, Lenders and their counsel.
(4) REPRESENTATIONS AND WARRANTIES. Borrowers hereby represents
and warrants as follows:
(a) This Amendment and the Loan Agreement, as ammended
hereby, constitute legal, valid and binding obligations of Borrowers
and are enforceable against Borrowers in accordance with their
respective terms.
(b) Upon the effectiveness of this Amendment, Borrowers
hereby reaffirm all covenants, representations and warranties made in
the Loan Agreement to the extent the same are not amended herby and
agree that all such covenants, representations and warranties shall be
deemed to have been remade as of the effective date of this Amendment.
-3-
<PAGE> 4
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim of offset with
respect to the Loan Agreement.
5. EFFECT ON THE LOAN AGREEMENT
(a) Upon the effectiveness of SECTION 2 hereof, each reference in
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the Loan Agreement as
amended hereby.
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of Agent or any
Lender, nor constitute a waiver of any provision of the Loan Agreement, or any
other documents, instruments or agreements executed and/or delivered under or
in connection therewith.
6. GOVERNING LAW. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of
the State of New York.
7. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.
8. COUNTERPARTS. This Amendment may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an orginal
and all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
TELXON CORPORATION
By: /S/ Kenneth W. Haver
----------------------------
Name: _______________
Title: ______________
3330 West Market Street
Akron, Ohio 44333
(SIGNATURES CONTINUED ON NEXT PAGE)
-4-
<PAGE> 5
THE RETAIL TECHNOLOGY GROUP, INC.
By: /S/ Kenneth W. Haver
-------------------------------
Name: _________________
Title: ________________
3330 West Market Street
Akron, Ohio 44333
TELETRANSACTION, INC.
By: /S/ Kenneth W. Haver
------------------------------
Name: _________________
Title: ________________
3330 West Market Street
Akron, Ohio 44333
ITRONIX CORPORATION
By: /S/ Kenneth W. Haver
------------------------------
Name: _________________
Title: ________________
South 801 Stevens
Spokane, WA 99204
MICROOFFICE SYSTEMS TECHNOLOGY, INC.
By: /S/ Kenneth W. Haver
------------------------------
Name: _________________
Title: ________________
3330 West Market Street
Akron, Ohio 44333
PTC AIRCO, INC.
By: /S/ Kenneth W. Haver
------------------------------
Name: _________________
Title: ________________
3330 West Market Street
Akron, Ohio 44333
(SIGNATURES CONTINUED ON NEXT PAGE)
-5-
<PAGE> 6
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, as Lender and as Agent
By: /S/ Daniel J. Murray
-----------------------------
Daniel J. Murray, Vice President
1290 Avenue of the Americas
New York, New York 10104
COMMITMENT PERCENTAGE: 50%
BANKAMERICA BUSINESS CREDIT, INC.,
as Lender
By: /S/ Richard Levenson
-----------------------------
Name: Richard Levenson
Title: Vice President
40 East 52nd Street
New York, New York 10022
COMMITMENT PERCENTAGE: 50%
CONSENTED AND AGREED TO:
Telxon Foreign Sales Corp.
By: /S/ Gerald J. Gabriel
----------------------
Name: ________________
Title: _______________
AIRONET Wireless Communications, Inc.
By: /S/ Kenneth W. Haver
----------------------
Name: ________________
Title: _______________
Telxon Trading Co., Inc.
By: /S/ Kenneth W. Haver
----------------------
Name: ________________
Title: _______________
(SIGNATURES CONTINUED ON THE NEXT PAGE)
-6-
<PAGE> 7
Penright! Corporation
By: /S/ Kenneth W. Haver
-----------------------
Name: _________________
Title: ________________
Metanetics Corporation
By: /S/ Kenneth W. Haver
-----------------------
Name: _________________
Title: ________________
Telxon Products, Inc.
By: /S/ Kenneth W. Haver
-----------------------
Name: _________________
Title: ________________
-7-
<PAGE> 1
EXHIBIT 10.3.3
BUSINESS PURPOSE REVOLVING PROMISSORY NOTE
[BANK1ONE(R) logo]
Date: November 24, 1995 Executed at Akron, Ohio
Amount $30,000,000.00
For value received, receipt of which is hereby acknowledged, the undersigned
jointly and severally promises to pay to the order of Bank One, Akron, NA
("Bank One") at its principal office located at 50 South Main Street, Akron,
Ohio or at such other place as Bank One may designate from time to time, in
lawful money of the United States of America, the principal sum of Thirty
Million and 00/100 Dollars or such lesser portion thereof as may have from time
to time been disbursed to, or for the benefit of the undersigned, and remaining
unpaid pursuant to the books or records of Bank One, together with interest on
the unpaid balance of principal advanced from the date(s) of disbursement until
paid in full as set forth below. The principal amount of this Note may be
advanced, repaid and readvanced in full or part during the term of this Note
provided no event of default or demand for payment exists hereunder.
