Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
(X) Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 30, 1996
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period from
_______ to _______
Commission File No. 1-6635
APPLIED MAGNETICS CORPORATION
---------------------------------------
(Exact name of registrant as specified in its charter)
A Delaware Corporation 95-1950506
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
75 Robin Hill Road, Goleta, California 93117
-------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (805) 683-5353
(No Change)
---------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
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 ninety days. Yes ...X... No ......
Indicate the number of shares outstanding of each of the issuer's
classes of common stock: 23,046,898 $.10 par value common stock as
of May 7, 1996.
Exhibit Index on Page 17
Page 1 of 117 <PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
The unaudited condensed consolidated financial statements included
herein have been prepared by Applied Magnetics Corporation and its
subsidiaries (the "Company") pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and
regulations. The unaudited condensed consolidated financial
statements and selected notes included therein should be read in
conjunction with the audited consolidated financial statements and
the notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995.
The following unaudited condensed consolidated financial statements
reflect all adjustments, consisting only of normal and recurring
adjustments, which, in the opinion of management, are necessary to
present fairly the consolidated financial position and results of
operations for the periods presented.
Page 2 of 117 <PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations - Unaudited
(In thousands except share and per share data)
For the three For the six
months ended months ended
March 30, March 31, March 30, March 31,
--------- --------- --------- ---------
1996 1995 1996 1995
---- ---- ---- ----
Net sales $ 86,706 $ 64,919 $ 181,415 $ 120,292
Cost of sales 61,409 59,796 132,604 115,963
---------- ---------- ---------- ----------
Gross profit 25,297 5,123 48,811 4,329
---------- ---------- ---------- ----------
Research and
development
expenses 13,972 7,285 27,287 15,067
Selling, general
and administrative
expenses 1,890 1,654 3,561 3,849
---------- ---------- ---------- ----------
Total operating
expenses 15,862 8,939 30,848 18,916
---------- ---------- ---------- ----------
Income (Loss) from
operations 9,435 (3,816) 17,963 (14,587)
Interest income 569 398 1,107 669
Interest expense (1,293) (1,086) (2,719) (2,080)
Other income, net 167 1,996 1,656 1,992
---------- ---------- ---------- ----------
Income (Loss) before
taxes 8,878 (2,508) 18,007 (14,006)
Provision for income
taxes 182 183 283 399
---------- ---------- ---------- ----------
Net income (loss) $ 8,696 $ (2,691) $ 17,724 $ (14,405)
========== ========== ========== ==========
Net income (loss)
per share: $0.37 ($0.12) $0.74 ($0.65)
========== ========== ========== ==========
Weighted average
common and dilutive
equivalent shares
outstanding: 23,812,784 22,099,879 23,793,627 22,087,082
========== ========== ========== ==========
The accompanying Selected Notes to Condensed Consolidated Financial
Statements are an integral part of these condensed consolidated
statements.
Page 3 of 117 <PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets - Unaudited
(In thousands except share and par value data)
ASSETS March 30, September 30,
------------ -------------
1996 1995
Current Assets: ---- ----
Cash and cash equivalents $ 133,937 $ 48,236
Accounts receivable, net 46,605 36,571
Inventories 30,569 32,727
Prepaid expenses and other 8,459 10,411
---------- ----------
219,570 127,945
---------- ----------
Property, plant and equipment, at cost 271,138 252,953
Less-accumulated depreciation (151,931) (148,636)
---------- ----------
119,207 104,317
---------- ----------
Other assets 17,605 14,555
---------- ----------
$ 356,382 $ 246,817
========== ==========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 2,014 $ 12,004
Bank notes payable 45,710 54,371
Accounts payable 39,768 44,535
Accrued payroll and benefits 10,667 9,361
Other current liabilities 13,302 13,637
---------- ----------
111,461 133,908
---------- ----------
Long-term debt, net 117,150 3,254
---------- ----------
Other liabilities 4,930 6,063
---------- ----------
Shareholders' Investment:
Preferred stock, $.10 par value,
authorized 5,000,000 shares, none issued
and outstanding - -
Common stock, $.10 par value, authorized
40,000,000 shares, issued 23,006,966 and
22,619,205 shares at March 30, 1996 and
September 30, 1995, respectively 2,301 2,262
Paid-in capital 183,041 181,191
Retained deficit (61,307) (79,031)
---------- ----------
124,035 104,422
Page 4 of 117 <PAGE>
Treasury stock, at cost (116,995 shares as
of March 30, 1996, and 96,603 as of
September 30, 1995) (1,194) (830)
---------- ----------
122,841 103,592
---------- ----------
$ 356,382 $ 246,817
========== ==========
The accompanying Selected Notes to Condensed Consolidated Financial
Statements are an integral part of these condensed consolidated
balance sheets.
Page 5 of 117 <PAGE>
APPLIED MAGNETICS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows - Unaudited
(In thousands)
Cash flows from operating activities:
Net income (loss) $ 17,724 $ (14,405)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 13,932 13,168
Gain on sale of business and assets - (3,110)
Provision for receivable allowances and
related costs - 50
Amortization of unearned restricted
stock compensation - 394
Other assets 61 106
Other liabilities (1,133) (281)
Other, net 294 (189)
Working capital changes affecting cash
flows from operations:
Accounts receivable (10,034) (9,591)
Inventories 2,158 2,967
Prepaid expenses and other 1,010 (1,173)
Accounts payable (4,767) 10,779
Accrued payroll and benefits 1,371 (174)
Other current liabilities (335) (2,381)
---------- ----------
Net cash provided by (used in) operating
activities 20,281 (3,840)
---------- ----------
Cash flows from investing activities:
Additions to property, plant and equipment (28,475) (7,406)
Proceeds from sale of business and
assets, net - 22,234
Repayment of notes receivable 1,071 1,364
---------- ----------
Net cash provided by (used in) investing
activities (27,404) 16,192
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of convertible
subordinated debentures 115,000 -
Proceeds from issuance of debt 78,935 85,534
Repayment of debt (98,385) (85,311)
Payment of debt issuance costs (3,842) -
Purchase of treasury stock (364) -
Proceeds from stock options exercised 1,824 298
---------- ----------
Net cash provided by financing
activities 93,168 521
---------- ----------
Page 6 of 117 <PAGE>
Effect of exchange rate changes on cash
and cash equivalents (344) 350
---------- ----------
Net increase in cash and cash equivalents 85,701 13,223
---------- ----------
Cash and cash equivalents at beginning of
period 48,236 20,761
---------- ----------
Cash and cash equivalents at end of period $ 133,937 $ 33,984
========== ==========
The accompanying Selected Notes to Condensed Consolidated Financial
Statements are an integral part of these condensed consolidated
statements.
Page 7 of 117 <PAGE>
Selected Notes to Condensed Consolidated Financial Statements
Unaudited
(March 30, 1996)
Note A: Inventories
-------------------
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventory costs consist of purchased materials and services,
direct production labor and manufacturing overhead expense. The
components of inventory are as follows (in thousands):
March 30, September 30,
1996 1995
-------------- -------------
Purchased parts and
manufacturing supplies $ 13,462 $ 13,036
Work in process 15,869 17,589
Finished goods 1,238 2,102
------ -------
$ 30,569 $ 32,727
Note B: Restructuring Reserve
-----------------------------
During the six months ended March 30, 1996 and March 31, 1995,
expenditures of approximately $1.0 million and $1.2 million,
respectively, were charged to the 1993 restructuring reserve, which
related to the consolidation of certain of the Company's
manufacturing resources.
Note C: Sale of Assets
----------------------
During the first quarter of fiscal 1996, the Company received final
payment of $1.3 million related to the completion of certain
milestones and release of the escrow holdback in connection with the
sale of the Company's Tape Head business unit to Seagate Technology,
Inc. ("Seagate") in December 1994. This completes the sale to
Seagate.
Note D: Long Term Debt
----------------------
On March 22, 1996, the Company completed the sale, in an offshore
offering and in a concurrent private placement in the United States,
of $115.0 million of its 7.0% Convertible Subordinated Debentures
(the "Convertible Debentures") due in 2006. The net proceeds were
used to retire a $10.0 million line of credit maturing March 29,
1996. The balance of the proceeds will be used for working capital
and other general corporate purposes, including capital
expenditures.
Of the $115.0 million debt, $22.0 million of the Convertible
Debentures may be converted, at any time after May 1, 1996, at a
conversion price of $18.60 per share. The remaining $93.0 million
Page 8 of 117 <PAGE>
of Convertible Debentures may be converted at the same price, at any
time after March 22, 1997.
Page 9 of 117 <PAGE>
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
During fiscal 1995, in response to market demands, the Company
furthered its technological development of the nanoslider form
factor thin film disk head products, made substantial progress in
thin film production process improvements and increased production
capacity for thin film disk heads. This resulted in quarterly
improvements in net sales, unit shipments and profit margins for
fiscal 1995 and the first quarter of fiscal 1996. During the second
quarter of fiscal 1996, the Company began shipping the next
generation of thin film disk heads, which contributed to a 3.2%
decrease in thin film sales from the previous quarter, as new
products typically have lower yields during initial production.
Demand continues to be strong for the Company's products. The
Company's revenue base will continue to transition towards the next
generation inductive head technologies during the second half of
fiscal 1996. The Company has been working closely with its
customers and has qualified on several targeted thin film disk head
programs.
Engineering research and production development efforts continue on
magnetoresistive ("MR") disk heads to increase production
capabilities. The Company has been shipping low volumes of MR disk
heads in production quantities to certain of its customers.
The following table sets forth, for the periods indicated, net sales
by product line.
For the three For the six
months ended months ended
March 30, March 31, March 30, March 31,
1996 1995 1996 1995
---- ---- ---- ----
Thin-film disk head products
Net sales $ 62,544 $ 46,333 $127,161 $ 84,496
Percentage of total 72.1% 71.4% 70.1% 70.2%
Ferrite disk head products
Net sales $ 14,791 $ 1,139 $ 28,296 $ 8,756
Percentage of total 17.1% 1.7% 15.6% 7.3%
Other products
Net sales $ 9,371 $ 17,447 $ 25,958 $ 27,040
Percentage of total 10.8% 26.9% 14.3% 22.5%
Total net sales $ 86,706 $ 64,919 $181,415 $120,292
Page 10 of 117 <PAGE>
Three Months Ended March 30, 1996
---------------------------------
NET SALES. Net sales in the second quarter of fiscal 1996
increased 33.6% from the second quarter of fiscal 1995 primarily as
a result of the thin film disk head net sales increase of 35.0% for
the comparable periods as the Company continued volume production
on qualified customer programs. Ferrite disk head net sales
increased significantly for the comparable periods due to business
from one customer. Ferrite business continues to be a small
portion of the Company's business and will decrease as this
technology becomes obsolete for the Company. It is expected to be
replaced by advanced thin film and MR technology products. Other
net sales primarily include tape head products and disk head
products for which the Company only performs head stack assembly
("HSA") functions using thin film and MR disk heads purchased from
other manufacturers. Other net sales decreased 46.3% for the
comparable periods primarily due to a decrease in assembly of thin
film HSA's which had significantly lower gross margins than the
Company's manufactured disk heads and, to a lesser extent, a
decrease in tape head product sales.
GROSS PROFIT. As a percentage of net sales, gross profit was 29.2%
and 7.9% for the second quarter of fiscal 1996 and the second
quarter of fiscal 1995, respectively. The increase in gross profit
was primarily due to significant production process improvements on
the nanoslider form factor.
RESEARCH AND DEVELOPMENT. Research and development expenses
("R&D") as a percent of net sales was 16.1% and 11.2% for the
second quarter of fiscal 1996 and the second quarter of fiscal
1995, respectively. R&D expenses for the comparable periods
increased $6.7 million as the Company focused on next generation
thin film inductive technology and MR process and production ramp
efforts.
INTEREST INCOME AND EXPENSE. Interest income in the second quarter
of fiscal 1996 increased $0.2 million compared to the second
quarter of fiscal 1995 due to higher average cash balances.
Interest expense for the comparable periods increased $0.2 million
due to higher average debt outstanding resulting from the
Company's March 1996 issuance of $115.0 million 7% Convertible
Subordinated Debentures due in 2006.
OTHER INCOME. Other income in the second quarter of fiscal 1996
decreased $1.8 million compared to the second quarter of fiscal
1995. The prior fiscal year quarter included $2.0 million of gains
recognized as the Company completed certain performance milestones
related to the Seagate agreement. Other income during the current
year fiscal quarter were primarily foreign exchange gains.
Page 11 of 117 <PAGE>
Six Months Ended March 30, 1996
-------------------------------
NET SALES. Net sales in the first half of fiscal 1996 increased
50.8% from the first half of fiscal 1995 primarily due to a 50.5%
increase in thin film disk head net sales for the comparable
periods due to the Company's continued volume production on
qualified customer programs. Ferrite disk head net sales increased
significantly for the comparable periods primarily due to business
from one customer. Other net sales decreased 4.0% for the
comparable periods primarily due to decreases in assembly of thin
film HSA's.
GROSS PROFIT. As a percentage of net sales, gross profit was 26.9%
and 3.6% for the first half of fiscal 1996 and the first half of
fiscal 1995, respectively. The gross profit improvement was
primarily due to significant production process improvements made
during the second half of fiscal 1995.
RESEARCH AND DEVELOPMENT. R&D expenses as a percent of net sales
was 15.0% and 12.5% for the first half of fiscal 1996 and the first
half of fiscal 1995, respectively. Expenses in dollars for the
comparable periods increased $12.2 million as the Company focused
on next generation thin film inductive technology and MR production
development. It is expected that R&D expenditures in absolute
dollars will continue at similar levels as the Company continues to
invest in advanced technology products and processes, provided that
the Company's projected revenue base can support these
expenditures.
INTEREST INCOME AND EXPENSE. Interest income in the first half of
fiscal 1996 increased $0.4 million compared to the first half of
fiscal 1995 due to higher average cash balances. Interest expense
in the comparable periods increased $0.6 million due to higher
average debt outstanding.
OTHER INCOME. Other income in the first half of fiscal 1996
decreased $0.3 million compared to the first half of fiscal 1995.
Other income of $1.3 million and $2.0 million were recognized for
the comparable periods of fiscal 1996 and 1995, respectively, as
the Company completed certain performance milestones related to the
Seagate agreement. The balance of other income during the
comparable periods were primarily foreign exchange gains.
PROVISION FOR INCOME TAXES. The Company's provision for income
taxes for the six months ended March 30, 1996, primarily related to
federal alternative minimum taxes, state minimum taxes and foreign
taxes.
Liquidity and Capital Resources
-------------------------------
At March 30, 1996, the Company's cash and equivalents increased to
$133.9 million from $48.2 million at September 30, 1995. During
the first half of fiscal 1996, the Company generated $20.3 million
from operating activities, comprised primarily of (i) $17.7 million
Page 12 of 117 <PAGE>
from net income which included $13.9 million of non-cash
depreciation and amortization charges; (ii) $2.2 million from
reduced inventories; (iii) offset by $10.0 million in increased
accounts receivable as a result of higher sales levels and
discontinuance of accelerated payment terms with some of the
Company's customers.
On March 25, 1996, the Company completed the sale, in an offshore
offering and in a concurrent private placement in the United
States, of $115.0 million of 7.0% Convertible Subordinated
Debentures due in 2006. Net proceeds of $111.3 million were used
to retire a $10.0 million line of credit maturing March 29, 1996.
As a result, total debt at March 30, 1996, including notes payable,
amounted to $164.9 million, a net increase of $95.2 million from
the balance outstanding at September 30, 1995. The balance
available for borrowings under the CIT line of credit was
approximately $26.4 million at March 30, 1996. Also at that date,
the Company had drawn down $45.7 million of its unsecured Malaysian
credit facility which has no stated maturity but is callable on
demand by a bank in Malaysia where the Company has substantial
manufacturing operations. Should all or any significant portion of
the Malaysian credit facility become unavailable for any reason,
the Company would need to pursue alternative financing sources.
Additional borrowings available under this facility were
approximately $1.0 million at March 30, 1996.
Capital expenditures for the six months ended March 30, 1996, were
$28.5 million. In addition, the Company leased $12.5 million of
production equipment through operating leases. The Company plans a
total of approximately $125 million in new capital expenditures,
including equipment to be obtained through operating leases, during
fiscal 1996 primarily to continue to improve thin film production
processes, increase thin film production volumes and continue
development and production of MR technologies and products. During
the next twelve months, the Company believes it will have sufficient
cash flows from operations and equipment lease financing alternatives
to meet its operating and capital expenditure requirements.
Market and customer demand continues to be strong for the Company's
thin film disk heads. In the event that demand for the Company's
products declines, management believes that it will be able to
reduce its funding requirements for planned, but not committed,
capital expenditures. However, if the Company were unable to
continue to maintain production yields at acceptable levels in
order to permit it to execute customer orders for new drive
programs in a timely manner, there could be an adverse impact on
liquidity. Given its current liquidity position, the Company
believes it would not require additional external financing during
the next twelve months even if production yields could not be
maintained at acceptable levels. However, in such event capital
expenditures, research and development or working capital
expenditures may be curtailed. Such curtailment could, if severe,
adversely affect the Company's future years' operations and
competitive position.
Page 13 of 117 <PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Stockholders Meeting held on
February 9, 1996, the Company's stockholders voted on the following
matters:
1. Election of directors;
2. Approval of amendment to the Company's 1994 Employee
Stock Option Plan to increase the number of shares of Common Stock
authorized for the issuance thereunder by 1,100,000 shares; and
3. Ratification of the selection of auditors.
The tabulation of votes provided by the Inspector of Elections was
as follows:
Proposal Voting Tabulation
-------- -----------------
1. Election of Directors
Withhold/
Nominee For Against Broker Nonvotes
------- --- --------- ---------------
Craig Crisman 20,679,763 431,980 1,765,669
Harold R. Frank 20,674,476 437,267 1,765,669
R.C. Mercure, Jr. 20,677,138 434,605 1,765,669
Herbert M. Dwight, Jr. 20,665,642 449,101 1,765,669
Jerry E. Goldress 20,697,813 413,930 1,765,669
Broker
For Against Abstain Nonvotes
--- ------- ------- ---------
2. Approval of Amendment
to 1994 Employee Stock
Option Plan 20,000,251 946,504 164,988 1,765,669
3. Ratification of Selection
of Auditors 20,901,507 121,230 89,006 1,765,669
Page 14 of 117 <PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------- -----------
4 Indenture dated as of March 22, 1996, between the
Registrant and The Chase Manhattan Bank, N.A., as
trustee, with respect to the Registrant's 7%
Convertible Subordinated Debentures due 2006.
11 Statement re computation of per share
information.
27 Financial Data Schedule
(b) Reports on Form 8-K. Reports on Form 8-K dated March 11,
1996; March 20, 1996 and April 2, 1996 were filed by the Company
with respect to the initiation and completion of an offshore
offering and concurrent private placement in the United States, of
$115.0 million of 7.0% Convertible Subordinated Debentures due in
2006.
Page 15 of 117 <PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
APPLIED MAGNETICS CORPORATION
Dated: May 14, 1996 /s/ Craig D. Crisman
------------------------------
Craig D. Crisman
Chairman of the Board and Chief
Executive Officer
(Principal Financial Officer)
Dated: May 14, 1996 /s/ Peter T. Altavilla
------------------------------
Peter T. Altavilla
Corporate Controller
(Principal Accounting Officer)
Page 16 of 117 <PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description Page
------- ------------ ----
4 Indenture dated as of March 22, 1996,
between the Registrant and The Chase
Manhattan Bank, N.A., as trustee, with
respect to the Registrant's 7% Convertible
Subordinated Debentures due 2006. 18
11 Statement re computation of per share
information 116
27 Financial Data Schedule 117
Page 17 of 117 <PAGE>
EXHIBIT 4
[EXECUTION COPY]
APPLIED MAGNETICS CORPORATION,
Issuer,
and
THE CHASE MANHATTAN BANK, N.A.,
Trustee
_________________________
INDENTURE
Dated as of March 22, 1996
_________________________
U.S. $115,000,000
7% Convertible Subordinated Debentures due 2006
Page 18 of 117 <PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE . . 1
SECTION 1.1 DEFINITIONS. . . . . . . . . . . . . . . 1
SECTION 1.2 INCORPORATION BY REFERENCE OF TIA . . . . 11
SECTION 1.3 RULES OF CONSTRUCTION. . . . . . . . . . 11
ARTICLE II THE DEBENTURES . . . . . . . . . . . . . . . . 12
SECTION 2.1 FORM AND DATING. . . . . . . . . . . . . 12
SECTION 2.2 EXECUTION AND AUTHENTICATION. . . . . . . 14
SECTION 2.3 TRUSTEE; PAYING AGENT; CONVERSION AGENT
AND REGISTRAR. . . . . . . . . . . . . . 15
SECTION 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST. . . 17
SECTION 2.5 DEBENTUREHOLDER LISTS. . . . . . . . . . 17
SECTION 2.6 TRANSFER AND EXCHANGE; RESTRICTIONS ON
TRANSFER. . . . . . . . . . . . . . . . . 18
SECTION 2.7 EXCHANGE. . . . . . . . . . . . . . . . . 25
SECTION 2.8 REPLACEMENT DEBENTURES. . . . . . . . . . 27
SECTION 2.9 OUTSTANDING DEBENTURES. . . . . . . . . . 28
SECTION 2.10 TREASURY DEBENTURES. . . . . . . . . . . 29
SECTION 2.11 TEMPORARY DEBENTURES. . . . . . . . . . . 29
SECTION 2.12 CANCELLATION. . . . . . . . . . . . . . . 29
SECTION 2.13 PAYMENT. . . . . . . . . . . . . . . . . 29
SECTION 2.14 DEFAULTED INTEREST. . . . . . . . . . . . 32
SECTION 2.15 COMPUTATION INTEREST. . . . . . . . . . . 32
ARTICLE III REDEMPTION . . . . . . . . . . . . . . . . . . 33
SECTION 3.1 RIGHT OF REDEMPTION. . . . . . . . . . . 33
SECTION 3.2 EFFECT OF NOTICE OF REDEMPTION. . . . . . 35
SECTION 3.3 DEPOSIT OF REDEMPTION PRICE. . . . . . . 36
SECTION 3.4 DEBENTURES REDEEMED IN PART. . . . . . . 36
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . 36
SECTION 4.1 PAYMENT OF DEBENTURES. . . . . . . . . . 36
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY. . . . . 37
SECTION 4.3 CORPORATE EXISTENCE. . . . . . . . . . . 38
SECTION 4.4 PAYMENT OF TAXES AND OTHER CLAIMS. . . . 39
SECTION 4.5 MAINTENANCE OF PROPERTIES AND
INSURANCE. . . . . . . . . . . . . . . . 39
SECTION 4.6 COMPLIANCE CERTIFICATE; NOTICE OF
DEFAULT. . . . . . . . . . . . . . . . . 40
SECTION 4.7 REPORTS. . . . . . . . . . . . . . . . . 40
SECTION 4.8 LIMITATION ON STATUS AS INVESTMENT
COMPANY . . . . . . . . . . . . . . . . . 41
SECTION 4.9 WAIVER OF STAY, EXTENSION OR USURY LAWS . 41
SECTION 4.10 RULE 144A INFORMATION REQUIREMENT. . . . 41
ARTICLE V SUCCESSOR CORPORATION . . . . . . . . . . . . . 41
SECTION 5.1 LIMITATION ON MERGER, SALE OR
CONSOLIDATION . . . . . . . . . . . . . . 41
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED. . . . 42
i
Page 19 of 117 <PAGE>
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES . . . . . . . . 42
SECTION 6.1 EVENTS OF DEFAULT . . . . . . . . . . . . 42
SECTION 6.2 ACCELERATION OF MATURITY DATE;
RESCISSION AND ANNULMENT. . . . . . . . . 45
SECTION 6.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. . . . . . . . . . 46
SECTION 6.4 TRUSTEE MAY FILE PROOFS OF CLAIM. . . . . 47
SECTION 6.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF DEBENTURES. . . . . . . . . 48
SECTION 6.6 PRIORITIES. . . . . . . . . . . . . . . . 48
SECTION 6.7 LIMITATION ON SUITS. . . . . . . . . . . 49
SECTION 6.8 UNCONDITIONAL RIGHT OF HOLDERS TO
RECEIVE PRINCIPAL, PREMIUM, INTEREST AND
ADDITIONAL AMOUNTS . . . . . . . . . . . 49
SECTION 6.9 RIGHTS AND REMEDIES CUMULATIVE. . . . . . 50
SECTION 6.10 DELAY OR OMISSION NOT WAIVER. . . . . . . 50
SECTION 6.11 CONTROL BY HOLDERS. . . . . . . . . . . . 50
SECTION 6.12 WAIVER OF PAST DEFAULT. . . . . . . . . . 51
SECTION 6.13 UNDERTAKING FOR COSTS. . . . . . . . . . 51
SECTION 6.14 RESTORATION OF RIGHTS AND REMEDIES. . . . 51
ARTICLE VII TRUSTEE . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.1 DUTIES OF TRUSTEE . . . . . . . . . . . . 52
SECTION 7.2 RIGHTS OF TRUSTEE. . . . . . . . . . . . 53
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE. . . . . . . 54
SECTION 7.4 TRUSTEE'S DISCLAIMER. . . . . . . . . . . 54
SECTION 7.5 NOTICE OF DEFAULT. . . . . . . . . . . . 55
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS. . . . . . 55
SECTION 7.7 COMPENSATION AND INDEMNITY. . . . . . . . 55
SECTION 7.8 REPLACEMENT OF TRUSTEE. . . . . . . . . . 57
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER ETC. . . . . 58
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. . . . . . 58
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY. . . . . . . . . . . . . 58
ARTICLE VIII SATISFACTION AND DISCHARGE . . . . . . . . . . 59
SECTION 8.1 SATISFACTION AND DISCHARGE OF
INDENTURE. . . . . . . . . . . . . . . . 59
SECTION 8.2 REPAYMENT TO THE COMPANY. . . . . . . . . 59
ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . 59
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT
OF HOLDERS. . . . . . . . . . . . . . . . 59
SECTION 9.2 AMENDMENTS, SUPPLEMENTAL INDENTURES AND
WAIVERS WITH CONSENT OF HOLDERS. . . . . 60
SECTION 9.3 COMPLIANCE WITH TIA. . . . . . . . . . . 62
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS. . . . 62
SECTION 9.5 NOTATION ON OR EXCHANGE OF DEBENTURES. . 62
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . 63
ARTICLE X MEETINGS . . . . . . . . . . . . . . . . . . . 63
SECTION 10.1 MEETINGS AND VOTES OF HOLDERS . . . . . . 63
SECTION 10.2 ACTION BY HOLDERS. . . . . . . . . . . . 66
ARTICLE XI AGENTS . . . . . . . . . . . . . . . . . . . . 67
ii
Page 20 of 117 <PAGE>
SECTION 11.1 OFFICES, RESIGNATION, SUCCESSORS, ETC.
