SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED MARCH 31, 1997
Commission File Number 1-8538
WESTBRIDGE CAPITAL CORP.
(Exact name of Registrant as specified in its Charter)
DELAWARE 73-1165000
(State of Incorporation) (I.R.S. Employer Identification No.)
777 MAIN STREET, FORT WORTH, TEXAS 76102
(Address of Principal Executive Offices) (Zip Code)
817-878-3300
(Registrant's Telephone Number, including Area Code)
800-437-8690
(Registrant's Shareholder and Investor Relations Toll Free Telephone Number)
NOT APPLICABLE
(Former Name, 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 90 days. YES X NO_____
Common Stock - Par Value $.10 6,146,499 Shares Outstanding at May 8, 1997
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Form 10-Q
Company or group of companies for which report is filed:
WESTBRIDGE CAPITAL CORP.
This quarterly report, filed pursuant to Rule 13a-13 and 15d-13 of the General
Rules and Regulations under the Securities Exchange Act of 1934, consists of the
following information as specified in Form 10-Q:
<TABLE>
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PAGE(S)
PART I - FINANCIAL INFORMATION
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Item 1 - FINANCIAL STATEMENTS
1. Consolidated Balance Sheets at March 31, 1997, December 31, 1996
and March 31, 1996. 3-4
2. Consolidated Statements of Operations for the Three Months Ended
March 31, 1997 and 1996. 5
3. Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1997 and 1996. 6
4. Notes to Consolidated Financial Statements. 7
Item 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 8-15
PART II - OTHER INFORMATION
Item 1 - LEGAL PROCEEDINGS 16
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K 16
</TABLE>
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WESTBRIDGE CAPITAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1997 1996 1996
(UNAUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C>
Investments:
Fixed Maturities:
Available-for-sale, at market value
(amortized cost $79,533, $90,370
and $80,544) $ 79,584 $ 91,947 $ 81,975
Equity securities, at market 1,696 1,596 506
Investment in Freedom Holding Company,
on the equity basis - - 6,220
Mortgage loans on real estate 423 658 625
Investment real estate - - 141
Policy loans 281 282 278
Short-term investments 6,294 7,722 14,721
-------- -------- --------
Total Investments 88,278 102,205 104,466
Cash 202 1,013 1,534
Accrued investment income 1,440 1,889 1,486
Receivables from agents, net of allowance
for doubtful accounts 19,101 18,311 20,805
Deferred policy acquisition costs 87,663 83,871 63,373
Leasehold improvements and equipment, at
cost, net of accumulated depreciation and
amortization 1,285 1,311 1,534
Due from reinsurers 23,131 1,456 -
Other assets 12,865 10,660 13,880
-------- -------- --------
Total Assets $233,965 $220,716 $207,078
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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WESTBRIDGE CAPITAL CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1997 1996 1996
(UNAUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C>
Liabilities:
Policy liabilities and accruals:
Future policy benefits $ 55,171 $ 54,204 $ 49,154
Claims 32,136 39,186 38,415
--------- --------- ---------
87,307 93,390 87,569
Accumulated policyholders' funds 388 393 380
Due to reinsurers 9,214 - -
Other liabilities 18,071 8,171 12,849
Deferred income taxes 10,968 10,299 6,412
Notes payable 20,494 21,210 18,044
Senior subordinated notes, net of unamortized
discount, due 2002 19,374 19,350 19,285
--------- --------- ---------
Total Liabilities 165,816 152,813 144,539
--------- --------- ---------
Redeemable Preferred Stock 19,400 20,000 20,000
--------- --------- ---------
Stockholders' Equity:
Common stock, ($.10 par value, 30,000,000
shares authorized; 6,127,537, 6,039,994
and 5,993,458 shares issued) 613 604 599
Capital in excess of par value 29,815 29,226 29,210
Unrealized (depreciation) appreciation of
investments carried at market value, net of tax (29) 1,057 1,165
Retained earnings 18,520 17,186 11,735
--------- --------- ---------
48,919 48,073 42,709
Less - Aggregate of shares held in treasury and
investment by affiliate in Westbridge Capital Corp.
common stock (28,600 at March 31, 1997,
December 31, 1996 and March 31, 1996), at cost (170) (170) (170)
--------- --------- ---------
Total Stockholders' Equity 48,749 47,903 42,539
--------- --------- ---------
Total Liabilities, Redeemable Preferred
Stock and Stockholders' Equity $ 233,965 $ 220,716 $ 207,078
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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WESTBRIDGE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
MARCH 31,
1997 1996
<S> <C> <C>
Revenues:
Premiums:
First-year $ 12,129 $ 14,400
Renewal 28,691 21,010
----------- ----------
40,820 35,410
Net investment income 2,226 2,116
Fee and service income 3,502 1,777
Net realized (losses) gains on investments (60) 85
----------- ----------
46,488 39,388
----------- ----------
Benefits, Claims and Expenses:
Benefits and claims 25,295 21,914
Amortization of deferred policy acquisition costs 5,240 4,329
Commissions 3,288 1,937
General and administrative expenses 7,322 6,566
Taxes, licenses and fees 1,457 1,343
Interest expense 1,224 951
----------- ----------
43,826 37,040
----------- ----------
Income before provision for income taxes and
equity in earnings of Freedom Holding Company 2,662 2,348
Provision for income taxes 932 822
Equity in earnings of Freedom Holding Company - 47
----------- ----------
Net Income $ 1,730 $ 1,573
=========== ==========
Preferred stock dividends 396 413
----------- ----------
Income applicable to common stockholders $ 1,334 $ 1,160
=========== ==========
Earnings Per Common Share:
Primary $ .21 $ .19
=========== ==========
Fully diluted $ .20 $ .19
=========== ==========
Weighted Average Shares Outstanding:
Primary 6,331,000 6,105,000
=========== ==========
Fully diluted 8,637,000 8,483,000
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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WESTBRIDGE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
MARCH 31,
1997 1996
<S> <C> <C>
Cash Flows From Operating Activities:
Net income applicable to common stockholders $ 1,334 $ 1,160
Adjustments to reconcile net income to cash
used for operating activities:
Depreciation expense 118 131
Amortization of deferred policy acquisition costs 5,240 4,329
Equity in earnings of Freedom Holding Company - (47)
Increase in receivables from agents (790) (4,099)
Additions to deferred policy acquisition costs (9,032) (10,725)
Increase in due from reinsurers (21,675) -
Increase in other assets (2,205) (1,381)
(Decrease) increase in policy liabilities and accruals (6,083) 1,886
Increase in due to reinsurers 9,214 -
Increase in deferred income taxes 669 571
Increase in other liabilities 9,900 1,630
Other, net 1,162 863
-------- --------
Net Cash Used For Operating Activities (12,148) (5,682)
-------- --------
Cash Flows From Investing Activities:
Proceeds from investments sold:
Fixed maturities, classified as available-for-sale, called or matured 2,673 4,588
Fixed maturities, classified as available-for-sale, sold 10,751 1,033
Short-term investments, sold or matured 5,231 43,979
Other investments, sold or matured 339 72
Cost of investments acquired (6,394) (46,633)
Additions to leasehold improvements and equipment, net of retirements (92) (75)
-------- --------
Net Cash Provided By Investing Activities 12,508 2,964
-------- --------
Cash Flows From Financing Activities:
Issuance of notes payable 5,873 2,237
Repayment of notes payable (6,966) -
Issuance of common stock 68 2
Purchase and cancellation of common stock (146) -
-------- --------
Net Cash (Used for) Provided By Financing Activities (1,171) 2,239
-------- --------
Decrease In Cash During Period (811) (479)
Cash At Beginning Of Period 1,013 2,013
-------- --------
Cash At End Of Period $ 202 $ 1,534
======== ========
Supplemental Disclosures Of Cash Flow Information:
Cash paid during the periods for:
Interest $ 1,093 $ 896
Income taxes $ 35 $ 2
</TABLE>
The accompanying notes are an integral part of these financial statements.
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WESTBRIDGE CAPITAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements for Westbridge
Capital Corp. ("Westbridge" and, together with its consolidated subsidiaries,
the "Company") have been prepared in accordance with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X, and do not include all of the information
and footnotes required by generally accepted accounting principles ("GAAP") for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997. The financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
In the normal course of their business operations, National Foundation Life
Insurance Company ("NFL"), National Financial Insurance Company ("NFIC"),
American Insurance Company of Texas ("AICT"), and Freedom Life Insurance Company
of America ("FLICA"), Westbridge's primary insurance subsidiaries ("Insurance
Subsidiaries"), are involved in various claims and other business related
disputes. In the opinion of management, the disposition of these matters will
have no material adverse effect on the Company's consolidated financial
position.
NOTE 3 - EARNINGS PER SHARE
PRIMARY. Calculated by dividing net income, less preferred stock dividends, by
primary weighted average shares outstanding. Primary weighted average shares
outstanding do not assume the conversion of the Series A Preferred Stock to
Common Stock.
FULLY DILUTED. Calculated by dividing net income by fully diluted weighted
average shares outstanding. The preferred stock dividend is not deducted from
income for the fully diluted calculation. The fully diluted average shares
outstanding number is larger than the primary average shares outstanding because
the fully diluted calculation assumes the conversion of the Series A Preferred
Stock to Common Stock at the beginning of the period. Were such a conversion to
occur: (a) preferred dividends would not be paid and are therefore not deducted
from earnings for the calculation and, (b) there would be a greater number of
shares of Common Stock outstanding as a result of the conversion.
At March 31, 1997, the Series A Preferred Stock was convertible to Common Stock
at a conversion price of $8.41, which would result in 2,306,776 additional
shares of Common Stock upon conversion.
NOTE 4 - SUBSEQUENT EVENTS
On April 29, 1997, the Company completed the sale of $65 million aggregate
principal amount of its 7-1/2% Convertible Subordinated Notes Due 2004 (the
"Convertible Notes") in an underwritten public offering. The net proceeds of the
transaction approximated $62.2 million after deducting estimated underwriting
commissions and other expenses incurred in connection with the sale. Each $1,000
principal amount of the Notes is convertible into 91.575 shares of Westbridge
Common Stock (5,952,375 shares in the aggregate) at an initial conversion price
of $10.92 per share, subject to certain anti-dilution adjustments. Interest on
the Notes will be paid semi-annually on May 1 and November 1 of each year,
commencing November 1, 1997. Also, at the closing of the offering of the
Convertible Notes, Westbridge sold to the underwriters, for nominal
consideration, the underwriters' warrants, which entitle the underwriters to
purchase, in the aggregate, 297,619 shares of
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Common Stock at an exercise price of $10.92 per share, subject to certain
anti-dilution provisions, for a period of four years commencing on the first
anniversary of the closing.
Westbridge will use approximately $15 million of the net proceeds to provide
additional statutory capital and surplus to its Insurance Subsidiaries. In
addition, on May 1, 1997, Westbridge contributed approximately $7 million of the
net proceeds to NFL and FLICA to provide each entity with sufficient funds to
recapture a block of insurance policies which had previously been reinsured.
This amount represents the total cost of the recapture (approximately $9 million
less approximately $2 million in unearned premium reserves due to the Company).
The balance of the net proceeds, approximately $40.2 million, will be used for
general corporate purposes.
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WESTBRIDGE CAPITAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS OVERVIEW
The Company markets medical expense and supplemental health insurance products
and managed care health plans to individuals in 41 states. Since 1992, the
Company has grown through a combination of acquisitions and, more recently,
increased sales of its underwritten products. Primarily as a result of
acquisitions, the Company's total premiums grew from approximately $56.7 million
in 1992 to approximately $98.7 million in 1994. During the first quarter of
1995, the Company embarked on a strategy of expanding the number of agents in
its marketing distribution system to increase sales of its underwritten
products. As a result of this initiative, the Company's net annualized written
premiums increased from $19.9 million in 1994 to $79.1 million in 1996 with
total premiums increasing 59% to $156.8 million in 1996. During the middle of
1996, the Company reduced the marketing of its underwritten products due to
statutory capital and surplus constraints caused by its rapid growth.
The Company has taken advantage of its marketing distribution system to market
certain managed care health plans which are underwritten by Health Maintenance
Organizations ("HMOs") and other non-affiliated managed care organizations. This
marketing effort generates sales commissions which are included as a component
of fee and service income. Fee and service income can be generated without
regard to the statutory capital and surplus requirements that apply to the
Company's underwritten products.
The Company derives its revenue primarily from premiums from its insurance
products and, to a significantly lesser extent, from fee and service income,
income earned on invested assets and gains on the sales or redemptions of
invested assets. The Company's primary expenses include benefits and claims in
connection with its insurance products, deferred policy acquisition costs
("DPAC"), commissions paid on policy renewals, general and administrative
expenses associated with policy and claims administration, taxes, licenses and
fees and interest on its indebtedness. In addition to the foregoing expenses,
Westbridge is obligated to pay dividends on its Series A Preferred Stock if and
when declared by the Board of Directors.
Fee and service income is generated from (i) commissions received by the Company
for sales of managed care products underwritten primarily by HMOs and other
managed care organizations, (ii) telemarketing services provided by Precision
Dialing Services, Inc. ("PDS"), and (iii) printing services provided by
Westbridge Printing Services, Inc. ("WPS").
Benefits and claims are comprised of (i) claims paid, (ii) changes in claim
reserves for claims incurred (whether or not reported) and (iii) changes in
policy benefit reserves based on actuarial assumptions of future benefit
obligations not yet incurred on policies in force.
DPAC consists of expenditures made for the production of new business. Such
expenditures consist principally of the amount by which first-year commission
costs exceed commission costs paid in subsequent policy years and policy issue
costs. Also included in DPAC is the cost of insurance purchased relating to
acquired blocks of business. The amortization of these costs is based on
actuarially estimated future premium revenues. The amortization rate is adjusted
monthly to reflect actual experience.
ACQUISITIONS. Since 1992, the Company has from time to time acquired seasoned
blocks of business to supplement its revenue. These acquisitions included blocks
of: (i) Medicare Supplement Products purchased from American Integrity Insurance
Company ("AII") in September 1992, (ii) Medicare Supplement Products purchased
from Life and Health Insurance Company of America ("LHI") in March 1993, (iii)
Critical Care and Specified Disease Products purchased from Dixie National Life
Insurance Company ("DNL") in February 1994, (iv) policies in all of the
Company's product lines purchased in the acquisition of NFIC and AICT in April
1994, and (v) Critical Care and Specified Disease Products purchased in the
acquisition of the remaining 60%
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ownership interest in Freedom Holding Company, FLICA's parent, in May 1996.
NEW BUSINESS PRODUCTION. The Company's ability to underwrite insurance products
is limited by state regulation of statutory capital and surplus requirements. As
a result of rapid growth in underwritten health insurance product sales during
1995 and the first six months of 1996, the Company experienced a decline in its
available statutory capital and surplus. Accordingly, the Company has
deliberately reduced the marketing of its underwritten products beginning in the
second quarter of 1996, consistent with its available statutory capital and
surplus. This reduction in marketing efforts resulted in decreases in first-year
premiums over the last three quarters. Following the recently completed sale of
the Convertible Notes, the Company will initially contribute approximately $15
million of the net proceeds it received to its Insurance Subsidiaries. See Note
4 - "Subsequent Events." This additional statutory capital and surplus will
enable the Company to increase the marketing of its underwritten health
insurance products. The Company intends to use the additional statutory capital
and surplus to increase sales of its Medical Expense and Critical Care and
Specified Disease Products. Due to the relatively low margin on the Company's
Medicare Supplement Products, the Company intends to reduce its underwriting of
these underwritten products in favor of marketing the Medicare Supplement
Products of other non-affiliated insurers. Any resulting increase in sales as a
result of the capital contributions to the Insurance Subsidiaries is not
expected to significantly increase total premiums until the latter part of 1997
or early 1998. As a result, the Company's earnings are not expected to be
significantly affected by increased sales, if any, during the remainder of 1997.
PREMIUM GROWTH. The following table shows the premiums received by the Company
through internal sales and through acquisitions during the periods indicated:
Three Months Ended
MARCH 31,
-------------------
1997 1996
-------------------
Company-Issued Policies:
First-year premiums $11,870 $14,397
Renewal premiums 16,866 9,827
------- -------
Total company-issued policies 28,736 24,224
------- -------
Acquired Policies:
AII 1,893 2,226
LHI 407 478
DNL 717 774
NFIC and AICT 5,559 7,385
FLICA 3,234 -
Other 274 323
------- -------
Total acquired policies 12,084 11,186
------- -------
Total Premiums $40,820 $35,410
======= =======
Generally, as a result of acquisitions of policies in force, and the transfer of
assets and liabilities relating thereto, the Company receives higher revenues in
the form of premiums and net investment income and experiences higher expenses
in the form of benefits and claims, amortization of DPAC, commissions and
general and administrative expenses. The Company expects that the levels of
premiums, net investment income, net realized gains on investments, benefits and
claims, amortization of DPAC, commissions and general and administrative
expenses attributable to these acquired policies will continue to decline over
time as the acquired policies lapse.
The preceding statement and certain other statements contained herein are
forward-looking statements. It is important to note that the Company's actual
results could differ materially from those projected in such forwardlooking
statements based on a number of factors, some of which are beyond the Company's
control. Such factors include, but are not limited to, the Company's ability to
successfully implement its strategy to (i) expand its underwriting and marketing
of medical expense and health insurance products, (ii) increase its fee and
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service income by continuing to expand its marketing of managed care health
plans underwritten primarily by managed care organizations, and (iii)
cross-selling its underwritten health insurance products in connection with its
marketing of managed care health plans. Additional information concerning
factors that could cause actual results to differ materially from those in the
forward-looking statements is contained from time to time in the Company's
filings with the Securities and Exchange Commission ("SEC"), including but not
limited to the Company's Prospectus dated April 24, 1997 included in the
Registration Statement No. 333-24137 on Form S-1. Copies of these filings may be
obtained by contacting the Company or the SEC.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED
MARCH 31, 1996
PREMIUMS. Premiums increased $5.4 million, or 15.3%, from $35.4 million to $40.8
million. This increase was primarily attributable to increases in renewal
premiums from Company-issued and acquired policies of $7 million and $0.6
million, or 72.4% and 5.4%, respectively, and an increase in first-year premiums
from acquired policies of $0.3 million, and were offset by a decrease in
first-year premiums from Company-issued policies of $2.5 million, or 16.0%.
The decrease in first-year premiums of Company-issued policies was attributable
to decreases of $1.5 million, or 30.6%, in Medicare Supplement premiums, a
decrease of $0.8 million, or 72.7%, in Critical Care and Specified Disease
premiums as a result of the reclassification of FLICA policies from
Company-issued policies to acquired policies, and a decrease of $0.2 million, or
2.4%, in Medical Expense premiums. These decreases were offset, in part, by an
increase in first-year premiums of acquired policies of $0.3 million.