RATE OF INTEREST AND ITS CALCULATION
/X/ Fixed: SEE ATTACHED EXHIBIT A percent (________%) per annum
/__/ Variable: Prime rate plus _____________________ percent (_____%) per
annum which will be adjusted to reflect the change in the
Prime Rate:
/_/ on the first day of each month following the month
in which the Prime Rate changes
/_/ on the same day as the Prime Rate changes
"Prime Rate" means the rate announced from time to time by Bank One as its
prime rate.
Interest shall be calculated on a 360 day year basis and shall be calculated by
dividing the actual number of days which elapsed during the period interest
accrued by a year of 360 days times the interest rate in effect.
After this Note becomes due and payable, whether at maturity, by acceleration
or otherwise, the interest rate on the outstanding principal sum and accrued
interest will be the rate stated above plus five percent (5%) per annum.
Bank One shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or five (5)% of the schedule payment in the
event of a default in payment that remains uncured for a period of at least ten
(10) days.
<PAGE> 2
TIME AND METHOD OF PAYMENT
/X/ PRINCIPAL DUE AND PAYABLE ON THE MATURITY DATE, INTEREST DUE AND
PAYABLE ON THE MATURITY DATE OR PERIODICALLY:
MATURITY DATE: January 31, 1996
PRINCIPAL: The principal balance is immediately due and payable on the
MATURITY DATE
INTEREST: Interest is immediately due and payable:
/_/ on the MATURITY DATE
/X/ beginning SEE ATTACHED EXHIBIT A and continuing
(see attached Exhibit A) thereafter until the
MATURITY DATE on which date all accrued and unpaid
interest shall be immediately due and payable.
/_/ PRINCIPAL AND INTEREST DUE AND PAYABLE ON DEMAND. Principal and interest
are immediately due and payable on demand but until such time as demand for
payment is made, accrued interest thereon is due and payable as hereinafter
provided:
INTEREST: Date of first interest payment: and continuing
-------------------,
/_/ Monthly /_/ Quarterly thereafter, until demand is made.
This Note /X/ is /_/ is not issued in conjunction with an agreement or letter
dated November 22, 1995, to which reference is made, and /_/ is
/X/ is not supported by other security documents.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE
TELXON CORPORATION
By: /s/ Kenneth W. Haver
_______________________
Kenneth W. Haver, Senior Vice President,
Chief Financial Officer and Treasurer
Additional terms and conditions of this Promissory Note
are contained on the reverse side of this document.
<PAGE> 3
[reverse side]
ADDITIONAL TERMS AND CONDITIONS OF PROMISSORY NOTE
1. All credits, deposits, accounts, securities or moneys of any
signer, endorser or guarantor hereof ("Obligor", meaning each jointly and
severally), and all other property or rights belonging to or in which Obligor
has any interest, now or hereafter pledged or hypothecated to Bank One or in
the possession or control of Bank One ("Collateral") shall be held by Bank One
as security for the payment of this Note, and of every other liability now or
hereafter existing of Obligor, absolute or contingent, due or to become due,
and in whatsoever manner acquired by or accruing to Bank One ("Obligations").
Bank One shall have the right to setoff any such Collateral at any time without
prior notice of Obligor.
2. If this Note is due and payable on demand it is subject to
being called at any time upon actual demand by Bank One. The inclusion of a
payment schedule is merely to provide terms for payment in the absence of
actual demand and does not affect or impair Bank One's absolute right to demand
payment of this Note at any time. Obligor agrees that Bank One may delay
demand until, or make demand at anytime before, any payment date specified in
the demand payment section of this Note.
3. At the option of Bank One, and without in any way limiting its
right to demand payment in full of this Note if it is due and payable on
demand, all Obligations shall become immediately due and payable without prior
notice or demand upon the occurrence of any of the following events of default:
(a) failure of Obligor to make payment when due of the principal or interest of
this Note and/or any of the Obligations; (b) failure of Obligor to furnish
satisfactory collateral or additional collateral, as the case may be, as
hereinafter agreed; (c) failure of Obligor to comply with any of the terms and
conditions of this Note and/or any of the Obligations or contained in any
security agreement or instrument securing this Note and/or any of the
Obligations; (d) death of Obligor; (e) dissolution of, termination of existence
of, insolvency of, business failure of, appointment of a receiver for, or
assignment for the benefit of creditors or a commencement of any proceeding
under any bankruptcy, reorganization, arrangement or liquidation law by or
against Obligor or any property of Obligor; (f) failure of Obligor to pay when
due any premium on any policy of life or other insurance pledged hereunder, or
held in connection with any Collateral; (g) [deleted by interlineation]; (h)
the institution of any garnishment proceedings by attachment, levy or otherwise
against any deposit balance or Collateral maintained or deposited with Bank One
by Obligor; (i) failure of Obligor to either furnish Bank One within thirty
(30) days after written request by Bank One, current financial statements,
including income tax returns, in form satisfactory to Bank One or to permit
inspection of any of Obligor's books or records; (j) any representation,
warranty, statement, report, or application made, or furnished, by Obligor
proving to have been false, erroneous or misleading, in any material respect at
the time of the making thereof; (k) the issuance of any tax levy or lien
against Obligor or Obligor's failure to pay, withhold, collect or remit any tax
when assessed or due; (l) sale or transfer of Collateral out of Obligor's
ordinary course of business; (m) a bulk sale of Obligor's assets; or (n)
suspension or liquidation of Obligor's business.