OF AGENTS; PAYING, CONVERSION AND
TRANSFER AGENCIES . . . . . . . . . . . . 67
ARTICLE XII SUBORDINATION . . . . . . . . . . . . . . . . . 68
SECTION 12.1 DEBENTURES SUBORDINATED TO SENIOR
INDEBTEDNESS. . . . . . . . . . . . . . . 68
SECTION 12.2 NO PAYMENT ON DEBENTURES IN CERTAIN
CIRCUMSTANCES. . . . . . . . . . . . . . 69
SECTION 12.3 DEBENTURES SUBORDINATED TO PRIOR PAYMENT
OF ALL SENIOR INDEBTEDNESS ON
DISSOLUTION, LIQUIDATION OR
REORGANIZATION. . . . . . . . . . . . . . 71
SECTION 12.4 DEBENTUREHOLDERS TO BE SUBROGATED TO
RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS. . . . . . . . . . . . . . . 72
SECTION 12.5 OBLIGATIONS OF THE COMPANY
UNCONDITIONAL. . . . . . . . . . . . . . 72
SECTION 12.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT
PROHIBITED IN ABSENCE OF NOTICE. . . . . 74
SECTION 12.7 APPLICATION BY TRUSTEE OF ASSETS
DEPOSITED WITH IT. . . . . . . . . . . . 74
SECTION 12.8 SUBORDINATION RIGHTS NOT IMPAIRED BY
ACTS OR OMISSIONS OF THE COMPANY OR
HOLDERS OF SENIOR INDEBTEDNESS. . . . . . 74
SECTION 12.9 DEBENTUREHOLDERS AUTHORIZE TRUSTEE TO
EFFECTUATE SUBORDINATION DEBENTURES. . . 75
SECTION 12.10 RIGHT OF TRUSTEE TO HOLD SENIOR
INDEBTEDNESS. . . . . . . . . . . . . . . 75
SECTION 12.11 ARTICLE XII NOT TO PREVENT EVENTS OF
DEFAULT. . . . . . . . . . . . . . . . . 75
SECTION 12.12 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS
OF SENIOR INDEBTEDNESS. . . . . . . . . . 76
ARTICLE XIII CONVERSION OF DEBENTURES . . . . . . . . . . . 76
SECTION 13.1 CONVERSION PRIVILEGE. . . . . . . . . . . 76
SECTION 13.2 EXERCISE OF CONVERSION PRIVILEGE. . . . . 77
SECTION 13.3 CONVERSION AT THE OPTION OF THE
COMPANY. . . . . . . . . . . . . . . . . 78
SECTION 13.4 FRACTIONAL INTERESTS. . . . . . . . . . . 79
SECTION 13.5 ADJUSTMENT OF CONVERSION PRICE. . . . . . 80
SECTION 13.6 NOTICE OF CERTAIN EVENTS . . . . . . . . 80
SECTION 13.7 CONTINUATION OF CONVERSION PRIVILEGE IN
CASE OF RECLASSIFICATION, CHANGE,
MERGER, CONSOLIDATION OR SALE OF
ASSETS. . . . . . . . . . . . . . . . . . 81
SECTION 13.8 TAXES ON CONVERSION . . . . . . . . . . . 82
SECTION 13.9 COMPANY TO PROVIDE STOCK . . . . . . . . 83
SECTION 13.10 DISCLAIMER OF RESPONSIBILITY FOR CERTAIN
MATTERS . . . . . . . . . . . . . . . . . 83
SECTION 13.11 RETURN OF FUNDS DEPOSITED FOR REDEMPTION
OF CONVERTED DEBENTURES . . . . . . . . . 84
ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . . 84
SECTION 14.1 TIA CONTROLS . . . . . . . . . . . . . . 84
iii
Page 21 of 117 <PAGE>
SECTION 14.2 NOTICES . . . . . . . . . . . . . . . . . 84
SECTION 14.3 COMMUNICATIONS BY HOLDERS WITH OTHER
HOLDERS . . . . . . . . . . . . . . . . . 86
SECTION 14.4 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT . . . . . . . . . . . . . . . . 86
SECTION 14.5 STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION . . . . . . . . . . . . . . . . . 86
SECTION 14.6 RULES BY TRUSTEE, PAYING AGENT,
REGISTRAR . . . . . . . . . . . . . . . . 87
SECTION 14.7 LEGAL HOLIDAYS . . . . . . . . . . . . . 87
SECTION 14.8 TAXES . . . . . . . . . . . . . . . . . . 87
SECTION 14.9 GOVERNING LAW . . . . . . . . . . . . . . 88
SECTION 14.10 AGENT FOR SERVICE OF PROCESS . . . . . . 88
SECTION 14.11 NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS . . . . . . . . . . . . . . . 89
SECTION 14.12 NO RECOURSE AGAINST OTHERS . . . . . . . 89
SECTION 14.13 SUCCESSORS . . . . . . . . . . . . . . . 89
SECTION 14.14 DUPLICATE ORIGINALS . . . . . . . . . . . 89
SECTION 14.15 SEVERABILITY . . . . . . . . . . . . . . 89
SECTION 14.16 TABLE OF CONTENTS, HEADINGS, ETC. . . . . 89
SECTION 14.17 QUALIFICATION OF INDENTURE . . . . . . . 90
SECTION 14.18 REGISTRATION RIGHTS . . . . . . . . . . . 90
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 91
EXHIBIT A - FORM OF DEBENTURE . . . . . . . . . . . . . . . A-1
EXHIBIT B - FORM OF REGULATION S GLOBAL
DEBENTURE . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - FORM OF CERTIFICATE TO BE GIVEN BY THE
EUROCLEAR OPERATOR AND CEDEL BANK,
S.A. . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D - FORM OF CERTIFICATE OF BENEFICIAL OWNERSHIP FOR
BEARER DEBENTURES . . . . . . . . . . . . . . . D-1
EXHIBIT E - FORM OF CERTIFICATE OF BENEFICIAL
OWNERSHIP FOR REGISTERED DEBENTURES . . . . . . E-1
EXHIBIT F - FORM OF CERTIFICATE TO BE GIVEN BY THE
EUROCLEAR OPERATOR AND CEDEL BANK,
S.A. . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G - FORM OF TRANSFEREE LETTER . . . . . . . . . . . G-1
iv
Page 22 of 117 <PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.8;
7.10;
14.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 14.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 14.3
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 7.6;
14.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . 4.6;
13.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . 2.2;
7.2;
14.4
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . 7.2
14.4
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . 14.5
(f) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 7.5;
7.6;
14.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
6.11
7.1(b) (c)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . 6.14
316(a) (last sentence) . . . . . . . . . . . . . . . . . 2.10
(a) (1) (A) . . . . . . . . . . . . . . . . . . . . . 6.11
(a) (1) (B) . . . . . . . . . . . . . . . . . . . . . 6.12
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . N.A.
v
Page 23 of 117 <PAGE>
TIA Indenture
Section Section
------- ---------
(b) . . . . . . . . . . . . . . . . . . . . . . . . 6.12;
6.7
317(a) (1) . . . . . . . . . . . . . . . . . . . . . . . 6.3
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . 6.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . 14.1
__________________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
vi
Page 24 of 117 <PAGE>
INDENTURE, dated as of March 22, 1996, between APPLIED
MAGNETICS CORPORATION, a Delaware corporation (the "Company"),
and THE CHASE MANHATTAN BANK, N.A., a national banking
association, as Trustee.
Each party hereto agrees as follows for the benefit of
each other party and for the equal and ratable benefit of the
Holders of the Company's 7% Convertible Subordinated Debentures
due 2006 and the Coupons:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
"ACCELERATION NOTICE" shall have the meaning specified
in Section 6.2.
"ACCREDITED INVESTOR DEBENTURES" shall have the meaning
specified in Section 2.1(b).
"ADDITIONAL AMOUNTS" shall have the meaning specified
in Section 2 of the form of Registered Debenture and Bearer
Debenture attached hereto as Exhibit A.
"AFFILIATE" means (i) any person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company, (ii) any spouse, immediate family
member, or other relative who has the same principal residence of
any person described in clause (i) above, and (iii) any trust in
which any person described in clause (i) or (ii) above has a
beneficial interest. For purposes of this definition, the term
"control" means the power to direct the management and policies
of a person, directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract
or otherwise.
"AGENT" shall have the meaning set forth in Section
2.3.
"AUTHORIZED NEWSPAPER" means a leading newspaper, in an
official language of the country of publication or in the English
language, customarily published on each Business Day whether or
not published on Saturdays, Sundays or holidays, and of general
circulation in the place in connection with which the term is
used or in the financial community of such place. If by reason
of the temporary or permanent suspension of publication of any
newspaper or by reason of any other cause it shall be impossible
to make publication of such notice in an Authorized Newspaper as
herein provided, then such publication or other notice in lieu
thereof as shall be made by the Trustee shall constitute
sufficient publication of such notice, if such publication or
Page 25 of 117 <PAGE>
other notice shall, so far as may be possible, approximate the
terms and conditions of the publication in lieu of which it is
given.
"BANKRUPTCY LAW" means Title 11, U.S. Code, or any
similar Federal, state or foreign law for the relief of debtors.
"BEARER DEBENTURES" shall have the meaning set forth in
Section 2.1(c).
"BENEFICIAL OWNER" for purposes of the definition of
Change of Control has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act (as in effect on the Closing
Date), whether or not such Rules are applicable, except that a
"person" shall be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time or upon the occurrence of certain events.
"BOARD OF DIRECTORS" means, with respect to any person,
the Board of Directors of such person or any committee of the
Board of Directors of such person authorized, with respect to any
particular matter, to exercise the power of the Board of
Directors of such person.
"BOARD RESOLUTION" means, with respect to any person, a
copy of a resolution certified by the Secretary or an Assistant
Secretary of such person to have been duly adopted by the Board
of Directors thereof and to be in full force and effect on the
date of such certification, and delivered to the Trustee.
"BUSINESS DAY" means, with respect to any act to be
performed hereunder, each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in the
place where such act is to occur are authorized or obligated by
applicable law, regulation or executive order to close.
"CAPITALIZED LEASE OBLIGATION" means rental obligations
under a lease that are required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligations shall be the
capitalized amount of such obligations, as determined in
accordance with GAAP.
"CAPITAL STOCK" means, with respect to any corporation,
any and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness), warrants, options,
participations or other equivalents of or interests (however
designated) in stock issued by that corporation.
2
Page 26 of 117 <PAGE>
"CASH" means 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.
"CEDEL" shall have the meaning specified in Section
2.7(b).
"CHANGE OF CONTROL" means (i) any merger or
consolidation of the Company with or into any person or any sale,
transfer or other conveyance, whether direct or indirect, of all
or substantially all of the assets of the Company, on a
consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not such Rules are applicable) is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the total
voting power in the aggregate normally entitled to vote in the
election of directors, managers, or trustees, as applicable, of
the transferee or surviving entity, (ii) when any "person" or
"group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not such Rules are
applicable) is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the total voting power in the
aggregate normally entitled to vote in the election of directors
of the Company, or (iii) when, during any period of 12
consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of
Directors of the Company (together with any new directors whose
election by such Board or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company
then in office.
"CHANGE OF CONTROL NOTICE DATE" shall have the meaning
specified in Section 3.1.
"CLOSING DATE" shall have the meaning specified in
Section 2.7(b).
"CLOSING PRICE" means for any day the last reported
sales price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to
trading on such Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national
securities exchange, the closing sale price quoted on the Nasdaq
3
Page 27 of 117 <PAGE>
Stock Market's National Market, or if not so quoted, as
determined by the Company.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COMMON DEPOSITARY" shall have the meaning specified in
Section 2.7(b).
"COMMON STOCK" means the Company's common stock, par
value $.10 per share, or as such stock may be reconstituted from
time to time.
"COMPANY" means the party named as such in this
Indenture until a successor replaces it pursuant to the
Indenture, and thereafter means such successor.
"CONVERSION AGENT" shall have the meaning specified in
Section 2.3.
"CONVERSION DATE" shall have the meaning specified in
Section 13.3.
"CONVERSION NOTICE" shall have the meaning specified in
Section 13.3.
"CONVERSION PRICE" shall have the meaning specified in
Section 13.1.
"CONVERSION SHARES" shall have the meaning specified in
Section 13.1.
"COUPON" means any interest coupon appertaining to any
Debenture.
"CURRENT MARKET PRICE" means, on any date, the average
of the Closing Prices for the 15 consecutive trading days upon
which the principal trading market for the Common Stock is open
commencing 25 trading days before the day in question.
"CUSTODIAN" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy
Law.
"DEBENTURE REGISTER" shall have the meaning specified
in Section 2.3.
"DEBENTURES" means, collectively, the 7% Convertible
Subordinated Debentures due 2006, as supplemented from time to
time in accordance with the terms hereof, issued under this
Indenture.
4
Page 28 of 117 <PAGE>
"DEBENTURES CUSTODIAN" means the Trustee, as custodian
with respect to the Debentures in global form, or any successor
entity thereto.
"DEFAULT" means any event or condition that is, or
after notice or passage of time or both would be, an Event of
Default.
"DEFAULTED INTEREST" shall have the meaning specified
in Section 2.14.
"DEPOSITARY" means, with respect to the Debentures
issuable or issued in whole or in part in global form, the person
specified in Section 2.3 as the Depositary with respect to the
Debentures, until a successor shall have been appointed and
become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include
such successor.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) the
Indebtedness outstanding under that certain Financing Agreement,
dated January 11, 1995, between the Company and The CIT
Group/Business Credit, Inc., as the same may be amended, modified
or supplemented from time to time and (ii) any other Senior
Indebtedness having a principal amount of at least $5,000,000
that is designated as "Designated Senior Indebtedness" by written
notice from the Company to the Trustee.
"DISQUALIFIED CAPITAL STOCK" means (a) except as set
forth in clause (b) below, with respect to any person, Capital
Stock of such person that, by its terms or by the terms of any
security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the
passage of time would be, required to be redeemed or repurchased
(including at the option of the holder thereof) by such person or
any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Debentures and (b) with respect to any
Subsidiary of such person (including with respect to any
Subsidiary of the Company), any Capital Stock other than any
common stock with no preference, privileges, or redemption or
repayment provisions.
"DTC" shall have the meaning specified in Section 2.3.
"EUROCLEAR OPERATOR" shall have the meaning specified
in Section 2.7(b).
"EVENT OF DEFAULT" shall have the meaning specified in
Section 6.1.
"EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by
the SEC thereunder.
5
Page 29 of 117 <PAGE>
"EXCHANGE DATE" shall have the meaning specified in
Section 2.7(d).
"GAAP" means United States generally accepted
accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
("FASB") or in such other statements by such other entity as
approved by a significant segment of the accounting profession
which are in effect in the United States; provided, however, that
for purposes of determining compliance with covenants in the
Indenture, "GAAP" means such generally accepted accounting
principles which are in effect as of the Issue Date.
"GLOBAL DEBENTURE" means a Rule 144A Global Debenture
of a Regulation S Global Debenture.
"HOLDER" or "DEBENTUREHOLDER" means, with respect to a
Registered Debenture, the person in whose name a Registered
Debenture is registered on the Registrar's books and, with
respect to a Bearer Debenture, the bearer of such Bearer
Debenture and, with respect to a Coupon, the bearer thereof.
"HOLDER REDEMPTION DATE" means a date not less than 30
nor more than 60 days after a Change of Control Notice Date
(except as otherwise required by law).
"INDEBTEDNESS" of any person means, without
duplication, (a) all liabilities and obligations, contingent or
otherwise, of any such person, (i) in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the
assets of such person or only to a portion thereof), (ii)
evidenced by bonds, notes, debentures or similar instruments,
(iii) representing the balance deferred and unpaid of the
purchase price of any property or services, except such as would
constitute trade payables to trade creditors in the ordinary
course of business, (iv) evidenced by bankers, acceptances or
similar instruments issued or accepted by banks, (v) for the
payment of money relating to a Capitalized Lease Obligation, or
(vi) evidenced by a letter of credit or a reimbursement
obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap and
Hedging Obligations; (c) all liabilities of others of the kind
described in the preceding clause (a) or (b) that such person has
guaranteed or that is otherwise its legal liability and all
obligations to purchase, redeem or acquire any Capital Stock; and
(d) any and all deferrals, renewals, extensions, refinancings,
refunding (whether direct or indirect) of any liability of the
kind described in any of the preceding clauses (a), (b) or (c),
or this clause (d), whether or not between or among the same
parties.
6
Page 30 of 117 <PAGE>
"INDENTURE" means this Indenture, as amended or
supplemented from time to time in accordance with the terms
hereof.
"INTEREST PAYMENT DATE" means the stated due date of an
installment of interest on the Debentures.
"INTEREST RECORD DATE" means an Interest Record Date
specified in the Debentures whether or not such Interest Record
Date is a Business Day.
"INTEREST SWAP AND HEDGING OBLIGATION" means any
obligation of any person pursuant to any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement, interest rate exchange agreement, currency exchange
agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency
values, including, without limitation, any arrangement whereby,
directly or indirectly, such person is entitled to receive from
time to time periodic payments calculated by applying either a
fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by
applying a fixed or floating rate of interest on the same
notional amount.
"JUNIOR SECURITY" of any Person means any Qualified
Capital Stock and any Indebtedness of such Person that is (i)
subordinated in right of payment to the Debentures and has no
scheduled installment of principal due, by redemption, sinking
fund payment or otherwise, on or prior to the Stated Maturity of
the Debentures and (ii) subordinated in right of payment to all
Senior Indebtedness at least to the same extent as the
Debentures.
"LIEN" means any mortgage, lien, pledge, charge,
security interest or other encumbrance of any kind, whether or
not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest
and any option or other agreement to give any security interest).
"LONDON OFFICE" shall have the meaning specified in
Section 2.3.
"MANAGERS" means NatWest Securities Limited, Salomon
Brothers Inc and Montgomery Securities.
"NOTICE OF DEFAULT" shall have the meaning specified in
Section 6.1(3).
"OBLIGATIONS" means any principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and
7
Page 31 of 117 <PAGE>
other liabilities payable under the documentation governing any
Senior Indebtedness.
"OFFICER" means, with respect to the Company, the Chief
Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the
Secretary of the Company.
"OFFICERS' CERTIFICATE" means, with respect to the
Company, a certificate signed by two officers or by an Officer
and an Assistant Secretary of the Company and otherwise complying
with the requirements of Sections 14.4 and 14.5, if applicable.
"OPINION OF COUNSEL" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee and which
complies with the requirements of Sections 14.4 and 14.5, if
applicable.
"PAYING AGENT" shall have the meaning specified in
Section 2.3.
"PAYMENT BLOCKAGE PERIOD" shall have the meaning
specified in Section 12.2.
"PAYMENT DEFAULT" shall have the meaning specified in
Section 12.2.
"PAYMENT NOTICE" shall have the meaning specified in
Section 12.2.
"PERSON" or "PERSON" means any corporation, individual,
limited liability company, joint stock company, joint venture,
partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust,
municipality or other entity.
"PRINCIPAL" of any Indebtedness means the principal of
such Indebtedness plus, without duplication, any applicable
premium, if any, on such Indebtedness.
"PRINCIPAL CORPORATE TRUST OFFICE" shall have the
meaning specified in Section 2.3.
"PROPERTY" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal
or mixed and whether tangible or intangible.
"QIBS" shall have the meaning specified in Section
2.1(b).
"QUALIFIED CAPITAL STOCK" means any Capital Stock of
the Company that is not Disqualified Capital Stock.
8
Page 32 of 117 <PAGE>
"REDEMPTION DATE," when used with respect to any
Debenture to be redeemed, means the date fixed for such
redemption pursuant to Article III of this Indenture and Section
3 in the form of Debenture.
"REDEMPTION PRICE," when used with respect to any
Debenture to be redeemed, means the redemption price for such
redemption pursuant to Section 3 in the form of Debenture, which
shall include, without duplication, in each case, accrued and
unpaid interest and Additional Amounts, if any, to and including
the Redemption Date.
"REGISTERED ACCREDITED INVESTOR DEBENTURES" shall have
the meaning specified in Section 2.1(e).
"REGISTERED REGULATION S DEBENTURES" shall have the
meaning specified in Section 2.1(c).
"REGISTERED DEBENTURES" shall have the meaning
specified in Section 2.1(c).
"REGISTRAR" shall have the meaning specified in Section
2.3.
"REGISTRATION RIGHTS AGREEMENT" means the Registration
Rights Agreement, dated the date hereof, by and among the Company
and the persons listed on Schedule I thereto, as such agreement
may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"REGULATION S GLOBAL DEBENTURE" shall have the meaning
specified in Section 2.1(c).
"RESALE RESTRICTION TERMINATION DATE" shall have the
meaning specified in Section 2.6(i).
"RESTRICTED COMMON STOCK" shall have the meaning
specified in Section 13.7(b).
"RESTRICTED DEBENTURE" shall have the meaning specified
in Section 2.1(f).
"RULE 144A GLOBAL DEBENTURE" shall have the meaning
specified in Section 2.1(d).
"RULE 144A DEBENTURES" shall have the meaning specified
in Section 2.1(b).
"SEC" means the Debentures and Exchange Commission.
9
Page 33 of 117 <PAGE>
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated
thereunder.
"SENIOR INDEBTEDNESS" of the Company means any
Indebtedness of the Company, whether outstanding on the date of
the Indenture or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that
such Indebtedness is not senior or superior, in right of payment,
to the Debentures or to other Indebtedness which is pari passu
with, or subordinated to, the Debentures; provided, that in no
event shall Senior Indebtedness include (a) Indebtedness of the
Company owed or owing to any Subsidiary of the Company or any
officer, director or employee of the Company or any Subsidiary of
the Company, (b) Indebtedness to trade creditors, or (c) any
liability for taxes owed or owing by the Company.
"SIGNIFICANT SUBSIDIARY" shall have the meaning
assigned to that term under Regulation S-X promulgated by the
SEC, as in effect on the date of this Indenture.