The increase in renewal premiums of Company-issued policies was attributable to
an increase of $4.5 million and $4.2 million, or 134.4% and 215.8%, in Medical
Expense and Medicare Supplement premiums, respectively. These increases were
offset by a decrease of $1.7 million, or 36.2%, in premiums from Critical Care
and Specified Disease Products as a result of the reclassification of FLICA
premiums from Companyissued policies to acquired policies.
The increase in renewal premiums of acquired policies was attributable to $3.0
million related to the reclassification of FLICA premiums as described above,
offset by a decrease of $0.6 million, or 13.2%, due to the continued lapses from
the closed blocks of business acquired from AII, LHI and DNL, and a decrease of
$1.8 million, or 24.3%, from the policies acquired in the NFIC and AICT
acquisition.
NET INVESTMENT INCOME. Net investment income remained relatively level.
FEE AND SERVICE INCOME. Fee and service income increased $1.7 million, or 94.4%,
from $1.8 million to $3.5 million. This increase was primarily due to $1.9
million, or 158.3%, related to commissions on managed care product sales which
were earned by the Company's controlled general agencies and an increase of $0.1
million related to WPS printing services. These increases were offset by a
slight decrease in fees earned by PDS.
BENEFITS AND CLAIMS. Benefits and claims expense increased $3.4 million, or
15.5%, from $21.9 million to $25.3 million. This increase was attributable to an
increase in benefits and claims expense from Companyissued policies of $4.6
million, or 37.7%, offset by a decrease in benefits and claims expense from
acquired policies of $1.2 million, or 12.4%. During the first quarter of 1997,
the Company experienced increased benefits and claims expense resulting from
higher incidence of claims and medical inflation which will moderate the
Company's earnings growth during 1997.
The increase in benefits and claims expense from Company-issued policies was
comprised of $4.1 million, or 93.2%, from Medical Expense Products and an
increase of $1.5 million, or 26.0%, from Medicare Supplement Products. These
increases were offset by a decrease of $1.0 million, or 40.0%, in Critical Care
and Specified Disease Products as a result of the reclassification of FLICA
policies from Company-issued policies to acquired policies.
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The decrease in benefits and claims expense from acquired policies was
attributable to a decrease of $2.6 million, or 37.7%, from the policies acquired
in the NFIC and AICT acquisition and to a decrease of $0.3 million, or 10.7%,
from the closed blocks of business acquired from AII, LHI and DNL. These
decreases were offset by an increase of $1.7 million related to the
reclassification of FLICA policies subsequent to its acquisition.
AMORTIZATION OF DPAC. Amortization of DPAC increased $0.9 million, or 20.9% from
$4.3 million to $5.2 million. This increase was attributable to $1.5 million, or
87.5%, from Company-issued Medical Expense Products and was offset by a decrease
of $0.6 million, or 62.5% from Critical Care and Specified Disease Products as a
result of the reclassification of FLICA policies from Company-issued policies to
acquired policies. Amortization of DPAC for acquired policies increased as a
result of the reclassification of FLICA policies but was offset by decreases in
amortization relating to the other acquired policies.
COMMISSIONS. Commissions increased $1.4 million, or 73.7%, from $1.9 million to
$3.3 million due primarily to an increase in commissions on sales of
non-affiliated insurance products of $2.0 million which was offset by a $1.0
million, or 52.6%, decrease in commissions on sales of Company-issued Critical
Care and Specified Disease and Medical Expense Products. The decrease in
commissions on sales of Critical Care and Specified Disease Products was a
result of the reclassification of FLICA policies from Company-issued policies to
acquired policies. The decrease in commissions on sales of Medical Expense
Products was due to the reduction of the Company's marketing efforts related to
its underwritten insurance products beginning in the second quarter of 1996.
The increase in commissions on sales of acquired policies was comprised of $0.6
million of commissions related to the reclassification of FLICA policies as
described above, offset by a decrease of $0.2 million, or 33.3%, of commissions
relating to other acquired policies.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $0.7 million, or 10.6%, from $6.6 million to $7.3 million. This
increase was attributable to the expansion of the marketing operations of
certain controlled general agencies and to the fact that fewer policies were
eligible for deferral of acquisition costs as a result of the reduction of the
Company's marketing efforts related to its underwritten insurance products
beginning in the second quarter of 1996.
TAXES, LICENSES AND FEES. Taxes, licenses and fees increased $0.2 million, or
15.4%, from $1.3 million to $1.5 million. This increase is primarily
attributable to growth in premiums.
INTEREST EXPENSE. Interest expense increased $0.2 million, or 20.0%, from $1.0
million to $1.2 million. This increase is primarily attributable to interest
associated with a reinsurance treaty which was effective July 1, 1996.
PROVISION FOR INCOME TAXES. The provision for income taxes increased $0.1
million, or 12.5%, from $0.8 million to $0.9 million. This increase was the
result of pre-tax income increasing $0.4 million, or 17.4%.
FINANCIAL CONDITION
LIQUIDITY, CAPITAL RESOURCES AND STATUTORY CAPITAL AND SURPLUS
WESTBRIDGE
Westbridge is an insurance holding company, the principal assets of which
consist of the capital stock of its operating subsidiaries. Accordingly,
Westbridge is dependent upon dividends from its operating subsidiaries, advances
from non-insurance company subsidiaries, principal and interest payments on a
surplus certificate issued by NFL to Westbridge, lease payments on fixed assets
and tax contributions under a tax sharing agreement among Westbridge and its
subsidiaries for funds to meet its obligations, including principal and interest
on its indebtedness and, if and when declared by the Board of Directors,
dividends on its Series A Preferred Stock.
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Dividend payments from the Insurance Subsidiaries are regulated by the insurance
laws of their domiciliary states. NFL is domiciled in the State of Delaware.
Under the Delaware Insurance Code, an insurer domiciled in Delaware may not
declare or pay a dividend or other distribution from any source other than
"earned surplus" without the state insurance commissioner's prior approval.
"Earned surplus" is defined as an amount equal to the unassigned funds of an
insurer as set forth on its most recent statutory annual statement, including
all or part of the surplus arising from unrealized capital gains or revaluation
of assets. NFIC and AICT are domiciled in Texas. An insurer domiciled in Texas
may pay dividends only out of "surplus profits arising from its business" to the
extent of net gains from operations, not including realized capital gains, for
the twelve month period ending as of the preceding December 31. Moreover,
insurers domiciled in either Delaware or Texas may not pay "extraordinary
dividends" without first providing the state insurance commissioner with 30-days
prior notice, during which time such commissioner may disapprove the payment. An
"extraordinary dividend" is defined as a dividend whose fair market value
together with that of other dividends made within the preceding 12 months
exceeds the greater of (a) 10% of the insurer's surplus as regards policyholders
as of the preceding December 31 or (b) the net gain from operations of such
insurer, not including realized capital gains, for the twelve-month period
ending on the preceding December 31. FLICA is domiciled in Mississippi. Under
Mississippi Insurance Regulations, an insurer domiciled in Mississippi may pay
dividends limited to the lesser of 10% of statutory capital and surplus or 100%
of statutory net income for the preceding year unless prior written approval of
the Commissioner is obtained.
With respect to ordinary dividends payable by an insurer domiciled in Delaware,
notice of any dividend must be provided to the state insurance commissioner
within five business days following the declaration thereof and at least ten
days prior to the payment thereof. NFL is currently precluded from paying
dividends during 1997 without prior regulatory approval due to negative
statutory "earned surplus" as a result of historical statutory losses as of
December 31, 1996. In addition, for the foreseeable future, NFL has agreed to
seek the approval of the Delaware insurance commissioner prior to making any
dividend payments. FLICA currently has the ability to pay NFL, without prior
regulatory approval, approximately $1.5 million in dividends during 1997, none
of which has been paid. NFIC and AICT are precluded from making dividend
payments during 1997 without prior written approval from the insurance
commissioner due to net losses on a statutory basis for the year ended December
31, 1996. In the States of Delaware, Mississippi and Texas, the state insurance
commissioner reviews the dividends paid by each insurer domiciled in such
commissioner's state at least once each year to determine whether they are
reasonable in relation to the insurer's surplus as regards policyholders and
quality of earnings. The state insurance commissioner may issue an order to
limit or disallow the payment of ordinary dividends if such commissioner finds
the insurer to be presently or potentially financially distressed or troubled.
On April 29, 1997, Westbridge completed the sale of $65 million aggregate
principal amount of its Convertible Notes in an underwritten public offering.
See Note 4 - "Subsequent Events." Westbridge received approximately $62.2
million in net proceeds, after deducting estimated underwriting commissions and
other expenses incurred in connection with the sale. Westbridge will use
approximately $15 million of the net proceeds to provide additional statutory
capital and surplus to its Insurance Subsidiaries. In addition, on May 1, 1997,
Westbridge contributed approximately $7 million of the net proceeds to NFL and
FLICA to provide each entity with sufficient funds to recapture a block of
insurance policies which had previously been reinsured. This amount represents
the total cost of the recapture (approximately $9 million less approximately $2
million in unearned premium reserves due to the Company). The balance of the net
proceeds, approximately $40.2 million, will be used for general corporate
purposes.
Westbridge believes that its short-term cash requirements, including interest on
its Convertible Notes and Senior Subordinated Notes, and dividend payments on
its Series A Preferred Stock, will be met through operating cash flows,
repayments of advances from subsidiaries, and payments relating to a $0.8
million surplus certificate held by NFL.
The Convertible Notes may not be redeemed prior to May 1, 2000 and, thereafter,
may be redeemed at the Company's option at a specified declining premium. The
Convertible Notes mature on May 1, 2004. The Senior Subordinated Notes may be
redeemed, at the Company's option, without premium, on or after March 1, 1998
and mature in March 2002. The Series A Preferred Stock may be redeemed, at the
Company's option
13
<PAGE>
on and after April 12, 1997 and is subject to mandatory redemption on April 12,
2004. Payments of principal due under the surplus certificate require the prior
approval of the Delaware regulatory authorities.
INSURANCE SUBSIDIARIES
The primary sources of cash for the Insurance Subsidiaries are premiums and
income on invested assets. Additional cash is periodically provided by advances
from Westbridge and from the sale of short-term investments and could, if
necessary, be provided through the sale of long-term investments and blocks of
business. The Insurance Subsidiaries' primary uses for cash are benefits and
claims, commissions, general and administrative expenses, taxes, licenses and
fees.
In the ordinary course of business, the Company advances commissions on policies
written by its general agencies and their agents. The Company is reimbursed for
these advances from the commissions earned over the respective policy's life. In
the event that policies lapse prior to the time the Company has been fully
reimbursed, the general agency or the individual agents, as the case may be, are
responsible for reimbursing the Company for the outstanding balance of the
commission advance. The Company has not experienced material annual losses on
such commission advances.
In order to finance commission advances, the Company's wholly-owned subsidiary
Westbridge Funding Corporation ("WFC") entered into a Credit Agreement dated as
of December 28, 1995, as amended, with Fleet National Bank (the "Credit
Agreement") which provides WFC with a two-year $20 million revolving loan
facility (the "Receivables Financing"). The proceeds of this loan facility are
used by WFC to purchase receivables evidencing commission advances to agents.
WFC's obligations under the Credit Agreement are secured by liens upon
substantially all of WFC's assets. In addition, Westbridge has guaranteed WFC's
obligations under the Credit Agreement and has pledged all of the issued and
outstanding shares of the capital stock of FLICA, NFL, NFIC, AICT and WFC as
collateral for its guaranty. As of March 31, 1997, $11.4 million was outstanding
under the Credit Agreement. The Credit Agreement terminates on January 7, 1998,
at which time the outstanding principal and interest thereunder will be due and
payable. The Company expects that the Credit Agreement will be extended or
refinanced at or prior to its maturity.
The ability of the Insurance Subsidiaries to underwrite insurance products is
limited by state regulation of statutory capital and surplus requirements. As a
result of rapid growth in underwritten health insurance product sales during
1995 and the first six months of 1996, the Company experienced a decline in its
available statutory capital and surplus. Accordingly, the Company deliberately
reduced the marketing of its underwritten products beginning in the second
quarter of 1996, consistent with its available statutory capital and surplus.
Following the recently completed sale of the Convertible Notes, the Insurance
Subsidiaries will receive approximately $15 million in the form of a capital
contribution from Westbridge which will be added to available statutory capital
and surplus. See Note 4 - "Subsequent Events." This additional statutory capital
and surplus will enable the Company to increase the marketing of its
underwritten health insurance products. However, any resulting increase in sales
is not expected to significantly increase total premiums until the latter part
of 1997 or early 1998. As a result, the Company's earnings are not expected to
be significantly affected by increased sales, if any, during the remainder of
1997.
CONSOLIDATED
The Company's consolidated net cash used for operations totaled $12.1 million
and $5.7 million for the three months ended March 31, 1997 and 1996,
respectively. The increase in the amount of net cash used for operations was
primarily the result of the increase in the number of claims processed during
the first three months of 1997 coupled with the increase in certain medical
costs covered by the Company's Medical Expense and Medicare Supplement Products
as a result of medical cost inflation. Additional increases in consolidated net
cash used for operations related to amounts remitted to reinsurers under certain
reinsurance arrangements. These increases in the consolidated net cash used for
operations were offset, in part, by lower levels of DPAC and receivables from
agents as a result of the Company's reduction of its marketing efforts for its
underwritten products beginning in the middle of 1996.
14
<PAGE>
Net cash provided by investing activities totaled $12.5 million and $3.0 million
for the three months ended March 31, 1997 and 1996, respectively. This increase
was attributable to the liquidation of investments to support operating
activities.
Net cash (used for) provided by financing activities totaled ($1.2) million and
$2.2 million for the three months ended March 31, 1997 and 1996, respectively.
The net cash outflow for the first three months of 1997 was the result of the
repayment of principal for a note payable associated with a reinsurance
agreement which was not in effect during the comparable 1996 period. See Note 4
- - "Subsequent Events." Additionally, certain other financing activities were
related to borrowings and repayments of amounts under the Credit Agreement in
connection with the Receivables Financing program.
The Company believes that its short-term cash requirements will be met through a
combination of operating and investing cash flows and use of the revolving line
of credit. The Company anticipates that its longer-term cash requirements for
the operation of the business will be met through a combination of operating and
investing cash flows. See Note 4 - "Subsequent Events."
The Company had no significant high-yield, unrated or less than investment grade
fixed maturity securities in its investment portfolio as of March 31, 1997, and
it is the Company's policy not to exceed more than 5% of total assets in such
securities. Changes in interest rates may affect the market value of the
Company's investment portfolio. The Company's principal objective with respect
to the management of its investment portfolio is to meet its future policyholder
benefit obligations. In the event of material adverse loss experience, the
Company may be required to compromise its investment yield to satisfy such
obligations.
Included in the invested assets of the Company at March 31, 1997 were real
estate mortgage loans with an estimated market value of $0.4 million.
Approximately 98% of these assets relate to property located in Oklahoma and
Texas. Such regional concentration may have a higher investment risk than a more
diversified portfolio. The Company has adopted a policy not to invest in such
assets and, accordingly, the Company has made no mortgage loans or real estate
purchases since 1989.
Inflation will affect claim costs on the Company's Medicare Supplement Products
and Medical Expense Products. Costs associated with a hospital stay and the
amounts reimbursed by the Medicare program are each determined, in part, based
on the rate of inflation. If hospital and other medical costs which are
reimbursed by the Medicare program increase, claim costs on the Medicare
Supplement Products will increase. Similarly, as the hospital and other medical
costs increase, claim costs on the Medical Expense Products will increase.
During the first quarter of 1997, the Company experienced increased benefits and
claims expense resulting from higher incidence of claims and medical inflation
which will moderate the Company's earnings growth during 1997.
The Company has the ability, within the constraints of the loss ratios mandated
by the regulatory authorities and subject to regulatory approval, to raise
premium rates on its guaranteed renewable products in the event of adverse
claims experience. In addition, the Company has somewhat mitigated its exposure
to inflation by incorporating certain limitations on the maximum benefits which
may be paid under its policies.
The National Association of Insurance Commissioners ("NAIC") has developed
certain Risk-Based Capital ("RBC") statutory requirements for insurance
companies. Under these requirements, insurers whose statutory capital and
surplus fall below the specified level are subject to remedial action. These
guidelines are not effective unless they are adopted by the states. The States
of Delaware and Mississippi have each adopted the NAIC's RBC calculation
guidelines. The State of Texas has developed an RBC calculation which varies
from the NAIC. The RBC statutory requirements are only in effect based on
year-end financial position and results of operations. As such, the RBC for each
of the Insurance Subsidiaries exceeded the proposed thresholds for required
regulatory intervention as of December 31, 1996.
15
<PAGE>
PART II
Item 1 - LEGAL PROCEEDINGS (See Part I - Note 2 to the Consolidated Financial
Statements).
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 4.1 Indenture, dated as of April 24, 1997, between
Westbridge and First Union National Bank, as Trustee,
relating to the 7-1/2% Convertible Subordinated Notes
due 2004, including form of Convertible Subordinated
Note.
Exhibit 4.2 Underwriters' Warrant Agreement, dated as of
April 29, 1997, by an among Westbridge Capital Corp.,
Forum Capital Markets L.P. and Raymond James &
Associates, Inc., including form of Warrant.
Exhibit 27 Financial Data Schedule, (included in electronic filing
only).
(b) REPORTS ON FORM 8-K
No Form 8-K was required to be filed during the period.
16
<PAGE>
Form 10-Q
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTBRIDGE CAPITAL CORP.
/s/ Patrick J. Mitchell
Patrick J. Mitchell
Executive Vice President, Chief Financial
Officer and Treasurer
(On Behalf of the Registrant and as
Principal Financial and Accounting Officer)
Dated at Fort Worth, Texas
May 9, 1997
17
<PAGE>
Form 10-Q
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WESTBRIDGE CAPITAL CORP.
/s/ Patrick J. Mitchell
Patrick J. Mitchell
Executive Vice President, Chief Financial
Officer and Treasurer
(On Behalf of the Registrant and as
Principal Financial and Accounting Officer)
Dated at Fort Worth, Texas
May 9, 1997
14
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
WESTBRIDGE CAPITAL CORP.,
Company
and
FIRST UNION NATIONAL BANK
Trustee
---------------
INDENTURE
Dated as of April 24, 1997
---------------
$74,750,000
7 1/2% Convertible Subordinated Notes due 2004
- --------------------------------------------------------------------------------
## CT01/CORCA/96930.38
<PAGE>
TABLE OF CONTENTS
RECITALS ................................................ 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101.