<PAGE> 4
4. No delay or omission on the part of Bank One in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Note. A waiver on any one occasion shall not be construed as a bar
to or waiver of any such right and or remedy on any future occasion.
5. Obligor waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note; and assents to any extension
or postponement of the time of payment, modification or waiver of any payment
amount or any other indulgence, and/or to the addition or release of any other
party or person liable hereon or of any Collateral herefore.
6. This Note shall be governed by and construed in accordance
with the laws of the State of Ohio in all respects.
7. Obligor will pay on demand all costs of collection and
attorneys' fees incurred or paid by Bank One in enforcing this Note when the
same have become due, whether by acceleration or otherwise, if allowable by
law.
8. Bank One shall have the right to charge interest on the amount
of any interest payment not paid as provided in this Note at the same rate as
applicable to the principal sum.
9. Payments shall be allocated between principal, interest and
fees, if any, in the discretion of Bank One, and, when applicable, any
prepayments will be applied to principal in the inverse order of scheduled
maturity.
10. All rights, powers, privileges and immunities herein granted
to Bank One shall extend to its successors and assigns and any other legal
holder of this Note. All rights, powers, privileges and immunities of Obligor
hereunder may not in any way be assigned, transferred or sold. Bank One at any
time is authorized to correct patient errors and fill in any blanks herein.
11. Obligor acknowledges that this Note evidences a loan made
primarily for business, commercial or agricultural purposes and not primarily
for personal, family or household purposes.
12. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One shall have all of the remedies
provided in the security documents including the remedies of a secured party
under the Uniform Commercial Code. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Bank One will give Obligor reasonable notice of the time and
place of any public sale thereof or of the time after which any private sale or
other intended disposition is to be made. The requirement of reasonable notice
shall be met if such notice is mailed, postage prepaid, to the last known
address of Obligor at least ten (10) days before the time of the sale or
disposition.
<PAGE> 5
13. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One is empowered to collect, sell,
assign, transfer, set over and deliver the whole or any part of any Collateral
through any stock exchange, broker or agent or at any public or private sale,
either for cash or credit or for future delivery, without assumption of credit
risk, and at any such sale Bank One may become the purchaser of any part of the
Collateral discharged from right of redemption. Upon any such sale, after
deducting all costs and expenses of every kind related to retaking, storing and
selling the Collateral, the residue of the proceeds thereof may be applied as
Bank One may determine toward the payment of any or all of the Obligations,
whether due or not, returning the overage, if any, to Obligor and Obligor shall
be and remain liable to Bank One for every and any deficiency after application
of such proceeds.
14. Right is expressly granted to Bank One at its option to
transfer at any time to itself or to its nominee any securities pledged
hereunder, to receive and retain the income thereon, all splits, substitutions
and divisions, and hold the same as security herefore, or apply it on the
principal or interest which has become due on any Obligation, whether by
acceleration or otherwise, and, in the case of voting shares or interests
pledged to vote the same when Bank One deems the exercise of such power
necessary to maintain or protect such Collateral.
15. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One may, at its option, demand, sue
for, collect or make any compromise or settlement it deems desirable with
reference to the Collateral. Bank One shall not be bound to take any steps
necessary to preserve any rights in the Collateral against prior parties,
inasmuch as Obligor agrees to assume such responsibility. Bank One shall have
no duty with respect to collection or protection of the Collateral or of any
income on the Collateral as to the preservation of any rights pertaining to the
Collateral beyond safe custody.
16. Obligor will deliver to Bank One satisfactory collateral or
additional collateral, as the case may be, should Bank One so require.
17. Obligor agrees that Bank One may take possession of any
Collateral without prior judicial hearing or process, hereby expressly waives
any right to such judicial hearing process, and hereby assents to any
substitution, exchange or release of Collateral.
18. When any Obligation becomes due, by acceleration or otherwise,
Bank One shall have the right, without notice to Obligor, any party claiming
under Obligor, or any other party, such notice being hereby expressly waived,
and without regard to the adequacy of value of the Collateral or the solvency
or insolvency of Obligor, to the appointment of a receiver by a court of
competent jurisdiction chosen solely by Bank One, upon application at any time,
whether prior to or after a judgment has been obtained against Obligor, to take
possession of the assets and/or business of Obligor together with its books and
records, to maintain or to liquidate said assets and/or business, to collect
the proceeds of the Collateral and apply the net proceeds to any Obligation.
Obligor consents to jurisdiction and venue for the appointment of such receiver
by such court and agrees that any receiver so appointed may take possession of
the assets and/or business of the Obligor, together with the Collateral in any
other jurisdiction in which the Collateral may be located.
<PAGE> 6
19. Obligor authorizes Bank One to exchange Bank One deposit,
credit and borrowing information about Obligor with third parties.