"STATED MATURITY," when used with respect to any
Debenture, means March 15, 2006
"SUBSCRIPTION AGREEMENT" means that certain
Subscription Agreement, dated March 15, 1996, by and among the
Company and the Managers, as such agreement may be amended,
modified or supplemented from time to time in accordance with the
terms thereof.
"SUBSIDIARY" with respect to any person, means (i) a
corporation a majority of whose Capital Stock with voting power
normally entitled to vote in the election of directors is at the
time, directly or indirectly, owned by such person, by such
person and one or more Subsidiaries of such person or by one or
more Subsidiaries of such person, (ii) a partnership in which
such person or a Subsidiary of such person is, at the time, a
general partner, or (iii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of
such person, or such person and one or more Subsidiaries of such
person, directly or indirectly, at the date of determination
thereof has at least majority ownership interest.
"SURRENDER DATE" shall have the meaning specified in
Section 13.3.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code 77aaa-77bbbb) as in effect on the date of the execution
of this Indenture.
"TRADING DAY" means each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are
10
Page 34 of 117 <PAGE>
not traded on the New York Stock Exchange (or, if the Common
Stock is not listed or admitted to trading thereon, on the
principal national securities exchange on which the Common Stock
is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities
exchange, or the Nasdaq Stock Market's National Market if the
Common Stock is quoted thereon).
"TRUSTEE" shall have the meaning specified in Section
2.3.
"TRUST OFFICER" means any officer within the corporate
trustee administration department (or any successor group) of the
Trustee or any other officer of the Trustee customarily
performing functions similar to those performed by the Persons
who at that time shall be such officers, and also means, with
respect to a particular corporate trust matter, any other officer
of the Trustee to whom such trust matter is referred because of
his knowledge of and familiarity with the particular matter.
"U.S. GOVERNMENT OBLIGATIONS" means direct noncallable
obligations of, or noncallable obligations guaranteed by, the
United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of
America is pledged.
SECTION 1.2 INCORPORATION BY REFERENCE OF TIA.
Whenever this Indenture refers to a provision of the
TIA, such provision is incorporated by reference in and made a
part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"COMMISSION" means the SEC.
"INDENTURE SECURITIES" means the Debentures.
"INDENTURE SECURITYHOLDER" means a Holder or a
Debentureholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means
the Trustee.
"OBLIGOR" on the indenture securities means the Company
and any other obligor on the Debentures.
All other TIA terms used in this Indenture that are
defined by the TIA, defined by TIA reference to another statute
or defined by SEC rule and not otherwise defined herein have the
meanings assigned to them thereby.
11
Page 35 of 117 <PAGE>
SECTION 1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
words in the plural include the singular;
(5) provisions apply to successive events and
transactions;
(6) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(7) references to Sections or Articles means reference
to such Section or Article in this Indenture, unless stated
otherwise.
ARTICLE II
THE DEBENTURES
SECTION 2.1 FORM AND DATING.
(a) The Company has, by the Subscription Agreement,
agreed to issue and sell to the Managers up to U.S. $115,000,000
aggregate principal amount of its 7% Convertible Subordinated
Debentures due 2006.
(b) Pursuant to the Subscription Agreement, the
Managers may resell the Debentures to (i) persons who are not
"U.S. Persons" (as such term is defined in Regulation S
promulgated by the SEC pursuant to the Securities Act) in
transactions that meet the requirements of Regulation S, (ii)
"qualified institutional buyers" (as such term is defined in Rule
144A promulgated by the SEC pursuant to the Securities Act and
hereinafter referred to as "QIBs") in reliance on Rule 144A (the
Debentures that are resold by the Managers pursuant to Rule 144A
being hereinafter referred to as the "Rule 144A Debentures"), and
(iii) institutional "accredited investors" (within the meaning of
Rule 501(a)(1), (2), (3) or (7) promulgated by the SEC pursuant
to the Securities Act) (the Debentures that are resold by the
Managers to institutional "accredited investors" being
hereinafter referred to as the "Accredited Investor Debentures").
12
Page 36 of 117 <PAGE>
(c) The Debentures will initially be issued in the
form of a temporary global debenture in bearer form without
coupons in the aggregate principal amount of the entire issue of
Debentures less the aggregate principal amount of the Rule 144A
Debentures and Accredited Investor Debentures concurrently
issued, substantially in the form of Exhibit B hereto (the
"Regulation S Global Debenture"). As hereinafter provided, the
Regulation S Global Debenture may subsequently be exchanged for
Debentures in printed definitive form either as (i) bearer
Debentures ("Bearer Debentures") in denominations of U.S. $1,000
and U.S. $10,000 and with interest Coupons attached thereto,
representing the semi-annual interest payable thereon, or (ii)
fully registered Debentures ("Registered Regulation S
Debentures") in denominations of U.S. $1,000 and integral
multiples thereof. Bearer Debentures shall be substantially in
the form of Exhibit A hereto, including the Coupons set forth
therein, and Registered Regulation S Debentures shall be
substantially in the form of Exhibit A hereto, in each case
excluding the information called for by footnotes 1 and 2 and
excluding the additional schedule referred to in footnote 3
thereto. The Debentures which are not Bearer Debentures or the
Regulation S Global Debenture are hereinafter collectively
referred to as the "Registered Debentures."
(d) The Rule 144A Debentures will initially be issued
in the form of a global Debenture in the aggregate principal
amount of the Rule 144A Debentures, which Debenture shall be in
substantially the form of Exhibit A hereto, including the
paragraphs referred to in footnotes 1 and 2 and the additional
schedule referred to in footnote 3 thereto, and is hereinafter
referred to as the "Rule 144A Global Debenture."
(e) The Accredited Investor Debentures will initially
be issued in fully registered form in denominations of U.S.
$1,000 and integral multiples thereof, which Debentures shall be
in substantially the form of Exhibit A hereto, excluding the
information called for by footnote 1 thereto and the additional
schedule referred to in footnote 3 thereto but including the
information called for by footnote 2 thereto, and are hereinafter
collectively referred to as "Registered Accredited Investor
Debentures."
(f) During the period beginning on the Closing Date
and ending on the date which is three years after the Closing
Date, all Rule 144A Debentures and all Accredited Investor
Debentures, and all Debentures issued upon registration of
transfer of or in exchange for such Debentures, shall be
"Restricted Debentures" and shall be subject to the restrictions
on transfer in Section 2.6 hereof; PROVIDED, HOWEVER, that the
term "Restricted Debentures" shall not include (i) Registered
Debentures which are issued upon transfer of or in exchange for
either Bearer Debentures or Registered Regulation S Debentures or
(ii) Registered Debentures as to which such restrictions on
13
Page 37 of 117 <PAGE>
transfer have been terminated in accordance with Section 2.6(i)
hereof. All Restricted Debentures shall bear the legend required
by Section 2.6(h) hereof.
(g) The Registered Debentures, the Bearer Debentures
and the Regulation S Global Debenture shall contain such
appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture and may
have such letters, numbers or other marks of identification and
such legends or endorsements placed thereon as may, consistent
herewith, be determined by the officer of the Company executing
such Debentures, as evidenced by his execution of such
Debentures.
(h) The Company in issuing the Debentures shall use
CUSIP numbers, and the Trustee may use such CUSIP numbers in any
notice of redemption with respect to the Debentures. The Company
shall obtain one CUSIP number for the Rule 144A Debentures and
one for the Registered Debentures that are not Restricted
Debentures. In addition, the Company shall obtain an ISIN number
and a Common Code for the Regulation S Global Debenture, the
Bearer Debentures and the Registered Regulation S Debentures.
(i) In compliance with United States tax laws and
regulations, Bearer Debentures may not be offered or sold during
the 40-day period beginning on the Closing Date, or at any time
if such Bearer Debentures form part of a Manager's unsold
allotment, to a person who is within the United States or its
possessions or to a United States person other than (a) foreign
branches of United States financial institutions if such
institutions agree in writing to comply with the requirements of
Section 165(j)(3)(A), (B) or C of the Code, and the regulations
thereunder, (b) exempt distributors (as defined in the Treasury
Regulations), or (c) United States offices of international
organizations or foreign central banks. United States tax laws
and regulations also require that Bearer Debentures not be
delivered within the United States or its possessions.
(j) The Debentures and the Trustee's certificate of
authentication, in respect thereof, shall be substantially in the
forms of Exhibits A and B hereto, as applicable, which Exhibits
are part of this Indenture. The Debentures may have notations,
legends or endorsements required by law, stock exchange rule or
usage. The Company shall approve the forms of the Debentures and
any notation, legend or endorsement on them. Any such notations,
legends or endorsements not contained in the forms of Debenture
attached as Exhibits A and B hereto shall be delivered in writing
by the Company to the Trustee. Each Debenture shall be dated the
date of its authentication, except that Bearer Debentures shall
be dated March 22, 1996.
(k) The terms and provisions contained in the forms of
Debentures shall constitute, and are hereby expressly made, a
14
Page 38 of 117 <PAGE>
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 2.2 EXECUTION AND AUTHENTICATION.
Two Officers shall sign, or one Officer shall sign and
one Officer shall attest to, each Debenture and each Coupon for
the Company by manual or facsimile signature. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the
Debentures and may be in facsimile form.
If an Officer whose signature is on a Debenture or a
related Coupon was an Officer at the time of such execution but
no longer holds that office at the time the Trustee authenticates
such Debenture, such Debenture and such Coupon shall be valid
nevertheless and the Company shall nevertheless be bound by the
terms of such Debenture, such Coupon and this Indenture.
A Debenture and the related Coupons shall not be valid
until an authorized officer of the Trustee manually signs the
certificate of authentication on the Debenture but such signature
shall be conclusive evidence that the Debenture has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate the Debentures for
original issue in the aggregate principal amount of up to U.S.
$115,000,000 upon a written order of the Company in the form of
an Officers' Certificate. The Officers' Certificate shall
specify the amount of Debentures to be authenticated and the date
on which the Debentures are to be authenticated. The aggregate
principal amount of Debentures outstanding at any time may not
exceed U.S. $115,000,000, except as provided in Section 2.7. Upon
the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Debentures in
substitution of Debentures originally issued to reflect any name
change of the Company.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Debentures. Unless
otherwise provided in the appointment, an authenticating agent
may authenticate Debentures whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company, any
Affiliate of the Company, or any of their respective
Subsidiaries.
15
Page 39 of 117 <PAGE>
SECTION 2.3 TRUSTEE; PAYING AGENT; CONVERSION AGENT AND
REGISTRAR.
The Company hereby appoints The Chase Manhattan Bank,
N.A., at present having its principal corporate trust office at 4
Chase Metrotech Center, Brooklyn, New York 11245 (the "Principal
Corporate Trust Office"), as its Trustee in respect of the
Debentures upon the terms and subject to the conditions herein
set forth (The Chase Manhattan Bank, N.A. and its successor or
successors as such Trustee qualified and appointed in accordance
with Section 7.8 hereof are herein called the "Trustee"). The
Trustee shall have the powers and authority granted to and
conferred upon it herein and in the Debentures, and such further
powers and authority, acceptable to it, to act on behalf of the
Company as the Company may hereafter grant to or confer upon it
in writing.
The Company hereby appoints The Chase Manhattan Bank,
N.A., at the Principal Corporate Trust Office and at its London
office, presently located at Woolgate House, Coleman Street,
London EC2P 2HD, England (the "London Office"), as its Paying
Agent in respect of the Debentures upon the terms and subject to
the conditions herein set forth The Chase Manhattan Bank, N.A.
and its successor or successors as such paying agent qualified
and appointed in accordance with Section 11.1 hereof are herein
called the "Paying Agent"). The Paying Agent shall have the
powers and authority granted to and conferred upon it herein and
in the Debentures, and such further powers and authority,
acceptable to it, to act on behalf of the Company as the Company
may hereafter grant to or confer upon it in writing. The Company
may have one or more additional Paying Agents and the term
"Paying Agent" includes any additional Paying Agent. As used
herein, "paying agencies" shall mean paying agencies maintained
by the Company as provided in Section 4.2 hereof.
The Company hereby appoints The Chase Manhattan Bank,
N.A. at the Principal Corporate Trust Office and the London
Office and The Chase Manhattan Bank Luxembourg S.A., at present
having its principal corporate trust office at 5, rue Plaetis, L-
2338 Luxembourg (the "Luxembourg Office"), as its Conversion
Agents in respect of the Debentures upon the terms and subject to
the conditions herein set forth (each of The Chase Manhattan
Bank, N.A., The Chase Manhattan Bank Luxembourg S.A. and their
respective successors as such conversion agents qualified and
appointed in accordance with Section 11.1 hereof are herein
called a "Conversion Agent," and the Registrar, the Paying Agent,
the Conversion Agents and the Transfer Agents (as defined in
Section 4.2 hereof) are sometimes herein referred to severally as
an "Agent" and, collectively, as the "Agents"). Each Conversion
Agent shall have the powers and authority granted to and
conferred upon it herein and in the Debentures, and such further
powers and authority, acceptable to it, to act on behalf of the
Company as the Company may hereafter grant to or confer upon it
16
Page 40 of 117 <PAGE>
in writing. As used herein, "conversion agencies" shall mean
conversion agencies maintained by the Company as provided in
Section 4.2 hereof.
The Company shall cause to be kept at the Principal
Corporate Trust Office of the Trustee a register (the register
maintained in such office (which office shall be located in the
Borough of Brooklyn, The City of New York) being herein referred
to as the "Debenture Register") in which, subject to such
reasonable regulations as the Trustee may prescribe, the Company
shall provide for the registration of Registered Debentures and
of transfers of Registered Debentures (the Trustee in such
capacity, the "Registrar"). The Trustee is hereby appointed
Registrar for the purpose of registering Registered Debentures
and transfers of Registered Debentures as herein provided. The
Company may have one or more co-Registrars.
The Company shall enter into an appropriate written
agency agreement with any Agent not a party to this Indenture,
which agreement shall implement the provisions of this Indenture
that relate to such Agent. The Company shall promptly notify the
Trustee in writing of the name and address of any such Agent. If
the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Company initially appoints The Depository Trust
Company ("DTC") to act as Depositary with respect to the Rule
144A Global Debentures.
The Company initially appoints the Trustee to act as
Debentures Custodian with respect to the Rule 144A Global
Debentures.
SECTION 2.4 PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than
the Trustee to agree in writing that each Paying Agent shall hold
in trust for the benefit of Holders or the Trustee all assets
held by the Paying Agent for the payment of principal of,
premium, if any, interest on or Additional Amounts with respect
to, the Debentures (whether such assets have been distributed to
it by the Company or any other obligor on the Debentures), and
shall notify the Trustee in writing of any Default in making any
such payment. The Company at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account
for any assets disbursed and the Trustee may at any time during
the continuance of any payment Default, upon written request to a
Paying Agent, require such Paying Agent to distribute all assets
held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that
shall have been delivered by the Company to the Paying Agent, the
Paying Agent (if other than the Company or an Affiliate of the
Company) shall have no further liability for such assets.
17
Page 41 of 117 <PAGE>
SECTION 2.5 DEBENTUREHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Holders of Registered Debentures. If
the Trustee is not the Registrar, the Company shall furnish to
the Trustee on or before the third Business Day preceding each
Interest Payment Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the
Trustee reasonably may require of the names and addresses of
Holders of Registered Debentures.
SECTION 2.6 TRANSFER AND EXCHANGE; RESTRICTIONS ON
TRANSFER.
(a) Upon surrender for registration of transfer of any
Registered Debenture at any office or agency designated for such
purpose by the Company pursuant to Section 4.2 hereof, the
Company shall execute, and the Trustee shall authenticate,
register and deliver, in the name of the designated transferee or
transferees, one or more new Registered Debentures of any
authorized denominations and of a like aggregate principal amount
and bearing such restrictive legends as may be required by this
Indenture; PROVIDED, HOWEVER, that, with respect to any
Registered Debenture that is a Restricted Debenture, the Trustee
shall not register the transfer of such Debenture unless the
conditions in Section 2.6(b) hereof shall have been satisfied.
The Holder of each Restricted Debenture, by such Holder's
acceptance thereof, agrees to be bound by the transfer
restrictions set forth herein and in the legend on such
Restricted Debenture.
(b) Whenever any Restricted Debenture is presented or
surrendered for registration of transfer or exchange for a
Registered Debenture registered in a name other than that of the
Holder, no registration of transfer or exchange shall be made
unless:
(i) The registered holder presenting such
Restricted Debenture for transfer shall have certified to the
Trustee in writing that such registered holder is transferring
such Restricted Debenture to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in compliance
with the exemption from registration under the Securities Act
provided by Rule 144A thereunder (or a successor provision);
(ii) The registered holder presenting such
Restricted Debenture for transfer shall have certified to the
Trustee in writing that the registered holder is transferring
such Restricted Debenture outside the United States in a
transaction meeting the requirements of Rule 904 of Regulation S
under the Securities Act;
18
Page 42 of 117 <PAGE>
(iii) (A) The registered holder presenting such
Restricted Debenture for transfer shall have certified to the
Trustee in writing that such registered holder is transferring
such Restricted Debenture to an institutional "accredited
investor" (within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) in a transaction not involving any
general solicitation or general advertising; and (B) a broker or
dealer registered under Section 15 of the Exchange Act shall have
certified to the Trustee in writing that: (x) each person who
will become a beneficial owner of the Restricted Debenture upon
transfer is an institutional "accredited investor" (as such term
is defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act); (y) no general solicitation or general
advertising was made or used by such broker or dealer in
connection with the offer and sale of such Restricted Debenture
to such person(s); and (z) such institutional accredited investor
has been informed that the Debentures have not been registered
under the Securities Act and are subject to the restrictions on
transfer set forth in the Debentures and this Indenture;
(iv) The registered holder presenting such
Restricted Debenture for transfer shall have certified to the
Trustee in writing that the registered holder is transferring the
Registered Debenture to the Company; or
(v) The Trustee has received transfer documentation
indicating, and a written opinion of counsel acceptable in form
and substance to the Company and the Trustee, that the transfer
is being made pursuant to another available exemption from, or a
transaction not otherwise subject to, the registration
requirements of the Securities Act.
For purposes of this Section 2.6(b), any such
certification to the Trustee in writing shall be in the form of
the Transfer Notice set forth on the reverse of such Debenture.
In the case of a transfer pursuant to the foregoing clauses (ii),
(iii) or (v), the Company may require that the registered holder
deliver an opinion of counsel, certifications or other
information acceptable to it in form and substance. In addition,
in the case of a transfer pursuant to the foregoing clause (iii),
the transferor shall be required to deliver a letter from the
transferee substantially in the form of Exhibit G hereto.
(c) Bearer Debentures may, at the option of the holder
thereof, be exchanged for an equal aggregate principal amount of
Registered Regulation S Debentures in denominations of U.S.
$1,000 and integral multiples thereof without Coupons and/or
Bearer Debentures of authorized denominations, upon surrender of
the Bearer Debentures to be exchanged at any office or agency
outside the United States designated for such purpose by the
Company pursuant to Section 4.2 hereof, with all unmatured
Coupons and all matured Coupons in default thereto appertaining.
19
Page 43 of 117 <PAGE>
If such Holder is unable to produce any such unmatured Coupon or
Coupons or matured Coupon or Coupons in default, such exchange
may be effected if the Bearer Debentures are accompanied by
payment in funds acceptable to the Company in an amount equal to
the face amount of such missing Coupon or Coupons or the
surrender of such missing Coupon or Coupons may be waived by the
Company if there be furnished to it and the Trustee such security
or indemnity as it may require to save it, the Trustee, the
Paying Agent and any paying agency harmless. If, thereafter the
Holder of such Debenture shall surrender to any paying agency any
such missing Coupon in respect of which such a payment shall have
been made, such holder shall be entitled to receive the amount of
such payment from the Company; provided, however, that, except as
otherwise provided in the form of Bearer Debenture set forth in
Exhibit A hereto, interest represented by Coupons shall be
payable only upon presentation and surrender of those Coupons
outside of the United States and its possessions. Bearer
Debentures and Coupons are transferable upon delivery.
(d) Registered Debentures may, at the option of the
holder thereof, be exchanged for Registered Debentures of any
other authorized denominations and of a like aggregate principal
amount, upon surrender of the Registered Debentures to be
exchanged at any office or agency designated for such purpose by
the Company pursuant to Section 4.2 hereof. Registered
Debentures shall not be exchangeable for Bearer Debentures.
Whenever any Registered Debentures are so surrendered for
exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Registered Debentures which the
holder making the exchange is entitled to receive. If the
Registered Debenture so surrendered for exchange is a Registered
Accredited Investor Debenture and the Holder thereof requests in
writing that such Registered Accredited Investor Debenture be
exchanged for an interest in the Rule 144A Global Debenture, such
Registered Accredited Investor Debenture will be exchangeable
into an equal aggregate principal amount of beneficial interests
in the Rule 144A Global Debenture; PROVIDED, HOWEVER, that, if
such Registered Accredited Investor Debenture is a Restricted
Debenture, such exchange may only be made if such holder
certifies to the Trustee in writing that such holder is a QIB by
completing the Transfer Notice on the reverse of such Debenture.
Upon any exchange as provided in the immediately preceding
sentence, the Trustee shall cancel such Registered Accredited
Investor Debenture and cause, or direct any custodian for the
Rule 144A Global Debenture to cause, in accordance with the
standing instructions and procedures existing between the
Depositary and any such custodian, the aggregate principal amount
of Debentures represented by the Rule 144A Global Debenture to be
increased accordingly. If no Rule 144A Global Debentures are
then outstanding, the Company shall issue and the Trustee shall
authenticate a new Rule 144A Global Debenture in the appropriate
principal amount.
20
Page 44 of 117 <PAGE>
(e) Any person having a beneficial interest in a Rule
144A Global Debenture may upon request exchange such beneficial
interest for a Registered Debenture only as provided in this
paragraph. Upon receipt by the Company and the Trustee of (i)
written instructions (or such other form of instructions as is
customary) on behalf of any person having a beneficial interest
in a Rule 144A Global Debenture and (ii) in the case of a
Restricted Debenture, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the person designated as being the beneficial
owner, a certification to that effect from such person; or
(B) if such beneficial interest is being
transferred to a person other than the person designated as being
the beneficial owner, the provisions of Section 2.6(b) hereof
have been satisfied;
in which case the Trustee or any custodian for the Rule 144A
Global Debenture, at the direction of the Trustee shall, in
accordance with the standing instructions and procedures existing
between the Depositary and such custodian, cause the aggregate
principal amount of the Rule 144A Global Debenture to be reduced
accordingly and, following such reduction, the Company shall
execute and the Trustee shall authenticate and deliver to the
transferee a Registered Debenture in the appropriate principal
amount and, if such Registered Debenture is a Restricted
Debenture, including the appropriate legend. Registered
Debentures issued in exchange for a beneficial interest in the
Rule 144A Global Debenture pursuant to this paragraph shall be
registered in such names and in such authorized denominations as
shall be instructed to the Trustee. The Trustee shall deliver
such Registered Debentures to the persons in whose names such
Debentures are so registered.
(f) Notwithstanding any other provision of this
Indenture (other than the provisions set forth in Section 2.6(e)
hereof), the Rule 144A Global Debenture may not be transferred as
a whole 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.
(g) If at any time either (i) the Depositary for the
Rule 144A Global Debenture notifies the Company and the Company
notifies the Trustee in writing that the Depositary is unwilling
or unable to continue as Depositary for the Rule 144A Global
Debenture and a successor Depositary for the Rule 144A Global
Debenture is not appointed by the Company within 90 days after
delivery of such notice, or (ii) the Company, at its sole
discretion, notifies the Trustee in writing that it elects to
21
Page 45 of 117 <PAGE>
cause the issuance of Registered Debentures under this Indenture,
then the Company shall execute, and the Trustee shall
authenticate and deliver, Registered Debentures in an aggregate
principal amount equal to the principal amount of the Rule 144A
Global Debenture in exchange for such Rule 144A Global Debenture
(registered in the names and denominations specified by the
Depositary).