Definitions 1
Act 2
Affiliate 2
Authenticating Agent 2
Board of Directors 2
Board Resolution 2
Business Day 2
Capital Stock 2
Change of Control 2
Commission 3
Common Stock 3
Company 3
Company Request" or "Company Order 3
Continuing Directors 3
Corporate Trust Office 3
Current Market Price 3
Designated Senior Debt 4
Exchange Act 4
Fair Market Value 4
GAAP 4
Holder 4
Indenture 4
Interest Payment Date 4
Junior Securities 4
Maturity 4
Notes 4
Officers' Certificate 5
Opinion of Counsel 5
Outstanding 5
Paying Agent 5
Person 6
Predecessor Note 6
Preferred Stock 6
Principal 6
Property 6
Redemption Date 6
Redemption Price 6
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<PAGE>
Regular Record Date 6
Responsible Officer 6
Securities Act 6
Senior Indebtedness 6
Significant Subsidiary 7
Special Record Date 7
Stated Maturity 7
Subsidiary 7
Trading Day 7
Trustee 8
Trust Indenture Act 8
U.S. Government Obligations 8
Vice President 8
SECTION 102. Compliance Certificates and Opinions 9
SECTION 103. Form of Documents Delivered to Trustee 9
SECTION 104. Acts of Holders; Record Dates 10
SECTION 105. Notices, etc., to Trustee and Company 11
SECTION 106. Notice to Holders; Waiver 11
SECTION 107. Conflict with Trust Indenture Act 11
SECTION 108. Effect of Headings and Table of Contents 11
SECTION 109. Successors and Assigns 12
SECTION 110. Separability Clause 12
SECTION 111. Benefits of Indenture 12
SECTION 112. Governing Law 12
SECTION 113. Legal Holidays 12
SECTION 114. Accounting Terms 12
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally 13
SECTION 202. Form of Face of Note 14
SECTION 203. Form of Reverse of Note 15
SECTION 204. Form of Trustee's Certificate of Authentication 18
SECTION 205. Form of Conversion Notice 18
SECTION 206. Form of Option of Holder to Elect Repurchase 19
SECTION 207. Form of Assignment by Holder 20
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms 21
SECTION 302. Denominations 21
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SECTION 303. Execution, Authentication, Delivery and Dating 21
SECTION 304. Temporary Notes 22
SECTION 305. Registration, Registration of Transfer and Exchange 22
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes 23
SECTION 307. Payment of Interest; Interest Rights Preserved 24
SECTION 308. Persons Deemed Owners 25
SECTION 309. Cancellation 26
SECTION 310. Computation of Interest 26
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture 26
SECTION 402. Release of Paying Agent 27
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default 27
SECTION 502. Acceleration of Maturity; Rescission and Annulment 29
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee 29
SECTION 504. Trustee May File Proofs of Claim 30
SECTION 505. Trustee May Enforce Claims Without Possession of Notes 31
SECTION 506. Application of Money Collected 31
SECTION 507. Limitation on Suits 31
SECTION 508. Unconditional Right of Holders to Receive Principal and
Interest and to Convert 32
SECTION 509. Restoration of Rights and Remedies 32
SECTION 510. Rights and Remedies Cumulative 32
SECTION 511. Delay or Omission Not Waiver 33
SECTION 512. Control by Holders 33
SECTION 513. Waiver of Past Defaults 33
SECTION 514. Undertaking for Costs 33
SECTION 515. Waiver of Stay or Extension Laws 34
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities 34
SECTION 602. Notice of Defaults 35
SECTION 603. Certain Rights of Trustee 35
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## CT01/CORCA/96930.38
<PAGE>
SECTION 604. Not Responsible for Recitals or Issuance of Notes 36
SECTION 605. May Hold Notes 36
SECTION 606. Money Held in Trust 36
SECTION 607. Compensation and Reimbursement 36
SECTION 608. Disqualification; Conflicting Interests 37
SECTION 609. Corporate Trustee Required; Eligibility 37
SECTION 610. Resignation and Removal; Appointment of Successor 37
SECTION 611. Acceptance of Appointment by Successor 38
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business 38
SECTION 613. Preferential Collection of Claims Against Company 39
SECTION 614. Appointment of Authenticating Agent 39
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of
Holders 40
SECTION 702. Preservation of Information; Communications to Holders 41
SECTION 703. Reports by Trustee 42
SECTION 704. Reports by Company 42
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms 43
SECTION 802. Successor Corporation Substituted 43
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders 44
SECTION 902. Supplemental Indentures with Consent of Holders 44
SECTION 903. Execution of Supplemental Indentures 45
SECTION 904. Effect of Supplemental Indentures 46
SECTION 905. Revocation and Effect of Consents 46
SECTION 906. Conformity with Trust Indenture Act 46
SECTION 907. Reference in Notes to Supplemental Indentures 46
SECTION 908. Subordination Unimpaired 47
- iv -
## CT01/CORCA/96930.38
<PAGE>
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal and Interest 47
SECTION 1002. Maintenance of Office or Agency 47
SECTION 1003. Money for Note Payments to Be Held in Trust 48
SECTION 1004. Corporate Existence 49
SECTION 1005. Change of Control 49
SECTION 1006. Payment of Taxes and Other Claims 51
SECTION 1007. Books and Records 51
SECTION 1008. Statement by Officers as to Default 51
SECTION 1009. Stay, Extension and Usury Laws 52
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Right of Redemption 52
SECTION 1102. Applicability of Article 52
SECTION 1103. Election to Redeem; Notice to Trustee 52
SECTION 1104. Selection by Trustee of Notes to Be Redeemed 52
SECTION 1105. Notice of Redemption 53
SECTION 1106. Deposit of Redemption Price 54
SECTION 1107. Notes Payable on Redemption Date 54
SECTION 1108. Notes Redeemed in Part 54
ARTICLE TWELVE
CONVERSION OF NOTES
SECTION 1201. Conversion Privilege 55
SECTION 1202. Conversion Procedure 55
SECTION 1203. Cash Payments in Lieu of Fractional Shares 56
SECTION 1204. Adjustment of Conversion Price 56
SECTION 1205. Effect of Reclassification, Consolidation, Merger or Sale 60
SECTION 1206. Taxes on Shares Issued 61
SECTION 1207. Reservation of Shares; Shares to be Fully Paid;
Compliance with Government Requirements;
Listing of Common Stock 61
SECTION 1208. Responsibility of Trustee 62
SECTION 1209. Notice to Holders Prior to Certain Actions 62
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## CT01/CORCA/96930.38
<PAGE>
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. Agreement to Subordinate 63
SECTION 1302. No Payment on Notes in Event of Default on Senior
Indebtedness 63
SECTION 1303. Distribution on Dissolution, Liquidation and
Reorganization 64
SECTION 1304. Payment to Holders of Senior Indebtedness 65
SECTION 1305. Subrogation 65
SECTION 1306. Payment on Notes Permitted 66
SECTION 1307. Authorization of Holders to Trustee to Effect
Subordination 66
SECTION 1308. Trustee as Holder of Senior Indebtedness 66
SECTION 1309. Notices to Trustee 67
SECTION 1310. No Fiduciary Duty by Trustee to Holders of
Senior Indebtedness 67
SECTION 1311. Paying Agent Treated as Trustee 67
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or
Covenant Defeasance 68
SECTION 1402. Defeasance and Discharge 68
SECTION 1403. Covenant Defeasance 68
SECTION 1404. Conditions to Defeasance or Covenant Defeasance 69
SECTION 1405. Application of Trust Money 71
SECTION 1406. Reinstatement 71
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## CT01/CORCA/96930.38
<PAGE>
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
INDENTURE, DATED AS OF APRIL 24, 1997
Trust Indenture
ACT SECTION INDENTURE SECTION
ss.310(a)(1) ................................ 609
(a)(2) ...................................... 609
(a)(3) ...................................... Not Applicable
(a)(4) ...................................... Not Applicable
(a)(5) ...................................... Not Applicable
(b) ......................................... 608, 610
(c) ......................................... Not Applicable
ss.311(a) ................................... 613
(b) ......................................... 613
(c) ......................................... Not Applicable
ss.312(a) ................................... 701, 702(a)
(b) ......................................... 702(b)
(c) ......................................... 702(c)
ss.313(a) ................................... 703(a)
(b) ......................................... 703(a)
(c) ......................................... 703(a)
(d) ......................................... 703(b)
ss.314(a) ................................... 704, 1008
(b) ......................................... Not Applicable
(c)(1) ...................................... 102
(c)(2) ...................................... 102
(c)(3) ...................................... 102
(d) ......................................... Not Applicable
(e) ......................................... 102
(f) ......................................... Not Applicable
ss.315(a) ................................... 601
(b) ......................................... 602
(c) ......................................... 601
(d) ......................................... 601
(e) ......................................... 514
ss.316(a) ................................... 101
(a)(1)(A) ................................... 502, 512
(a)(1)(B) ................................... 513
(a)(2) ...................................... Not Applicable
(b) ......................................... 508
(c) ......................................... 104(c)
ss.317(a)(1) ................................ 503
(a)(2) ...................................... 504
(b) ......................................... 1003
ss.318(a) ................................... 107
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.
- vii -
## CT01/CORCA/96930.38
<PAGE>
INDENTURE, dated as of April 24, 1997, between Westbridge Capital
Corp., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal executive office at
777 Main Street, Fort Worth, Texas 76102, and First Union National Bank, a
national banking association duly organized and existing under the laws of the
United States of America, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of up to
$74,750,000 aggregate principal amount of its 7 1/2% Convertible Subordinated
Notes due 2004 (herein called the "Notes") of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
All things necessary to make the Notes, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the
singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
- 1 -
## CT01/CORCA/96930.38
<PAGE>
(5) references to Sections or Articles mean Sections or Articles
of this Indenture.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Notes.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board, except that, for purposes of the
definitions of "Change of Control" and "Continuing Director, "Board of
Directors" means the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New Jersey, New York,
North Carolina or Texas are authorized or obligated by law or executive order to
close.
"Capital Stock" of any Person means the Common Stock or Preferred Stock
of such Person. Unless otherwise stated herein or the context otherwise
requires, "Capital Stock" means Capital Stock of the Company.
"Change of Control" means the occurrence of any of the following events
after the date of this Indenture: (i) any Person (including, without limitation,
any "person" within the meaning of Section 13(d) or 14(d) of the Exchange Act,
but excluding the Company, any Subsidiary and any employee benefit plan of the
Company or any Subsidiary) becomes the direct or indirect beneficial owner of
shares of Capital Stock representing greater than 50% of the combined voting
power of all outstanding shares of Capital Stock entitled to vote in the
election of directors under ordinary circumstances, (ii) the Company
consolidates with or merges into any other Person and the outstanding Common
Stock is changed or exchanged as a result, (iii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company or of the
collective assets of the Company and the Subsidiaries, (iv) at any time
Continuing Directors cease for any reason to constitute a majority of the Board
of Directors then in office or (v) the Company makes any distribution of cash,
Property or securities (other than regular quarterly dividends, Common Stock,
Preferred Stock which is substantially equivalent to the Common Stock or rights
to acquire Common Stock or Preferred Stock which is substantially equivalent to
the Common Stock) to holders of
- 2 -
## CT01/CORCA/96930.38
<PAGE>
Common Stock, or the Company or any Subsidiary purchases or otherwise acquires
Common Stock, and the sum of the Fair Market Value of such cash, Property or
securities distributed or Common Stock purchased on the date the same is made,
plus the Fair Market Value, when made, of all other cash, Property or securities
so distributed and Common Stock so purchased which have occurred during the
12-month period ending on such date, in each case expressed as a percentage of
the aggregate Current Market Price of all Common Stock outstanding at the close
of business on the last Trading Day prior to the date of such distribution or
purchase, exceeds 50%.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Stock" means all shares now or hereafter authorized of the
class of common stock, par value $.10 per share, of the Company currently
authorized and stock of any other class into which such shares may hereafter
have been changed.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor corporation shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by the Chairman of the Board, a Vice Chairman
of the Board, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Secretary or an Assistant Secre tary, of the Company
and delivered to the Trustee.
"Continuing Directors" means any member of the Board of Directors who
(i) is a member of the Board of Directors on the date hereof or (ii) was
nominated for election or elected to the Board of Directors with the affirmative
vote of at least two-thirds of such members and members of the Board of
Directors who were previously so nominated or elected.
"Corporate Trust Office" means the principal office of the Trustee in
Newark, New Jersey at 765 Broad Street, Newark, New Jersey 07102 which at any
particular time its corporate trust business shall be administered.
"Current Market Price" means, when used with respect to any security as
of any date, the last sale price, regular way, or, in case no such sale takes
place on such date, the average of the closing bid and asked prices, regular
way, of such security in either case as reported for consolidated transactions
on the New York Stock Exchange or, if such security is not listed or admitted to
trading on the New York Stock Exchange, as reported for consolidated
transactions with respect to securities listed on the principal national
securities exchange on which such security is listed or admitted to trading or,
if such security is not listed or admitted to trading on any national securities
exchange, as reported on the Nasdaq National Market, or, if such security is not
listed or admitted to trading on the Nasdaq National Market, as reported on the
Nasdaq SmallCap Market, or if such security is not listed or admitted to trading
on any national securities exchange or the Nasdaq National Market
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or the Nasdaq SmallCap Market, the average of the high bid and low asked prices
of such security in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use or, if such security is not quoted by any such
organization, the average of the closing bid and asked prices of such security
furnished by a New York Stock Exchange member firm selected by the Company. If
such security is not quoted by any such organization and no such New York Stock
Exchange member firm is able to provide such prices, the Current Market Price of
such security shall be the Fair Market Value thereof.
"Designated Senior Debt" means the 11% Senior Subordinated Notes due
2002 of the Company, any Senior Indebtedness outstanding from time to time under
the Credit Agreement dated as of December 28, 1995 between Westbridge Capital
Funding Corporation and Fleet National Bank, as amended, or the Guarantee
Agreement of the Company dated concurrently therewith and any other Senior
Indebtedness the principal amount of which is $10.0 million or more and which
has been designated as Designated Senior Debt in an Officer's Certificate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fair Market Value" means, at any date as to any asset, Property or
right (including, without limitation, Capital Stock of any Person, evidences of
indebtedness or other securities, but excluding cash), the fair market value of
such item as determined in good faith by the Board of Directors, whose
determination shall be conclusive and evidenced by a Board Resolution; PROVIDED,
HOWEVER, that if there is a Current Market Price for such item on such date,
"Fair Market Value" means such Current Market Price (without giving effect to
the last sentence of the definition thereof).
"GAAP" means, as of any date, generally accepted accounting principles
in the United States and does not include any interpretations or regulations
that have been proposed but that have not become effective.
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Junior Securities" means (a) shares of any and all classes of Capital
Stock and (b) securities of the Company which are subordinated in right of
payment to Senior Indebtedness at the time of issuance or delivery of such
securities to substantially the same extent as, or to a greater extent than, the
Notes are so subordinated as provided in Article Thirteen.
"Maturity," when used with respect to any Note, means the date on which
the Principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
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"Notes" has the meaning specified in the recitals of the Company.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee and, unless otherwise
provided in this Indenture, containing the statements provided for in Section
102; PROVIDED, HOWEVER, that for purposes of Section 1008, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and who shall be reasonably acceptable to the Trustee,
containing the statements provided for in Section 102.
"Outstanding," when used with respect to Notes, means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, EXCEPT:
(i) Notes theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Notes for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company, any Subsidiary or any Affiliate
thereof) in trust, in accordance with this Indenture, for the Holders
of such Notes and the Trustee or Paying Agent is not prohibited from
paying such money to the Holders thereof pursuant to the terms of this
Indenture; provided that, such Notes shall continue to be Outstanding
until the redemption date or maturity date; and
(iii) Notes which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Notes have been authenticated
and delivered pursuant to this Indenture, other than any such Notes in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser
in whose hands such Notes are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or of such other obligor.
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"Paying Agent" means any Person authorized by the Company to pay the
Principal of or interest on any Notes on behalf of the Company.
"Person" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a trust, or other entity.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Preferred Stock" of any Person means the class or classes of equity,
ownership or participation interests (however designated) in such Person,
including, without limitation, stock, share, partnership and membership
interests, which are preferred as to the payment of dividends or distributions
by, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of, such Person (or equivalents thereof) over
interests of any other class of interests of such Person. Unless otherwise
stated herein or the context otherwise requires, "Preferred Stock" means
Preferred Stock of the Company.
"Principal" of a debt security means the principal of the security plus
the premium, if any, on the security. "Principal" shall include, with respect to
the Notes, the redemption price or repurchase price, if any, payable thereon.
"Property" of any Person means any and all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included on the most recent consolidated balance sheet of such Person in
accordance with GAAP.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the date specified in Section 202 as the "Regular Record Date."
"Responsible Officer," when used with respect to the Trustee, means any
vice president or assistant vice president, any trust officer or assistant trust
officer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
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"Senior Indebtedness" means the Principal of and interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company, whether or not such claim for
post-petition interest is allowed in such proceeding) on: (a) indebtedness of
the Company existing on the date hereof for money borrowed (other than the
Notes) or evidenced by notes or other written obligations given in connection
with the acquisition of any business, Properties or assets of any kind
(including purchase-money obligations); (b) obligations of the Company as lessee
under capitalized leases and leases of Property made as part of any sale and
leaseback transactions; (c) indebtedness of others of any of the kinds described
in the preceding clauses (a) and (b) assumed or guaranteed by the Company,
including the amounts guaranteed by the Company under the Guaranty Agreement
dated as of December 28, 1995 by the Company in favor of Fleet National Bank of
Connecticut, as amended; (d) renewals, extensions and refundings of, and
indebtedness and obligations of a successor corporation issued in exchange for
or in replacement of, indebtedness or obligations of the kinds described in the
preceding clauses (a) through (c); and (e) future indebtedness of the Company
described in clause (a) above, and renewals, extensions and refundings thereof,
if the instrument creating or evidencing such future indebtedness provides that
such indebtedness is superior in right of payment to the Notes. Notwithstanding
the foregoing, Senior Indebtedness shall not include (i) any future indebtedness
of the kind described in clause (a) above if and to the extent such indebtedness
is convertible into shares of Common Stock or other equity securities of the
Company, and the Notes shall rank PARI PASSU with any such convertible
indebtedness unless the instrument creating or evidencing such convertible
indebtedness provides that such convertible indebtedness is junior in right of
payment to the Notes or (ii) indebtedness or amounts owed (except to banks and
other financial institutions) for compensation to employees, or for goods or
materials purchased, or services utilized, in the ordinary course of business of
the Company or of any other person from whom such indebtedness or amount was
assumed or for whom such indebtedness was guaranteed.
"Significant Subsidiary" means each Subsidiary that would constitute a
"Significant Subsidiary" within the meaning of Rule 1-02 of Regulation S-X of
the Commission.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the Principal of such Note or such installment of interest
is due and payable, whether at maturity, upon redemption, upon a Change of
Control or otherwise.