20. Obligor jointly and severally hereby authorizes any attorney
at law to appear in an action on this Note at any time after the same becomes
due, whether by acceleration or otherwise, in any court of record in or of the
State of Ohio, or of elsewhere, and to waive the issuing and service of process
against any or all of said parties, enter an appearance and to confess judgment
is in favor of Bank One against any or all of said parties for the amount that
may be due, together with costs of suit, and to release all errors and waive
all rights of appeal and stay of execution from the judgment rendered. After
the judgment is entered against one or more of said parties, the powers wherein
conferred may be exercised as to one or more of the others. The death of
Obligor shall not impair the authority herein granted as to the survivor or
survivors of Obligor.
<PAGE> 7
EXHIBIT A
The interest rate options available to Borrower shall be as follows, if, as and
when offered by Bank:
MONEY MARKET RATE - meaning interest shall be calculated daily on the current
outstanding principal balance at a variable rate equal to the Money Market
rate, as determined solely by Bank, plus 175 basis points. Interest payments
under the Money Market Rate option shall be due and payable on the first day of
each month beginning December 1, 1995.
LIBOR RATE - meaning the London Interbank Offer Rate, as determined solely by
Bank, plus 175 basis points for a period of 30, 60 or 90 day term as selected
by Borrower. Interest payments under the Libor Rate option shall be due and
payable at the expiration of the 30, 60 or 90 day term.
Telxon Corporation
By: /s/ Kenneth W. Haver
---------------------
Kenneth W. Haver, Senior Vice President,
Chief Financial Officer and Treasurer
<PAGE> 8
[BANK1ONE(R) logo]
November 22, 1995
Mr. Kenneth Haver
Chief Financial Officer
Telxon Corporation
3330 West Market Street
P.O. Box 5582
Akron, Ohio 44334-0582
Dear Mr. Haver:
This Letter Agreement is issued in conjunction with the Business Purpose
Revolving Promissory Note (the "Note") in the amount of $30,000,000.00 executed
on the 24[th] day of September, 1995, and the terms and conditions contained
herein are considered to be an integral part of that Note. Bank One, Akron,
N.A. (the "Bank") agrees to disburse funds to Telxon Corporation (the
"Borrower") subject to the Borrower meeting all of the Terms and Conditions
contained in the Note and all of the terms and conditions contained in this
Letter Agreement.
The Borrower is currently a party to the Amended and Restated Revolving Credit,
Term Loan and Security Agreement (the "Agreement"), dated March 31, 1995, with
the Bank of New York Commercial Corporation acting as lender and as agent. In
this Agreement, the Borrower has agreed to provide a security interest in all
Receivables, all Equipment, all General Intangibles, all Inventory, the Texas
Real Property and other property as further described in Section 1.2. With the
exception of these liens, the Borrower shall not, without prior written consent
of the Bank, create any additional liens, except Permitted Encumbrances as
further described in Section 1.2 of the Agreement.
This Agreement required the Borrower to meet a number of Affirmative and
Negative Covenants, with a failure to do so resulting in a Default as further
described in the Events of Default section of the Agreement. By executing this
Letter Agreement, the Borrower hereby agrees to meet each Affirmative and
Negative Covenant contained in the Agreement, and provides the same Default
remedies to the Bank for principal advances under the Note in the event of a
failure to properly cure a Default. In addition, in the event that the Bank of
New York Commercial Corporation declares a Default under the Agreement, the
Bank may also declare a default under the Note.
<PAGE> 9
Mr. Kenneth W. Haver
November 22, 1995
Page 2
If, for any calendar month during the term of this Note, the average daily
unpaid balance of the disbursements does not equal the committed face amount of
the Note, the Borrower agrees to pay to the Bank an Unused Line fee of 1/8
percent per annum on a monthly basis on the unused portion of the Note. The
Borrower may terminate the Note at any time prior to the expiration date of
January 1, 1996 and incur an Unused Line Fee on a pro rate basis up to the point
of termination. The Borrower may reduce the committed face amount of the Note
at any time prior to the expiration and incur an Unused Line Fee on the lower
amount of the Note.
This Letter Agreement and the Note comprise all of the terms and conditions
underlying the extension of credit by the Bank to the Borrower. By executing
this Letter Agreement below, the Borrower agrees to be bound by all terms and
conditions.
Very truly yours,
/s/ Steven B. Currier
Steven B. Currier
Vice President
Acknowledged and agreed to this 24[th] day of November, 1995:
Telxon Corporation
By: /s/ Kenneth W. Haver
----------------------
Name: Kenneth W. Haver
- ---------------------
Title: Senior Vice President, CFO & Treasurer
- ---------------------------------------------
<PAGE> 1
EXHIBIT 10.3.4
BUSINESS PURPOSE REVOLVING PROMISSORY NOTE
[BANK1ONE(R) logo]
Date: January 31, 1996 Executed at Akron, Ohio
Amount $30,000,000.00
For value received, receipt of which is hereby acknowledged, the undersigned
jointly and severally promises to pay to the order of Bank One, Akron, NA
("Bank One") at its principal office located at 50 South Main Street, Akron,
Ohio or at such other place as Bank One may designate from time to time, in
lawful money of the United States of America, the principal sum of Thirty
Million and 00/100 Dollars or such lesser portion thereof as may have from time
to time been disbursed to, or for the benefit of the undersigned, and remaining
unpaid pursuant to the books or records of Bank One, together with interest on
the unpaid balance of principal advanced from the date(s) of disbursement until
paid in full as set forth below. The principal amount of this Note may be
advanced, repaid and readvanced in full or part during the term of this Note
provided no event of default or demand for payment exists hereunder.