(h) Each certificate evidencing Restricted Debentures
shall bear a legend in substantially the following form:
THE DEBENTURES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS AND NEITHER THIS DEBENTURE NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. EACH
PURCHASER OF THIS DEBENTURE IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS DEBENTURE, BY ITS ACCEPTANCE
HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT
OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED"
DEBENTURE WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS
DEBENTURE, PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE
LATER OF THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE
COMPANY WAS THE OWNER OF THIS DEBENTURE (OR ANY PREDECESSOR
OF SUCH DEBENTURE) (THE "RESALE RESTRICTION TERMINATION
DATE") EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS DEBENTURE
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) IN A TRANSACTION ARRANGED BY A
BROKER OR DEALER REGISTERED UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED, TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (WITHIN THE MEANING OF SUBPARAGRAPHS (a)(1), (2),
(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT) THAT IS
ACQUIRING THIS DEBENTURE FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR
SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE
22
Page 46 of 117 <PAGE>
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THIS DEBENTURE OF THE RESALE RESTRICTIONS SET FORTH IN
(II) ABOVE. IF ANY RESALE OR OTHER TRANSFER OF THIS
DEBENTURE IS PROPOSED TO BE MADE PURSUANT TO CLAUSE II(E)
ABOVE PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE DATE
OF ORIGINAL ISSUANCE HEREOF, THE TRANSFEROR SHALL DELIVER A
LETTER FROM THE TRANSFEREE CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS DEBENTURE. ANY OFFER, SALE OR OTHER
DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D), (E)
AND (F) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS
DEBENTURE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO IT IN FORM
AND SUBSTANCE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST
OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
(i) The restrictions imposed by Section 2.6(b) upon
the transferability of any particular Restricted Debenture shall
cease and terminate (i) when such Restricted Debenture has been
(x) sold pursuant to an effective registration statement under
the Securities Act or (y) transferred pursuant to Rule 144 under
the Securities Act (or any successor provisions thereto), unless
the holder is an affiliate of the Company within the meaning of
said Rule 144 (or such successor provision) or (ii) upon the date
which is three years after the later of the date of original
issue and the last date on which the Company or any Affiliate of
the Company was the owner of such Restricted Debenture (or any
predecessor security)(the "Resale Restriction Termination Date").
Any Restricted Debenture as to which such restrictions on
transfer shall have expired in accordance with their terms or
shall have terminated may, upon surrender of such Restricted
Debenture for exchange to the Trustee in accordance with the
provisions of this Section 2.6(i) (accompanied, in the event that
such restrictions on transfer have terminated by reason of a
transfer pursuant to Rule 144 (or any successor provision), by an
opinion of counsel reasonably acceptable to the Company,
addressed to the Company and the Trustee and in form and scope
satisfactory to the Company, to the effect that the transfer of
such Restricted Debenture has been made in compliance with Rule
144 (or such successor provision)), be exchanged for a new
Registered Debenture, of like tenor and aggregate principal
amount, which shall not bear the restrictive legend required by
Section 2.6(h) hereof. The Company shall promptly inform the
Trustee in writing of the effective date of any registration
statement registering the Debentures under the Securities Act.
(j) The transfer and exchange of the Rule 144A Global
Debenture or beneficial interest therein shall be effected
through the Depositary, in accordance with this Indenture and the
procedures of the Depositary therefor, which shall include
23
Page 47 of 117 <PAGE>
restrictions on transfer comparable to those set forth herein to
the extent required by the Securities Act.
(k) At such time as all beneficial interests in the
Rule 144A Global Debenture have either been exchanged for
Registered Debentures, redeemed, repurchased or cancelled, the
Rule 144A Global Debenture shall be returned to or retained and
cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in the Rule 144A Global
Debenture is exchanged for Registered Debentures, redeemed,
repurchased or cancelled, the principal amount of Debentures
represented by the Rule 144A Global Debenture shall be reduced
accordingly and an endorsement shall be made on the Rule 144A
Global Debenture, by the Trustee or any custodian therefor, at
the direction of the Trustee, to reflect such reduction.
(l) All Debentures issued upon any registration of
transfer or exchange of Debentures shall be the valid obligations
of the Company, evidencing the same obligations, and entitled to
the same benefits under this Indenture, as the Debentures
surrendered upon such registration of transfer or exchange.
(m) Every Registered Debenture presented for
registration of transfer or surrendered for exchange shall be
duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company, the Trustee and the
Transfer Agent to which such Debenture is presented or
surrendered and the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing. All such
instruments shall comply with the applicable provisions of this
Section 2.6. The registration of the transfer of a Registered
Debenture by the Registrar shall be deemed to be the written
acknowledgement of such transfer on behalf of the Company.
(n) No service charge shall be made for any
registration of transfer or exchange, but the Company or the
Transfer Agent may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Debentures, other than exchanges pursuant to Section 2.7 hereof
or not involving any registration of transfer.
(o) Neither the Company nor the Trustee nor any of the
offices or agencies designated for the purposes specified in
Section 4.2 hereof nor any Transfer Agent shall be required (i)
to exchange Bearer Debentures for Registered Debentures during
the period between the close of business on any Interest Record
Date and the opening of business on the next succeeding Interest
Payment Date, (ii) to exchange any Bearer Debenture (or portion
thereof) for a Registered Debenture if the Company shall
determine and inform the Trustee in writing that, as a result
thereof, the Company may incur adverse consequences under the
Federal income tax laws and regulations (including proposed
24
Page 48 of 117 <PAGE>
regulations) of the United States in effect or proposed at the
time of such exchange, or (iii) in the event of a redemption in
part, (A) to register the transfer or exchange of Registered
Debentures or to exchange any Bearer Debentures for Registered
Debentures during a period of 15 days immediately preceding the
date notice is given pursuant to Section 3(e) of the Registered
Debentures and the Bearer Debentures identifying the serial
numbers of any Debentures to be redeemed, or (B) to register the
transfer or exchange of any Registered Debenture so selected for
redemption in whole or in part, except portions not being
redeemed of Debentures being redeemed in part, or (C) to exchange
any Bearer Debenture called for redemption; PROVIDED, HOWEVER,
that a Bearer Debenture called for redemption may be exchanged,
on the terms and conditions set forth above, for a Registered
Debenture that is simultaneously surrendered, with written
instruction for payment on the Redemption Date, unless the
Redemption Date is between the close of business on any Interest
Record Date and the close of business on the next succeeding
Interest Payment Date, in which case such exchange may only be
made prior to the Interest Record Date immediately preceding the
Redemption Date.
SECTION 2.7 EXCHANGE.
(a) At any time and from time to time after the
execution and delivery of this Indenture, the Company may deliver
Debentures executed by the Company in accordance with this
Indenture to the Trustee for authentication together with an
Officers' Certificate of the Company directing such
authentication, and the Trustee shall thereupon authenticate and
make such Debentures available for delivery upon and in
accordance with the written order of the Company. No Debenture
shall be valid or enforceable for any purpose unless and until
the certificate of authentication thereon shall have been
manually signed by a duly authorized officer of the Trustee and
such duly executed certificate of authentication on any Debenture
shall be conclusive evidence that the Debenture has been duly
authenticated and delivered hereunder.
(b) The Regulation S Global Debenture, the Rule 144A
Global Debenture and the Registered Accredited Investor
Debentures will be issued upon payment to the Company or its
order in United States dollars in next-day funds by check or wire
transfer to a United States dollar account designated by the
Company, at 3:00 p.m., London time, on March 22, 1996, or at such
other time on the same or such other date, not later than 5:00
p.m., London time, on the fifth Business Day in London
thereafter, as the Managers and the Company may agree (the
"Closing Date"). Such payment will be made (1) upon
authorization from the Managers, (2) against delivery as provided
in Section 2.7(c) hereof of the amount, if any, of Rule 144A
Debentures and Accredited Investor Debentures as the Managers may
request and as they shall direct, and (3) against the delivery of
25
Page 49 of 117 <PAGE>
the Regulation S Global Debenture for the balance of the
Debentures to The Chase Manhattan Bank N.A., London office, as
depositary (the "Common Depositary") for Morgan Guaranty Trust
Company of New York, Brussels office, as operator of the
Euroclear System (the "Euroclear Operator"), and Cedel Bank
societe anonyme ("Cedel"). The Regulation S Global Debenture
shall be held on deposit with the Common Depositary for the
accounts of the Euroclear Operator and Cedel, for credit to the
Managers' respective securities clearance accounts (or to such
other accounts as NatWest Securities Limited may have specified)
with the Euroclear Operator or Cedel.
(c) On the Closing Date, the Company shall execute and
deliver to (i) the Managers, at the offices of White & Case in
New York, temporary Registered Accredited Investor Debentures
(which shall have been duly authenticated by the Trustee and
which may be in typewritten form) in respect of the Accredited
Investor Debentures and (ii) the Depositary, at its office in New
York, the Rule 144A Global Debenture (which shall have been duly
authenticated by the Trustee and which may be in type-written
form) in respect of the Rule 144A Debentures. On or before the
Exchange Date (as defined in Section 2.7(d)), the Company will
execute and deliver to the Trustee at its office in New York City
Registered Accredited Investor Debentures in the aggregate
principal amount of the Registered Accredited Investor Debentures
outstanding. At the request of a holder of temporary Registered
Accredited Investor Debentures, the Trustee shall deliver to such
holder Registered Accredited Investor Debentures in exchange for
an equal aggregate principal amount of temporary Registered
Accredited Investor Debentures.
(d) On or before the Exchange Date, the Company will
execute and deliver to the Trustee, at its office in London,
definitive Registered Regulation S Debentures and Bearer
Debentures in the aggregate principal amount outstanding in the
Regulation S Global Debenture and in such proportion of
Registered Regulation S Debentures to Bearer Debentures as the
Trustee may specify. "Exchange Date" means the date following
the expiration of the 40-day period commencing on the Closing
Date. On or after the Exchange Date, the Regulation S Global
Debenture may be surrendered to the Trustee at its London office
to be exchanged, as a whole or in part, for definitive Bearer
Debentures without charge, and the Trustee shall authenticate and
deliver, in exchange for such Regulation S Global Debenture or
the portions thereof to be exchanged, an equal aggregate
principal amount of definitive Bearer Debentures, but only upon
presentation to the Trustee at its office in London of a
certificate of the Euroclear Operator or Cedel with respect to
the Regulation S Global Debenture or portions thereof being
exchanged, substantially in the form of Exhibit C hereto, to the
effect that it has received a certificate or certificates in
substantially the form set forth in Exhibit D hereto dated no
earlier than 15 days prior to the Exchange Date and signed by the
26
Page 50 of 117 <PAGE>
person appearing in its records as the owner of the Regulation S
Global Debenture or portions thereof being exchanged. Similarly,
after the Exchange Date, portions of the Regulation S Global
Debenture may be exchanged for an equal aggregate principal
amount of definitive Registered Regulation S Debentures upon
presentation to the Trustee at its office in London of a
certificate substantially in the form of Exhibit F hereto.
(e) The definitive Debentures and Coupons shall be
printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner permitted
by the rules of any securities exchange on which the Debentures
may be listed, all as determined by the officers executing such
Debentures and Coupons, as evidenced by such execution.
(f) Bearer Debentures may be issued only upon receipt
by the Euroclear Operator or Cedel of a certificate or
certificates in the form of Exhibit D hereto. Bearer Debentures
will be delivered only outside the United States and its
possessions. Registered Debentures may be issued only upon
receipt by the Euroclear Operator or Cedel of a certificate or
certificates in the form of Exhibit E hereto.
(g) The delivery to the Trustee by the Euroclear
Operator or Cedel of any certificate referred to above may be
relied upon by the Company and the Trustee as conclusive evidence
that a corresponding certificate or certificates has or have been
delivered to the Euroclear Operator or Cedel pursuant to the
terms of this Indenture.
(h) Upon any such exchange of a portion of the
Regulation S Global Debenture for a definitive Bearer Debenture
or Debentures or a definitive Registered Regulation S Debenture
or Debentures, the Regulation S Global Debenture shall be
endorsed by the Trustee to reflect the reduction of its principal
amount by an amount equal to the aggregate principal amount of
such definitive Debenture or Debentures. Until so exchanged in
full for definitive Debentures, the Regulation S Global Debenture
shall in all respects be entitled to the same benefits under this
Indenture as definitive Debentures authenticated and delivered
hereunder, except that neither the Holder thereof nor the
beneficial owners of the Regulation S Global Debenture shall be
entitled to receive payment of interest thereon or exercise
conversion rights with respect thereto.
SECTION 2.8 REPLACEMENT DEBENTURES.
If a mutilated Debenture or a Debenture with a
mutilated Coupon appertaining thereto is surrendered to the
Trustee or if the Holder of a Debenture or Coupon claims and
submits an affidavit or other evidence, satisfactory to the
Trustee, to the effect that the Debenture or Coupon has been
lost, destroyed or wrongfully taken, the Company shall issue and
27
Page 51 of 117 <PAGE>
the Trustee shall authenticate and deliver, in lieu of any such
lost, destroyed or wrongfully taken Debenture or in exchange for
the Debenture to which a lost, destroyed or wrongfully taken
Coupon appertains (with all appurtenant Coupons not lost,
destroyed or wrongfully taken) a replacement Debenture with
Coupons corresponding to the Coupons, if any, appertaining to
such lost, destroyed or wrongfully taken Debenture or to the
Debenture to which such lost, destroyed or wrongfully taken
Coupon appertains, if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder must provide
an indemnity bond or other indemnity, sufficient in the judgment
of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer
if a Debenture or Coupon is replaced. The Company may charge
such Holder for its reasonable, out-of-pocket expenses in
replacing a Debenture or Coupon.
In case any such lost, destroyed or wrongfully taken
Debenture or Coupon has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a
new Debenture, pay such Debenture or Coupon; PROVIDED, HOWEVER,
that principal of and any premium and interest on Bearer
Debentures shall, except as otherwise provided in the Bearer
Debentures, be payable only at an office or agency located
outside the United States and its possessions.
Every replacement Debenture or Coupon is an additional
obligation of the Company.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debentures or Coupons.
SECTION 2.9 OUTSTANDING DEBENTURES.
Debentures outstanding at any time are all the
Debentures that have been authenticated by the Trustee (including
any Debenture represented by a Rule 144A Global Debenture or a
Regulation S Global Debenture) except those cancelled by it,
those delivered to it for cancellation, those reductions in the
interest in a Global Debenture effected by the Trustee hereunder
and those described in this Section 2.9 as not outstanding. A
Debenture does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Debenture, except as
provided in Section 2.10 hereof.
If a Debenture is replaced pursuant to Section 2.8
hereof (other than a mutilated Debenture surrendered for
replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Debenture is
held by a bona fide purchaser. A mutilated Debenture ceases to
28
Page 52 of 117 <PAGE>
be outstanding upon surrender of such Debenture and replacement
thereof pursuant to Section 2.8 hereof.
If on a Redemption Date the Paying Agent (other than
the Company or an Affiliate of the Company) holds Cash or U.S.
Government Obligations sufficient to pay all of the principal and
interest due on the Debentures payable on that date in accordance
with Section 3.3 hereof and payment of the Debentures called for
redemption is not otherwise prohibited pursuant to Article XII
hereof or otherwise, then on and after that date such Debentures
cease to be outstanding and interest on them shall cease to
accrue from such Redemption Date.
SECTION 2.10 TREASURY DEBENTURES.
In determining whether the Holders of the required
principal amount of Debentures have concurred in any direction,
amendment, supplement, waiver or consent, Debentures owned by the
Company or an Affiliate of the Company shall be disregarded,
except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment,
supplement, waiver or consent, only Debentures that the Trustee
knows are so owned by the Company or an Affiliate shall be
disregarded.
SECTION 2.11 TEMPORARY DEBENTURES.
Until definitive Debentures are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Debentures. Temporary Debentures shall be substantially in the
form of definitive Debentures but may have variations that the
Company reasonably and in good faith considers appropriate for
temporary Debentures. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive
Debentures in exchange for temporary Debentures. Until so
exchanged, the temporary Debentures shall in all respects be
entitled to the same benefits under this Indenture as permanent
Debentures authenticated and delivered hereunder, except as
provided in Section 2.7(h) hereof.
SECTION 2.12 CANCELLATION.
The Company at any time may deliver Debentures or
Coupons to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Debentures or
Coupons surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or
the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else, shall cancel and, at the written
direction of the Company, shall dispose of all Debentures or
Coupons surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.8 hereof, the Company may not
issue new Debentures or Coupons to replace Debentures or Coupons
29
Page 53 of 117 <PAGE>
that have been paid or delivered to the Trustee for cancellation.
No Debentures shall be authenticated in lieu of or in exchange
for any Debentures cancelled as provided in this Section 2.12,
except as expressly permitted in the form of Debentures and as
permitted by this Indenture.
SECTION 2.13 PAYMENT.
(a) The Company will pay or cause to be paid to the
Paying Agent at its office in Brooklyn, New York the amounts, at
the times and for the purposes, set forth herein and in the text
of the Debentures, and the Company hereby authorizes and directs
the Paying Agent to make payment of the principal of, premium, if
any, and interest on and Additional Amounts, if any, on the
Debentures from such payments.
(b) At least 15 days prior to the date on which any
payment of Additional Amounts shall be required to be made
pursuant to Section 2 of the Debentures, the Company will furnish
the Paying Agent, each other paying agency of the Company and the
Trustee with a certificate of one of its duly authorized officers
instructing the Paying Agent and each other paying agency of the
Company as to the amounts required (i) to be deducted or withheld
for or on account of any taxes described in Section 2 of the
Debentures from a payment to be made on that date and (ii) to be
paid to each holder of Debentures or Coupons as Additional
Amounts pursuant to Section 2 of the Debentures. If the
foregoing amounts are not uniform for all Holders, then the
Company's certificate shall specify by country of residence or
other factor the amounts required to be deducted or withheld and
to be paid as Additional Amounts for each Holder or class of
Holders of the Debentures or Coupons. In the absence of its
receipt of any such certificate from the Company, the Paying
Agent may make payment without deduction or withholding.
(c) Interest on any Registered Debenture that is
payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the person in whose name
that Debenture is registered at the close of business on the
Interest Record Date immediately preceding such Interest Payment
Date even if such Registered Debenture is cancelled after such
Interest Record Date. In case a Bearer Debenture is surrendered
for exchange for a Registered Debenture after the close of
business on any Interest Record Date and before the opening of
business on the next succeeding Interest Payment Date, the
Trustee shall not be required to perform the exchange of such
Debenture.
(d) If a Registered Debenture is converted after the
close of business on an Interest Record Date and before the
opening of business on the next succeeding Interest Payment Date,
the interest due on such Interest Payment Date shall be paid on
such Interest Payment Date to the person in whose name that
30
Page 54 of 117 <PAGE>
Debenture is registered at the close of business on that Interest
Record Date.
(e) In order to provide for the payment of the
principal of, premium, if any, and interest on the Debentures as
the same shall become due and payable, the Company shall pay to
the Paying Agent at its office in Brooklyn, New York, in Cash,
and in same day funds, the following amounts (and the Company
shall give notice to the Trustee at least one full Business Day
prior to the date payment is due to the Paying Agent as to the
means of such payment), to be held and applied by the Paying
Agent as hereinafter set forth:
(i) The Company shall pay to the Paying Agent no
later than 12:00 noon, New York City time, on the Business Day
immediately prior to each Interest Payment Date an amount
sufficient to pay the interest due on (and Additional Amounts, if
any, on) all the Debentures outstanding on such Interest Payment
Date, and the Paying Agent shall apply the amounts so paid to it
to the payment of such interest (and Additional Amounts, if any)
on such Interest Payment Date.
(ii) If the Company shall elect, or shall be
required, to redeem all or any part of the Debentures in
accordance with Section 3.1 hereof, the Company will pay to the
Paying Agent (other than the Company or an Affiliate of the
Company) no later than 12:00 noon, New York City time, on the
Business Day immediately prior to the Redemption Date thereof an
amount sufficient (with any amount then held by the Paying Agent
and available for the purpose) to pay the Redemption Price of the
Debentures called for redemption or entitled to be redeemed,
together with accrued interest thereon (and Additional Amounts,
if any, with respect thereto) to the Redemption Date fixed for
redemption and not paid pursuant to clause (e)(i) of this Section
2.13, and the Paying Agent shall apply such amount to the payment
of the Redemption Price and accrued interest (and Additional
Amounts, if any) in accordance with the terms of Article III
hereof.
(iii) No later than 12:00 noon, New York City time,
on the Business Day immediately prior to the Stated Maturity of
the Debentures, the Company shall pay to the Paying Agent an
amount which, together with any amounts then held by the Paying
Agent, and available for payment thereof, shall be equal to the
entire amount of principal and interest (and Additional Amounts,
if any) to be due on such maturity date on all the Debentures
then outstanding, and the Paying Agent shall apply such amount to
the payment of the principal of and interest on (and Additional
Amounts, if any, on) the Debentures in accordance with the terms
of the Debentures.
(f) If the Paying Agent pays out any amount due under
the terms of the Debentures on or after the due date thereof on
31
Page 55 of 117 <PAGE>
the assumption that the corresponding payment for such amount has
been or will be made by the Company and such payment has in fact
not been so made by the Company prior to the time that the Paying
Agent makes such payment, then the Company shall on demand
reimburse the Paying Agent for the relevant amount, and pay
interest to the Paying Agent on such amount from the date on
which it is paid out to the date of reimbursement at a rate per
annum equal to the cost to the Paying Agent of funding the amount
paid, as certified by the Paying Agent and expressed as a rate
per annum. For the avoidance of doubt, the provisions of Article
XII of this Indenture as to subordination shall not apply to the
Company's obligations under this paragraph (f).
SECTION 2.14 DEFAULTED INTEREST.
Any interest on any Registered Debenture which is
payable, but is not punctually paid or duly provided for, on any
Interest Payment Date plus, to the extent lawful, any interest
payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered
Holder on the relevant Interest Record Date, and such Defaulted
Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may make payment of any Defaulted
Interest to the Holder of a Registered Debenture on a
subsequent record date established by notice given by mail
by or on behalf of the Company to such Holder not less than
15 days preceding such subsequent record date, such record
date to be not less than 10 days preceding the date of
payment of such Defaulted Interest.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this clause, such manner shall be deemed practicable by the
Trustee.
Any Defaulted Interest payable in respect of any Bearer
Debenture shall be payable pursuant to such procedures as may be
satisfactory to the Trustee in such manner that there is no
discrimination between the Holders of Registered Debentures and
Bearer Debentures, and notice of the payment date therefor shall
be given by the Trustee, in the name and at the expense of the
Company, in the manner provided in Section 14.2 hereof.
Subject to the foregoing provisions of this Section
2.14, each Debenture delivered under this Indenture upon transfer
of or in exchange for or in lieu of any other Debenture shall
32
Page 56 of 117 <PAGE>
carry the rights to interest accrued and unpaid, and to accrue,
which were carried by such other Debenture.
SECTION 2.15 COMPUTATION INTEREST.
Interest on the Debentures shall be computed on the
basis of a 360-day year of twelve 30-day months.
ARTICLE III
REDEMPTION
SECTION 3.1 RIGHT OF REDEMPTION.
If, under the circumstances described in Section 3 of
the Registered Debentures and Bearer Debentures, the Company
shall elect or be required to redeem the outstanding Debentures,
the following provisions shall he applicable:
(a) Except in the case of redemption pursuant to
Section 3(d) of the Registered Debentures and the Bearer
Debentures (in which case notice shall be given by the Company as
provided in subsection (c) of this Section 3.1), the Company
shall, at least 75 days (or such shorter period as shall be
reasonably acceptable to the Trustee) before the date designated
for such redemption, give written notice to the Agents of its
election to redeem the outstanding Debentures on the Redemption
Date specified in such notice and state in such notice that the
conditions precedent to such redemption have occurred and
describe them, and shall request the Trustee to arrange for
publication and mailing of the notice specified in clause (b)
below.
(b) In the event the Company shall give notice to the
Agents of its election to redeem the Debentures, the Trustee
shall cause to be given to Holders on behalf of and at the
expense of the Company a notice of redemption in accordance with
Section 14.2 hereof. The Trustee shall send a copy of such
notice of redemption to the Company, the Paying Agent (if
different from the Trustee) and each other paying agency of the
Company. In the case of a redemption in whole, notice will be
given once not more than 60 nor less than 30 days prior to the
Redemption Date. In the case of a partial redemption, notice
will be given twice, the first such notice to be given not more
than 90 nor less than 45 days prior to the Redemption Date and
the second such notice to be given not more than 45 and not less
than 30 days prior to the Redemption Date. The Trustee shall
notify the Company promptly of the portions of outstanding
Debentures to be called for redemption as determined pursuant to
Section 3(a) of the Registered Debentures and Bearer Debentures.
If less than all of the Debentures are called for redemption, the
Trustee shall select the Debentures or any given portion thereof
to be redeemed by lot.