"Subsidiary" of a Person on any date means any other Person, a majority
of whose Capital Stock with voting power, under ordinary circumstances,
entitling holders of such Capital Stock to elect the board of directors or other
governing body of such other Person, is at such date, directly or indirectly,
owned by such Person and/or a Subsidiary or Subsidiaries of such Person. Unless
otherwise stated herein or the context otherwise requires, "Subsidiary" means a
Subsidiary of the Company.
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"Trading Day" means (i) if the applicable security is listed or
admitted for trading on a national security exchange, a day on which such
exchange is open for business, (ii) if the applicable security is quoted on the
Nasdaq National Market, a day on which trades may be made thereon or (iii) if
the applicable security is not so listed, admitted for trading or quoted, any
Business Day.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; PROVIDED, HOWEVER, that in
the event the Trust Indenture Act of 1939 is amended after such date, or the
date any supplemental indenture is executed, "Trust Indenture Act" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939 as so
amended.
"U.S. Government Obligations" means non-callable (i) direct obligations
(or certificates representing an ownership interest in such obligations) of the
United States for which its full faith and credit are pledged and (ii)
obligations of a Person controlled or supervised by, and acting as an agency or
instrumentality of, the United States, the payment of which is unconditionally
guaranteed as a full faith and credit obligation of the United States.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
In addition, the following terms are defined in the respective
Sections:
TERM DEFINED IN SECTION
"Aggregate Consideration"...................................1204
"Change of Control Date".......... .........................1005
"Change of Control Notice"..................................1005
"Change of Control Offer"...................................1005
"Change of Control Payment"........ ........................1005
"Change of Control Payment Date"............................1005
"Code"......................................................1004
"covenant defeasance".......................................1403
"Conversion Agent"...........................................305
"Conversion Price"..........................................1201
"Defaulted Interest"................ ........................307
"Defeasance"................................................1402
"Defeasance Date".................... ......................1404
"DTC".......................................................1202
"Event of Default"...........................................501
"Nonpayment Default".................. .....................1302
"Note Register"..............................................305
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"Note Registrar" ..................................... 305
"Payment Blockage Period" ............................ 1302
"Trigger Event" ...................................... 1204
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture.
Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the Officers'
Certificate provided pursuant to Section 1008) shall include
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
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, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered in an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
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erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders entitled to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date, only the Holders on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.
(d) The ownership of Notes shall be proved by the Note Register.
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(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Note shall bind every future Holder of
the same Note and the Holder of every Note issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such Note.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Department, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee
by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Note Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by operation
of Sections 310 to 317, inclusive, of the Trust Indenture Act, such required
provision shall control.
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SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not. All covenants and
agreements in this Indenture by the Trustee shall bind its successors and
assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness and the Holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Note shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Notes) payment of interest or
Principal need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date, Redemption Date, or at the Stated Maturity, provided that no interest
shall accrue for the period from and after such Interest Payment Date,
Redemption Date or Stated Maturity, as the case may be.
SECTION 114. ACCOUNTING TERMS.
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP, and all financial data required to be delivered
hereunder shall be prepared in accordance with GAAP, applied on a consistent
basis; except as otherwise specifically prescribed herein.
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SECTION 115. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
This Indenture is subject to the mandatory provisions of the Trust
Indenture Act, which are incorporated by reference in and made a part of this
Indenture. Such provisions shall apply to this Indenture at all times,
notwithstanding that at any time or from time to time this Indenture is not
required to be qualified under the Trust Indenture Act.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes means the Company and any successor
obligor on the Notes.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by Trust Indenture Act reference to another statute or
defined by Commission rule under the Trust Indenture Act and not otherwise
defined herein have the meanings so assigned to them.
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Notes, the Trustee's certificate of authentication and the
Conversion Notice shall be in substantially the forms set forth in this Article,
with 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 be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution of the Notes.
The definitive Notes shall be printed, lithographed or engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner, all as determined by the officers executing such
Notes, as evidenced by their execution of such Notes.
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SECTION 202. FORM OF FACE OF NOTE.
WESTBRIDGE CAPITAL CORP.
7 1/2% Convertible Subordinated Note due 2004
CUSIP No.: 957152AD3
No..... $..................
Westbridge Capital Corp., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ________________, or registered
assigns, the principal sum of ______________ Dollars on May 1, 2004, and to pay
interest thereon from April 29, 1997 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually in
arrears on May 1 and November 1 of each year, commencing November 1, 1997, or,
if any such date is not a Business Day on the next succeeding Business Day
(each, an "Interest Payment Date"), at the rate of 7 1/2% per annum, until the
Principal hereof is paid. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Note (or one or more Predecessor Notes)
is registered at the close of business on April 15 and October 15, whether or
not a Business Day, preceding the respective Interest Payment Date (the "Regular
Record Date"). Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Notes not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture. Payment of the Principal of and interest
on this Note will be made at the office or agency of the Company maintained for
that purpose in New York, New York or Newark, New Jersey, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; PROVIDED, HOWEVER, that at the
option of the Company payment of interest on any Interest Payment Date other
than at Maturity may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Note Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
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## CT01/CORCA/96930.38
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
WESTBRIDGE CAPITAL CORP.
By:_________________________
Attest:
By:________________________
Dated:
SECTION 203. FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of Notes of the Company
designated as its 7 1/2% Convertible Subordinated Notes due 2004 (herein called
the "Notes"), limited in aggregate principal amount to $74,750,000, issued and
to be issued under an Indenture, dated as of April 24, 1997 (herein called the
"Indenture"), between the Company and First Union National Bank, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Indebtedness and the Holders of the Notes and of the terms
upon which the Notes are, and are to be, authenticated and delivered.
CONVERSION. Subject to and upon compliance with the provisions of the
Indenture, the Holder of this Note is entitled, at his option, at any time prior
to the Stated Maturity of the Outstanding Notes on May 1, 2004 (provided that,
in case this Note or any portion hereof shall be called for redemption prior to
such date, such right shall terminate with respect to this Note or portion
hereof, as the case may be, so called for redemption on the Business Day next
preceding the Redemption Date), to convert the principal amount of this Note (or
any portion hereof which is $1,000 or an integral multiple thereof) into shares
of Common Stock. The Conversion Price shall be subject to adjustment as provided
in the Indenture. In order to exercise the conversion privilege, the Holder
shall surrender this Note, together with the conversion notice hereon duly
executed (unless such Holder is DTC, in which case the customary procedures of
DTC will apply), to the Company at the
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## CT01/CORCA/96930.38
<PAGE>
designated office or agency of the Company in New York, New York or Newark, New
Jersey, accompanied (if so required by the Company) by instruments of transfer,
in form satisfactory to the Company and to the Trustee, duly executed by the
Holder or by his duly authorized attorney in writing. Except as provided in the
Indenture, no adjustment or payment is to be made on conversion for interest
accrued hereon or for dividends on shares of Common Stock issued on conversion.
The Company is not required to issue fractions of shares upon any such
conversion, but shall make adjustment therefor in cash as provided in the
Indenture. A Holder is not entitled to any rights of a holder of Common Stock
until such Holder has converted its Notes into Common Stock as provided in the
Indenture.
OPTIONAL REDEMPTION BY THE COMPANY. The Notes are subject to redemption
at any time on or after May 1, 2000, as a whole or in part, at the election of
the Company, upon not less than 30 nor more than 60 days' notice, at the
Redemption Prices (expressed as percentages of the principal amount being
redeemed) set forth below if the Redemption Date occurs during the twelve-month
period beginning May 1 of the years indicated:
For the 12 Months Redemption
AFTER MAY 1, PRICE
2000 103.75%
2001 102.50%
2002 101.25%
2003 and thereafter 100.00%
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Notes, or one or
more Predecessor Notes, of record at the close of business on the applicable
Regular Record Dates referred to on the face hereof, all as provided in the
Indenture.
MANDATORY REDEMPTION. The Notes do not have the benefit of any sinking
fund obligation.
REPURCHASE AT THE OPTION OF HOLDER. Upon a Change of Control, the
Company shall make an offer to purchase all the Outstanding Notes at a purchase
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon to the Change of Control Payment Date. Within the periods
specified in the Indenture, the Company shall mail a notice to each Holder
setting forth the procedures governing the offer to purchase as required by the
Indenture. A Holder may tender or refrain from tendering all or any portion of
such Holder's Notes, at such Holder's discretion, by completing and signing the
form entitled "Option of Holder to Elect Repurchase" below and delivering such
form, together with the Notes with respect to which the repurchase right is
being exercised, duly endorsed for transfer to the Company, to the Trustee. Any
partial tender of Notes must be made in an integral multiple of $1,000.
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## CT01/CORCA/96930.38
<PAGE>
In the event of redemption or repurchase by the Company of this Note in
part only, a new Note or Notes for the portion hereof not redeemed or
repurchased will be issued in the name of the Holder hereof upon the
cancellation hereof.
DISCHARGE AND DEFEASANCE. The Indenture contains provisions for
defeasance of (a) the entire indebtedness of the Notes and (b) certain
restrictive covenants upon compliance by the Company with certain conditions set
forth therein.
SUBORDINATION. The indebtedness evidenced by the Notes is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of all Senior Indebtedness, and
this Note is issued subject to such provisions and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions, and
authorizes the Trustee in such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in the
Indenture and appoints the Trustee as such Holder's attorney-in-fact for such
purpose.
DEFAULT. If an Event of Default shall occur and be continuing, the
Principal of all the Notes may be declared due and payable in the manner and
with the effect provided in the Indenture.
MODIFICATION. The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding. Without the consent of any Holder, the Company and the Trustee may
amend or supplement the Indenture to (i) evidence the succession of another
corporation to the Company and the assumption by any such successor of the
covenants of the Company herein and in the Indenture; (ii) add to the covenants
of the Company for the benefit of the Holders, or surrender any right or power
herein conferred upon the Company; (iii) cure any ambiguity, correct or
supplement any pro vision herein which may be inconsistent with any other
provision therein, or to make any other provisions with respect to matters or
questions arising under the Indenture which shall not be incon sistent with the
provisions of the Indenture, provided such action shall not adversely affect the
interests of the Holders in any material respect; or (iv) provide for
uncertificated Notes in addition to or in lieu of certificated Notes. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Notes at the time Outstanding,
on behalf of the Holders of all the Notes, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in ex change herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Note.
TRANSFER; DENOMINATIONS; EXCHANGE. As provided in the Indenture and
subject to certain limitations therein set forth, the transfer of this Note is
registrable in the Note Register, upon surrender of this Note for registration
of transfer at the designated office or agency of the Company in New York, New
York or Newark, New Jersey, duly endorsed by, or accompanied by a written
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## CT01/CORCA/96930.38
<PAGE>
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Notes, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees. The Notes are issuable only in registered
form without coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations therein
set forth, Notes are exchangeable for a like aggregate principal amount of Notes
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
PERSONS DEEMED OWNERS. Prior to due presentment of this Note for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
DEFINITIONS; AUTHENTICATION. All terms used in this Note which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants
by the entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to:
Westbridge Capital Corp.
777 Main Street, Suite 900
Fort Worth, Texas 76102
Attn: General Counsel
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## CT01/CORCA/96930.38
<PAGE>
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By _______________________________
Authorized Officer
SECTION 205. FORM OF CONVERSION NOTICE.
To Westbridge Capital Corp.
The undersigned owner of this Note hereby irrevocably exercises the
option to convert this Note, or portion hereof (which is $1,000 or an integral
multiple thereof) below designated, into shares of Common Stock, par value $.10
per share, of Westbridge Capital Corp. in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon the conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.
Dated____________________
--------------------------------------
Signature (exactly as your name appears on the face
of this Note)
Signature Guaranteed:
By:_______________________
This signature shall be guaranteed by an eligible guarantor institution (a bank
or a trust company having an office or correspondent in the United States or a
broker or dealer which is a member of a registered securities exchange or the
National Association of Securities Dealers, Inc.) with membership is an approved
signature guaranty medallion program pursuant to SEC Rule 17Ad-15.
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## CT01/CORCA/96930.38
<PAGE>
Fill in for registration of shares of Common Stock and Notes if to be issued
otherwise than to the registered holder.
Social Security or Other Taxpayer
Identifying Number
- --------------------------- --------------------------------------
(Print Name)
Principal Amount to be
Converted (in an integral
multiple of $1,000, if less
than all):
- --------------------------- $-------------------------------------
(Print address, including
zip code)
SECTION 206. FORM OF OPTION OF HOLDER TO ELECT REPURCHASE.
To elect to have this Note, or portion hereof (which is $1,000 or an
integral multiple thereof) repurchased by Westbridge Capital Corp. pursuant to
Section 1005 of the Indenture in connection with a Change of Control, state the
amount you elect to have repurchased (if all, write "ALL"):
$--------------.
Dated____________________
--------------------------------------
Signature (exactly as your name appears
on the face of this Note)
Signature Guaranteed:
By:
This signature shall be guaranteed by an eligible guarantor institution (a bank
or a trust company having an office or correspondent in the United States or a
broker or dealer which is a member of a registered securities exchange or the
National Association of Securities Dealers, Inc.) with membership is an approved
signature guaranty medallion program pursuant to SEC Rule 17Ad-15.
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## CT01/CORCA/96930.38
<PAGE>
SECTION 207. FORM OF ASSIGNMENT BY HOLDER.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and transfer(s)
unto
- -----------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Name and Address of Assignee, including zip code, must be
printed or typewritten.)
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
Attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated:
NOTICE: The signature
to this assignment
must correspond with
the name as it appears
upon the face of the
within Note in every
particular without
alteration or
enlargement or any
change whatever.
SIGNATURE GUARANTY
Signature(s) must be guaranteed by an eligible guarantor institution which is a
participant in a Securities Transfer Association recognized program.
By:
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## CT01/CORCA/96930.38
<PAGE>
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $74,750,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 304, 305, 306, 907 or 1108.
The Notes shall be known and designated as the "7 1/2% Convertible
Subordinated Notes due 2004" of the Company. Their Stated Maturity shall be May
1, 2004, and they shall bear interest at the rate of 7 1/2% per annum from April
29, 1997 or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, payable semi-annually in
arrears on May 1 and November 1 of each year, commencing November 1, 1997, until
the principal thereof is paid or made available for payment.
The Principal of and interest on the Notes shall be payable at the
office or agency of the Company in New York, New York or Newark, New Jersey,
maintained for such purpose and at any other office or agency maintained by the
Company for such purpose; PROVIDED, HOWEVER, that at the option of the Company,
payment of interest may be made by check mailed to the address of the Person
entitled thereto as such address shall appear in the Note Register.
The Company shall be required to offer to repurchase Notes following
the occurrence of a Change of Control as provided in Article Ten.
The Notes shall be redeemable at the option of the Company as provided
in Article Eleven.
The Notes shall be convertible into Common Stock as provided in Article
Twelve.
The Notes shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Thirteen.
The Notes shall not have the benefit of any sinking fund obligations.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons and
only in denominations of $1,000 and any integral multiples of $1,000.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chairman of
the Board, one of its Vice Chairmen of the Board, its President or one of its
Vice Presidents, under its corporate seal
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## CT01/CORCA/96930.38
<PAGE>
reproduced thereon attested by its Treasurer or one of its Assistant Treasurers,
or its Secretary or one of its Assistant Secretaries. The signature of any of
these officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Notes; and the Trustee in accordance with such Company
Order shall authenticate and deliver such Notes as in this Indenture provided
and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Notes in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Notes may determine, as evidenced by their execution of such
Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at any office or agency of the Company
designated pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to
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## CT01/CORCA/96930.38
<PAGE>
Section 1002 being herein sometimes collectively referred to as the "Note
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of Notes and of transfers of
Notes. The Trustee is hereby appointed "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided, the "Conversion
Agent" for the purpose of converting the Notes as provided herein and the
"Paying Agent" for the purpose of paying Principal of and interest on the Notes
on behalf of the Company as provided herein.
Upon surrender for registration of transfer of any Note at an office or
agency of the Company designated pursuant to Section 1002 for such purpose, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Notes of any
authorized denominations, of a like aggregate principal amount.
Subject to Section 302, at the option of the Holder, Notes may be
exchanged for other Notes of any authorized denominations, of a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Notes which the
Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient from
a Holder requesting such transfer or exchange to cover any tax or other
government charge that may be imposed in connection with any registration of
transfer or exchange of Notes, other than exchanges pursuant to Section 304, 907
or 1108 not involving any transfer.
The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of (a) Notes selected for redemption during the
15 day (or shorter) period after the Trustee is notified of a redemption and
preceding the mailing of a notice of such redemption to the Holders in
accordance with Article Eleven (except, in the case of Notes to be redeemed in
part, the portion thereof not to be redeemed) or (b) any Notes with respect to
which a repurchase election has been tendered and not withdrawn by the Holder
thereof in accordance with Section 1005 (except, in the case of Notes tendered
for purchase in part, the portion thereof not to be purchased).
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## CT01/CORCA/96930.38
<PAGE>
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If any mutilated Note is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of like tenor and principal amount and bearing a number not
contemporaneously Outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Note and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice of the
Company or the Trustee that such Note has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount and bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
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 Notes.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which 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 Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
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## CT01/CORCA/96930.38
<PAGE>
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a "Special Record Date" for the payment
of such Defaulted Interest, which shall be fixed in the following manner. At
least 20 days prior to the proposed payment date, the Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid on
each Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at his address as it appears
in the Note Register, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
In the case of any Note which is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Note whose Maturity is prior to such Interest Payment Date), interest whose
Stated Maturity is on such Interest Payment Date shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Note (or one or more Predecessor Notes) is registered
at the close of business on such Regular Record Date.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of Principal of and (subject to Section 307)
interest on such Note and for all other purposes whatsoever, whether or not such
Note
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## CT01/CORCA/96930.38
<PAGE>
be overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Notes surrendered for payment, redemption, registration of transfer
or exchange, conversion or repurchase shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or
in exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be disposed of as directed by a Company Order.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Notes herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section
1003) have been delivered to the Trustee for cancellation;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and the obligations
of the Trustee to any Authenticating Agent under Section 614 shall survive.
SECTION 402. RELEASE OF PAYING AGENT.