RATE OF INTEREST AND ITS CALCULATION
/X/ Fixed: SEE ATTACHED EXHIBIT A percent (________%) per annum
/__/ Variable: Prime rate plus _____________________ percent (_____%) per
annum which will be adjusted to reflect the change in the
Prime Rate:
/_/ on the first day of each month following the month
in which the Prime Rate changes
/_/ on the same day as the Prime Rate changes
"Prime Rate" means the rate announced from time to time by Bank One as its
prime rate.
Interest shall be calculated on a 360 day year basis and shall be calculated by
dividing the actual number of days which elapsed during the period interest
accrued by a year of 360 days times the interest rate in effect.
After this Note becomes due and payable, whether at maturity, by acceleration
or otherwise, the interest rate on the outstanding principal sum and accrued
interest will be the rate stated above plus five percent (5%) per annum.
Bank One shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or five (5)% of the schedule payment in the
event of a default in payment that remains uncured for a period of at least ten
(10) days.
<PAGE> 2
TIME AND METHOD OF PAYMENT
/X/ PRINCIPAL DUE AND PAYABLE ON THE MATURITY DATE, INTEREST DUE AND
PAYABLE ON THE MATURITY DATE OR PERIODICALLY:
MATURITY DATE: March 1, 1996
PRINCIPAL: The principal balance is immediately due and payable on the
MATURITY DATE
INTEREST: Interest is immediately due and payable:
/_/ on the MATURITY DATE
/X/ beginning SEE ATTACHED EXHIBIT A and continuing
(see attached Exhibit A) thereafter until the
MATURITY DATE on which date all accrued and unpaid
interest shall be immediately due and payable.
/_/ PRINCIPAL AND INTEREST DUE AND PAYABLE ON DEMAND. Principal and interest
are immediately due and payable on demand but until such time as demand for
payment is made, accrued interest thereon is due and payable as hereinafter
provided:
INTEREST: Date of first interest payment: and continuing
-------------------,
/_/ Monthly /_/ Quarterly thereafter, until demand is made.
This Note /_/ is /_/ is not issued in conjunction with an agreement or letter
dated ______________________, 19_____, to which reference is made, and /_/ is
/X/ is not supported by other security documents.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE
TELXON CORPORATION
By: /s/ Kenneth W. Haver
------------------------
Kenneth W. Harver, Senior Vice President,
Chief Financial Officer and Treasurer
Additional terms and conditions of this Promissory Note
are contained on the reverse side of this document.
<PAGE> 3
[reverse side]
ADDITIONAL TERMS AND CONDITIONS OF PROMISSORY NOTE
1. All credits, deposits, accounts, securities or moneys of any
signer, endorser or guarantor hereof ("Obligor", meaning each jointly and
severally), and all other property or rights belonging to or in which Obligor
has any interest, now or hereafter pledged or hypothecated to Bank One or in
the possession or control of Bank One ("Collateral") shall be held by Bank One
as security for the payment of this Note, and of every other liability now or
hereafter existing of Obligor, absolute or contingent, due or to become due,
and in whatsoever manner acquired by or accruing to Bank One ("Obligations").
Bank One shall have the right to setoff any such Collateral at any time without
prior notice of Obligor.
2. If this Note is due and payable on demand it is subject to
being called at any time upon actual demand by Bank One. The inclusion of a
payment schedule is merely to provide terms for payment in the absence of
actual demand and does not affect or impair Bank One's absolute right to demand
payment of this Note at any time. Obligor agrees that Bank One may delay
demand until, or make demand at anytime before, any payment date specified in
the demand payment section of this Note.