33
Page 57 of 117 <PAGE>
(c) Under the circumstances described in Section 3(d)
of the Registered Debentures and Bearer Debentures concerning the
redemption of outstanding Debentures at the option of the holders
thereof, the following provisions shall be applicable:
(i) The Company shall give notice to the Trustee of
the occurrence of a Change of Control promptly upon the
occurrence of such Change of Control or, if later, immediately
upon learning of the occurrence of such Change of Control
(provided, that the Company shall be deemed to have knowledge of
any information contained in any Statement on Schedule 13D or 13G
filed with the U.S. Debentures and Exchange Commission). Such
notice shall state:
A. the Holder Redemption Date in respect of
such Change of Control;
B. the Redemption Price as set forth in
Section 3(d) of the Registered Debentures and Bearer Debentures;
C. the place or places of payment of the
Registered Debentures and Bearer Debentures; and
D. such other information as the Company
shall deem advisable.
(ii) The Trustee shall cause to be given to the
Holders on behalf of the Company a notice of entitlement to
redeem in accordance with the provisions of Section 14.2 hereof.
Such notice shall be given on behalf and at the expense of the
Company and shall be given not later than 30 days after the later
of the Exchange Date, the date of the occurrence of a Change of
Control or the date of receipt of notice by the Trustee from the
Company of such Change of Control (the date on which such notice
is given by the Trustee shall be the "Change of Control Notice
Date").
(iii) Upon the deposit of any of the Registered
Debentures or Bearer Debentures with the agency designated by the
Company as the place for payment of the Registered Debentures and
Bearer Debentures together with a duly signed and completed
Redemption Notice in the form set forth on the reverse of the
Bearer Debentures and Registered Debentures, all in accordance
with the provisions of Section 3 of the Registered Debentures and
Bearer Debentures, the Holder of such Registered Debenture and
Bearer Debenture shall be entitled to receive a non-transferable
receipt evidencing such deposit.
(iv) The Trustee shall notify the Company on each
Business Day in the five Business Days prior to the Holder
Redemption Date for outstanding Debentures to be redeemed under
34
Page 58 of 117 <PAGE>
this Section 3.1(c) of the amount required to redeem such
Debentures.
(d) Notices relating to the redemption of Debentures
whether at the option of the Company or the Holder hereof shall
specify: the Redemption Date or the Holder Redemption Date, as
the case may be, therefor; the Redemption Price; the place or
places of payment; that payment will be made upon presentation
and surrender of the Debentures to be redeemed, together, in the
case of a Bearer Debenture, with all appurtenant Coupons, if any,
maturing subsequent to the Redemption Date; that interest accrued
to the Redemption Date will be paid as specified in such notice;
that on and after said date interest thereon will cease to
accrue; and such other information as the Company may wish to
include. In the case of a redemption by the Company at the
option of the Holder of a Debenture, the notices given by the
Trustee informing a Holder of such Holder's entitlement to redeem
shall also specify that a Holder electing redemption will be
entitled to revoke its election by delivering a written notice of
such revocation, together with the Holder's nontransferable
receipt for such Debenture, to the agency designated by the
Company as the place for the payment of the Debentures to be so
redeemed not later than the Holder Redemption Date in the case of
a redemption pursuant to Section 3(d) of the Registered
Debentures and Bearer Debentures. In the case of a redemption in
part at the option of the Company, notices shall specify the
aggregate principal amount of Debentures to be redeemed and the
aggregate principal amount of Debentures outstanding after such
partial redemption. The first notice shall specify the last date
on which exchanges or transfers of Debentures may be made (in
accordance with Section 2.6(o) hereof), and the second notice
shall specify the serial numbers of the Debentures and the
portions thereof called for redemption. In the case of a
redemption in whole or in part by the Company, notices shall
specify the date the conversion privilege expires in accordance
with Section 4(a) of the Registered Debentures and Bearer
Debentures. Such notices shall also state that the conditions
precedent, if any, to such redemption have occurred and, in the
case of a redemption pursuant to Section 3(d) of the Registered
Debentures and Bearer Debentures, the last day for surrender of
the Debentures being redeemed.
If any date fixed for the redemption of Bearer
Debentures is a date prior to the Exchange Date, the beneficial
owners will be entitled to receive payment of the Redemption
Price, subject to the receipt by the Euroclear Operator or Cedel
of a certificate or certificates in the form of Exhibit D hereto.
SECTION 3.2 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is made in accordance with
Section 3.1 hereof, Debentures called for redemption become due
and payable on the Redemption Date and at the Redemption Price,
35
Page 59 of 117 <PAGE>
including accrued and unpaid interest and Additional Amounts, if
any, to the Redemption Date. Upon surrender to the Trustee or
Paying Agent, such Debentures called for redemption shall be paid
at the Redemption Price, including accrued and unpaid interest
and Additional Amounts, if any, to the Redemption Date; provided
that if the Redemption Date is after a regular Interest Record
Date and on or prior to the next succeeding Interest Payment
Date, the accrued interest to the Redemption Date and Additional
Amounts, if any, shall be payable on the Redemption Date to the
Holder of the redeemed Debentures registered on the relevant
Interest Record Date; and provided, further, that if a Redemption
Date is not a Business Day, payment shall be made on the next
succeeding Business Day and no interest or Additional Amounts
shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.3 DEPOSIT OF REDEMPTION PRICE.
On the Business Day immediately prior to the Redemption
Date, the Company shall deposit with the Paying Agent (other than
the Company or an Affiliate of the Company) Cash sufficient to
pay the Redemption Price of, including accrued and unpaid
interest on, and Additional Amounts with respect to, all
Debentures to be redeemed on such Redemption Date (other than
Debentures or portions thereof called for redemption on that date
that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the
Company any Cash so deposited which is not required for that
purpose upon the written request of the Company.
If the Company complies with the preceding paragraph
and the other provisions of this Article III and payment of the
Debentures called for redemption is not prohibited under Article
XII hereof or otherwise, interest and Additional Amounts on the
Debentures to be redeemed will cease to accrue on the applicable
Redemption Date, whether or not such Debentures are presented for
payment. Notwithstanding anything herein to the contrary, if any
Debenture surrendered for redemption in the manner provided in
the Debentures shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the
preceding paragraph, interest and Additional Amounts shall
continue to accrue and be paid from the Redemption Date until
such payment is made on the unpaid principal, and, to the extent
lawful, on any interest not paid on such unpaid principal, in
each case at the rate and in the manner provided in Section 4.1
hereof and the Debenture.
SECTION 3.4 DEBENTURES REDEEMED IN PART.
Upon surrender of a Debenture that is to be redeemed in
part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, without service charge to
36
Page 60 of 117 <PAGE>
the Holder, a new Debenture or Debentures equal in principal
amount to the unredeemed portion of the Debenture surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1 PAYMENT OF DEBENTURES.
The Company shall pay the principal of, premium, if
any, interest on, and Additional Amounts, if any, with respect
to, the Debentures on the dates and in the manner provided in the
Debentures, as applicable. An installment of principal of,
premium, if any, interest on, or Additional Amounts, if any, with
respect to, the Debentures shall be considered paid on the date
it is due if the Trustee or Paying Agent (other than the Company
or an Affiliate of the Company) holds for the benefit of the
Holders on that date Cash deposited and designated for and
sufficient to pay the installment.
The Company shall pay interest on overdue principal and
on overdue installments of interest at the rate specified in the
Debentures compounded semi-annually, to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY.
(a) So long as any of the Registered Debentures remain
outstanding or until monies for the payment of all principal of,
premium, if any, and interest on (and Additional Amounts with
respect to) all outstanding Debentures shall have been made
available at the office of the Paying Agent and shall have been
returned to the Company as provided in Section 8.2 hereof, the
Company will maintain in the Borough of Manhattan or Brooklyn,
The City of New York, an office or agency where the Registered
Debentures may be presented or surrendered for payment, an office
or agency where the Debentures may be surrendered for conversion
as provided in this Indenture and an office or agency where
notices and demands to or upon the Company with respect to the
Registered Debentures or this Indenture may be served, in each
case, which office or agency shall be a bank or trust company
organized, in good standing and doing business under the laws of
the United States of America or of any State of the United States
of America. So long as any Bearer Debentures remain outstanding
or until monies for the payment of all principal of, premium, if
any, and interest on (and Additional Amounts with respect to) all
outstanding Debentures shall have been made available at the
office of the Paying Agent and shall have been returned to the
Company as provided in Section 8.2 hereof, the Company will
maintain, in at least one city in Western Europe, which shall be
Luxembourg so long as the Debentures are listed on the Luxembourg
Stock Exchange, an office or agency where Bearer Debentures may
be surrendered for payment or conversion pursuant to Section 2.6
hereof and where notices and demands to or upon the Company in
37
Page 61 of 117 <PAGE>
respect of the Bearer Debentures of that series or of this
Indenture may be served. The Company now intends to maintain
additional agencies (subject to applicable laws and regulations)
outside the United States and its possessions where Bearer
Debentures and Coupons may be surrendered for payment, where
Registered Debentures may be surrendered for payment and where
Debentures may be surrendered for conversion in London, England
and Luxembourg, and during such period to keep the Agents advised
of the names and locations of such agencies. Unless the Company
shall otherwise notify each of the Agents in writing, the sole
such paying agencies and conversion agencies shall be the
agencies specified in the Debentures.
(b) So long as there shall be Debentures outstanding
or until monies for the payment of all principal of, premium, if
any, and interest on (and Additional Amounts with respect to) all
outstanding Debentures shall have been made available at the
office of the Paying Agent and shall have been returned to the
Company as provided in Section 8.2 hereof, the Company shall
maintain a Debenture Registrar and additional transfer agencies
(each a "Transfer Agent and, collectively, the "Transfer Agents")
(i) where Registered Debentures may be surrendered for
registration of transfer or for exchange for Registered
Debentures in New York City and (ii) in at least one city in
Western Europe, which shall be Luxembourg so long as the
Debentures are listed on the Luxembourg Stock Exchange, where
Registered Debentures may be surrendered for purposes of transfer
or exchange, and where Bearer Debentures may be delivered in
exchange for Bearer Debentures or for Registered Debentures.
Consistent with applicable laws and regulations, including the
provisions of the federal income tax laws of the United States,
such agencies may be the same agencies as or different agencies
from those maintained by the Company pursuant to Section 4.2(a).
The Company hereby appoints the London Office of The Chase
Manhattan Bank, N.A. and The Chase Manhattan Bank Luxembourg
S.A., as Transfer Agents for such transfers and exchanges. The
registration of transfer or exchange of Registered Debentures
shall only be made by the Trustee in New York City.
(c) The Company will give to the Trustee written
notice of the locations of such offices or agencies and of any
change in the locations thereof. If at any time the Company
shall fail to maintain any such offices or agencies or shall fail
to give such notice of the location or any change in the
locations thereof, presentations, surrenders, notices and demands
in respect of Registered Debentures may be made or served at the
Principal Corporate Trust Office of the Trustee in Brooklyn, New
York and in respect of Bearer Debentures may be made or served at
the principal office of the Trustee in London, England at which
at any particular time its corporate trust business shall be
administered.
38
Page 62 of 117 <PAGE>
SECTION 4.3 CORPORATE EXISTENCE.
Subject to Article V hereof, the Company shall do or
cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate
or other existence of each of its Subsidiaries in accordance with
the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the
Company and each of its Subsidiaries; PROVIDED, HOWEVER, that the
Company shall not be required to preserve, with respect to
itself, any right or franchise, and with respect to any of its
Subsidiaries, any such existence, right or franchise, if (a) the
Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of such entity
and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.4 PAYMENT OF TAXES AND OTHER CLAIMS.
Except with respect to immaterial items, the Company
shall, and shall cause each of its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same
shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any
penalties, interest and additions to taxes) levied or imposed
upon the Company or any of its Subsidiaries or any of their
respective properties and assets and (ii) all lawful claims,
whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or
may become a Lien upon the property and assets of the Company or
any of its Subsidiaries; PROVIDED, HOWEVER, that neither the
Company nor any Subsidiary shall be required to pay or discharge
or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which
disputed amounts adequate reserves have been established in
accordance with GAAP.
SECTION 4.5 MAINTENANCE OF PROPERTIES AND INSURANCE.
The Company shall cause all material properties used or
useful to the conduct of its business and the business of each of
its Subsidiaries to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted) and
supplied with all necessary equipment and shall cause to be made
all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in their reasonable judgment may be
necessary, so that the business carried on in connection
therewith may be properly conducted at all times; PROVIDED,
HOWEVER, that nothing in this Section 4.5 shall prevent the
Company or any Subsidiary from discontinuing any operation or
maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is (a), in the judgment
39
Page 63 of 117 <PAGE>
of the Company, desirable in the conduct of the business of such
entity and (b) not disadvantageous in any material respect to the
Holders.
The Company shall provide, or cause to be provided, for
itself and each of its Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds
that, in the reasonable, good faith opinion of the Company is
adequate and appropriate for the conduct of the business of the
Company and such Subsidiaries in a prudent manner, with (except
for self-insurance) reputable insurers or with the government of
the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable, good faith
opinion of the Company, and adequate and appropriate for the
conduct of the business of the Company and such Subsidiaries in a
prudent manner for entities similarly situated in the industry,
unless failure to provide such insurance (together with all other
such failures) would not have a material adverse effect on the
financial condition or results of operations of the Company or
such Subsidiary.
SECTION 4.6 COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee within
120 days after the end of its fiscal year an Officers'
Certificate complying with Section 314(a)(4) of the TIA and
stating that a review of its activities and the activities of its
Subsidiaries during the preceding fiscal year has been made under
the supervision of the signing officers with a view to
determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture and further
stating, as to each such officer signing such certificate,
whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or
covenants in this Indenture and, if such signor does know of such
a failure to comply, the certificate shall describe such failure
with particularity. The Officers' Certificate shall also notify
the Trustee should the relevant fiscal year end on any date other
than the current fiscal year end date.
(b) The Company shall, so long as any of the
Debentures are outstanding, deliver to the Trustee, promptly and
in any event within 5 Business Days upon becoming aware of any
Default, Event of Default or fact which would prohibit the making
of any payment to or by the Trustee in respect of the Debentures,
an Officers' Certificate specifying such Default, Event of
Default or fact and what action the Company is taking or proposes
to take with respect thereto. The Trustee shall not be deemed to
have knowledge of any Default, any Event of Default or any such
fact unless one of its Trust Officers receives notice thereof
from the Company or any of the Holders.
40
Page 64 of 117 <PAGE>
SECTION 4.7 REPORTS.
Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall deliver to the Trustee and to each Holder
identified to the Company, and to prospective purchasers of
Debentures identified to the Company by NatWest Securities
Limited, within 15 days after it is or would have been required
to file such with the SEC, annual and quarterly consolidated
financial statements substantially equivalent to financial
statements that would have been included in reports filed with
the SEC if the Company was subject to the requirements of Section
13 or 15(d) of the Exchange Act, including, with respect to
annual information only, a report thereon by the Company's
certified independent public accountants as such would be
required in such reports to the SEC and, in each case, together
with a management's discussion and analysis of financial
condition and results of operations which would be so required.
SECTION 4.8 LIMITATION ON STATUS AS INVESTMENT COMPANY.
Neither the Company nor any of its Subsidiaries shall
become an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become
subject to regulation under said Investment Company Act.
SECTION 4.9 WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other
law which would prohibit or forgive the Company from paying all
or any portion of the principal of, premium of, interest on, or
Additional Amounts with respect to, the Debentures 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 (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
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 had been enacted.
SECTION 4.10 RULE 144A INFORMATION REQUIREMENT.
The Company shall furnish to the Holders or beneficial
holders of the Debentures or the underlying Common Stock and
prospective purchasers of Debentures or the underlying Common
Stock designated by the Holders of Debentures or the underlying
Common Stock, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act
until such time as the Debentures are no longer "restricted
41
Page 65 of 117 <PAGE>
securities" within the meaning of Rule 144 under the Securities
Act.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 LIMITATION ON MERGER, SALE OR CONSOLIDATION.
(a) The Company shall not, directly or indirectly,
consolidate with or merge with or into another Person or sell,
lease, convey or transfer all or substantially all of its assets
(computed on a consolidated basis), whether in a single
transaction or a series of related transactions, to another
Person or group of affiliated Persons, unless (i) either (a) in
the case of a merger or consolidation, the Company is the
surviving entity or (b) the resulting, surviving or transferee
entity is a corporation organized under the laws of the United
States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Debentures and
the Indenture; (ii) no Default or Event of Default shall exist or
shall occur immediately before or after giving effect on a pro
forma basis to such transaction; and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an opinion
of Counsel, each stating that such consolidation, merger or
transfer and, if a supplemental indenture is required, such
supplemental indenture comply with the Indenture and that all
conditions precedent relating to such transactions have been
satisfied.
(b) For purposes of clause (a) of this Section 5.1,
the sale, lease, conveyance, assignment, transfer, or other
disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the
properties and assets of the Company on a consolidated basis,
shall be deemed to be the transfer of all or substantially all of
the properties and assets of the Company.
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any sale, lease,
conveyance or transfer of all or substantially all of the assets
of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the
Company is merged or to which such sale, lease, conveyance or
transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
had been named therein as the Company, and when a successor
corporation duly assumes all of the obligations of the Company
pursuant hereto and pursuant to the Debentures, the predecessor
42
Page 66 of 117 <PAGE>
(except in the case of a lease) shall be released from such
obligations (except with respect to any obligations that arise
from or as a result of such transaction).
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether it shall be caused voluntarily or
involuntarily or effected, without limitation, 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):
(1) failure to pay any installment of interest on, or
Additional Amounts with respect to, the Debentures as and
when the same becomes due and payable, or to perform any
conversion of the Debentures required under this Indenture,
and the continuance of such default for a period of 30 days,
whether or not such payment is prohibited by Article XII
hereof;
(2) failure to pay all or any part of the principal
of, or premium, if any on the Debentures when and as the
same become due and payable at maturity, redemption, by
acceleration or otherwise, including, without limitation,
default in the payment of the Redemption Price on the
Redemption Date in accordance with Section 3(d) of the
Registered Debentures and the Bearer Debentures, whether or
not such payment is prohibited by Article XII hereof;
(3) failure by the Company to perform (or cause the
performance of) the conversion of any Debenture in
accordance with its terms and the terms of this Indenture,
and continuance of such failure for a period of 60 days
after tender for conversion by the Holder thereof;
(4) failure by the Company to observe or perform any
covenant, agreement or warranty contained in the Debentures
or this Indenture (other than a default in the performance
of any covenant, agreement or warranty which is specifically
dealt with elsewhere in this Section 6.1), and continuance
of such failure for a period of 60 days after there has been
given, by registered or certified mail, to the Company by
the Trustee, or to the Company and the Trustee by Holders of
at least 25% in aggregate principal amount of the then
outstanding Debentures, a written notice specifying such
default or breach, requesting it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
43
Page 67 of 117 <PAGE>
(5) a default under Indebtedness of the Company or any
of its Significant Subsidiaries with an aggregate principal
amount in excess of $5,000,000 (a) resulting from the
failure to pay principal, premium or interest when due that
extends beyond any stated period of grace applicable thereto
or (b) as a result of which the maturity of such
Indebtedness has been accelerated prior to its stated
maturity;
(6) a decree, judgment, or order by a court of
competent jurisdiction shall have been entered adjudging the
Company or any of its Significant Subsidiaries as bankrupt
or insolvent, or approving as properly filed a petition
seeking reorganization of the Company or any of its
Significant Subsidiaries under any bankruptcy or similar
law, and such decree or order shall have continued
undischarged and unstayed for a period of 75 days; or a
decree or order of a court of competent jurisdiction over
the appointment of a receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of the Company, any of
its Significant Subsidiaries, or of the property of any such
Person, or for the winding up or liquidation of the affairs
of any such Person, shall have been entered, and such
decree, judgment, or order shall have remained in force
undischarged and unstayed for a period of 75 days;
(7) the Company or any of its Significant Subsidiaries
shall institute proceedings to be adjudicated a voluntary
bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or
consent seeking reorganization under any bankruptcy or
similar law or similar statute, or shall consent to the
filing of any such petition, or shall consent to the
appointment of a Custodian, receiver, liquidator, trustee,
or assignee in bankruptcy or insolvency of it or any of its
assets or property, or shall make a general assignment for
the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or
shall, within the meaning of any Bankruptcy Law, become
insolvent, fail generally to pay its debts as they become
due, or take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the
foregoing; or
(8) final unsatisfied judgments not covered by
insurance, or the issuance of any warrant of attachment
against any portion of the property or assets of the Company
or any of its Significant Subsidiaries, aggregating in
excess of $2,000,000 at any one time, shall have been
rendered against the Company or any of its Subsidiaries and
not have been stayed, bonded or discharged for a period
(during which execution shall not be effectively stayed) of
44
Page 68 of 117 <PAGE>
60 days (or, in the case of any such final judgment which
provides for payment over time, which shall so remain
unstayed, unbonded or undischarged beyond any applicable
payment date provided therein).
Notwithstanding the 60-day period and notice
requirement contained in Section 6.1(4) above, with respect to a
default under Section 3(d) of the Registered Debentures and the
Bearer Debentures, the 60-day period referred to in Section
6.1(4) shall be deemed to have begun as of the date the Change of
Control notice is required to be sent in the event that the
Company has not complied with the provisions of Section 3 of the
Registered Debentures and the Bearer Debentures and the Trustee
or Holders of at least 25% in principal amount of the outstanding
Debentures thereafter give the Notice of Default referred to in
Section 6.1(4) to the Company and, if applicable, the Trustee;
PROVIDED, HOWEVER, that if the breach or default is a result of a
default in the payment when due of the Redemption Price on the
Redemption Date, such Event of Default shall be deemed, for
purposes of this Section 6.1, to arise no later than on the
Redemption Date.
SECTION 6.2 ACCELERATION OF MATURITY DATE; RESCISSION AND
ANNULMENT.
If an Event of Default (other than an Event of Default
specified in Section 6.1(6) or (7) relating to the Company or any
of its Significant Subsidiaries) occurs and is continuing, then,
and in every such case, unless the principal of all of the
Debentures shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate
principal amount of then outstanding Debentures, by a notice in
writing to the Company (and to the Trustee if given by Holders)
(an "Acceleration Notice"), may declare all of the principal of
the Debentures, including in each case accrued interest thereon
and Additional Amounts, if any, with respect thereto, to be due
and payable immediately, whereupon such amounts shall, subject to
the rights of the holders of Senior Indebtedness, become
immediately due and payable. If an Event of Default specified in
Section 6.1(6) or (7) relating to the Company or any Significant
Subsidiary occurs, all principal, accrued interest thereon and
Additional Amounts, if any, with respect thereto will be
immediately due and payable on all outstanding Debentures without
any declaration or other act on the part of the Trustee or the
Holders.
At any time after such a declaration of acceleration
has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter
provided in this Article VI, the Holders of no less than a
majority in aggregate principal amount of then outstanding
Debentures, by written notice to the Company and the Trustee, may
45
Page 69 of 117 <PAGE>
rescind, on behalf of all Holders, any such declaration of
acceleration if:
(1) the Company has paid or deposited with the Trustee
Cash sufficient to pay:
(A) all overdue interest on, and Additional
Amounts, if any, with respect to, all Debentures;
(B) the principal of (and premium, if any,
applicable to) any Debentures which would then be due otherwise
than by such declaration of acceleration, and interest thereon at
the rate borne by the Debentures;
(C) to the extent that payment of such
interest is lawful, interest upon overdue interest and Additional
Amounts, if any, at the rate borne by the Debentures;
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default, other than the non-payment
of the principal of, premium, if any, interest on and
Additional Amounts, if any, with respect to Debentures that
have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 6.12
hereof, including, if applicable, any Event of Default
relating to the covenants contained in Section 3(d) of the
Registered Debentures and the Bearer Debentures.
Notwithstanding the previous sentence of this Section 6.2, no
waiver shall be effective against any Holder for any Event of
Default or Default with respect to any covenant or provision
which cannot be modified or amended without the consent of the
Holder of each outstanding Debenture affected thereby, unless all
such affected Holders agree, in writing, to waive such Event of
Default or Default. No such waiver shall cure or waive any
subsequent Default or Event of Default or impair any right
consequent thereon.
SECTION 6.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
The Company covenants that if an Event of Default in
payment of principal, premium, interest or Additional Amounts
specified in clause (1) or (2) of Section 6.1 hereof occurs and
is continuing, the Company shall, upon demand of the Trustee, pay
to it, for the benefit of the Holders of such Debentures, the
whole amount then due and payable on such Debentures for
principal, premium (if any), interest, Additional Amounts and, to
the extent that payment of such interest shall be legally
enforceable, interest on any overdue principal (and premium, if
46
Page 70 of 117 <PAGE>
any), Additional Amounts and on any overdue interest, at the rate
borne by the Debentures, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses,
disbursements and advances of, the Trustee, its agents and
counsel.