In connection with the satisfaction and discharge of this Indenture all
moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee and thereupon such
Paying Agent shall be released from all further liability with respect to such
moneys.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reasons for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest upon any
Note when it becomes due and payable, and continuance of such
default for a period of ten Business Days, whether or not such
payment is prohibited by the subordination provisions of this
Indenture; or
(2) default in the payment of the Principal of any
Note at its Stated Maturity, whether or not such payment is
prohibited by the subordination provisions of this Indenture;
or
(3) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period
of 30 days after there has been given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Notes a
written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(4) a default under any bond, debenture, note or
other evidence of indebtedness for money borrowed by the
Company or any of its Subsidiaries or under any mortgage,
indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for
money borrowed by the
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Company or any of its Subsidiaries whether such indebtedness
now exists or shall hereafter be created, which default shall
have resulted in such indebtedness in an aggregate amount
exceeding $10,000,000 becoming or being declared due and
payable prior to the date on which it would otherwise have
become due and payable or such obligations being accelerated,
without such acceleration having been rescinded or annulled
within a period of 30 days after there shall have been given,
by first class mail, to the Company by the Trustee (which
notice will be delivered by the Trustee promptly after a
Responsible Officer of the Trustee obtains actual knowledge of
any such default) or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding
Notes a written notice specifying such default and requiring
the Company to cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default"
hereunder; or
(5) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Company or any of
its Significant Subsidiaries a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company or any of its Significant Subsidiaries under federal
bankruptcy law, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or appointing a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company
or any of its Significant Subsidiaries or of any substantial
part of the property of the Company or any of its Significant
Subsidiaries, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 30 consecutive days; or
(6) the commencement by the Company or any of its
Significant Subsidiaries, of a voluntary case under federal
bankruptcy law, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency, or other
similar law, or the consent by the Company or any of its
Significant Subsidiaries to the institution of bankruptcy or
insolvency proceedings against the Company or any of its
Significant Subsidiaries, or the filing by the Company or any
of its Significant Subsidiaries of a petition or answer or
consent seeking reorganization or relief under federal
bankruptcy law or any other applicable federal or state law,
or the consent by the Company or any of its Significant
Subsidiaries to the filing of such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or any of its
Significant Subsidiaries or of any substantial part of the
property of the Company or any of its Significant
Subsidiaries, or the making by the Company or any of its
Significant Subsidiaries of an assignment for the benefit of
creditors, or the admission by the Company or any of its
Significant Subsidiaries in writing of its inability to pay
its debts generally as they become due, or the taking of
corporate action by the Company or any of its Significant
Subsidiaries in furtherance of any such action; or
(7) the entry of a judgment or order by a court having
jurisdiction in the premises adjudging the Company or any of
its Subsidiaries liable for the payment of
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money of at least $10,000,000 and such judgment or order is
not vacated, discharged, stayed or bonded pending appeal
within 30 days thereof.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
clauses (5) and (6) of Section 501) occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Notes may declare the Principal of all the Notes, and the
interest accrued thereon, to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee, if given by Holders). Upon any such
declaration such Principal shall become immediately due and payable. If an Event
of Default specified in clause (5) or (6) of Section 501 occurs, such an amount
shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
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 in this Article provided, the Holders of a majority
in principal amount of the Outstanding Notes, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue installments of interest on all Notes,
(B) the Principal of any Notes which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Notes,
(C) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest at
the rate borne by the Notes, and
(D) all sums paid or advanced by the Trustee hereunder
and the reasonable 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 Notes which have become due solely by such
declaration of acceleration, have been cured and waived as
provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if
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(1) default is made in the payment of any installment of
interest on any Note when such interest becomes due and payable
and such default continues for a period of ten (10) Business
Days, or
(2) default is made in the payment of the Principal of any
Note at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
Principal and interest, with interest upon the overdue Principal and, to the
extent that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Notes; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, 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, 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 Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Com pany or any other obligor upon the Notes, 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
effectual 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 504. 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 Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the Principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue Principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
Principal and interest owing and unpaid in respect of the Notes
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding,
and
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(ii) to collect and receive any moneys or other Property
payable or deliverable on any such claims and to distribute the
same;
and any 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 607.
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 Notes 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 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes 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, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Subject to Article Thirteen, any money collected by the Trustee
pursuant to this Article 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 or interest, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of all amounts due the holders of
Senior Indebtedness to the extent required by Article Thirteen;
and
THIRD: To the payment of the amounts then due and unpaid for
Principal of and interest on the Notes in respect of which 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 Notes for Principal and interest,
respectively.
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SECTION 507. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes 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;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) 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 the Outstanding Notes;
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 herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST
AND TO CONVERT.
Notwithstanding any other provision in this Indenture, but subject to
Article Thirteen, the Holder of any Note shall have the right to receive payment
of the Principal of and (subject to Section 307) interest on such Note on the
respective Stated Maturities expressed in such Note (or, in the case of
redemption, on the Redemption Date), to require the Company to repurchase such
Note pursuant to Article Ten and to convert such Note in accordance with Article
Twelve and to institute suit for the enforcement of any such payment and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. 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 such case, subject to
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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.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
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 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article 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 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law
or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default
(1) in the payment of the Principal of or interest on any Note,
or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Note affected.
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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 any right consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 514 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 508, or a suit by Holders of more than 10% in aggregate
principal amount of the then outstanding Notes or any suit for the enforcement
of the right to convert any Note in accordance with Article Twelve.
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it 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.
ARTICLE SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties that are
specifically set forth in this Indenture or the Trust Indenture Act
and no others; and
(ii) in the absence of gross negligence, willful misconduct or
bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the
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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 to the requirements of this
Indenture, but the Trustee need not verify the contents thereof.
(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:
(i) this Section 601(c) does not limit the effect of Section
601(b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 512. (d) Every provision of this
Indenture that in any way relates to the Trustee is subject to
the provisions of the Trust Indenture Act and Sections 601(a), 601(b),
and 601(c).
(e) If an Event of Default has occurred and is continuing the Trustee
may refuse to perform any duty or exercise any right or power hereunder unless
it receives indemnity satisfactory to it against any loss, liability or expense.
SECTION 602. NOTICE OF DEFAULTS.
The Trustee shall give the Holders notice of any default hereunder as
and to the extent provided by the Trust Indenture Act. For the purpose of this
Section, the term "default" means any event which is, or after notice or lapse
of time or both would become, an Event of Default.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 601:
(a) The Trustee may conclusively 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, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters to the extent reasonably deemed necessary by it.
(b) Whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, subject to the provisions of Section
601(b)(ii), rely on an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any actions it takes or omits to take in
good faith (in the absence of gross negligence or willful misconduct) in
reliance on such Officers' Certificate or Opinion of Counsel.
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(c) The Trustee may act through agents and attorneys and shall not be
responsible for the willful misconduct or gross negligence of any agents and
attorneys appointed with due care.
(d) Subject to the provisions of Section 601(c), 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 by this
Indenture.
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application by
the Company of Notes or the proceeds thereof.
SECTION 605. MAY HOLD NOTES.
The Trustee, any Authenticating Agent, any Paying Agent, any Note
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 608
and 613, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or
such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable
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compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
willful misconduct on its part, arising out of or in connection with
the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Notes upon all property
and funds held or collected by the Trustee as such, except funds held in trust
for the payment of Principal of or interest on Notes. The Provisions of this
Section 607 shall survive termination of this Indenture.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest, within the
meaning of the Trust Indenture Act, it shall either eliminate such conflicting
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $100,000,000 and subject to supervision
or examination by federal or state authority. If such Person publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Notes, delivered to the Trustee
and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 514, any Holder may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing written
notice of such event by first-class mail, postage prepaid, to all Holders as
their names and addresses appear in the Note Register. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
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<PAGE>
and duties of the retiring Trustee; but, on request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all Property and money held by
such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 607. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
At any time when any of the Notes remain Outstanding the Trustee may
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate Notes issued upon exchange, registration
of transfer or partial redemption thereof or pursuant to Section 306, and Notes
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any state thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or state
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authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Note Register. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent herein. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment is made pursuant to this Section, the Notes may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
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This is one of the Notes described in the within-mentioned Indenture.
FIRST UNION NATIONAL BANK
.....................................
As Trustee
By .....................................
As Authenticating Agent
By .....................................
Authorized Officer
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
(a) Semi-annually, not more than 5 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably
require, of the names and addresses of, and the principal amount of the
Notes held by, the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Note Registrar.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Note Registrar.
The Trustee may destroy any list furnished to it as provided in Section 701 upon
receipt of a new list so furnished.
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(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Trustee and such application states that the applicants desire
to communicate with other Holders with respect to their rights under this
Indenture or under the Notes and is accompanied by a copy of the form of proxy
or other communication which such applicants propose to transmit, then the
Trustee shall, within five business days after the receipt of such application,
at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 702(a), or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved
at the time by the Trustee in accordance with Section 702(a), and as
to the approximate cost of mailing to such Holders the form of proxy
or other communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relieved of any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
SECTION 703. REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to all Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
Section 313 of the Trust Indenture Act at the times and in the manner provided
pursuant thereto.
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(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Notes are listed, with the Commission and with the Company. The Company will
notify the Trustee when the Notes are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY.
(a) The Company shall file with the Trustee copies of all reports and
other information and documents that the Company is required to file with the
Commission pursuant to the Exchange Act. Each such report or other information
or document shall be filed with the Trustee within 15 days after filing of such
report or other information or document with the Commission. The Company will
mail or cause to be mailed to all Holders copies of all of (i) its annual
reports to stockholders and (ii) quarterly reports to stockholders which are
mailed to its institutional stockholders.
(b) If the Company is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will
prepare (i) for the first three quarters of each fiscal year of the Company,
quarterly financial statements substantially equivalent to the financial
statements required to be included in a report on Form 10-Q under the Exchange
Act, and (ii) annually, complete audited consolidated financial statements,
including, but not limited to, a balance sheet, a statement of operations, a
statement of stockholders' equity and all appropriate notes. All such financial
statements will be prepared in accordance with GAAP, except for changes with
which the Company's independent accountants concur and except that quarterly
financial statements may be subject to year-end adjustments. The Company will
file or cause to be filed with the Trustee and will mail or cause to be mailed
to the Holders a copy of such financial statements within 50 days after the end
of each of the first three quarters of each fiscal year of the Company and
within 95 days after the close of each fiscal year of the Company, respectively.
Notwithstanding the foregoing, if the Company is no longer subject to such
reporting requirements by reason of the acquisition of Capital Stock by, or
merger or consolidation of the Company with, a Person which is subject to such
reporting requirements or a Subsidiary of such a Person and such Person has
unconditionally and irrevocably guaranteed payment in full when due of all
amounts payable with respect to the Notes, then the Company need not prepare,
file or mail the financial statements described in this Section 704(b);
PROVIDED, HOWEVER, that such Person complies with Section 704(a) as if
references therein to the Company were references to such Person.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other
corporation or convey or transfer or lease its properties and assets
substantially as an entirety to any Person, without the consent of Holders of
the majority in aggregate principal amount of the Outstanding Notes, unless:
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(1) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation organized and
existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of
the Principal of and interest on all the Notes and the performance of
every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be
continuing;
(3) immediately after giving effect to such transaction, the
Notes and this Indenture (as supplemented by any such supplemental
indenture) will be valid and enforceable obligations of the Company or
such successor; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with.
SECTION 802. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor corporation formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease 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 as the Company
herein, and thereafter, except in the case of a lease, the predecessor
corporation shall be relieved of all obligations and covenants under this
Indenture and the Notes.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holder, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
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(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Notes; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company;
(3) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, 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 such action shall not adversely
affect the interests of the Holders in any material respect; or
(4) to provide for uncertificated Notes in addition to or in lieu
of certificated Notes;
PROVIDED, HOWEVER, that, in each case, the Company has delivered to the Trustee
an Officers' Certificate stating that such amendment complies with the
provisions of this Section 901 and an Opinion of Counsel stating that adoption
of such amendment does not conflict with the provisions of this Section 901.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Notes, by an Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may 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 of
modifying in any manner the rights of the Holders under this Indenture;
PROVIDED, HOWEVER, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby:
(1) change the Stated Maturity of the Principal of or any
installment of interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon, or change the place of payment
where, or the coin or currency in which, any Note or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date or, in
the case of an offer to purchase Notes by the Company pursuant to
Article Ten which has been made, on or after the applicable Repayment
Date), or modify the provisions of this Indenture with respect to the
subordination of the Notes in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the
Outstanding Notes, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
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(3) modify any of the provisions of this Section, or Section
513, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Note affected thereby, or
(4) following the making of an offer to purchase Notes by the
Company pursuant to Article Ten, modify the provisions of this
Indenture with respect to the Company's obligation to purchase such
Notes in a manner adverse to such Holder, or
(5) modify the provisions of this Indenture with respect to a
Holder's right to convert the Notes in a manner adverse to such Holder.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
After an amendment or waiver under this Section 902 becomes effective,
the Company shall mail to Holders a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notices, or any defect therein,
shall not, however, in any way, impair or affect the validity of any such
amendment or waiver.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 905. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplemental indenture or waiver becomes effective,
a consent to it by a Holder of a Note is a continuing consent by such Holder and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as such consenting Holder's Note, even if notation of the consent is not
made on any Note. However, prior to becoming effective, any such Holder or
subsequent Holder may revoke the consent as to its Notes or a portion thereof if
the Trustee receives
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written notice of revocation before the consent of Holders of the requisite
aggregate principal amount of Notes then outstanding has been obtained and not
revoked.
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 or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of Notes
required hereunder for such amendment or waiver to be effective shall have also
been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Holder; PROVIDED, HOWEVER, that in the case of any amendment referred to in
clauses (1) through (5) of Section 902 such amendment shall bind each Holder of
a Note who has consented to it and every subsequent Holder of a Note that
evidences the same debt as the consenting Holder's Note.
SECTION 906. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 907. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and the Board
of Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
SECTION 908. SUBORDINATION UNIMPAIRED.
No supplemental indenture entered into under this Article shall
directly or indirectly modify the provisions of Article Thirteen or the
definition of Senior Indebtedness in any manner which might alter or impair the
subordination of the Notes with respect to Senior Indebtedness then outstanding
unless each holder of such Senior Indebtedness has consented thereto in writing.
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ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will duly and punctually pay the Principal of and interest
on the Notes in accordance with the terms of the Notes and this Indenture.
Principal and interest shall be considered paid on the date due if the Paying
Agent (other than the Company or a Subsidiary) prior to 10:00 a.m., New York
City time, on that date holds money in immediately available funds and in
accordance with this Indenture designated for and sufficient to pay in cash all
Principal and interest then due and the Paying Agent is not prohibited from
paying such money to Holders on that date pursuant to the terms of this
Indenture.
To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under Title 11 of the U.S. Code or any
similar federal, foreign or state law for the relief of debtors) on (i) overdue
Principal and repurchase price, if any, of the Notes at the rate borne by the
Notes and (ii) overdue installments of interest at the same rate.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in New York, New York or Newark, New Jersey,
an office or agency where Notes may be presented or surrendered for payment,
where Notes may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside New York, New York or Newark, New Jersey)
where the Notes may be presented or surrendered for any or all such purposes and
may from time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in New York, New York or Newark, New
Jersey for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company or any Affiliate of the Company shall at any time act as
its own Paying Agent, it will, on or before each due date of the Principal of or
interest on any of the Notes, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the Principal
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or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, on
or before each due date of the Principal of or interest on any Notes, deposit
with a Paying Agent a sum sufficient to pay the Principal or interest so
becoming due, such sum to be held in trust for the benefit of the Persons
entitled to such Principal or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its action or failure
so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the Principal
of or interest on Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided:
(2) give the Trustee notice of any default by the Company (or
any other obligor upon the Notes) in the making of any payment of
Principal or interest; and
(3) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent (if other than the Company, a Subsidiary or an Affiliate
thereof) shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the Principal of or interest on any
Note and remaining unclaimed for six years after such Principal or interest has
become due and payable shall be paid to the Company on Company Request, or (if
then held by the Company) shall be discharged from such trust; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and its
Subsidiaries, and shall comply with all statutes, rules, regulations and orders
of and restrictions imposed by governmental and administrative authorities and
agencies applicable to the Company and its Subsidiaries; PROVIDED, HOWEVER, that
the foregoing shall not obligate the Company to preserve any such right or
franchise if the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries and that the loss thereof is not disadvantageous in any material
respect to any Holder.
SECTION 1005. CHANGE OF CONTROL.
(a) In the event of a Change of Control, the Company shall give or
cause to be given written notice in the form of an Officers' Certificate (the
"Change of Control Notice") to all Holders, the Trustee and the Paying Agent of
such event and shall make an offer to purchase (as the same may be extended in
accordance with applicable law, the "Change of Control Offer") all then
Outstanding Notes at a purchase price equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon to the Change of Control
Payment Date. The Change of Control Notice shall be given in accordance with
Section 1105 and the Change of Control Offer shall be made not more than 30 days
following the date of the Change of Control (the "Change of Control Date"),
unless the Company has previously given a notice of optional redemption by the
Company of all of the Notes in accordance with this Indenture. The Change of
Control Notice shall set forth:
(i) that a Change of Control has occurred and, unless the
Notes are subject to a notice of optional redemption described above,
that the Company is offering to repurchase all of the Outstanding
Notes;
(ii) a brief description of such Change of Control and, to the
extent readily available to the Company, information with respect to
pro forma consolidated income, cash flow and capitalization of the
Company after giving effect to such Change of Control and such other
financial information relating to the Company with respect to such
Change of Control as the Company may, in its sole discretion, deem
relevant to a decision whether to convert or hold Notes or tender Notes
in connection with such Change of Control Offer;
(iii) the repurchase price (the "Change of Control Payment");
(iv) the expiration date of the Change of Control Offer, which
shall be no earlier than 30 days nor later than 60 days from the date
the Change of Control Notice is mailed;
(v) the date such purchase shall be effected, which shall be
no later than 30 days after the expiration date of the Change of
Control Offer (the "Change of Control Payment Date");
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(vi) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes or portions thereof accepted for
payment pursuant to the Change of Control Offer shall cease to accrue
interest on and after the Change of Control Payment Date;
(vii) the Conversion Price;
(viii) the name and address of the Paying Agent and the
Conversion Agent;
(ix) that Notes (duly endorsed for transfer to the Company),
together with the form of "Option of Holder to Elect Repurchase"
thereon completed and signed, must be surrendered to the Paying Agent
prior to the expiration of the Change of Control Offer to collect the
Change of Control Payment; and
(x) any other information required by applicable law to be
included therein and any other procedures that a Holder must follow in
order to have Notes repurchased.
(b) The Change of Control Offer shall remain open until the close of
business on the expiration date of the Change of Control Offer. Each Holder
shall have the right to withdraw his tender in accordance with applicable rules
promulgated by the Commission under the Exchange Act.
(c) In the event that the Company is required to make a Change of Control
offer, the Company will comply with any applicable securities laws and
regulations, including, to the extent applicable, Section 14(e) of, and Rule
14e-1 under, the Exchange Act.
(d) On the Change of Control Payment Date, the Company shall, to the extent
lawful:
(i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer;
(ii) deposit with the Paying Agent in immediately available funds
an amount equal to the Change of Control Payment with respect to all
Notes or portions thereof so accepted; and
(iii) deliver to cause to be delivered to the Trustee the Notes
so accepted together with an Officers' Certificate stating the Notes
or portions thereof tendered to the Company.