3. At the option of Bank One, and without in any way limiting its
right to demand payment in full of this Note if it is due and payable on
demand, all Obligations shall become immediately due and payable without prior
notice or demand upon the occurrence of any of the following events of default:
(a) failure of Obligor to make payment when due of the principal or interest of
this Note and/or any of the Obligations; (b) failure of Obligor to furnish
satisfactory collateral or additional collateral, as the case may be, as
hereinafter agreed; (c) failure of Obligor to comply with any of the terms and
conditions of this Note and/or any of the Obligations or contained in any
security agreement or instrument securing this Note and/or any of the
Obligations; (d) death of Obligor; (e) dissolution of, termination of existence
of, insolvency of, business failure of, appointment of a receiver for, or
assignment for the benefit of creditors or a commencement of any proceeding
under any bankruptcy, reorganization, arrangement or liquidation law by or
against Obligor or any property of Obligor; (f) failure of Obligor to pay when
due any premium on any policy of life or other insurance pledged hereunder, or
held in connection with any Collateral; (g) [deleted by interlineation]; (h)
the institution of any garnishment proceedings by attachment, levy or otherwise
against any deposit balance or Collateral maintained or deposited with Bank One
by Obligor; (i) failure of Obligor to either furnish Bank One within thirty
(30) days after written request by Bank One, current financial statements,
including income tax returns, in form satisfactory to Bank One or to permit
inspection of any of Obligor's books or records; (j) any representation,
warranty, statement, report, or application made, or furnished, by Obligor
proving to have been false, erroneous or misleading, in any material respect at
the time of the making thereof; (k) the issuance of any tax levy or lien
against Obligor or Obligor's failure to pay, withhold, collect or remit any tax
when assessed or due; (l) sale or transfer of Collateral out of Obligor's
ordinary course of business; (m) a bulk sale of Obligor's assets; or (n)
suspension or liquidation of Obligor's business.
<PAGE> 4
4. No delay or omission on the part of Bank One in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Note. A waiver on any one occasion shall not be construed as a bar
to or waiver of any such right and or remedy on any future occasion.
5. Obligor waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note; and assents to any extension
or postponement of the time of payment, modification or waiver of any payment
amount or any other indulgence, and/or to the addition or release of any other
party or person liable hereon or of any Collateral herefore.
6. This Note shall be governed by and construed in accordance
with the laws of the State of Ohio in all respects.
7. Obligor will pay on demand all costs of collection and
attorneys' fees incurred or paid by Bank One in enforcing this Note when the
same have become due, whether by acceleration or otherwise, if allowable by
law.
8. Bank One shall have the right to charge interest on the amount
of any interest payment not paid as provided in this Note at the same rate as
applicable to the principal sum.
9. Payments shall be allocated between principal, interest and
fees, if any, in the discretion of Bank One, and, when applicable, any
prepayments will be applied to principal in the inverse order of scheduled
maturity.
10. All rights, powers, privileges and immunities herein granted
to Bank One shall extend to its successors and assigns and any other legal
holder of this Note. All rights, powers, privileges and immunities of Obligor
hereunder may not in any way be assigned, transferred or sold. Bank One at any
time is authorized to correct patient errors and fill in any blanks herein.
11. Obligor acknowledges that this Note evidences a loan made
primarily for business, commercial or agricultural purposes and not primarily
for personal, family or household purposes.
12. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One shall have all of the remedies
provided in the security documents including the remedies of a secured party
under the Uniform Commercial Code. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Bank One will give Obligor reasonable notice of the time and
place of any public sale thereof or of the time after which any private sale or
other intended disposition is to be made. The requirement of reasonable notice
shall be met if such notice is mailed, postage prepaid, to the last known
address of Obligor at least ten (10) days before the time of the sale or
disposition.
<PAGE> 5
13. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One is empowered to collect, sell,
assign, transfer, set over and deliver the whole or any part of any Collateral
through any stock exchange, broker or agent or at any public or private sale,
either for cash or credit or for future delivery, without assumption of credit
risk, and at any such sale Bank One may become the purchaser of any part of the
Collateral discharged from right of redemption. Upon any such sale, after
deducting all costs and expenses of every kind related to retaking, storing and
selling the Collateral, the residue of the proceeds thereof may be applied as
Bank One may determine toward the payment of any or all of the Obligations,
whether due or not, returning the overage, if any, to Obligor and Obligor shall
be and remain liable to Bank One for every and any deficiency after application
of such proceeds.
14. Right is expressly granted to Bank One at its option to
transfer at any time to itself or to its nominee any securities pledged
hereunder, to receive and retain the income thereon, all splits, substitutions
and divisions, and hold the same as security herefore, or apply it on the
principal or interest which has become due on any Obligation, whether by
acceleration or otherwise, and, in the case of voting shares or interests
pledged to vote the same when Bank One deems the exercise of such power
necessary to maintain or protect such Collateral.
15. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One may, at its option, demand, sue
for, collect or make any compromise or settlement it deems desirable with
reference to the Collateral. Bank One shall not be bound to take any steps
necessary to preserve any rights in the Collateral against prior parties,
inasmuch as Obligor agrees to assume such responsibility. Bank One shall have
no duty with respect to collection or protection of the Collateral or of any
income on the Collateral as to the preservation of any rights pertaining to the
Collateral beyond safe custody.
16. Obligor will deliver to Bank One satisfactory collateral or
additional collateral, as the case may be, should Bank One so require.
17. Obligor agrees that Bank One may take possession of any
Collateral without prior judicial hearing or process, hereby expressly waives
any right to such judicial hearing process, and hereby assents to any
substitution, exchange or release of Collateral.