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust in favor of the Holders, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon
the Debentures and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the
Company or any other obligor upon the Debentures, wherever
situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders by such appropriate judicial
proceedings as the Trustee shall deem most effective to protect
and enforce any such rights, whether for the specific enforcement
of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other
proper remedy.
SECTION 6.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Debentures or the
property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of
the securities 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 on the Company for the payment
of overdue principal, interest or Additional Amounts) shall be
entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including:
(1) to file and prove a claim for the whole amount of
principal (and premium, if any), interest and Additional
Amounts owing and unpaid in respect of the Debentures and to
file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agent and counsel) and of the Holders allowed in such
judicial proceeding; and
47
Page 71 of 117 <PAGE>
(2) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder 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 Holders,
to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 hereof.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment, or composition affecting the Debentures or the rights
of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF DEBENTURES.
All rights of action and claims under this Indenture or
the Debentures may be prosecuted and enforced by the Trustee
without the possession of any of the Debentures or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust in favor of the Holders, and
any recovery of judgment shall, after provision for the payment
of compensation to, and expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit
of the Holders of the Debentures in respect of which such
judgment has been recovered.
SECTION 6.6 PRIORITIES.
Any money collected by the Trustee pursuant to this
Article VI shall be applied in the following order, at the date
or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, premium (if any), interest or
Additional Amounts, upon presentation of the Debentures and the
notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due
pursuant to Section 7.7 hereof;
SECOND: To the holders of Senior Indebtedness of the
Company to the extent provided in Article XII hereof;
48
Page 72 of 117 <PAGE>
THIRD: To the Holders in payment of the amounts then
due and unpaid for principal of, premium (if any), interest on
and Additional Amounts with respect to, the Debentures in respect
or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to
the amounts due and payable on such Debentures for principal,
premium (if any), interest and Additional Amounts, respectively;
and
FOURTH: To whomsoever may be lawfully entitled
thereto, the remainder, if any.
The Trustee may fix a record date and payment date for
any payment by it to Holders pursuant to this Section.
SECTION 6.7 LIMITATION ON SUITS.
No Holder of any Debenture shall have any right to
order or direct the Trustee to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(A) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal
amount of then outstanding Debentures shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee
hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities to be incurred or reasonably probable to be
incurred in compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(E) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
then outstanding Debentures;
it being understood and intended that no one or more Holders
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 Holders, or to obtain or to
seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture, except in the manner
49
Page 73 of 117 <PAGE>
herein provided and for the equal and ratable benefit of all the
Holders.
SECTION 6.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM, INTEREST AND ADDITIONAL AMOUNTS.
Notwithstanding any other provision of this Indenture,
the Holder of any Debenture shall have the right, which is
absolute and unconditional, to receive payment of the principal
of, and premium (if any), interest on and Additional Amounts with
respect to, such Debenture when due (including, in the case of
redemption, the Redemption Price on the applicable Redemption
Date) and to institute suit for the enforcement of any such
payment after such respective dates, and such rights shall not be
impaired without the consent of such Holder.
SECTION 6.9 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Debentures in Section 2.8 hereof, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.10 DELAY OR OMISSION NOT WAIVER.
No delay or omission by the Trustee or by any Holder of
any Debenture to exercise any right or remedy arising upon any
Event of Default shall impair the exercise of any such right or
remedy or constitute a waiver of any such Event of Default.
Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 6.11 CONTROL BY HOLDERS.
The Holder or Holders of no less than a majority in
aggregate principal amount of then outstanding Debentures 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 upon the Trustee,
provided, that:
(1) such direction shall not be in conflict with any
rule of law or with this Indenture;
50
Page 74 of 117 <PAGE>
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not
taking part in such direction or would subject the Trustee
to any liability; and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
SECTION 6.12 WAIVER OF PAST DEFAULT.
Subject to Section 6.8 hereof, the Holder or Holders of
not less than a majority in aggregate principal amount of then
outstanding Debentures may, on behalf of all Holders, prior to
the declaration of acceleration of the maturity of the
Debentures, waive any past default hereunder and its
consequences, except a default:
(A) in the payment of the principal of, premium, if
any, interest on, or Additional Amounts with respect to, any
Debenture not yet cured as specified in clauses (1) and (2)
of Section 6.1 hereof; or
(B) in respect of a covenant or provision hereof
which, under Article IX hereof, cannot be modified or
amended without the consent of the Holder of each
outstanding Debenture affected.
Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other default or
impair the exercise of any right arising therefrom.
SECTION 6.13 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of
any Debenture by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but
the provisions of this Section 6.13 shall not apply to any suit
instituted by the Company, to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in aggregate principal
amount of then outstanding Debentures, or to any suit instituted
by any Holder for enforcement of the payment of principal of,
51
Page 75 of 117 <PAGE>
premium (if any), interest on or Additional Amounts with respect
to, any Debenture on or after the Stated Maturity of such
Debenture (including, in the case of redemption, on or after the
Redemption Date).
SECTION 6.14 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every case, subject to any determination
in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such
proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by
this Indenture and covenants and agrees to perform the same, as
herein expressed.
SECTION 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and
no covenants or obligations shall be implied in or read into
this Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform on their face to the requirements of this Indenture.
Unless expressly provided in this Indenture, the Trustee
shall have no duty to recalculate or verify information
contained in any such certificate or opinion.
52
Page 76 of 117 <PAGE>
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.1.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts.
(3) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 6.11 hereof.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder or to take or omit to take any action under this
Indenture or at the request, order or direction of the Holders or
in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c),
(d) and (f) of this Section 7.1.
(f) The Trustee shall not be liable for interest on
any assets received by it except as the Trustee may agree in
writing with the Company. Assets held in trust by the Trustee
need not be segregated from other assets except to the extent
required by law.
SECTION 7.2 RIGHTS OF TRUSTEE.
Subject to Section 7.1:
(a) The Trustee may rely on any document believed by
it to be genuine and to have been signed or presented by the
proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting,
it may consult with counsel and may require an officers'
Certificate or an Opinion of Counsel, which shall conform to
Sections 14.4 and 14.5 hereof, if applicable. The Trustee shall
not be liable for any action it takes or omits to take in good
faith in reliance on such certificate or advice of counsel.
53
Page 77 of 117 <PAGE>
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be
authorized or within its rights or powers conferred upon it by
this Indenture.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, 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.
(f) 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
Holders, pursuant to the provisions of this Indenture, unless
such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
(g) Unless otherwise specifically provided for in this
Indenture, any demand, request, direction or notice from the
Company shall be sufficient if signed by an Officer of the
Company.
(h) The Trustee shall have no duty to inquire as to
the performance of the Company's covenants in Article IV hereof.
In addition, the Trustee shall not be deemed to have knowledge of
any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.1(1) or 6.1(2), or (ii) any
Default or Event of Default of which a Trust Officer of the
Trustee shall have received written notification from the Company
or any Holder or obtained actual knowledge. Furthermore, the
Trustee shall not be deemed to have knowledge of any Payment
Default until such time as a Trust Officer of the Trustee shall
have received written notification from the Company or any holder
of Senior Indebtedness or obtained actual knowledge.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Debentures and may otherwise deal
with the Company, any of its Subsidiaries, or their respective
Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However,
the Trustee must comply with Sections 7.10 and 7.11 hereof.
54
Page 78 of 117 <PAGE>
SECTION 7.4 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Debentures and it shall not
be accountable for the Company's use of the proceeds from the
Debentures, and it shall not be responsible for any statement in
the Debentures, other than the Trustee's certificate of
authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
SECTION 7.5 NOTICE OF DEFAULT.
If a Default or an Event of Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall
give to Debenture Holders in accordance with Section 14.2 notice
of the uncured Default or Event of Default within 90 days after
such Default or Event of Default occurs. Except in the case of a
Default or an Event of Default in payment of principal (or
premium, if any) of, interest on or Additional Amounts with
respect to, any Debenture (including the payment of the
Redemption Price on the Redemption Date), the Trustee may
withhold the notice if and so long as a Trust Officer in good
faith determines that withholding the notice is in the interest
of the Debentureholders.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each August 15 beginning with the
August 15 following the date of this Indenture, the Trustee
shall, if required by TIA 313(a), transmit to the Holders a
brief report dated as of such August 15 that complies with TIA
313(a). The Trustee also shall comply with TIA 313(b) and
313(c).
The Company shall promptly notify the Trustee in
writing if the Debentures become listed on any stock exchange or
automatic quotation system.
A copy of each report at the time of its mailing to
Debentureholders shall be mailed to the Company and filed with
the SEC and each stock exchange, if any, on which the Debentures
are listed.
Reports pursuant to this Section 7.6 shall be
transmitted by mail:
(1) to all holders of Registered Debentures as the
names and addresses of such Holders appear in the Debenture
Register; and
(2) to other Holders of Debentures as have, within the
two years preceding such transmission, filed their names and
addresses with the Trustee for such purpose.
55
Page 79 of 117 <PAGE>
SECTION 7.7 COMPENSATION AND INDEMNITY.
The Company agrees to pay to the Trustee from time to
time reasonable compensation for its services. The Trustee's
compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it. Such expenses shall
include, without limitation, the reasonable compensation,
disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Company agrees to indemnify the Trustee and each of
its officers, directors, attorneys-in-fact and agents for, and
hold them harmless against, any claim, demand, expense (including
but not limited to reasonable compensation, disbursements and
expenses of the Trustee's agents and counsel), loss or liability
incurred by them without negligence or bad faith on their part,
arising out of or in connection with the acceptance and
administration of this trust and their rights or duties hereunder
including the reasonable costs and expenses of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties
hereunder, provided that for purposes of this Section 7.7, the
term Trustee shall mean The Chase Manhattan Bank, N.A.
individually and in each of its capacities hereunder as Trustee,
Paying Agent (including The Chase Manhattan Bank, N.A., London
and The Chase Manhattan Bank Luxembourg S.A.), Conversion Agent
and Registrar. Without limiting the foregoing, the Company
agrees to indemnify the Trustee against any claim or liability
for backup withholding or nonresident alien withholding taxes
(and interest and penalties thereon) under the U.S. tax laws.
The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity.
The Company shall defend the claim and the Trustee shall provide
reasonable cooperation at the Company's expense in the defense.
Notwithstanding the foregoing, in the event that there is a
conflict of interest between the Company and the Trustee in
connection with such defense, the Company shall pay the
reasonable fees and expenses of separate counsel for the Trustee,
which counsel shall be selected from the Trustee's existing list
of approved counsel and shall be satisfactory to the Company. If
an Event of Default has not occurred, nor is continuing, then,
and in every such case, counsel for the Trustee shall be selected
from the Trustee's then existing list of approved counsel and
shall be satisfactory to the Company. The Company shall pay the
reasonable fees and expenses of such counsel. If an Event of
Default has occurred or is continuing, then, and in every such
case, the Trustee may, in its sole discretion choose its own
counsel from its list of approved counsel and the Company shall
pay the reasonable fees and expenses of such counsel. Except in
the case of an Event of Default, the Company need not pay for any
56
Page 80 of 117 <PAGE>
settlement made without its written consent, which consent will
not be unreasonably withheld. The Company need not reimburse any
expense or indemnify against any loss or liability to the extent
incurred by the Trustee through its negligence, bad faith or
willful misconduct.
To secure the Company's payment obligations in this
Section 7.7, the Trustee shall have a lien prior to the
Debentures on all assets held or collected by the Trustee, in its
capacity as Trustee, except assets held in trust to pay principal
and premium, if any, of or interest on, or Additional Amounts
with respect to, particular Debentures.
Without limiting any of the rights available to the
Trustee under applicable law, when the Trustee incurs expenses or
renders services after an Event of Default specified in Section
6.1(6) or (7) hereof occurs, the expenses and the compensation
for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and
any lien arising hereunder shall survive the resignation or
removal of the Trustee, the discharge of the Company's
obligations pursuant to Article VIII of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy
Law.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company in
writing. The Holder or Holders of a majority in principal amount
of then outstanding Debentures may remove the Trustee by so
notifying the Company and the Trustee in writing and may appoint
a successor trustee with the Company's consent. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10
hereof;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer
takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holder or Holders of a
majority in principal amount of then outstanding Debentures may
appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
57
Page 81 of 117 <PAGE>
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.
Immediately after that and provided that all sums owing to the
retiring Trustee provided for in Section 7.7 have been paid, the
retiring Trustee shall transfer all property held by it as
trustee to the successor Trustee, subject to the lien provided in
Section 7.7, the resignation or removal of the retiring Trustee
shall become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holder or Holders of at
least 10% in principal amount of then outstanding Debentures may
petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Debentureholder who has been a bona fide holder of a Debenture
for at least 6 months may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment
of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Company's obligations under Section 7.7
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER ETC.
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate
trust business to, another corporation, the resulting, surviving
or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
The Trustee shall at all times satisfy the requirements
of TIA 310(a)(1), (2) and (5). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set
forth in its most recent published annual report of condition.
The Trustee shall comply with TIA 310(b), subject to the
penultimate paragraph thereof.
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY.
The Trustee shall comply with TIA 311(a), excluding
any creditor relationship listed in TIA 311(b). A Trustee who
58
Page 82 of 117 <PAGE>
has resigned or been removed shall be subject to TIA 311(a) to
the extent indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.1 SATISFACTION AND DISCHARGE OF INDENTURE.
The Company may terminate its obligations under this
Indenture (subject to the provisions of this Article VIII) when
it shall have delivered to the Trustee for cancellation all
Debentures theretofore authenticated and all Coupons appertaining
thereto (other than any Debentures and Coupons which shall have
been destroyed, lost or stolen and which shall have been replaced
or paid as provided in Article II hereof or any Debentures
referred to in Section 8.2) and the following conditions shall be
satisfied:
(1) the Company has paid all sums payable under the
Indenture; and
(2) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel in the United
States, each stating that all conditions precedent have been
complied with as contemplated by this Section 8.1.
SECTION 8.2 REPAYMENT TO THE COMPANY.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, for the payment of the
principal of, premium, if any, interest on or Additional Amounts
with respect to any Debenture and remaining unclaimed for two
years after such principal, premium, if any, interest or
Additional Amounts has become due and payable shall be paid to
the Company upon its written request and indemnity; and the
Holder of such Debenture shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall
thereupon cease.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS.
Without the consent of any Holder, the Company, when
authorized by Board Resolutions, and the Trustee, at any time and
from time to time, may, subject to Section 7.2(b), enter into one
or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
59
Page 83 of 117 <PAGE>
(1) to cure any ambiguity, defect or inconsistency, or
to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be
inconsistent with the provisions of this Indenture,
provided, that such action pursuant to this clause (1) does
not adversely affect the interests of any Holder in any
respect;
(2) to create additional covenants of the Company for
the benefit of the Holders, or to surrender any right or
power herein conferred upon the Company or to make any other
change that does not adversely affect the rights of any
Holder, provided, that the Company has delivered to the
Trustee an opinion of Counsel stating that such change
pursuant to this clause (2) does not adversely affect the
rights of any Holder;
(3) to provide for collateral for or guarantors of the
Debentures;
(4) to evidence the succession of another Person to
the Company and the assumption by any such successor of the
obligations of the Company herein and in the Debentures in
accordance with Article V;
(5) to comply with the TIA; or
(6) to comply with Section 13.7.
SECTION 9.2 AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS
WITH CONSENT OF HOLDERS.
Subject to Section 6.8 and the last sentence of this
paragraph, with the consent (evidenced as provided in Section
10.2 hereof) of the Holders of not less than a majority in
aggregate principal amount of then outstanding Debentures, by
written act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and
the Trustee may amend or supplement this Indenture or the
Debentures or 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 the Debentures or of modifying in any manner the rights of the
Holders under this Indenture or the Debentures. Subject to
Section 6.8 and the last sentence of this paragraph, the Holder
or Holders of not less than a majority in aggregate principal
amount of then outstanding Debentures may, in writing, waive
compliance by the Company with any provision of this Indenture or
the Debentures. Notwithstanding any of the above, however, no
such amendment, supplemental indenture or waiver shall, without
the consent of the Holder of each outstanding Debenture affected
thereby:
60
Page 84 of 117 <PAGE>
(1) change the Stated Maturity of any Debenture or
reduce the principal amount thereof or the rate (or extend
the time for payment) of interest thereon or any premium
payable upon the redemption thereof or Additional Amounts
with respect thereto, or change the place of payment where,
or the coin or currency in which, any Debenture or any
premium or the interest thereon or Additional Amounts with
respect thereto is payable, or impair the right to institute
suit for the enforcement of any such payment or the
conversion of any Debenture on or after the due date thereof
(including, in the case of redemption, on or after the
Redemption Date), or alter redemption provisions in a manner
adverse to the Holders;
(2) reduce the percentage in principal amount of the
outstanding Debentures, the consent of whose Holders is
required for any such amendment, supplemental indenture or
waiver provided for in this Indenture;
(3) modify any of the provisions of Article XII hereof
in a manner adverse to the Holders;
(4) adversely affect the right of such Holder to
convert Debentures; or
(5) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain
other provisions of the Indenture cannot be modified or
waived without the consent of the Holder of each outstanding
Debenture affected thereby.
It shall not be necessary for the consent of the
Holders under this Section 9.2 to approve the particular form of
any proposed amendment, supplement or waiver, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.2 becomes effective, the Company shall give to the
Holders in accordance with Section 14.2 a notice briefly
describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any
such supplemental indenture or waiver.
After an amendment, supplement or waiver under this
Section 9.2 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver
under this Article IX, the Company may, but shall not be
obligated to, offer to any Holder who consents to such amendment,
supplement or waiver, or (at the option of the Company) to all
61
Page 85 of 117 <PAGE>
Holders, consideration for consent to such amendment, supplement
or waiver.
SECTION 9.3 COMPLIANCE WITH TIA.
Every amendment, waiver or supplement of this Indenture
or the Debentures shall comply with the TIA as then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes
effective, a consent to it by a Holder is a continuing consent by
the Holder and every subsequent Holder of a Debenture or portion
of a Debenture that evidences the same debt as the consenting
Holder's Debenture, even if notation of the consent is not made
on any Debenture. However, any such Holder or subsequent Holder
may revoke the consent as to his Debenture or portion of his
Debenture by written notice to the Company or the Person
designated by the Company as the Person to whom consents should
be sent if such revocation is received by the Company or such
Person before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite
principal amount of Debentures have consented (and not
theretofore revoked such consent) to the amendment, supplement or
waiver.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver, which record
date shall be the date so fixed by the Company notwithstanding
the provisions of the TIA. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding
paragraph, those Persons who were Holders at such record date,
and only those Persons (or their duly designated proxies), shall
be entitled to revoke any consent previously given, whether or
not such Persons continue to be Holders after such record date.
No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes
effective, it shall bind every Debentureholder; provided, that
any such waiver shall not impair or affect the right of any
Holder to receive payment of principal and premium of and
interest on and Additional Amounts with respect to a Debenture,
on or after the respective dates set for such amounts to become
due and payable expressed in such Debenture, or to bring suit for
the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
SECTION 9.5 NOTATION ON OR EXCHANGE OF DEBENTURES.
If an amendment, supplement or waiver changes the terms
of a Debenture, the Trustee may require the Holder of the
62
Page 86 of 117 <PAGE>
Debenture to deliver it to the Trustee or require the Holder to
put an appropriate notation on the Debenture. The Trustee may
place an appropriate notation on the Debenture about the changed
terms and return it to the Holder. Alternatively, if the Company
or the Trustee so determines, the Company in exchange for the
Debenture shall issue and the Trustee shall authenticate a new
Debenture that reflects the changed terms. Any failure to make
the appropriate notation or to issue a new Debenture shall not
affect the validity of such amendment, supplement or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee may, but shall not be obligated to, execute
any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture
or otherwise. The Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver
authorized pursuant to this Article IX is authorized or permitted
by this Indenture.
ARTICLE X
MEETINGS
SECTION 10.1 MEETINGS AND VOTES OF HOLDERS.
(a) A meeting of Holders of Debentures may be called
at any time and from time to time pursuant to this Section 10.1
for any of the following purposes: (i) to give any notice to the
Company or to the Trustee, or to give any directions to the
Trustee, or to consent to the waiving of any Default or Event of
Default hereunder and its consequences, or to take any other
action authorized to be taken by Holders of Debentures pursuant
to Article IX hereof; or (ii) to take any other action authorized
to be taken by or on behalf of the Holders of any specified
aggregate principal amount of the Debentures under any other
provision of this Indenture, the Registered Debentures and Bearer
Debentures or under applicable law.
(b) Meetings of Holders of Debentures may be held at
such place or places in New York City or London as the Trustee
or, in case of its failure to act, the Company or the Holders
calling the meeting shall from time to time determine.
(c) The Trustee may at any time call a meeting of
Holders of Debentures to be held at such time and at such place
in any of the locations designated in Section 10.1(b) hereof as
the Trustee shall determine. Notice of every meeting of Holders
shall be made as specified in Section 14.2 hereof, except that
such notice shall set forth the time and the place of such
meeting, in general terms the action proposed to be taken at such
meeting and a general description of regulations applicable to
63
Page 87 of 117 <PAGE>
such meeting and shall be published at least three times in the
publications specified in such Section 14.2, the first
publication to be not less than 21 nor more than 180 days prior
to the date fixed for the meeting.
(d) In case at any time the Company or the Holders of
at least 25% in aggregate principal amount of the Debentures
shall have requested the Trustee to call a meeting of the
Holders, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee
shall not have given the first notice of such meeting within 21
days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then
the Company or the Holders of Debentures in the amount above
specified may determine the time and the place in either of the
locations designated in Section 10.1(b) hereof for such meeting
and may call such meeting to take any action authorized in
Section 10.1(a) hereof by giving notice thereof as provided in
Section 10.1(c) hereof.
(e) To be entitled to vote at any meeting of Holders
of Debentures, a person shall be (i) a Holder of one or more
Debentures, or (ii) a person appointed by an instrument in
writing as proxy for a Holder or Holders of Debentures by such
Holder or Holders, which proxy need not be a Holder of
Debentures. The only persons who shall be entitled to be present
or to speak at any meeting of Holders 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.
(f) The persons entitled to vote a majority in
principal amount of the outstanding Debentures shall constitute a
quorum for the transaction of all business specified in Section
10.1(a) hereof. No business shall be transacted in the absence
of a quorum unless a quorum is represented when the meeting is
called to order. In the absence of a quorum within 30 minutes of
the time appointed for any such meeting, the meeting shall, if
convened at the request of the Holders of Debentures (as provided
in Section 10.1(d) hereof), be dissolved. In any other case the
meeting shall be adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Notice of the reconvening
of any adjourned meeting (except pursuant to Section 10.1(j))
shall be given as provided in Section 10.1(c) hereof except that
such notice need be published only once but must be given not
less than five days prior to the date on which the meeting is
scheduled to be reconvened. Subject to the foregoing, at the
reconvening of any meeting adjourned for a lack of a quorum the
persons entitled to vote 25% in principal amount of the
Debentures shall constitute a quorum for the taking of any action
set forth in the notice of the original meeting. Notice of the
reconvening of an adjourned meeting shall state expressly the
64
Page 88 of 117 <PAGE>
percentage of the aggregate principal amount of the Debentures
that shall constitute a quorum. At a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as
aforesaid, any resolution and all matters (except as limited by
Section 6.8 and the last sentence of the first paragraph of
Section 9.2 hereof) shall be effectively passed and decided if
passed or decided by the persons entitled to vote a majority in
principal amount of the Debentures represented and voting at such
meeting, provided that such amount shall be not less than 25% in
principal amount of the Debentures outstanding. Any Holder of a
Debenture who has executed an instrument in writing appointing a
person as his proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted;
provided, however, that such Holder shall be considered as
present or voting only with respect to the matters covered by
such instrument in writing. Any resolution passed or decision
taken at any meeting of the Holders of Debentures duly held in
accordance with this Section 10.1 shall be binding on all the
Holders of Debentures whether or not present or represented at
the meeting.
(g) Notwithstanding any other provision of this
Indenture, the Trustee may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Debentures in
regard to proof of the holding of Debentures and of the
appointment of proxies and in regard to the appointment and
duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Bearer
Debentures shall be proved by the production of the Bearer
Debentures or by a certificate executed, as depositary, by, and
the appointment of any proxy shall be proved by having the
signature of the person executing the proxy witnessed or
guaranteed by, in each case, any trust company, bank or banker
satisfactory to the Trustee. Such regulations may provide that
written instruments appointing proxies, regular on their face,
may be presumed valid and genuine without the proof specified
herein or other proof. The holding of Registered Debentures
shall be proved by the registry books maintained in accordance
with Section 2.3 hereof or by a certificate or certificates of
the Trustee in its capacity as the Company's agent for the
maintenance of such books.