(e) The Paying Agent shall promptly (but in any case not later than five
Business Days after the Change of Control Payment Date) mail to each Holder of
Notes so accepted payment in an amount equal to the Change of Control Payment
for such Notes, and the Trustee shall promptly authenticate and mail to each
Holder a new Note equal in principal amount to any unpurchased portion of the
Notes surrendered by such Holder, if any; provided, that each such new Note
shall be in principal amount of $1,000 or an integral multiple thereof. The
Company shall publicly announce the results of all repurchases pursuant to this
Section 1005 on or as soon as practicable after the Change of Control Payment
Date.
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SECTION 1006. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or Property of the Company or any Subsidiary and (2)
all lawful claims for labor, material and supplies which, if unpaid, might by
law become a lien upon the Property of the Company or any Subsidiary; PROVIDED,
HOWEVER, that the Company shall not 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 (in the good faith
judgment of the Board of Directors evidenced by a Board Resolution) have been
established.
SECTION 1007. BOOKS AND RECORDS.
The Company shall, and shall cause each Subsidiary to, at all times
keep proper books of record and account in which proper entries shall be made in
accordance with generally accepted accounting principles and, to the extent
applicable, regulatory accounting principles.
SECTION 1008. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and the Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing Officer
with a view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture and further stating, as to such
Officer, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant and condition
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof (or, if an
Event of Default or an event which with notice, the passage of time or both
would be an Event of Default shall have occurred, describing all such defaults
or Events of Default of which he or she may have knowledge and what action the
Company is taking or proposes to take with respect thereto), and that, to the
best of his or her knowledge, no event has occurred and remains in existence by
reason of which payments on account of the Principal of or interest on the Notes
are prohibited.
SECTION 1009. STAY, EXTENSION AND 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, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
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ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. RIGHT OF REDEMPTION.
The Notes shall not be redeemable at the option of the Company prior to
May 1, 2000. The Company may, at its option, redeem all or any part of the Notes
at any time on or after May 1, 2000, at the Redemption Prices specified in the
form of Note hereinbefore set forth for redemptions, together with interest
accrued to the Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company shall be made in
accordance with this Article and such Notes.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company of less than all the Notes, the Company shall, at least
15 days prior to mailing any notice of redemption to the Holders (unless the
Trustee consents to a shorter period), notify the Trustee of such Redemption
Date and of the principal amount of Notes to be redeemed.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to
be redeemed shall be selected not more than 60 days or less than 30 days prior
to the Redemption Date by the Trustee, from the Outstanding Notes not previously
called for redemption, in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are quoted or listed,
or if not quoted or listed, by lot or such other method that complies with
applicable legal requirements and that the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Notes of a denomination larger than $1,000.
The Trustee shall promptly notify the Company and each Note Registrar
in writing of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Notes redeemed or to be redeemed only in part, to the portion of
the principal amount of such Note which has been or is to be redeemed.
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SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed, at his address appearing in the
Note Register.
In order to facilitate the redemption of Outstanding Notes, the Board
of Directors may fix by Board Resolution a record date for the determination of
Outstanding Notes to be redeemed; not more than 60 days nor less than 30 days
prior to the applicable Redemption Date.
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Price;
(4) the name and address of the Paying Agent and Conversion
Agent;
(5) that Notes called for redemption may be converted at any time
before the close of business on the Business Day immediately preceding
the Redemption Date in accordance with Article Twelve;
(6) that Holders who want to convert Notes must satisfy the
requirements in the Paragraph of the Notes entitled "Conversion;"
(7) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(8) the CUSIP number of the Notes;
(9) if fewer than all of the outstanding Notes are to be
redeemed, the certificate numbers and principal amounts of the
particular Notes to be redeemed;
(10) if any Note is being redeemed in part, that, after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion will be issued; and
(11) that unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such redemption
payment pursuant to the terms of this Indenture, interest on Notes
called for redemption ceases to accrue on and after the Redemption
Date.
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<PAGE>
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
On or before any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (ex cept if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Notes which
are to be redeemed on that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
PROVIDED, HOWEVER, that installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Notes, or
one or more Predecessor Notes, registered as such at the close of business on
the relevant record dates according to their terms and the provisions of Section
307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the Principal shall, until paid, bear interest from the
Redemption Date at the rate borne by the Note.
SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
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ARTICLE TWELVE
CONVERSION OF NOTES
SECTION 1201. CONVERSION PRIVILEGE.
Each Holder may, at such Holder's option, at any time prior to the
close of business on May 1, 2004, unless earlier redeemed or repurchased,
convert such Holder's Notes, in whole or in part (in denominations of $1,000 or
multiples thereof), at 100% of the principal amount so converted, into shares of
Common Stock at a conversion price per share equal to $10.92, as such conversion
price may be adjusted from time to time in accordance with this Article Twelve
(the "Conversion Price").
SECTION 1202. CONVERSION PROCEDURE.
(a) To convert a Note, the Holder thereof must (1) complete and sign
the "Form of Election to Convert" thereon (unless such Holder is The Depository
Trust Company ("DTC") or its nominee, in which case the customary procedures of
DTC will apply), (2) surrender such Note to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Note
Registrar or the Conversion Agent and (4) pay any transfer or similar tax if
required by Section 1206. The Conversion Agent (if other than the Company) shall
promptly (and in any event within two business days) notify the Company of each
such conversion. The Company's delivery to the Holder of a fixed number of
shares of Common Stock (and any cash in lieu of fractional shares of Common
Stock into which such Note is converted) shall be deemed to satisfy the
Company's obligation to pay the principal amount of such Note and, except as
provided in the next sentence, all accrued interest on such Note. If such Note
(including a Note which has been called for redemption and even if a Change of
Control Offer has been made) is converted after a Regular Record Date and prior
to the related Interest Payment Date, the full interest installment on such Note
scheduled to be paid on such Interest Payment Date shall be payable on such
Interest Payment Date to the Holder of record at the close of business on such
record date.
(b) As promptly as practicable after the surrender of a Note in
compliance with this Section 1202, the Company shall issue and deliver at the
office or agency of the Note Registrar or the Conversion Agent to such Holder,
or on such Holder's written order, a certificate or certificates for the full
number of whole shares of Common Stock issuable upon the conversion of such Note
in accordance with the provisions of this Article Twelve and a check or cash
with respect to any fractional share of Common Stock arising upon such
conversion as provided in Section 1203. In case any Note of a denomination
greater than $1,000 shall be surrendered for partial conversion, then, subject
to Article Two, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of the Note so surrendered, without charge to such Holder,
a new Note or Notes in authorized denominations in an aggregate principal amount
equal to the unconverted portion of the surrendered Note.
(c) Each conversion shall be deemed to have been effected on the date
on which such Note shall have been surrendered in compliance with this Section
1202, and the Person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such
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conversion shall be deemed to have become on said date the holder of record of
the shares of Common Stock represented thereby for all purposes; PROVIDED,
HOWEVER, that no surrender of a Note on any date when the stock transfer books
of the Company shall be closed shall be effective to constitute the Person or
Persons entitled to receive such shares upon such conversion as the record
holder or holders of such shares on such date, but such surrender shall be
effective to constitute the Person or Persons entitled to receive such shares as
the record holder or holders thereof for all purposes at the close of business
on the next succeeding day on which such stock transfer books are open and, in
any such case, such conversion shall be at the Conversion Price in effect on the
date on which such Note shall have been surrendered. If the last day on which a
Note may be converted is not a Business Day, the Note may be surrendered to that
Conversion Agent on the next succeeding Business Day. Provisions of this
Indenture that apply to conversion of all of a Note also apply to conversion of
a portion of such Note.
SECTION 1203. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
No fractional shares of Common Stock or scrip representing fractional
shares of Common Stock shall be issued upon conversion of Notes. If more than
one Note shall be surrendered for conversion at one time by the same Holder, the
full number of whole shares of Common Stock which shall be issuable upon
conversion shall be computed on the basis of the aggregate principal amount of
Notes (or specified portions thereof to the extent permitted hereby) so
surrendered. If any fractional share of Common Stock would be issuable upon the
conversion of any Note or Notes, the Company shall make an adjustment therefor
in cash at the Current Market Price of the Common Stock as of the close of
business on the Business Day prior to such conversion.
SECTION 1204. ADJUSTMENT OF CONVERSION PRICE.
(a) If the Company shall (i) pay a dividend or other distribution, in
Common Stock, on any class of Capital Stock of the Company, (ii) subdivide the
outstanding Common Stock into a greater number of shares by any means or (iii)
combine the outstanding Common Stock into a smaller number of shares by any
means (including, without limitation, a reverse stock split), then in each such
case the Conversion Price in effect immediately prior thereto shall be adjusted
so that the Holder of any Note thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock that such Holder would
have owned or have been entitled to receive upon the happening of such event had
such Note been converted immediately prior to the relevant record date or, if
there is no such record date, the effective date of such event. An adjustment
made pursuant to this Section 1204(a) shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date of such subdivision or combination, as the case may be.
(b) If the Company shall (i) issue or distribute (at a price per share
less than the Current Market Price per share of such Capital Stock on the date
of such issuance or distribution) Capital Stock generally to holders of Common
Stock or to holders of any class or series of Capital Stock which is convertible
into or exchangeable or exercisable for Common Stock (excluding an issuance or
distribution of Common Stock described in Section 1204(a)) or (ii) issue or
distribute generally
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to such holders rights, warrants, options or convertible or exchangeable
securities entitling the holder thereof to subscribe for, purchase, convert into
or exchange for Capital Stock at a price per share less than the Current Market
Price per share of such Capital Stock on the date of issuance or distribution,
then, in each such case, at the earliest of (A) the date the Company enters into
a firm contract for such issuance or distribution, (B) the record date for the
determination of stockholders entitled to receive any such Capital Stock or any
such rights, warrants, options or convertible or exchangeable securities or (C)
the date of actual issuance or distribution of any such Capital Stock or any
such rights, warrants, options or convertible or exchangeable securities, the
Conversion Price shall be reduced by multiplying the Conversion Price in effect
immediately prior to such earliest date by:
(x) if such Capital Stock is Common Stock, a fraction the
numerator of which is the number of shares of Common Stock outstanding
on such earliest date plus the number of shares of Common Stock which
could be purchased at the Current Market Price per share of Common
Stock on the date of such issuance or distribution with the aggregate
consideration (based on the Fair Market Value thereof) received or
receivable by the Company either (A) in connection with such issuance
or distribution or (B) upon the conversion, exchange, purchase or
subscription of all such rights, warrants, options or convertible or
exchangeable securities (the "Aggregate Consideration"), and the
denominator of which is the number of shares of Common Stock
outstanding on such earliest date plus the number of shares of Common
Stock to be so issued or distributed or to be issued upon the
conversion, exchange, purchase or subscription of all such rights,
warrants, options or convertible or exchangeable securities; or
(y) if such Capital Stock is other than Common Stock, a
fraction the numerator of which is the Current Market Price per share
of Common Stock on such earliest date minus an amount equal to (A) the
difference between of (1) the Current Market Price per share of such
Capital Stock multiplied by the number of shares of such Capital Stock
to be so issued and (2) the Aggregate Consideration, divided by (B) the
number of shares of Common Stock outstanding on such date, and the
denominator of which is the Current Market Price per share of Common
Stock on such earliest date.
Such adjustment shall be made successively whenever any such Capital Stock,
rights, warrants, options or convertible or exchangeable securities are so
issued or distributed. In determining whether any rights, warrants, options or
convertible or exchangeable securities entitle the holders thereof to subscribe
for, purchase, convert into or exchange for shares of such Capital Stock at less
than such Current Market Price, there shall be taken into account the Fair
Market Value of any consideration received or receivable by the Company for such
rights, warrants, options or convertible or exchangeable securities (including,
upon exercise thereof). If any right, warrant, option or convertible or
exchangeable securities, the issuance of which resulted in an adjustment in the
Conversion Price pursuant to this Section 1204(b), shall expire and shall not
have been exercised, the Conversion Price shall immediately upon such expiration
be recomputed to the Conversion Price which would have been in effect if such
right, warrant, option or convertible or exchangeable securities had never been
distributed or issued. Notwithstanding anything contained in this paragraph to
the contrary, the issuance of Capital Stock upon the exercise of such rights,
warrants or options or the conversion or exchange of such convertible or
exchangeable securities will not
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cause an adjustment in the Conversion Price if no such adjustment would have
been required at the time such right, warrant, option or convertible or
exchangeable security was issued or distributed; PROVIDED, HOWEVER, that, if the
consideration payable upon such exercise, conversion or exchange and/or the
Capital Stock receivable thereupon are changed after the time of the issuance or
distribution of such right, warrant, option or convertible or exchangeable
security, then such change shall be deemed to be the expiration thereof without
having been exercised and the issuance or distribution of new options, rights,
warrants or convertible or exchangeable securities.
Notwithstanding anything contained in this Indenture to the contrary,
options, rights or warrants issued or distributed by the Company, including
options, rights or warrants distributed prior to the date of this Indenture, to
holders of Common Stock generally which, until the occurrence of a specified
event or events (a "Trigger Event"), (i) are deemed to be transferred with
Common Stock, (ii) are not exercisable and (iii) are also issued on a pro rata
basis with respect to future issuances of Common Stock, shall be deemed not to
have been issued or distributed for purposes of this Section 1204 (and no
adjustment to the Conversion Price under this Section 1204 will be required)
until the occurrence of the earliest Trigger Event. Upon the occurrence of a
Trigger Event, such options, rights or warrants shall continue to be deemed not
to have been issued or distributed for purposes of this Section 1204 (and no
adjustment to the Conversion Price under this Section 1204 will be required) if
and for so long as each Holder who thereafter converts such Holder's Notes shall
be entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion, a number of such options, rights or
warrants, as the case may be, equal to the number of options, rights or warrants
to which a holder of the number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon conversion of such Holder's Notes is
entitled to receive at the time of such conversion in accordance with the terms
and provisions of and applicable to such options, rights or warrants. Upon the
expiration of any such options, rights or warrants or at such time, if any, as a
Holder is not entitled to receive such options, rights or warrants upon
conversion of such Holder's Notes, an adjustment (if any is required) to the
Conversion Price shall be made in accordance with this Section 1204(b) with
respect to the issuance of all such options, rights and warrants as of the date
of issuance thereof, but subject to the provisions of the preceding paragraph.
If any such option, right or warrant, including any such options, rights or
warrants distributed prior to the date of this Indenture, are subject to events,
upon the occurrence of which such options, rights or warrants become exercisable
to purchase different securities, evidences of indebtedness, cash, Properties or
other assets or different amounts thereof, then, subject to the preceding
provisions of this paragraph, the date of the occurrence of any and each such
event shall be deemed to be the date of distribution and record date with
respect to new options, rights or warrants with such new purchase rights (and a
termination or expiration of the existing options, rights or warrants without
exercise thereof). In addition, in the event of any distribution (or deemed
distribution) of options, rights or warrants, or any Trigger Event or other
event of the type described in the preceding sentence, that required (or would
have required but for the provisions of Section 1204(e) or this paragraph) an
adjustment to the Conversion Price under this Section 1204 and such options,
rights or warrants shall thereafter have been redeemed or repurchased without
having been exercised, then the Conversion Price shall be adjusted upon such
redemption or repurchase to give effect to such distribution, Trigger Event or
other event, as the case may be, as though it had instead been a cash
distribution, equal on a per share basis to the result of the aggregate
redemption or repurchase price received by holders of such options, rights or
warrants divided by
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the number of shares of Common Stock outstanding as of the date of such
repurchase or redemption, made to holders of Common Stock generally as of the
date of such redemption or repurchase.
(c) If the Company shall pay or distribute, as a dividend or otherwise,
generally to holders of Common Stock or any class or series of Capital Stock
which is convertible into or exercisable or exchangeable for Common Stock any
assets, Properties or rights (including, without limitation, evidences of
indebtedness of the Company, any Subsidiary or any other Person, cash or Capital
Stock or other securities of the Company, any Subsidiary or any other Person,
but excluding payments and distributions as described in Section 1204(a) or
1204(b), dividends and distributions in connection with the liquidation,
dissolution or winding up of the Company in its entirety and distributions
consisting solely of cash described in Section 1204(d)), then in each such case
the Conversion Price shall be reduced by multiplying the Conversion Price in
effect immediately prior to the date of such payment or distribution by a
fraction, the numerator of which is the Current Market Price per share of Common
Stock on the record date for the determination of stockholders entitled to
receive such payment or distribution less the Fair Market Value per share on
such record date of the assets, Properties or rights so paid or distributed, and
the denominator of which is the Current Market Price per share of Common Stock
on such record date. Such adjustment shall become effective immediately after
such record date. For purposes of this Section 1204(c), such Fair Market Value
per share shall equal the aggregate Fair Market Value on such record date of the
assets, Properties or rights so paid or distributed divided by the number of
shares of Common Stock outstanding on such record date.
(d) If the Company shall, by dividend or otherwise, make a distribution
(other than in connection with the liquidation, dissolution or winding up of the
Company in its entirety), generally to holders of Common Stock or any class or
series of Capital Stock which is convertible into or exercisable or exchangeable
for Common Stock, consisting solely of cash where
(x) the sum of (i) the aggregate amount of such cash plus (ii)
the aggregate amount of all cash so distributed (by dividend or
otherwise) to such holders within the 12-month period ending on the
record date for determining stockholders entitled to receive such
distribution with respect to which no adjustment has been made to the
Conversion Price pursuant to this Section 1204(d); exceeds
(y) 10% of the result of the multiplication of (1) the Current
Market Price per share of Common Stock on such record date times (2)
the number of shares of Common Stock outstanding on such record date,
then the Conversion Price shall be reduced, effective immediately prior
to the opening of business on the day following such record date, by
multiplying the Conversion Price in effect immediately prior to the
close of business on the day prior to such record date by a fraction,
the numerator of which is the Current Market Price per share of Common
Stock on such record date less the aggregate amount of cash per share
so distributed and the denominator of which is such Current Market
Price;
PROVIDED, HOWEVER, that, if the aggregate amount of cash per share is equal to
or greater than such Current Market Price, then, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion (with respect to each share of
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Common Stock issued upon such conversion and in addition to the Common Stock
issuable upon conversion) the aggregate amount of cash per share such Holder
would have received had such Holder's Note been converted immediately prior to
such record date. In no event shall the Conversion Price be increased pursuant
to this Section 1204(d); PROVIDED, HOWEVER, that if such distribution is not so
made, the Conversion Price shall be adjusted to be the Conversion Price which
would have been in effect if such distribution had not been declared. For
purposes of this paragraph of this Section 1204(d), such aggregate amount of
cash per share shall equal such sum divided by the number of shares of Common
Stock outstanding on such record date.