18. When any Obligation becomes due, by acceleration or otherwise,
Bank One shall have the right, without notice to Obligor, any party claiming
under Obligor, or any other party, such notice being hereby expressly waived,
and without regard to the adequacy of value of the Collateral or the solvency
or insolvency of Obligor, to the appointment of a receiver by a court of
competent jurisdiction chosen solely by Bank One, upon application at any time,
whether prior to or after a judgment has been obtained against Obligor, to take
possession of the assets and/or business of Obligor together with its books and
records, to maintain or to liquidate said assets and/or business, to collect
the proceeds of the Collateral and apply the net proceeds to any Obligation.
Obligor consents to jurisdiction and venue for the appointment of such receiver
by such court and agrees that any receiver so appointed may take possession of
the assets and/or business of the Obligor, together with the Collateral in any
other jurisdiction in which the Collateral may be located.
<PAGE> 6
19. Obligor authorizes Bank One to exchange Bank One deposit,
credit and borrowing information about Obligor with third parties.
20. Obligor jointly and severally hereby authorizes any attorney
at law to appear in an action on this Note at any time after the same becomes
due, whether by acceleration or otherwise, in any court of record in or of the
State of Ohio, or of elsewhere, and to waive the issuing and service of process
against any or all of said parties, enter an appearance and to confess judgment
is in favor of Bank One against any or all of said parties for the amount that
may be due, together with costs of suit, and to release all errors and waive
all rights of appeal and stay of execution from the judgment rendered. After
the judgment is entered against one or more of said parties, the powers wherein
conferred may be exercised as to one or more of the others. The death of
Obligor shall not impair the authority herein granted as to the survivor or
survivors of Obligor.
<PAGE> 7
EXHIBIT A
The interest rate options available to Borrower shall be as follows, if, as and
when offered by Bank:
MONEY MARKET RATE - meaning interest shall be calculated daily on the current
outstanding principal balance at a variable rate equal to the Money Market
rate, as determined solely by Bank, plus 175 basis points. Interest payments
under the Money Market Rate option shall be due and payable on the first day of
each month beginning February 1, 1996.
Telxon Corporation
By: /s/ Kenneth W. Haver
---------------------
Kenneth W. Haver, Senior Vice President,
Chief Financial Officer and Treasurer
<PAGE> 8
[BANK1ONE(R) logo]
January 31, 1996
Mr. Kenneth Haver
Chief Financial Officer
Telxon Corporation
3330 West Market Street
P.O. Box 5582
Akron, Ohio 44334-0582
Dear Mr. Haver:
This Letter Agreement is issued in conjunction with the Business Purpose
Revolving Promissory Note (the "Note") in the amount of $30,000,000.00 executed
on the 31st day of January, 1996, and the terms and conditions contained
herein are considered to be an integral part of that Note. Bank One, Akron,
N.A. (the "Bank") agrees to disburse funds to Telxon Corporation (the
"Borrower") subject to the Borrower meeting all of the Terms and Conditions
contained in the Note and all of the terms and conditions contained in this
Letter Agreement.
The Borrower is currently a party to the Amended and Restated Revolving Credit,
Term Loan and Security Agreement (the "Agreement"), dated March 31, 1995, with
the Bank of New York Commercial Corporation acting as lender and as agent. In
this Agreement, the Borrower has agreed to provide a security interest in all
Receivables, all Equipment, all General Intangibles, all Inventory, the Texas
Real Property and other property as further described in Section 1.2. With the
exception of these liens, the Borrower shall not, without prior written consent
of the Bank, create any additional liens, except Permitted Encumbrances as
further described in Section 1.2 of the Agreement.
This Agreement required the Borrower to meet a number of Affirmative and
Negative Covenants, with a failure to do so resulting in a Default as further
described in the Events of Default section of the Agreement. By executing this
Letter Agreement, the Borrower hereby agrees to meet each Affirmative and
Negative Covenant contained in the Agreement, and provides the same Default
remedies to the Bank for principal advances under the Note in the event of a
failure to properly cure a Default. In addition, in the event that the Bank of
New York Commercial Corporation declares a Default under the Agreement, the
Bank may also declare a default under the Note.
<PAGE> 9
Mr. Kenneth W. Haver
November 22, 1995
Page 2
If, for any calendar month during the term of this Note, the average daily
unpaid balance of the disbursements does not equal the committed face amount of
the Note, the Borrower agrees to pay to the Bank an Unused Line fee of 1/8
percent per annum on a monthly basis on the unused portion of the Note. The
Borrower may terminate the Note at any time prior to the expiration date of
March 1, 1996 and incur an Unused Line Fee on a pro rate basis up to the point
of termination. The Borrower may reduce the committed face amount of the Note
at any time prior to the expiration and incur an Unused Line Fee on the lower
amount of the Note.
This Letter Agreement and the Note comprise all of the terms and conditions
underlying the extension of credit by the Bank to the Borrower. By executing
this Letter Agreement below, the Borrower agrees to be bound by all terms and
conditions.