(h) The Trustee shall, by an instrument in writing,
appoint a temporary chairperson of the meeting, unless the
meeting shall have been called by the Company or by the Holders
of Debentures as provided in Section 10.1(d) hereof, in which
case the Company or the Holders calling the meeting, as the case
may be, shall in like manner appoint a temporary chairperson. A
permanent chairperson and a permanent secretary of the meeting
shall be elected by vote of the Holders of a majority in
65
Page 89 of 117 <PAGE>
principal amount of the Debentures represented at the meeting and
entitled to vote.
(i) At any meeting, each Holder or proxy shall be
entitled to one vote for each U.S. $1,000 principal amount of
Debentures held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any
Debentures challenged as not outstanding and ruled by the
chairperson of the meeting to be not outstanding. The
chairperson of the meeting shall have no right to vote, except as
a Holder or proxy.
(j) Any meeting of Holders of Debentures duly called
pursuant to Section 10.1(c) or 10.1(d) hereof at which a quorum
is present may be adjourned from time to time by vote of the
Holders (or proxies for the Holders) of a majority in principal
amount of the Debentures represented at the meeting and entitled
to vote; and the meeting may be held as so adjourned without
further notice.
(k) The vote upon any resolution submitted to any
meeting of Holders of Debentures shall be by written ballots on
which shall be subscribed the signatures of the Holders of
Debentures or of their representatives by proxy and the serial
number or numbers of the Debentures held or represented by them.
The permanent chairperson 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, at least
in duplicate, of the proceedings of each meeting of Holders of
Debentures 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 published as provided in Section 10.1(c) or
10.1(d) hereof and, if applicable, Section 10.1(f) hereof. Each
copy shall be signed and verified by the affidavits of the
permanent chairperson and secretary of the meeting, and one such
copy shall be delivered to the Company and another to the Trustee
to be preserved by the Trustee, the copy delivered to the Trustee
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 10.2 ACTION BY HOLDERS. Subject to Section 14.6,
whenever in this Indenture it is provided that the Holders of a
specified percentage in aggregate principal amount of the
Debentures may take any action (including the making of any
demand or request, the giving of any notice, consent or waiver or
the taking of any other action) the fact that at the time of
taking any such action the Holders of such specified percentage
66
Page 90 of 117 <PAGE>
have joined therein may be evidenced (a) by any instrument or any
number of instruments of similar tenor executed by Holders in
person or by agent or proxy appointed in writing, or (b) by the
record of Holders voting in favor thereof at any meeting of such
Holders duly called and held in accordance with the provisions of
Section 10.1 hereof, or (c) by a combination of such instrument
or instruments and any such record of such a meeting of Holders.
ARTICLE XI
AGENTS
SECTION 11.1 OFFICES, RESIGNATION, SUCCESSORS, ETC. OF
AGENTS; PAYING, CONVERSION AND TRANSFER AGENCIES.
(a) Each of the Agents may at any time resign as such
Agent by giving written notice to the Company and the Trustee of
such intention on its part, specifying the date in which its
desired resignation shall become effective; PROVIDED, HOWEVER,
that such date shall never be less than ninety days after receipt
of such notice by the Company unless the Company agrees to accept
less notice. Each of the Agents hereunder may be removed at any
time by the filing with it and the Trustee of any instrument in
writing signed on behalf of the Company and specifying such
removal and the date when it is intended to become effective.
Such resignation or removal shall take effect upon the date of
the appointment by the Company, as hereinafter provided, of a
successor Conversion Agent, Registrar, Transfer Agent or Paying
Agent, as the case may be, and the acceptance of such appointment
by such successor Agent. Upon its resignation or removal, each
of the Agents shall be entitled to the payment by the Company of
its compensation for the services rendered hereunder and to the
reimbursement of all reasonable out-of-pocket expenses incurred
in connection with the services rendered hereunder by such Agent.
(b) In case at any time any of the Agents shall
resign, or shall be removed, or shall be incapable of acting, or
shall file a voluntary petition as a debtor under Chapter 7 or 11
of Title 11 of the United States Code or have an order for relief
entered against it as a debtor under Chapter 7 or 11 of Title 11
of the United States Code or make an assignment for the benefit
of its creditors or consent to the appointment of a receiver of
all or any substantial part of its property, or shall admit in
writing its inability to pay or meet its debts as they mature, or
if an order of any court shall be entered approving any petition
filed by or against any of the Agents under any legislation
similar to the provisions of Title 11 of the United States Code,
or if a receiver of it or of all or any substantial part of its
property shall be appointed, or if any public officer shall take
charge or control of it or of its property or affairs, for the
purpose of rehabilitation, conservation or liquidation, a
successor Agent, qualified as aforesaid, shall be appointed by
the Company by an instrument in writing. Upon the appointment as
67
Page 91 of 117 <PAGE>
aforesaid of a successor Agent and acceptance by it of such
appointment, the Agent so superseded shall cease to be such Agent
hereunder. If no successor Agent shall have been so appointed by
the Company and shall have accepted appointment as hereinafter
provided, any Holder of a Debenture, on behalf of itself and all
others similarly situated, or any Agent may petition any court of
competent jurisdiction for the appointment of a successor Agent
and shall promptly notify the Company of such action.
(c) Any successor Conversion Agent, Registrar,
Transfer Agent or Paying Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor, the Company and the
Trustee an instrument accepting such appointment hereunder, and
thereupon such successor Agent, without any further act, deed or
conveyance, shall become vested with all the authority, rights,
powers, trusts, immunities, duties and obligations of such
predecessor with like effect as if originally named as such Agent
hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Agent shall be
entitled to receive, all monies, securities or other property on
deposit with or held by such predecessor, as such Agent
hereunder.
(d) Any corporation or bank into which any of the
Agents hereunder may be merged or converted, or any corporation
or bank with which such Agent may be consolidated, or any
corporation or bank resulting from any merger, conversion or
consolidation to which such Agent shall be a party, or any
corporation or bank to which such Agent shall sell or otherwise
transfer all or substantially all the assets and business of such
Agent, shall be the successor to such Agent under this Indenture
without the execution or filing of any document or any further
act on the part of any of the parties hereto.
ARTICLE XII
SUBORDINATION
SECTION 12.1 DEBENTURES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company and each Holder, by its acceptance of
Debentures, agree that (a) the payment of the principal of and
interest on, or Additional Amounts with respect to, the
Debentures and (b) any other payment in respect of the
Debentures, including on account of the acquisition or redemption
of the Debentures by the Company (including, without limitation,
pursuant to Section 3(d) of the Registered Debentures and the
Bearer Debentures) is subordinated, to the extent and in the
manner provided in this Article XII, to the prior payment in full
of all Senior Indebtedness of the Company, and all other Obliga-
tions in respect thereof, whether outstanding at the date of this
Indenture or thereafter created, incurred, assumed or guaranteed,
68
Page 92 of 117 <PAGE>
and that these subordination provisions are for the benefit of
the holders of Senior Indebtedness.
This Article XII shall constitute a continuing offer to
all Persons who, in reliance upon such provisions, become holders
of, or continue to hold, Senior Indebtedness, and such provisions
are made for the benefit of the holders of Senior Indebtedness,
and such holders are made obligees hereunder and any one or more
of them may enforce such provisions.
To the extent any provision of this Article XII
conflicts or is inconsistent with any other provision of this
Indenture, the provisions of this Article XII shall govern and
supersede such inconsistent or conflicting provision.
SECTION 12.2 NO PAYMENT ON DEBENTURES IN CERTAIN
CIRCUMSTANCES.
(a) No payment may be made by the Company on account
of the principal of, premium, if any, interest on, or Additional
Amounts with respect to, the Debentures, or to acquire any of the
Debentures (including redemptions of Debentures at the option of
the Holder) for cash or property (other than Junior Securities),
or on account of the redemption provisions of the Debentures, (i)
upon the maturity of any Senior Indebtedness of the Company by
lapse of time, acceleration (unless waived) or otherwise, unless
and until all principal of, premium, if any, and interest on such
Senior Indebtedness and all other Obligations in respect thereof
are first paid in full (or such payment is duly provided for), or
(ii) in the event of default in the payment of any principal of,
premium, if any, or interest on, or any other Obligation in
respect of, any Senior Indebtedness of the Company when it
becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise (a "Payment
Default"), unless and until such Payment Default has been cured
or waived by the holders of such Senior Indebtedness or otherwise
has ceased to exist.
(b) Upon (i) the happening of an event of default
(other than a Payment Default) that permits the holders of any
Designated Senior Indebtedness or their representative
immediately to accelerate its maturity and (ii) written notice of
such event of default given to the Company and the Trustee by the
requisite holders of such Designated Senior Indebtedness or their
representative (a "Payment Notice"), then, unless and until such
event of default has been cured or waived by the requisite
holders of such Designated Senior Indebtedness or otherwise has
ceased to exist, no payment (by set-off or otherwise) may be made
by or on behalf of the Company on account of the principal of,
premium, if any, interest on, or Additional Amounts with respect
to, the Debentures, or to acquire or repurchase any of the
Debentures for cash or property, or on account of the redemption
provisions of the Debentures, in any such case other than
69
Page 93 of 117 <PAGE>
payments made with Junior Securities of the Company.
Notwithstanding the foregoing, unless (I) the Designated Senior
Indebtedness in respect of which such event of default exists has
been declared due and payable in its entirety within 179 days
after the Payment Notice is delivered as set forth above (the
"Payment Blockage Period"), and (II) such declaration has not
been rescinded or waived by the requisite holders of such
Designated Senior Indebtedness, at the end of the Payment
Blockage Period, the Company shall be required to pay all sums
not paid to the Holders of the Debentures during the Payment
Blockage Period due to the foregoing prohibitions and to resume,
subject to this Article XII, all other payments as and when due
on the Debentures. Any number of Payment Notices may be given;
PROVIDED, HOWEVER, that (A) not more than one Payment Notice
shall be given within a period of any 360 consecutive days, and
(B) no default that existed upon the commencement of a Payment
Blockage Period (whether or not such event of default is on the
same issue of Designated Senior Indebtedness) shall be made the
basis for the commencement of any other Payment Blockage Period.
(c) In furtherance of the provisions of Section 12.1,
in the event that, notwithstanding the foregoing provisions of
this Section 12.2, any payment or distribution of assets of the
Company (other than Junior Securities) shall be received by the
Trustee or the Holders or any Paying Agent at a time when such
payment or distribution is prohibited by the provisions of this
Section 12.2, then such payment or distribution shall be received
and held in trust by the Trustee or such Holder or Paying Agent
(or, if the Company or any Affiliate of the Company is acting as
its own Paying Agent, money for any such payment or distribution
shall be segregated or held in trust) for the benefit of the
holders of Senior Indebtedness of the Company, and shall be paid
or delivered by the Trustee or such Holders or such Paying Agent,
as the case may be, to the holders of Senior Indebtedness of the
Company remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees
under any indenture pursuant to which any instruments evidencing
any of such Senior Indebtedness of the Company may have been
issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness of the Company held
or represented by each, for application to the payment of all
Senior Indebtedness of the Company in full after giving effect to
any concurrent payment and distribution to the holders of such
Senior Indebtedness, but only to the extent that as to any holder
of such Senior Indebtedness, as promptly as practical following
receipt by such holder of written notice from the Trustee to the
holders of such Senior Indebtedness that such prohibited payment
has been received by the Trustee, any Holder or Holders or any
Paying Agent (or has been segregated as provided above), such
holder (or a representative therefor) notifies the Trustee of the
amounts then due and owing on such Senior Indebtedness, if any,
held by such holder and only the amounts specified in such
70
Page 94 of 117 <PAGE>
notices to the Trustee shall be paid to the holders of such
Senior Indebtedness.
SECTION 12.3 DEBENTURES SUBORDINATED TO PRIOR PAYMENT OF ALL
SENIOR INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR
REORGANIZATION.
Upon any distribution of assets of the Company upon any
dissolution, winding up, total or partial liquidation or
reorganization of the Company, whether voluntary or involuntary,
in bankruptcy, insolvency, receivership or a similar proceeding
or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the
Company shall first be entitled to receive payments in full (or
have such payment duly provided for) before the Holders are
entitled to receive any payment on account of the principal of,
premium, if any, interest on, and Additional Amounts with respect
to, the Debentures (other than Junior Securities);
(b) any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities (other than Junior Securities) to which the Holders or
the Trustee on behalf of the Holders would be entitled (by setoff
or otherwise), except for the provisions of this Article XII,
shall be paid by the liquidating trustee or agent or other Person
making such a payment or distribution directly to the holders of
Senior Indebtedness of the Company or their representative to the
extent necessary to make payment in full of all such Senior
Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than
Junior Securities), shall be received by the Trustee or the
Holders or any Paying Agent (or, if the Company or any Affiliate
of the Company is acting as its own Paying Agent, money for any
such payment or distribution shall be segregated or held in
trust) on account of the principal of, premium, if any, interest
on, or Additional Amounts with respect to, the Debentures before
all Senior Indebtedness of the Company is paid in full, such
payment or distribution shall be received and held in trust by
the Trustee or such Holder or Paying Agent (or, if the Company or
any Affiliate of the Company is acting as its own Paying Agent,
money for any such payment or distribution shall be segregated or
held in trust) for the benefit of the holders of such Senior
Indebtedness, or their respective representative, or the trustee
or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness of the Company may
have been issued, ratably according to the respective amounts of
71
Page 95 of 117 <PAGE>
such Senior Indebtedness held or represented by each, to the
extent necessary to make payment as provided herein of all such
Senior Indebtedness remaining unpaid after giving effect to all
concurrent payments and distributions and all provisions therefor
to or for the holders of such Senior Indebtedness, but only to
the extent that as to any holder of such Senior Indebtedness, as
promptly as practical following receipt by such holder of written
notice from the Trustee to the holders of such Senior
Indebtedness that such prohibited payment has been received by
the Trustee, any Holder or Holders or any Paying Agent (or has
been segregated as provided above), such holder (or a
representative therefor) notifies the Trustee of the amounts then
due and owing on such Senior Indebtedness, if any, held by such
holder and only the amounts specified in such notices to the
Trustee shall be paid to the holders of such Senior Indebtedness.
SECTION 12.4 DEBENTUREHOLDERS TO BE SUBROGATED TO RIGHTS OF
HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full of all Senior
Indebtedness of the Company as provided herein, the Holders of
Debentures shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until
all amounts owing on the Debentures shall be paid in full, and
for the purpose of such subrogation no such payments or
distributions to the holders of such Senior Indebtedness by the
Company, or by or on behalf of the Holders by virtue of this
Article XII, which otherwise would have been made to the Holders
shall, as between the Company and the Holders, be deemed to be
payment by the Company on account of such Senior Indebtedness, it
being understood that the provisions of this Article XII are and
are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of such
Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders
would otherwise have been entitled but for the provisions of this
Article XII shall have been applied, pursuant to the provisions
of this Article XII, to the payment of amounts payable under
Senior Indebtedness of the Company, then the Holders shall be
entitled to receive from the holders of such Senior Indebtedness
any payments or distributions received by such holders of Senior
Indebtedness in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Indebtedness
in full.
SECTION 12.5 OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article XII or elsewhere in
this Indenture or in the Debentures is intended to or shall
impair as between the Company and the Holders, the obligation of
each such Person, which is absolute and unconditional, to pay to
72
Page 96 of 117 <PAGE>
the Holders the principal of, premium, if any, interest on, and
Additional Amounts with respect to, the Debentures 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 and creditors of the Company other than the holders
of the Senior Indebtedness, nor shall anything herein or therein
prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article XII,
of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise
of any such remedy. Notwithstanding anything to the contrary in
this Article XII or elsewhere in this Indenture or in the
Debentures, upon any distribution of assets of the Company
referred to in this Article XII, the Trustee, subject to the
provisions of Sections 7.1 and 7.2, and the Holders shall be
entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other Person
making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and
other Indebtedness of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Article XII so long
as such court has been apprised of the provisions of, or the
order, decree or certificate makes reference to, the provisions
of this Article XII. The Trustee shall be entitled to rely on
the delivery to it of a written notice by a person representing
himself to be a holder of Senior Indebtedness (or a trustee or
representative on behalf of such holder) to establish that such a
notice has been given by a holder of Senior Indebtedness (or a
trustee or representative on behalf of such holder). 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 XII, the Trustee may
request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such person, as to the extent to which such
person is entitled to participate in such payment or
distribution, and as to other facts pertinent to the rights of
such person under this Article XII, 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. Nothing in this Article XII shall apply to
the claims of, or payments to, the Trustee under or pursuant to
Section 7.7.
73
Page 97 of 117 <PAGE>
SECTION 12.6 TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT
PROHIBITED IN ABSENCE OF NOTICE.
The Trustee or any Paying Agent (other than the Company
acting as its own Paying Agent) shall not at any time be charged
with knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee or such Paying
Agent unless and until a Trust Officer of the Trustee or such
Paying Agent (other than the Company acting as its own Paying
Agent), as the case may be, shall have received, no later than
one Business Day prior to such payment, written notice thereof
from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to
the receipt of any such written notice, the Trustee, subject to
the provisions of Sections 7.1 and 7.2, and such Paying Agent
shall be entitled in all respects conclusively to assume that no
such fact exists.
SECTION 12.7 APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH
IT.
Any deposit of assets with the Trustee or the Agent
(whether or not in trust) for the payment of principal of or
interest on, or Additional Amounts with respect to, any
Debentures shall be subject to the provisions of Sections 12.1,
12.2, 12.3 and 12.4; provided that, if prior to one Business Day
preceding the date on which by the terms of this Indenture any
such assets may become distributable for any purpose (including,
without limitation, the payment of either principal of or
interest on any Debenture) the Trustee or a Paying Agent shall
not have received with respect to such assets the written notice
provided for in Section 12.6, then the Trustee or such Paying
Agent shall have full power and authority to receive such assets
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 date.
SECTION 12.8 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR
OMISSIONS OF THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination provisions contained in
this Article XII 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 of
this Indenture, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with. The holders
of Senior Indebtedness may extend, renew, modify or amend the
terms of the Senior Indebtedness or any security therefor and
release, sell or exchange such security and otherwise deal freely
with the Company, all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders.
74
Page 98 of 117 <PAGE>
SECTION 12.9 DEBENTUREHOLDERS AUTHORIZE TRUSTEE TO
EFFECTUATE SUBORDINATION DEBENTURES.
Each Holder of the Debentures by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to
take such action as may be necessary or appropriate to effectuate
the subordination provisions contained in this Article XII and to
protect the rights of the Holders pursuant to this Indenture, and
appoints the Trustee its attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in
bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors of the Company), the
making of a timely filing of a claim for the unpaid balance of
its Debentures in the form required in said proceedings and cause
said claim to be approved. If the Trustee does not file a proper
claim or proof of debt in the form required in such proceeding
prior to 30 days before the expiration of the time to file such
claim or claims, then the holders of the Senior Indebtedness or
their representative are or is hereby authorized to have the
right to file and are or is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said
Debentures. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or
their representative to authorize or consent to or accept or
adopt on behalf of any Debentureholder any plan of
reorganization, arrangement, adjustment or composition affecting
the Debentures or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or
their representative to vote in respect of the claim of any
Debentureholder in any such proceeding.
SECTION 12.10 RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set
forth in this Article XII 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 this Indenture shall be
construed to deprive the Trustee of any of its rights as such
holder.
SECTION 12.11 ARTICLE XII NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal
of, premium, if any, interest on, or Additional Amounts with
respect to, the Debentures by reason of any provision of this
Article XII shall not be construed as preventing the occurrence
of a Default or an Event of Default under Section 6.1 or in any
way prevent the Holders or the Trustee from exercising any right
hereunder other than the right to receive payment on the
Debentures.
75
Page 99 of 117 <PAGE>
SECTION 12.12 NO FIDUCIARY DUTY OF TRUSTEE TO HOLDERS OF
SENIOR INDEBTEDNESS.
The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders (other than for its willful misconduct
or negligence) if it shall in good faith mistakenly pay over or
distribute to the Holders of Debentures or the Company or any
other Person, cash, property or securities to which any holders
of Senior Indebtedness shall be entitled by virtue of this
Article XII or otherwise. Nothing in this Section 12.12 shall
affect the obligation of any other such Person to hold such
payment for the benefit of, and to pay such payment over to, the
holders of Senior Indebtedness or their representative.
ARTICLE XIII
CONVERSION OF DEBENTURES
SECTION 13.1 CONVERSION PRIVILEGE.
Subject to and upon compliance with the provisions of
this Article XIII, at the option of the holder thereof, (a) any
outstanding Registered Regulation S Debenture or Bearer Debenture
or, in the case of any Registered Regulation S Debenture or
Bearer Debenture of a denomination other than $1,000, any portion
of the principal amount thereof which is $1,000 or an integral
multiple of $1,000, may be converted on or after the Exchange
Date and (b) any outstanding Rule 144A Debenture or Accredited
Investor Debenture or, in the case of any Rule 144A Debenture or
Accredited Investor Debenture of a denomination other than
$1,000, any portion of the principal amount thereof which is
$1,000 or an integral multiple of $1,000, may be converted at any
time one year after the Closing Date and prior to redemption or
maturity, PROVIDED that such Rule 144A Debenture or Accredited
Investor Debenture or portion thereof may be converted at the
Holder's option prior to such time upon the earlier of (i) the
first date on which the registration statement described in the
Registration Rights Agreement becomes effective, and (ii) the day
after the first date on which (A) any person (or group of
persons) announces that it is (or they are) commencing a tender
offer for all or part of the Company's Common Stock or (B) the
Company makes a public announcement of a proposed Change of
Control, in each case, at the principal amount thereof, or of
such portion thereof, into fully paid and nonassessable shares of
Common Stock ("Conversion Shares") as set forth in the Registered
Debentures and Bearer Debentures. The right to convert
Debentures called for redemption or delivered for repurchase will
terminate at the close of business on the fifth day next
preceding the Redemption Date (or if such date is not a Business
Day, on the next succeeding Business Day) and will be lost if not
exercised prior to that time. The price at which shares of
Common Stock shall be delivered upon conversion (herein called
76
Page 100 of 117 <PAGE>
the "Conversion Price") shall be initially $18.60 per share of
Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in paragraphs (e)(i), (ii), (iii), (iv),
(v) and (vi) of Section 4 of the Registered Debentures and Bearer
Debentures.
SECTION 13.2 EXERCISE OF CONVERSION PRIVILEGE.
(a) In order to exercise the conversion privilege, the
Holder of any Debenture to be converted shall surrender such
Debenture, together with all unmatured Coupons, if any, and any
matured Coupons in default appertaining thereto, if any, at the
office of the Conversion Agent or any office or agency of the
Company maintained for that purpose pursuant to Section 4.2
hereof, accompanied by written notice, in substantially the form
set forth in the Registered Debentures and the Bearer Debentures,
to the Company, at such office or agency, that the Holder elects
to convert such Debenture or, if less than the entire principal
amount of a Registered Debenture or Bearer Debenture of a
denomination other than $1,000 is to be converted, the portion
thereof to be converted. Upon presentment for conversion of any
Debentures pursuant to this Section 13.2, the Conversion Agent
shall immediately on that day notify the Company of such
presentment. No payment or adjustment shall be made upon any
conversion on account of any dividends on the Common Stock issued
upon conversion. If a Registered Debenture is converted after
the close of business on an Interest Record Date and before the
opening of business on the next succeeding Interest Payment Date,
the interest due on such Interest Payment Date shall be paid on
such Interest Payment Date to the person in whose name that
security is registered at the close of business on that Interest
Record Date. Except as otherwise provided in the immediately
preceding sentence, no payment or adjustment shall be made upon
any conversion on account of any interest accrued on the
Debentures surrendered for conversion or on account of any
dividends or distributions on the Conversion Shares issued upon
conversion. Registered Debentures surrendered for conversion
during the period after the close of business on any Interest
Record Date next preceding any Interest Payment Date to the close
of business on such Interest Payment Date shall (except in the
case of Registered Debentures or portions thereof which are
called for redemption on a Redemption Date within such period) be
accompanied by payment of an amount equal to the interest payable
on such Interest Payment Date on the principal amount being
surrendered for conversion.