(e) The provisions of this Section 1204 shall similarly apply to all
successive events of the type described in this Section 1204. Notwithstanding
anything contained herein to the contrary, no adjustment in the Conversion Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Price then in effect; PROVIDED, HOWEVER, that
any adjustments which by reason of this Section 1204(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Article Twelve shall be made by the
Company and shall be made to the nearest cent or to the nearest one hundredth of
a share, as the case may be, and the Trustee shall be entitled to rely
conclusively thereon. Notwithstanding anything contained in this Section 1204 to
the contrary, the Company shall be entitled to make such reductions in the
Conversion Price, in addition to those required by this Section 1204, as would,
in the sole discretion of the Company, be in the best interests of the Company,
which determination shall be conclusive. Except as provided in this Article
Twelve, no adjustment in the Conversion Price will be made for the issuance of
Common Stock or any securities convertible into or exchangeable for Common Stock
or carrying the right to purchase Common Stock or any securities so convertible
or exchangeable.
(f) Whenever the Conversion Price is adjusted as provided herein, the
Company shall promptly file with the Trustee and any Conversion Agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price in
effect after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Promptly after delivery of such Officers'
Certificate, the Company shall give or cause to be given to each Holder a notice
of such adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the date on which such adjustment becomes effective.
(g) Notwithstanding anything contained herein to the contrary, in any
case in which this Section 1204 provides that an adjustment in the Conversion
Price shall become effective immediately after a record date for an event, the
Company may defer until the occurrence of such event (i) issuing to the Holder
of any Note converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the number of
shares of Common Stock issuable upon such conversion before giving effect to
such adjustment and (ii) paying to such Holder any amount in cash in lieu of any
fractional share of Common Stock pursuant to Section 1203.
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SECTION 1205. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
In the event of (i) any reclassification (including, without
limitation, a reclassification effected by means of an exchange or tender offer
by the Company or any Subsidiary) or change of outstanding Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value, or as a result of a subdivision or combination), (ii) any
consolidation, merger or combination of the Company with another corporation as
a result of which holders of Common Stock shall be entitled to receive
securities or other Property (including cash) with respect to or in exchange for
Common Stock or (iii) any sale or conveyance of the Property of the Company as,
or substantially as, an entirety to any other corporation as a result of which
holders of Common Stock shall be entitled to receive securities or other
Property (including cash) with respect to or in exchange for Common Stock, then
the Company or the successor or purchasing corporation, as the case may be,
shall enter into a supplemental indenture providing that each Note shall be
convertible into the kind and amount of securities or other Property (including
cash) receivable upon such reclassification, change, consolidation, merger,
combination, sale or conveyance which the Holder of such Note would have
received if such Note had been converted immediately prior to such
reclassification, change, consolidation, merger, combination, sale or
conveyance. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article Twelve. Whenever a supplemental indenture is entered into as
provided herein, the Company shall promptly file with the Trustee and any
Conversion Agent other than the Trustee an Officers' Certificate setting forth a
brief statement of the facts requiring such supplemental indenture. Promptly
after delivery of such Officers' Certificate, the Company shall give or cause to
be given to each Holder a notice of the execution of such supplemental
indenture. The provisions of this Section 1205 shall similarly apply to all
successive events of the type described in this Section 1205.
SECTION 1206. TAXES ON SHARES ISSUED.
The issuance of a certificate or certificates on conversions of Notes
shall be made without charge to the Holders of such Notes for any tax or charge
with respect to the issuance thereof. The Company shall not, however, be
required to pay any tax or charge which may be payable with respect to any
transfer involved in the issuance and delivery of a certificate or certificates
in any name other than that of the Holders of such Notes, and the Company shall
not be required to issue or deliver any such certificate or certificates unless
and until the Person or Persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or charge or shall have established to the
satisfaction of the Company that such tax or charge has been paid.
SECTION 1207. RESERVATION OF SHARES; SHARES TO BE FULLY PAID; COMPLIANCE WITH
GOVERNMENT REQUIREMENTS; LISTING OF COMMON STOCK.
The Company shall reserve, out of its authorized but unissued Common
Stock or its Common Stock held in treasury, sufficient shares of Common Stock to
provide for the conversion of all of the Notes that are outstanding from time to
time. Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the Common Stock issuable
upon conversion of Notes, the Company will take all corporate action which may,
in the
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opinion of its counsel, be necessary in order that the Company may validly and
legally issue Common Stock at such adjusted Conversion Price. The Company
covenants that all Common Stock which may be issued upon conversion of Notes
will, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance and delivery thereof. The Company covenants that if any Common Stock
issued or delivered upon conversion of Notes hereunder require registration with
or approval of any governmental authority under any applicable federal or state
law (excluding federal or state securities laws) before such Common Stock may be
lawfully issued, the Company will in good faith and as expeditiously as possible
endeavor to secure such registration or approval, as the case may be. The
Company covenants that it will not take any action which would cause the
exemption from the registration requirement of Section 5 of the Securities Act
afforded by Section 3(a)(9) of the Securities Act to be unavailable with respect
to the issuance and delivery of Common Stock upon the conversion of Notes in
accordance with this Indenture.
SECTION 1208. RESPONSIBILITY OF TRUSTEE.
The Trustee and any other Conversion Agent shall not at any time be
under any duty or responsibility to any Holder to determine whether any fact
exists which may require any adjustment of the Conversion Price or other
adjustment, or with respect to the nature, extent or calculation of any such
adjustment when made, or with respect to the method employed, or herein or in
any supplemental indenture provided to be employed, in making any such
adjustment, or with respect to the correctness thereof. The Trustee and any
other Conversion Agent shall not be accountable with respect to the validity,
value, kind or amount of any item at any time issued or delivered upon the
conversion of any Note, and neither the Trustee nor any other Conversion Agent
makes any representations with respect thereto. Subject to Section 603, neither
the Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to issue, transfer or deliver any item upon the surrender of any Note
for conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article Twelve. Without limiting the
generality of the foregoing, neither the Trustee nor any Conversion Agent shall
be under any responsibility to determine the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 1205,
but, subject to the provisions of Section 603, may accept as conclusive evidence
of the correctness of any such provisions, and shall be protected in relying
upon, the Officers' Certificate with respect thereto.
SECTION 1209. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
In the event that: (a) the Company shall declare or authorize any event
which could result in an adjustment in the Conversion Price under Section 1204
or require the execution of a supplemental indenture under Section 1205; or (b)
the Company shall authorize the granting to the holders of Common Stock
generally of rights, options or warrants to subscribe for or purchase any shares
of any class or series of Capital Stock of the Company or any Subsidiary or any
other rights, options or warrants, the reclassification of Common Stock (other
than a subdivision or combination of outstanding Common Stock, or a change in
par value, or from par value to no par value, or from no par value to par
value), the combination, consolidation or merger of the Company for which
approval of any stockholders of the Company is required, the sale or transfer of
all or substantially all of the
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assets of the Company or the voluntary or involuntary dissolution, liquidation
or winding-up of the Company in whole or in part; then, in each such case, the
Company shall file or cause to be filed with the Trustee and shall give or cause
to be given to each Holder, as promptly as possible but in any event at least 15
days prior to the applicable date hereinafter specified, a notice stating the
date on which a record is to be taken for the purpose of determining the holders
of outstanding Common Stock entitled to participate in such event, the date on
which such event is expected to become effective or occur and the date on which
it is expected that holders of outstanding Common Stock of record shall be
entitled to surrender their shares, or receive any items, in connection with
such event. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of such event.
ARTICLE THIRTEEN
SUBORDINATION OF NOTES
SECTION 1301. AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each Holder of Notes, by such
Holder's acceptance thereof, likewise covenants and agrees, that the
indebtedness evidenced by the Notes and the payment of the Principal thereof and
interest thereon shall be subordinate and subject in right of payment, to the
extent and in the manner hereinafter set forth, to the prior payment in full of
all Senior Indebtedness.
No provisions of this Article Thirteen shall prevent the occurrence of
any Event of Default hereunder.
Nothing contained in this Article Thirteen or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the Company,
its creditors and the Holders, the right, which is absolute and unconditional,
of a Holder to convert any Note in accordance with Article Twelve.
SECTION 1302. NO PAYMENT ON NOTES IN EVENT OF DEFAULT ON SENIOR INDEBTEDNESS.
(a) In the event (i) of any default in the payment of Principal of or
interest on any Designated Senior Debt beyond any applicable grace period with
respect thereto, or (ii) that the Trustee has received written notice ("Payment
Blockage Notice") that a nonpayment event of default with respect to any
Designated Senior Debt that shall have occurred and be continuing permitting the
holders of such Designated Senior Debt (or a trustee on behalf of the holders
thereof) to declare such Designated Senior Debt due and payable prior to the
date on which it would otherwise have become due and payable (a default under
this clause (ii) being hereinafter referred to as a "Nonpayment Default"), then
no payment shall be made by the Company with respect to the Principal of or
interest on the Notes (other than in the form of Junior Securities) or to
acquire any of the Notes (other than in the form of Junior Securities). Payments
on the Notes shall be resumed, (i) in the case of a payment default in respect
of any Designated Senior Debt, on the date on which
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such default is cured or waived, and (ii) in the case of a Nonpayment Default in
respect of any Designated Senior Debt, on the earlier of (a) the date on which
such Nonpayment Default is cured or waived, or (b) 120 days after the date on
which the applicable Payment Blockage Notice is received, in each case, unless
the maturity of any Designated Senior Debt has been accelerated in the Company
had defaulted with respect to the payment of such Designated Senior Debt. Not
more than one payment blockage period may be commenced in any consecutive 360
day period, irrespective of the number of defaults with respect to Designated
Senior Debt during such period, and no default with respect to Designated Senior
Debt (other than a default in the payment of Principal of or interest on any
Designated Senior Debt beyond any applicable grace period with respect thereto)
that existed or was continuing on the date of commencement of any such Payment
Blockage Period shall be, or be made, the basis for a subsequent Payment
Blockage Period unless such default shall have been cured or waived for a period
of not less than 180 consecutive days.
(b) The provisions of this Section 1302 shall not apply to any payment
with respect to which Section 1303 would be applicable.
SECTION 1303. DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND REORGANIZATION.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, (b) any payment or distribution of assets or
securities of the Company of any kind or character, whether in cash, Property or
securities, to creditors upon any dissolution or winding up or total or partial
liquidation or reorganization of the Company, whether voluntary or involuntary
and whether in bankruptcy, insolvency or receivership proceedings or (c) any
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of the Company, or upon other proceedings:
(a) all Principal of and interest due on all Senior
Indebtedness shall first be paid in full, or due provision made for
such payment, in accordance with the terms of such Senior Indebtedness,
before any payment is made on account of the Principal of or interest
on the indebtedness evidenced by the Notes other than in the form of
Junior Securities, or before the Holders of the Notes shall be entitled
to retain any assets so paid or distributed in respect thereof other
than Junior Securities; and
(b) any payment or distribution of assets or securities of the
Company of any kind or character, whether in cash, Property or
securities (other than Junior Securities), to which the Holders of the
Notes or the Trustee for their benefit would be entitled except for the
provisions of this Section 1303, shall be paid or delivered by the
Company or any receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution of assets of
the Company for application to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness
in full in accordance with the terms of such Senior Indebtedness, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is
made to the Holders of the Notes.
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The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company within the
meaning of this Section 1303.
The consolidation of the Company with, or the merger of the Company
into, another Person or the liquidation or dissolution of the Company following
the conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding-up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of assets
and liabilities of the Company for the purposes of this Section 1303 if the
Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
SECTION 1304. PAYMENT TO HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the provisions of Section 1306, in the event that,
notwithstanding the provisions of Section 1302 or Section 1303, any payment or
distribution of assets or securities (other than Junior Securities, as
applicable) of the Company of any kind or character, whether in cash, Property
or securities, shall be received by the Trustee or the Holders of the Notes from
the Company in violation of such provisions, such payment or distribution shall
forthwith be paid over by the Trustee or such Holders directly to holders of
Senior Indebtedness or their representatives or the trustees under any indenture
pursuant to which any instruments evidencing any Senior Indebtedness may have
been issued, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in
accordance with the terms of such Senior Indebtedness, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness.
Upon any payment or distribution of assets or securities of the Company
referred to in Sections 1302 and 1303, the Trustee and the Holders of the Notes
shall be entitled to rely upon any order or decree of a court of competent
jurisdiction, or upon any certificate of any liquidating trustee or agent or
other Person making any payment or distribution to the Trustee or to the Holders
of the Notes, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness, the amount thereof for payment thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
Thirteen. 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 referred to in
Sections 1302 and 1303, 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 participation in such payment or distribution, and as to other facts
pertinent to the rights of such Person under Sections 1302 and 1303, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 1305. SUBROGATION.
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Subject to the payment in full of all Senior Indebtedness, the Holders
shall be subrogated to the extent of the payments or distributions made to the
holders of such Senior Indebtedness pursuant to the provisions of this Article
Thirteen (equally and ratably with the holders of all indebtedness of the
Company which is not Senior Indebtedness and which is entitled to like rights of
subrogation) to the rights of the holders of such Senior Indebtedness to receive
payments and distributions of cash, Property and securities applicable to the
Senior Indebtedness until the Principal of and interest on the Notes shall be
paid in full. For purposes of such subrogation, no payments or distributions to
the holders of Senior Indebtedness of any cash, Property or securities to which
the Holders or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders or the Trustee, shall, as among the
Company, its creditors other than holders of Senior Indebtedness and the Holders
be deemed to be a payment or distribution by the Company to or on account of
Senior Indebtedness. The provisions of this Article Thirteen are and are
intended solely for the purpose of defining the relative rights of the Holders
on the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article Thirteen or elsewhere in this Indenture or in
the Notes is intended to or shall: (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders, the
obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article Thirteen of the holders of Senior
Indebtedness, is intended to rank equally with all other general obligations of
the Company), to pay to the Holders the Principal or Repurchase Price, if any,
of and interest on the Notes as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders and creditors of the Company other than the holders of
Senior Indebtedness; or (c) 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 Thirteen of the
holders of Senior Indebtedness to receive cash, Property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 1306. PAYMENT ON NOTES PERMITTED.
Nothing contained in this Article Thirteen or elsewhere in this
Indenture, or in any of the Notes, shall prevent the Company from making payment
of the Principal of or interest on the Notes, at any time, except under the
conditions described in Section 1302 and except during the pendency of any
dissolution, winding up, liquidation or reorganization of the Company within the
meaning of Section 1303. Nothing contained in this Article Thirteen or elsewhere
in this Indenture, or in any of the Notes, shall prevent the application by the
Trustee of any moneys deposited with it hereunder, for such purpose, to the
payment of or on account of the Principal of or interest on the Notes, unless,
prior to the Business Day next preceding the date upon which such Principal
shall have become payable, or, in the case of any payment of or on account of
interest unless, prior to two Business Days before the date upon which such
interest shall have become payable, the Trustee shall have received written
notice, directed to it at its Corporate Trust Office, from the Company or any
holder of Senior Indebtedness or any trustee therefor of the existence of any of
the conditions described in Section 1302 or of any dissolution, winding up,
liquidation or reorganization of the Company within the meaning of Section 1303.
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SECTION 1307. AUTHORIZATION OF HOLDERS TO TRUSTEE TO EFFECT SUBORDINATION.
Each Holder of Notes by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article Thirteen and appoints
the Trustee his attorney-in-fact for any and all such purposes.
SECTION 1308. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Thirteen 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 deprive or be construed to
deprive the Trustee of its rights as such holder.
SECTION 1309. NOTICES TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Notes. Notwithstanding the provisions of this Article
Thirteen or any other provisions of this Indenture, the Trustee shall not be
charged with the knowledge of the existence of any facts which would prohibit
the making of any payment to or by the Trustee in respect of the Notes, unless
and until the Trustee shall have received written notice thereof, directed to it
at its Corporate Trust Office, from the Company or any holder of Senior
Indebtedness or any trustee thereof; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 601, shall be
entitled in all respects to assume that no such facts exist.
Subject to the provisions of Section 601, 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 therefor) to
establish that such notice has been given by a holder of Senior Indebtedness (or
a trustee therefor). 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, 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, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article Thirteen, and if such evidence is not furnished,
the Trustee may defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
SECTION 1310. NO FIDUCIARY DUTY BY 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 if it
shall in good faith mistakenly pay over or distribute to Holders of Notes or to
the Company or to any other Person cash, Property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article
Thirteen or otherwise.
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SECTION 1311. PAYING AGENT TREATED AS TRUSTEE.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article Thirteen shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article Thirteen in place of the Trustee.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option by Board Resolution at any time on or
after May 1, 2003 or at any time after a notice of redemption has been delivered
to the Holders in accordance with Article Eleven, elect to have either Section
1402 or Section 1403 be applied to all Outstanding Notes upon compliance with
the conditions set forth below in this Article Fourteen.
SECTION 1402. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1401 of the option applicable
to this Section 1402, the Company shall be deemed to have been discharged from
its obligations with respect to all the Outstanding Notes on the date the
conditions set forth in Section 1404 are satisfied (hereinafter, "defeasance").
For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire indebtedness represented by Outstanding Notes
except for (i) the rights of Holders of Outstanding Notes to receive payments
out of amounts deposited in trust with the Trustee (as set forth in Section
1404) in respect of the Principal of and interest on such Notes when such
payments are due, (ii) the right of Holders to convert Notes in accordance with
Article Twelve, (iii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes, and the maintenance of an office or agency for payment and
money for security payments held in trust, (iv) the rights, powers, trusts,
duties and immunities of the Trustee, (v) Article Eleven, if such defeasance
will occur prior to May 1, 2003 and (vi) this Article Fourteen.
SECTION 1403. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1401 of the option applicable
to this Section 1403, the Company shall be released from its obligations under
any covenant in Section 801 and in Sections 1005 and 1008 with respect to the
Outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"), and the Notes shall thereafter
be deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent, declaration or Act (and the consequences of any thereof) in connection
with such covenants, but shall continue to be deemed "Outstanding" for all other
purposes hereunder. For this purpose, such covenant
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defeasance means that, with respect to the Outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a default
or an Event of Default under Section 501(3), but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby.