Very truly yours,
/s/ Steven B. Currier
Steven B. Currier
Vice President
Acknowledged and agreed to this 31st day of January, 1996:
Telxon Corporation
By: /s/ Kenneth W. Haver
----------------------
Name: Kenneth Haver
---------------
Title: Senior Vice President & CFO
-----------------------------
<PAGE> 1
EXHIBIT 10.9.1
FIRST AMENDMENT TO SHAREHOLDER AGREEMENT
----------------------------------------
THIS FIRST AMENDMENT TO SHAREHOLDER AGREEMENT (this "Amendment"), is made as
of and is effective as of September 29, 1995 by and among NEW META LICENSING
CORPORATION, a Delaware corporation (the "Corporation") and each of the
undersigned (collectively referred to as the "Shareholders"):
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Shareholders and the Corporation entered
into a Shareholder Agreement (the "Shareholder Agreement); and
WHEREAS, to correct and clarify the Shareholder Agreement to reflect the
intentions of the parties thereto, the Corporation and the Shareholders enter
into this Amendment;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be legally and equitably bound, hereby agree as follows:
1. Article 4(d)(iii)(A) of the Shareholder Agreement is amended by replacing
that section in its entirety with the following:
One fifth (1/5) of the Shares owned on the date hereof by each of Ynjiun
P. Wang, Yung Fu Chang and John Chu, respectively, are hereby deemed to
have "Fixed" on January 1, 1995 and one fifth (1/5th) shall "Fix" on
each of the next four (4) anniversaries of January 1, 1995.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first appearing above.
NEW META LICENSING CORPORATION
By: /s/ David B. Swank
---------------------------
David B. Swank, President
<PAGE> 1
EXHIBIT 10.9.2
SECOND AMENDMENT TO SHAREHOLDER AGREEMENT
-----------------------------------------
THIS SECOND AMENDMENT TO SHAREHOLDER AGREEMENT (this "Second Amendment"), is
made as of and is effective as of January 31, 1996 by and among METANETICS
CORPORATION fka New Meta Licensing Corporation, a Delaware corporation (the
"Corporation") and each of the undersigned (collectively referred to as the
"Shareholders"):
W I T N E S S E T H:
--------------------
WHEREAS, as of the date hereof, the Shareholders and the Corporation entered
into a Shareholder Agreement (the "Shareholder Agreement) and a First Amendment
to Shareholders Agreement (the "First Amendment"); and
WHEREAS, the Shareholders desire to further amend the Shareholder Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Second
Amendment, intending to be legally and equitably bound, hereby agree as
follows:
1. Article 4(d)(iii)(A) of the Shareholder Agreement is amended by replacing
that section in its entirety with the following:
One fifth (1/5) of the Shares owned on the date hereof by each of Yung
Fu Chang and John Chu, respectively, are hereby deemed to have "Fixed"
on January 1, 1995 and one fifth (1/5th) shall "Fix" on each of the next
four (4) anniversaries of January 1, 1995, and the shares of Ynjiun P.
Wang are deemed to have "Fixed" on January 1, 1995.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the date first appearing above.
METANETICS CORPORATION
By: /s/ Jay R. Faeges
--------------------
Its: Assistant Secretary
<PAGE> 1
EXHIBIT 11
----------
EXHIBIT 11* TO REPORT ON FORM 10-Q
TELXON CORPORATION AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------ -----------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net income applicable to
common shares $ 4,205 $ 2,464 $ 9,245 $ 5,356
======= ======= ======= =======
Weighted average common shares
outstanding for the period 16,302 15,620 16,301 15,788
Increase in weighted average from:
Dilutive effect of stock
options 1 0 62 0
------ ------- ------- -------
Weighted average common shares
assuming issuance of the above
securities 16,303 15,620 16,363 15,788
======= ======= ======= =======
Net income per common share:
On the weighted average
common shares outstand-
ing for the year $ .26 $ .16 $ .57 $ .34
Assuming issuance of shares
for dilutive stock
options** $ .26 $ .16 $ .57 $ .34
</TABLE>
* Numbered in accordance with Item 601 of Regulation S-K.
** This calculation is submitted in accordance with Regulation S-K Item
601(b)(1) although not required for income statement presentation
because it results in dilution of less than three percent. The
Company's 7 1/2% Convertible Subordinated Debentures Due 2012 and
Convertible Subordinated Notes due 2003 were omitted from the fully
diluted calculation due to their antidilutive effect.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 24,305
<SECURITIES> 1,349
<RECEIVABLES> 133,782
<ALLOWANCES> 2,010
<INVENTORY> 90,890
<CURRENT-ASSETS> 284,032
<PP&E> 121,794
<DEPRECIATION> 70,163
<TOTAL-ASSETS> 363,649
<CURRENT-LIABILITIES> 94,038
<BONDS> 113,168
<COMMON> 160
0
0
<OTHER-SE> 152,984
<TOTAL-LIABILITY-AND-EQUITY> 363,649
<SALES> 291,381
<TOTAL-REVENUES> 341,586
<CGS> 171,935
<TOTAL-COSTS> 200,453
<OTHER-EXPENSES> 122,982
<LOSS-PROVISION> 1,427
<INTEREST-EXPENSE> 4,646
<INCOME-PRETAX> 15,099
<INCOME-TAX> 5,854
<INCOME-CONTINUING> 9,245
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,245
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