(b) Debentures shall be deemed to have been converted
immediately prior to the close of business on the day of
surrender of such Debentures for conversion in accordance with
the foregoing provisions, and at such time the rights of the
Holders of such Debentures as Holders shall cease, and the person
or persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder
77
Page 101 of 117 <PAGE>
or holders of such Common Stock at such time. As promptly as
practicable on or after the conversion date, the Company shall
cause to be issued or delivered at such office or agency a
certificate or certificates for the number of full shares of
Common Stock issuable or deliverable upon conversion, together
with payment, in lieu of any fraction of a share, as provided
below.
(c) In the case of any Registered Debenture or Bearer
Debenture of a denomination other than $1,000 that is converted
in part only, upon such conversion the Company shall execute and
the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Company, a new Debenture or Debentures of
any authorized kind or denomination as requested by such Holder,
in aggregate principal amount equal to the unconverted portion of
the principal amount of such Debenture.
SECTION 13.3 CONVERSION AT THE OPTION OF THE COMPANY.
If, after April 1, 1999 and prior to the Stated
Maturity, the closing price of the Common Stock (determined as
the last reported sales price regular way or, in case no such
reported sale takes place on a day, the average of the reported
bid and asked prices regular way, in either case on the New York
Stock Exchange or, if the Common Stock is not listed or admitted
to trading thereon, on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if
the Common Stock is not listed or admitted to trading on any
national securities exchange, on the Nasdaq Stock Market's
National Market) exceeds an amount equal to 130% of the
Conversion Price for at least 20 Trading Days within 30
consecutive Trading Days, the Company at its option may convert
all (but not less than all) of the Debentures, together with the
interest accrued and unpaid thereon to the Surrender Date (as
defined below), into fully paid and nonassessable shares of
Common Stock by giving the Trustee written notice (the
"Conversion Notice") of its election, together with information
and calculations supporting such election (which information and
calculations shall be verified by the Trustee), no later than 5
Business Days after the twentieth such Trading Day (such
twentieth day, the "Conversion Date"). If, after April 1, 1999
and prior to the Stated Maturity, the Common Stock ceases to be
listed on the New York Stock Exchange and is not listed on any
other national securities exchange or admitted for trading on the
Nasdaq Stock Market's National Market, then the Company's option
to convert the Debentures shall be suspended until such time as
the Common Stock is so listed or admitted.
Promptly after (and in any event within 5 Business Days
following) its receipt of the Conversion Notice, the Trustee
shall, at the Company's expense, give notice to each
Debentureholder stating: (i) that it has received the Conversion
Notice and that, so long as the Company delivers a sufficient
78
Page 102 of 117 <PAGE>
number of shares of Common Stock (and cash in lieu of fractional
shares) to convert all outstanding Debentures and accrued and
unpaid interest thereon through the Surrender Date (as defined
below) at the Conversion Price in effect on the Conversion Date,
all (but not less than all) Debentures shall be deemed to have
been converted on the Conversion Date, (ii) the Conversion Price
in effect on the Conversion Date, (iii) the identity of the
Conversion Agent or Conversion Agents for the conversion and the
office of the Conversion Agent or Conversion Agents at which
Debentures may be surrendered, (iv) that the Debentures of such
Debentureholder must be surrendered (together in the case of
Bearer Debentures with all unmatured Coupons, if any) at the
office of a Conversion Agent in order to obtain the shares of
Common Stock issuable as a result of the Company's election to
convert the Debentures, (v) that such Debentureholder must
complete and manually sign the mandatory conversion notice on the
reverse side of each Debenture held by such Debentureholder and
deliver such notice to the office of a Conversion Agent, (vi) the
first date (the "Surrender Date") on which Debentures may be
surrendered in exchange for shares of Common Stock, which date
shall be no later than 25 Business Days after the Conversion
Date, and (vii) so long as the Company delivers to the Conversion
Agent or Conversion Agents on or before the Surrender Date a
sufficient number of shares of Common Stock (and cash in lieu of
fractional shares) to convert on the Surrender Date all
outstanding Debentures and accrued and unpaid interest thereon
through the Surrender Date at the Conversion Price in effect on
the Conversion Date, all (but not less than all) Debentures shall
be deemed to have been converted on the Conversion Date and
interest shall cease to accrue on the Debentures from and after
the Conversion Date.
In the event the Company delivers a Conversion Notice
but fails to deliver to a Conversion Agent or Conversion Agents
by the Surrender Date a sufficient number of shares of Common
Stock (and cash in lieu of fractional shares) to convert on the
Surrender Date all outstanding Debentures and accrued and unpaid
interest thereon through the Surrender Date, then such conversion
shall be revoked and interest shall continue to accrue on the
Debentures.
SECTION 13.4 FRACTIONAL INTERESTS.
No fractional shares of Common Stock shall be issued or
delivered upon conversion of Debentures. If more than one
Debenture shall be surrendered for conversion at one time by the
same Holder, the number of full shares which shall be issuable or
deliverable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Debentures (or, in
the case of Registered Debentures or Bearer Debentures of a
denomination other than $1,000, specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock
which would otherwise be issuable or deliverable upon conversion
79
Page 103 of 117 <PAGE>
of any Debenture or Debentures (or, in the case of Registered
Debentures or Bearer Debentures of a denomination other than
$1,000, specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the
same fraction of the Closing Price per share of Common Stock at
the close of business on the day preceding the day of conversion.
SECTION 13.5 ADJUSTMENT OF CONVERSION PRICE.
(a) Whenever the Conversion Price is adjusted as
provided in the Registered Debentures and Bearer Debentures:
(i) the Company shall compute the adjusted
Conversion Price in accordance with the terms of the Registered
Debentures and Bearer Debentures and shall prepare a certificate
signed by the President, any Vice President or the Treasurer of
the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment
is based, and such certificate shall forthwith be filed with the
Trustee and the Conversion Agent and at each office or agency
maintained for the purpose of conversion of Debentures pursuant
to Section 4.2 hereof; and
(ii) a notice stating that the Conversion Price has
been adjusted in accordance with the terms of the Debentures and
this Indenture and setting forth the adjusted Conversion Price
shall forthwith be required, and, as soon as practicable after it
is required, the Company shall promptly cause a notice setting
forth the adjusted Conversion Price to be given to the holders of
the Debentures as provided in Section 14.2 hereof.
SECTION 13.6 NOTICE OF CERTAIN EVENTS.
In case:
(i) the Company shall declare a dividend (or any
other distribution) on its Common Stock payable otherwise than in
cash out of its retained earnings (excluding dividends payable in
stock for which adjustment is made pursuant to the terms of the
Registered Debentures and Bearer Debentures); or
(ii) the Company shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of
any other rights; or
(iii) of any reclassification of the Common Stock of
the Company (other than a subdivision or combination of its
outstanding shares of Common Stock), or of any consolidation or
merger to which the Company is a party and for which approval of
any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the
Company; or
80
Page 104 of 117 <PAGE>
(iv) of the involuntary dissolution, liquidation or
winding up of the Company; or
(v) the Company proposes to take any other action
which would require an adjustment of the Conversion Price
pursuant to the Registered Debentures and Bearer Debentures;
then the Company shall cause to be filed with the Conversion
Agent and at each office or agency maintained for the purpose of
conversion of Debentures a notice setting forth the adjusted
Conversion Price and shall cause the Trustee to give such notice
to the Holders as provided in Section 14.2 hereof except that
notice need be given to the Holders once at least 20 days (or 10
days in any case specified in clause (i) or (ii) above) prior to
the applicable record date hereinafter specified, stating (x) the
date on which a record is to be taken for the purpose of such
dividend, distribution, 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, rights or
warrants is to be determined, or (y) the date on which a
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their
shares of Common Stock for the securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up. The
failure to give notice required by this Section 13.6 or any
defect therein shall not affect the legality or validity of any
dividend, distribution, rights, warrants, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation
or winding up, or the vote on any such action.
Promptly following each conversion of Debentures (or
portions thereof) into Common Stock, the Company shall provide,
or cause its transfer agent to provide, written notice thereof to
the Trustee.
SECTION 13.7 CONTINUATION OF CONVERSION PRIVILEGE IN CASE OF
RECLASSIFICATION, CHANGE, MERGER, CONSOLIDATION OR SALE OF
ASSETS.
(a) In case of any consolidation with, or merger of
the Company into, any other corporation, or in case of any merger
of another corporation into the Company (other than a merger
which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of
the Company), or in case of any sale or transfer of all or
substantially all of the assets of the Company, the corporation
formed by such consolidation or resulting from such merger or
which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture to the Indenture
81
Page 105 of 117 <PAGE>
providing that the Holder of each Registered Debenture and Bearer
Debenture shall have the right during the period such Debenture
shall be convertible as specified in the Registered Debenture and
Bearer Debentures to convert such Debenture only into the kind
and amount of securities, cash and other property receivable upon
such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of the Company into which such
Debenture might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of
Common Stock failed to exercise any rights of election as to the
kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer, and assuming,
if such consolidation, merger, sale or transfer is prior to the
period such Debenture shall be convertible, that the Debentures
were convertible at such time at the initial Conversion Price as
adjusted pursuant to the terms of the Registered Debentures and
Bearer Debentures. Such amendment shall provide for adjustments
which, for events subsequent to the effective date of such
amendment, shall be as nearly equivalent as may be practicable to
the adjustments provided for in the Registered Debentures and the
Bearer Debentures. The above provisions of this Section 13.7(a)
shall similarly apply to successive consolidations, mergers,
sales or transfers.
(b) Any Common Stock issued upon conversion of a
Restricted Debenture ("Restricted Common Stock") shall, prior to
the earlier of (i) the date which is three years after the
Closing Date and (ii) the date a registration statement in
respect of such Common Stock first becomes effective under the
Securities Act, be subject to the restrictions on transfer set
forth in Section 2.6 hereof to the same extent as the Restricted
Debentures which were so converted. All shares of Restricted
Common Stock shall bear the legend and transfer requirements set
forth on the form of Registered Debenture set forth as Exhibit A
hereto.
SECTION 13.8 TAXES ON CONVERSION.
The Company will pay any and all documentary, stamp,
transfer sales or other similar taxes, duties or governmental
charges imposed by the United States of America, Luxembourg, the
United Kingdom or any political subdivision or taxing authority
thereof or therein in respect of the issue or delivery of shares
of Common Stock on conversion of Debentures pursuant thereto;
PROVIDED, HOWEVER, that the Company shall not be required to pay
any such tax, duty or governmental charge which may be payable in
respect of any transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the Holder of
the Debentures to be converted and no such issue or delivery
shall be made unless and until the person requesting such issue
or delivery has paid to the Company the amount of any such tax,
duty or governmental charge or has established, to the
satisfaction of the Company, that such tax, duty or governmental
82
Page 106 of 117 <PAGE>
charge has been paid. The Company extends no protection with
respect to any other taxes imposed in connection with conversion
of the Debentures.
SECTION 13.9 COMPANY TO PROVIDE STOCK.
The Company shall reserve, free from preemptive rights,
out of its authorized but unissued shares, sufficient shares to
provide for the conversion of the Debentures from time to time as
such Debentures are presented for conversion, provided, that
nothing contained herein shall be construed to preclude the
Company from satisfying its obligations in respect of the
conversion of Debentures by delivery of repurchased shares of
Common Stock which are held in the treasury of the Company.
If any shares of Common Stock to be reserved for the
purpose of conversion of Debentures hereunder require
registration with or approval of any governmental authority under
any Federal or state law before such shares may be validly issued
or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible use its
reasonable best efforts to secure such registration or approval,
as the case may be; PROVIDED, HOWEVER, that nothing in this
Section 13.9 shall be deemed to limit in any way the obligations
of the Company provided in this Article XIII.
Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par
value, if any, of the Common Stock, the Company will take all
corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock
which may be issued upon conversion of Debentures will upon issue
be fully paid and non-assessable by the Company and free of
preemptive rights.
SECTION 13.10 DISCLAIMER OF RESPONSIBILITY FOR CERTAIN
MATTERS.
Neither the Trustee, any agent of the Trustee, the
Conversion Agent nor any agency appointed by the Company shall at
any time be under any duty or responsibility to any Holder of
Debentures to determine whether any facts exist which may require
any adjustment of the Conversion Price, or with respect to the
certificate referred to in Section 13.5 hereof, or with respect
to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither
the Trustee, any agent of the Trustee, the Conversion Agent nor
any agency appointed by the Company shall be accountable with
83
Page 107 of 117 <PAGE>
respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property
(including cash), which may at any time be issued or delivered
upon the conversion of any Debenture; and neither the Trustee,
the Conversion Agent nor any agency appointed by the Company
makes any representation with respect thereto. Neither the
Trustee, any agent of the Trustee, the Conversion Agent nor any
agency appointed by the Company shall be responsible for any
failure of the Company to issue, register the transfer of or
deliver any shares of Common Stock or stock certificates or other
securities or property (including cash) upon the surrender of any
Debenture for the purpose of conversion or, subject to Article
VIII hereof, to comply with any of the covenants of the Company
contained in this Article XIII.
SECTION 13.11 RETURN OF FUNDS DEPOSITED FOR REDEMPTION OF
CONVERTED DEBENTURES.
Any funds which at any time shall have been deposited
by the Company or on its behalf with the Trustee or any other
Paying Agent for the purpose of paying the principal of and
interest on, or Additional Amounts with respect to, any of the
Debentures and which shall not be required for such purposes
because of the conversion of such Debentures, as provided in this
Article XIII, shall after such conversion be repaid to the
Company by the Trustee or such other Paying Agent.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 TIA CONTROLS.
If any provision of this Indenture limits, qualifies,
or conflicts with the duties imposed by operation of the TIA, the
imposed duties, upon qualification of this Indenture under the
TIA, shall control.
SECTION 14.2 NOTICES.
Except for notices to Holders which shall be made in
accordance with the last paragraph of this Section 14.2, notices
hereunder shall be made in writing by hand delivery, mail, telex
or facsimile. Notice hereunder shall be deemed to have been
given (i) when delivered by hand, if personally delivered, (ii)
three Business Days after deposit in the mail as first class
mail, registered or certified, return receipt requested, postage
prepaid, properly addressed, if mailed, (iii) when answered back,
if telexed and (iv) when receipt is acknowledged by the
recipient's facsimile machine, if sent by facsimile. Notices
shall be addressed to any party hereto as follows:
84
Page 108 of 117 <PAGE>
ADDRESS
The Company.............. Applied Magnetics Corporation
75 Robin Hill Road
Goleta, California 93117-3108
Attention: Chief Executive Officer
Telephone number: (805) 683-5353
Facsimile number: (805) 967-2677
The Trustee The Chase Manhattan Bank, N.A.
and Registrar............... 4 Chase Metrotech Center
Brooklyn, New York 11245
Attention: Institutional Trust
Administration
Telephone number: (718) 242-3159
Facsimile number: (718) 242-5885
The Paying Agents, The Chase Manhattan Bank, N.A.
Conversion Agents 4 Chase Metrotech Center
and Transfer Agents...... Brooklyn, New York 11245
Attention: Institutional Trust
Administration
Telephone number: (718) 242-7276
Facsimile number: (718) 242-5885
The Chase Manhattan Bank, N.A.
Woolgate House
Coleman Street
London EC2P 2HD, England
Attention: Institutional Trust
Administration
Telephone number: 011-44-120-234-
7431
Facsimile number: 011-44-120-234-
7945
The Chase Manhattan Bank
Luxembourg S.A.
5, rue Plaetis
L-2338 Luxembourg
Attention: Institutional Trust
Administration
Telephone number: 011-352-46-26-
85-284
Facsimile number: 011-352-46-26-
85-380
or at any other address of which any of the foregoing shall have
notified the others in writing.
Notices to Holders of the Debentures will be given by
publication in an Authorized Newspaper in New York City and in
London and, for so long as the Debentures are listed on the
85
Page 109 of 117 <PAGE>
Luxembourg Stock Exchange, in Luxembourg, or, if publication in
either London or Luxembourg is not practical, in an Authorized
Newspaper in Europe. In addition, notices to Holders of
Registered Debentures will be given by first-class mail to the
addresses of such Holders as they appear in the register
maintained by the Trustee on the fifteenth day prior to such
mailing. Such notices will be deemed to have been given on the
date of such publication or mailing or, if published in such
newspapers on different dates, on the date of the first such
publication. The Trustee shall promptly furnish to the Company,
the Paying Agent and to each other paying agency of the Company a
copy of each notice so published or mailed.
SECTION 14.3 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Debentureholders may communicate pursuant to TIA
312(b) with other Debentureholders with respect to their rights
under this Indenture or the Debentures. The Company, the
Trustee, the Registrar and any other Person shall have the
protection of TIA 312(c).
SECTION 14.4 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate (in form reasonably
satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (in form reasonably
satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent to the proposed
action have been complied with.
SECTION 14.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
86
Page 110 of 117 <PAGE>
(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 each such Person, such condition or covenant has been
complied with; PROVIDED, HOWEVER, that with respect to
matters of fact, an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 14.6 RULES BY TRUSTEE, PAYING AGENT, REGISTRAR.
The Trustee may make reasonable rules for action by or
at a meeting of Debentureholders. The Paying Agent or Registrar
may make reasonable rules for its functions.
SECTION 14.7 LEGAL HOLIDAYS.
In any case where the date of maturity of the principal
of or interest on (or Additional Amounts, if any, with respect
to) the Debentures or the date fixed for redemption of any
Debenture or the last day on which a Debenture may be converted
shall be at any place of payment (or such other act) a day other
than a Business Day, then payment of principal or interest (or
Additional Amounts, if any), or presentation for conversion, need
not be made on such date at such place but may be made on the
next succeeding Business Day at such place of payment (or such
other act), with the same force and effect as if made on the date
of maturity or the date fixed for redemption or such last day on
which a Debenture may be converted, and no interest shall accrue
for the period after such date.
SECTION 14.8 TAXES.
The Company will pay all documentary, stamp, transfer
sales and other similar taxes, duties and governmental charges,
if any, that may be imposed by the United States of America,
Luxembourg or the United Kingdom, or any political subdivision
thereof or taxing authority therein, with respect to the
execution or delivery of this Indenture, or the issuance of the
Regulation S Global Debenture, or the exchange from time to time
of the Regulation S Global Debenture for Registered Debentures or
Bearer Debentures; PROVIDED, HOWEVER, that the Company shall not
be required to pay any such tax, duty or governmental charge
which may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock in a name other than
that of the holder of the Debenture or Debentures to be
converted, and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Company
the amount of any such tax, duty or governmental charge or has
established to the satisfaction of the Company that such tax,
87
Page 111 of 117 <PAGE>
duty or governmental charge has been paid; and further provided,
that the Company shall not be required to pay any tax, duty or
governmental charge that may be payable in respect of any accrued
interest paid in connection with the conversion of the
Debentures.
SECTION 14.9 GOVERNING LAW.
THIS INDENTURE AND THE DEBENTURE 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. 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
INDENTURE AND THE DEBENTURES, 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 WHICH 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. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE TRUSTEE OR ANY DEBENTUREHOLDER TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 14.10 AGENT FOR SERVICE OF PROCESS.
As long as any of the Debentures or Coupons remain
outstanding, the Company will at all times have an authorized
agent in the City of New York, upon whom process may be served in
any legal action or proceeding arising out of or relating to this
Indenture or any Debenture or any Coupons appertaining thereto.
Service of process upon such agent and written notice of such
service mailed or delivered to the Company shall to the extent
permitted by law be deemed in every respect effective service of
process upon the Company in any such legal action or proceeding.
The Company hereby appoints the Trustee as its agent for such
purpose, and covenants and agrees that service of process in any
legal action or proceeding may be made upon it at the office of
the Trustee at 4 Chase Metrotech Center, Brooklyn, New York
11245, U.S.A., Attention: Corporate Trust Department (or such
other address in the City of New York, as may be the Principal
Corporate Trust Office of the Trustee in New York), unless and
until the Company shall designate another agent for such purpose
by written notice to the Trustee. if the Trustee receives any
such service of process, it shall promptly notify the Company of
such service.
88
Page 112 of 117 <PAGE>
SECTION 14.11 NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any of its
Subsidiaries. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.
SECTION 14.12 NO RECOURSE AGAINST OTHERS.
No direct or indirect partner, employee, stockholder,
director or officer, as such, past, present or future of the
Company or any successor corporation, shall have any personal
liability in respect of the obligations of the Company under the
Debentures or this Indenture by reason of his, her or its status
as such partner, stockholder, employee, director or officer.
Each Debentureholder by accepting a Debenture waives and releases
all such liability. Such waiver and release are part of the
consideration for the issuance of the Debentures.
SECTION 14.13 SUCCESSORS.
All agreements of the Company in this Indenture and the
Debentures shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 14.14 DUPLICATE ORIGINALS.
All parties may sign any number of copies or
counterparts of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent
the same agreement.
SECTION 14.15 SEVERABILITY.
In case any one or more of the provisions in this
Indenture or in the Debentures shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent
permitted by law.
SECTION 14.16 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and
headings of the Articles and the 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.
89
Page 113 of 117 <PAGE>
SECTION 14.17 QUALIFICATION OF INDENTURE.
The Company shall qualify this Indenture under the TIA
in accordance with the terms and conditions of the Registration
Rights Agreement and shall pay all costs and expenses (including
attorneys' fees for the Company and the Trustee) incurred in
connection therewith, including, but not limited to, costs and
expenses of qualification of the Indenture and the Debentures and
printing this Indenture and the Debentures. The Trustee shall be
entitled to receive from the Company any such Officers,
Certificates, Opinions of Counsel or other documentation as it
may reasonably request in connection with any such qualification
of this Indenture under the TIA.
SECTION 14.18 REGISTRATION RIGHTS.
Certain Holders of the Debentures are entitled to
certain registration rights with respect to such Debentures
pursuant to, and subject to the terms of, the Registration Rights
Agreement.
90
Page 114 of 117 <PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
APPLIED MAGNETICS CORPORATION,
a Delaware corporation
[Seal]
By: /s/ Craig Crisman
---------------------------
Name: Craig Crisman
----------------------
Title: Chairman & CEO
---------------------
Attest: /s/ Mayellen Banister
-----------------------
Assistant Secretary
THE CHASE MANHATTAN BANK, N.A.,
a national banking association,
as Trustee
[Seal]
By: /s/ John T. Needham, Jr.
---------------------------
Name: John T. Needham, Jr.
----------------------
Title: Assistant Secretary
---------------------
Attest: /s/ Douglas Lavelle
----------------------
Trust Officer
91
Page 115 of 117 <PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
----------------------------------------------
(in thousands except per share data)
For the three months For the six months
ended ended
March 30, 1996 March 30, 1996
(Unaudited) (Unaudited)
-------------------- ---------------------
Fully Fully
Primary diluted Primary diluted
earnings earnings earnings earnings
per share per share per share per share
--------- --------- --------- ---------
Net income $ 8,696 $ 8,696 $17,724 $17,724
====== ====== ====== ======
Weighted average common
shares outstanding 22,828 22,828 22,763 22,763
Dilutive common stock
equivalents 985 986 1,031 1,080
------ ------ ------ ------
Total weighted average
common shares outstanding 23,813 23,814 23,794 23,843
====== ====== ====== ======
Net income per share $ 0.37 $ 0.37 $ 0.74 $ 0.74
====== ====== ====== ======
Since fully diluted earnings per share does not reduce the Company's
earnings per share by more than 3% of primary earnings per share, the
Company has reflected primary earnings per share on the Consolidated
Statement of Operations for the three months and six months ended
March 30, 1996.
Page 116 of 117 <PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of March 30, 1996 and the Consolidated Statement
of Operations for the six months ended as of March 30, 1996 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-30-1996
<CASH> 133,937
<SECURITIES> 0
<RECEIVABLES> 46,605
<ALLOWANCES> 0
<INVENTORY> 30,569
<CURRENT-ASSETS> 219,570
<PP&E> 271,138
<DEPRECIATION> (151,931)
<TOTAL-ASSETS> 356,382
<CURRENT-LIABILITIES> 111,461
<BONDS> 0
0
0
<COMMON> 2,301
<OTHER-SE> 120,540
<TOTAL-LIABILITY-AND-EQUITY> 356,382
<SALES> 181,415
<TOTAL-REVENUES> 181,415
<CGS> 132,604
<TOTAL-COSTS> 132,604
<OTHER-EXPENSES> 30,848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,719
<INCOME-PRETAX> 18,007
<INCOME-TAX> 283
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,724
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
</TABLE>