SECTION 1404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
1402 or Section 1403 to the Outstanding Notes:
(i) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 609 who shall agree to comply with the
provisions of this Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Notes, (A) cash in United States dollars in an amount,
or (B) U.S. Government Obligations which through the scheduled payment
of Principal and interest in respect thereof in accordance with their
terms will provide, not later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the
Principal of and interest on the Outstanding Notes on the Stated
Maturity (or Redemption Date, if applicable) of such Principal (or on
any date (such date being referred to as the "Defeasance Redemption
Date") if when exercising under Section 1401 either its option
applicable to Section 1402 or its option applicable to Section 1403,
the Company shall have delivered to the Trustee an irrevocable notice
to redeem all of the Outstanding Notes on the Defeasance Redemption
Date and interest); provided that the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to said payments with respect to the Notes;
(ii) In the case of an election under Section 1402, the
Company shall have delivered to the Trustee an opinion of independent
counsel in the United States of America stating that (A) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel in the
United States of America shall confirm that, the Holders of the
Outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred;
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(iii) In the case of an election under Section 1403, the
Company shall have delivered to the Trustee an opinion of independent
counsel in the United States of America to the effect that the Holders
of the Outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred;
(iv) No default or Event of Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit or,
with respect to Section 501(5) or Section 501(6), at any time during
the period ending on the 91st day after the date of deposit, as
evidenced to the Trustee by an Officer's Certificate delivered to the
Trustee concurrently with such deposit;
(v) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest with respect to any securities
of the Company;
(vi) The Company has delivered to the Trustee an Opinion of
Counsel to the effect that the deposit shall not result in the Company,
the Trustee or the trust being deemed to be an "investment company"
under the Investment Company Act of 1940, as amended;
(vii) The Company shall have delivered to the Trustee an
opinion of independent counsel to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(viii) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of the Notes over the
other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company;
(ix) 91 days pass after the deposit is made and during such 91
day period no event of Default specified in Section 501(5) or 501(6)
shall occur and be continuing at the end of such period;
(x) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 1402 or the covenant defeasance under Section 1403 (as
the case may be) have been complied with;
(xi) Such defeasance does not result in a breach or violation
of, or constitute a default under, any other agreement or instrument to
which the Company is a party or by which it is bound, and is not
prohibited by Article 11, as evidenced to the Trustee by an Officers'
Certificate delivered to the Trustee concurrently with such deposit;
- 72 -
## CT01/CORCA/96930.38
<PAGE>
(xii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such deposit,
defeasance and discharge does not conflict with the applicable
provisions of this Indenture; and
(xiii) The Company shall have notified each Holder not more
than 60 nor less than 30 days prior to the date of such defeasance or
covenant defeasance of the effective date of such defeasance or
covenant defeasance.
SECTION 1405. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to this Article Fourteen. It shall apply the
deposited money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of Principal
and interest on the Notes. Money and securities so held in trust are not subject
to Article Thirteen.
SECTION 1406. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money in
accordance with this Article Fourteen by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article Fourteen until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with this Article Fourteen;
PROVIDED, HOWEVER that if the Company makes any payment of interest on or
Principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
* * * * * * * * * *
- 73 -
## CT01/CORCA/96930.38
<PAGE>
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
WESTBRIDGE CAPITAL CORP.
[seal] BY /S/ PATRICK J. MITCHELL
Patrick J. Mitchell
Executive Vice President,
Chief Financial Officer
and Treasurer
ATTEST:
/S/ MICHAEL D. NORRIS
Michael D. Norris
Secretary
FIRST UNION NATIONAL BANK
[seal] BY /S/ CHRISTOPHER E. GOLABEK
Christopher E. Golabek
Assistant Vice President
ATTEST:
/S/ THOMAS J. BRETT
Thomas J. Brett
Corporate Trust Officer
- 74 -
## CT01/CORCA/96930.38
<PAGE>
STATE OF NEW YORK
) SS.:
COUNTY OF NEW YORK )
On the __ day of April, 1997, before me personally came Patrick J.
Mitchell, to me known, who, being by me duly sworn, did depose and say that he
is EVP, CFO & Treas. of Westbridge Capital Corp., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
/S/ DEBRA G. SHADE
"Official Seal"
[Name of Notary]
Notary Public, State of Texas
My Commission Expires: 3-5-99
STATE OF NEW JERSEY )
) SS.:
COUNTY OF ESSEX )
On the 29th day of April, 1997, before me personally came Christopher
E. Golabek, to me known, who, being by me duly sworn, did depose and say that he
is Assistant Vice President of First Union National Bank, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/S/ CAROL E. FERGUSON
CAROL E. FERGUSON
Notary Public of New Jersey
My Commission Expires April 7, 2000
- 75 -
## CT01/CORCA/96930.38
<PAGE>
EXHIBIT 4.2
WESTBRIDGE CAPITAL CORP.,
FORUM CAPITAL MARKETS L.P.
AND
RAYMOND JAMES & ASSOCIATES, INC.
UNDERWRITERS'
WARRANT AGREEMENT
Dated as of April 29, 1997
## CT01/CORCA/98595.38
<PAGE>
UNDERWRITERS' WARRANT AGREEMENT, dated as of April 29, 1997 by and among
WESTBRIDGE CAPITAL CORP., a Delaware corporation (the "Company"), FORUM CAPITAL
MARKETS L.P. and RAYMOND JAMES & ASSOCIATES, INC. (the "Underwriters").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriters warrants
("Warrants") to purchase up to 297,619 shares (the "Warrant Securities") of
Common Stock, par value $.10 per share, of the Company (the "Common Stock"); and
WHEREAS, the Underwriters have agreed, pursuant to the Underwriting
Agreement dated April 24, 1997 between the Underwriters and the Company (the
"Underwriting Agreement"), to act as the Underwriters in connection with the
Company's proposed public offering (the "Offering") of up to $65,000,000
principal amount of 7 1/2% Convertible Subordinated Notes due 2004 (the
"Notes"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Underwriters in consideration for, and as part
of the Underwriters' compensation in connection with, the Underwriters acting as
such pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises hereof, the payment by
the Underwriters to the Company of an aggregate of $29.76, the agreements herein
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT. The Underwriters are hereby granted the right to purchase, up
to 297,619 shares of Common Stock (subject to adjustment as provided in Section
9 hereof) at the initial Exercise Price (as hereinafter defined) (subject to the
terms and conditions of this Agreement at any time from April 24, 1998 until
5:30 p.m., New York time, on April 24, 2002 (the "Expiration Date"), which date
is the fifth anniversary of the effective date (the "Effective Date") of the
Registration Statement on Form S-1 (No. 333-24137) relating to the registration
of the Notes and Warrants. Any Warrant that is not exercised on or prior to the
Expiration Date shall be void, and all rights hereunder shall cease.
2. WARRANT CERTIFICATES. The warrant certificates delivered and to be
delivered pursuant to this Agreement (the "Warrant Certificates") shall be in
the form set forth in Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement.
3. EXERCISE OF WARRANT.
3.1 METHOD OF EXERCISE. The Warrants are exercisable at the Exercise
Price payable by certified or official bank check. Upon surrender of a Warrant
Certificate with a duly executed Election to Purchase (in the form of Annex A to
the Warrant Certificate) together with payment of the aggregate Exercise Price
for the Common Stock to be purchased at the Company's principal offices
(presently located at 777 Main Street, Fort Worth, Texas 76102), the registered
holder of a Warrant Certificate ("Holder") shall be entitled to receive a
certificate or certificates for the Common Stock so purchased. The purchase
rights represented by each Warrant Certificate are exercisable at the option of
the Holder thereof, in whole or in part (but not as to fractional shares of
Common Stock underlying the Warrants). In the case of the purchase of less than
all the Common Stock purchasable under any Warrant Certificate, the Company
shall cancel said Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate of like tenor for the balance of
the Warrants exercisable thereunder.
3.2 EXERCISE BY SURRENDER OF WARRANT. As an alternative to the method
of payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holders shall have the right at any time and from time to time
to exercise the Warrants by surrendering Warrant Certificates representing a
certain number of additional Warrants
## CT01/CORCA/98595.38
-1-
<PAGE>
(as determined below) as payment of the aggregate Exercise Price for the shares
of Common Stock being acquired upon exercise of the Warrants. The Warrants are
exercisable pursuant to this Section 3.2 by surrender of the Warrant Certificate
with a duly executed Election to Purchase (in the form of Annex B to the Warrant
Certificate). The number of additional Warrants to be surrendered in payment of
the aggregate Exercise Price for the shares of Common Stock being acquired upon
exercise of the Warrant shall be determined by multiplying the number of
Warrants to be exercised by the Exercise Price, and then dividing the product
thereof by an amount equal to the Market Price minus the Exercise Price. Solely
for the purposes of this Section 3.2, Market Price shall be calculated at the
date on which the Form of Election to Purchase is deemed to have been sent to
the Company pursuant to Section 14 hereof (the "Notice Date").
3.3 DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
Price" at any date shall be the average of the daily reported closing price per
share of Common Stock for the 30 consecutive trading days immediately prior to
such date or, if the Common Stock is not then publicly traded, as determined in
good faith by resolution of the Board of Directors of the Company, based on the
best information available to it. The closing price for each trading day shall
be the last reported sale price as officially reported by the Nasdaq National
Market system, or, if not quoted on the Nasdaq National Market system, by the
principal 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 quoted by the Nasdaq National Market system, the
average closing bid price as furnished by the National Association of Securities
Dealers, Inc. (the "NASD") through the Nasdaq National Market system or similar
organization if the Nasdaq Stock Market is no longer reporting such information.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
issuance of certificates for the total number of whole shares of Common Stock
for which such Warrants were exercised shall be made promptly (and in any event
within five business days thereafter) without charge to the Holder thereof
including, without limitation, any stock transfer or similar tax which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the provisions of Sections 5 and 7 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; PROVIDED, HOWEVER, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder, and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates shall be executed on behalf of the Company, by
the manual or facsimile signature of the then present Chairman of the Board of
Directors or President of the Company under its corporate seal reproduced
thereon and by the manual or facsimile signature of the then present Treasurer
or Assistant Treasurer or Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer. Certificates
representing the Common Stock issuable upon exercise of the Warrants (and/or
other securities, property or rights issuable upon exercise of Warrants) shall
be dated the date on which the Company receives the Election to Purchase,
Warrant Certificate and payment of the Exercise Price (regardless of when
executed).
5. RESTRICTION ON TRANSFER OF WARRANTS. The Warrants may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole or in
part, except that: (i) during the period prior to the first anniversary of the
Effective Date, the Warrants may be assigned to any partner or officer of either
Underwriter; (ii) subsequent to the first anniversary of the Effective Date, the
Warrants may be sold, transferred, assigned, hypothecated or otherwise disposed
of, to (a) either Underwriter or their respective successors, and (b) any
officer, director or employee of either Underwriter; and (iii) at any time,
transferred by operation of law as a result of the death or divorce of any
transferee to whom the Warrants may have been transferred; PROVIDED, HOWEVER,
that notwithstanding the foregoing, the Company shall not be required to
register any such transfer unless the following conditions have been satisfied:
(x) at the time of such transfer, the transferee provides to the Company in
writing such representations and warranties as the Company may reasonably
request regarding the status of the transferee as an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act of 1933, as amended,
and (y) based solely on the representations and warranties provided pursuant to
clause (x) above, at the time of such proposed transfer there are not more than
ten holders of
## CT01/CORCA/98595.38
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<PAGE>
Warrants which are not "accredited investors." Any assignment shall be effected
by a duly executed assignment in the form of Annex C to the Warrant Certificate.
6. EXERCISE PRICE.
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. The initial exercise price of
each Warrant shall be $10.92 per share of Common Stock. The adjusted exercise
price of each Warrant shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Section 9 hereof.
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. REGISTRATION RIGHTS.
7.1 PIGGYBACK REGISTRATION. If, at any time commencing after April 24,
1998 and expiring seven years thereafter, the Company proposes to register any
of Common Stock (excluding for this purpose any Common Stock issuable upon
exercise or conversion of other Securities) in connection with an offering under
the Securities Act (other than pursuant to Form S-4, Form S-8 or any successor
form of limited purpose), it will give written notice by registered mail at
least 20 days prior to the filing of such registration statement to Holders of
the Warrants or Warrant Securities of its intention to do so. If the Holders of
the Warrants and/or Warrant Securities notify the Company within 20 days after
mailing of any such notice of its or their desire to include any of their
respective Warrant Securities in such proposed registration statement, the
Company shall afford each of the Holders the opportunity to have such Warrant
Securities registered under such registration statement, PROVIDED, HOWEVER, that
if the managing underwriter advises the Company in writing that the inclusion of
all Warrant Securities held by the Holders proposed to be included in such
registration statement would interfere with the successful marketing of the
securities proposed to be registered by the Company, then the securities to be
included in such registration shall be included in the following order:
(a) first, the securities proposed to be included in such
registration by the Company or, if such registration is for securities
of specified security holders of the Company, by such holders; and
(b) second, all holders of Common Stock (including Holders)
entitled to be included in such registration statement (PRO RATA among
the holders requesting such registration based upon the number of
shares of Common Stock requested by each such holder to be registered).
Notwithstanding the provisions of this Section 7.1, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.1 (irrespective of whether a written request for inclusion of any
such Warrant Securities shall have been made) to elect not to file any such
proposed registration statement or to withdraw the same after the filing but
prior to the effective date thereof.
7.2 DEMAND REGISTRATION.
(a) At any time commencing on April 24, 1998 and expiring four years
thereafter which date is the fifth anniversary of the Effective Date (or such
earlier time as the Warrant Securities are eligible for sale under Rule 144(k)),
the Holders of the Warrants and/or Warrant Securities representing a Majority
(as hereinafter defined) of such securities shall have the right (which right is
in addition to the registration rights under Section 7.1 hereof), exercisable by
written notice to the Company, to require the Company to prepare and file with
the Securities and Exchange Commission (the "Commission"), on one occasion only,
a registration statement and such other documents, including a prospectus, as
may be necessary in the opinion of both counsel for the Company and counsel for
the Underwriters and Holders, in order to comply with the provisions of the
Securities Act, so as to permit a public offering and sale of their Warrant
Securities for nine consecutive months (subject to the provisions of Section
7.2(d) below) by any such Holders and any other Holders of the Warrants and/or
Warrant Securities who notify the Company of their decision to join therein
within 15 days after the Company provides notice pursuant to Section 7.2(b)
below.
## CT01/CORCA/98595.38
-3-
<PAGE>
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.2 to all Holders of the Warrants
and/or the Warrant Securities within 10 days from the date of the receipt of any
such registration request.
(c) Notwithstanding the provisions of Sections 7.2(a), any time during
which the Company is obligated to maintain the effectiveness of a registration
statement pursuant to such Section 7.2(a), the Board of Directors of the
Company, after consultation with counsel to the Company (which counsel shall be
experienced in securities matters) has determined in good faith that the filing
of such registration statement or the compliance by the Company with its
disclosure obligations thereunder would require the disclosure of material
information which the Company has a BONA FIDE business purpose for preserving as
confidential, then the Company may delay the filing or the effectiveness of such
registration statement (if not then filed or effective, as appropriate) and
shall not be required to maintain the effectiveness thereof for a period
expiring upon the earlier to occur of (i) the date on which such information is
disclosed to the public or ceases to be material or the Company is so able to
comply with its disclosure obligations or (ii) 60 days after the Board of
Directors makes such good faith determination. There shall not be more than one
such delay period with respect to any registration pursuant to Section 7.2(a).
Notice of any such delay period and of the termination thereof will be promptly
delivered by the Company to each Holder and shall be maintained in confidence by
each such Holder.
7.3 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with any registration under Section 7.1 or 7.2 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement as soon as practicable, but in any event within 90 days after receipt
of any demand therefor, shall use its best efforts to have such registration
statement declared effective at the earliest possible time and shall furnish
each Holder desiring to sell Warrant Securities such number of prospectuses as
shall reasonably be requested; PROVIDED, HOWEVER, that the Company shall not be
obligated to effect such registration under the Securities Act except in
accordance with the following provisions:
(i) the Company shall not be obligated to use its best efforts
to file and cause to become effective any registration statement for a
period of up to 90 days if at the time of such request any other
registration statement pursuant to which shares of Common Stock of the
Company are to be or were sold has been filed with the Commission and
not withdrawn or has been declared effective within the prior 60 days;
and
(ii) the Company may delay the filing or effectiveness of the
registration statement for a period of up to 120 days after the date of
a request for registration if at the time of such request the Company
is engaged in a firm commitment underwritten public offering of Common
Stock in which the Holders may include their Warrant Securities
pursuant to Section 7.1 hereof.
(b) The Company shall pay all costs, fees and expenses in connection
with all registration statements filed pursuant to Sections 7.1 and 7.2(a)
hereof (excluding fees and expenses of Holders' counsel and accountants, any
underwriting or selling commissions and any transfer taxes). If the Company
shall fail, during the twelve month period immediately preceding the expiration
of the Exercise Period, to comply with the provisions of Section 7.3(a) hereof,
the Company shall extend the Exercise Period by such number of days as shall
equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holders; provided that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action which would subject it
to general service of process or to taxation in any jurisdiction where it is not
then so subject.
(d) The Company shall furnish without charge to each Holder of Warrant
Securities, promptly after filing thereof with the Commission, at least one copy
of the registration statement filed pursuant to Section 7.1 or 7.2 (a
## CT01/CORCA/98595.38
-4-
<PAGE>
"Registration Statement") and each amendment thereto or each amendment or
supplement to the prospectus included therein (the "Prospectus") including all
financial statements and schedules, documents incorporated by reference therein
and if the Holder so requests in writing, all exhibits thereto.
(e) The Company shall take such action as may be reasonably necessary
so that (i) the Registration Statement and any amendment thereto and any
Prospectus forming a part thereof and any supplement or amendment thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) the Registration Statement and any amendment
thereto (in either case, other than with respect to written information
furnished to the Company by or on behalf of any Holder specifically for
inclusion therein) does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
any statement therein not misleading and (iii) the Prospectus and any supplement
thereto (in either case, other than with respect to such information from
Holders), does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(f) The Company shall promptly advise the Holders of Warrant Securities
registered under the Registration Statement (which advice pursuant to clauses
(ii) - (iv) shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made) and, if requested by such
persons, shall confirm such advice in writing:
(i) when the Registration Statement and any amendment thereto
has been filed with the Commission and when the Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information relating thereto;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
suspension by any state securities commission of the qualification of
the Warrant Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes; and
(iv) of the happening of any event that requires the making of
any changes in the Registration Statement or the Prospectus so that, as
of such date, the Registration Statement and the Prospectus do not
contain an untrue statement of a material fact and do not omit to state
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(g) If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Warrant Securities under
state securities or Blue Sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(h) The Company shall, during the period the Company is obligated to
maintain the effectiveness of a Registration Statement under Section 7.2 hereof,
deliver to each Holder of Warrant Securities included under the Registration
Statement, without charge, such reasonable number of copies of the Prospectus
(including each preliminary prospectus) included in the Registration Statement
and any amendment or supplement thereto as such Holder may reasonably request to
facilitate the public sale or other disposition of the Warrant Securities by the
selling Holder.
(i) The Company shall cooperate with the Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Warrant Securities to be sold under the Registration
Statement, free of any restrictive legends and in such denominations and
registered in such names as the Holders or the underwriter(s),
## CT01/CORCA/98595.38
-5-
<PAGE>
if any, may reasonably request in connection with the sales of Warrant
Securities pursuant to the Registration Statement.
(j) Upon the occurrence of any event contemplated by Section 7(e)(ii) -
(iv) hereof, the Company shall file (and use its reasonable best efforts to have
declared effective as soon as possible) a post-effective amendment to the
Registration Statement or an amendment or supplement to the Prospectus or file
any other required document so that, as thereafter delivered to the purchasers
of Warrant Securities registered under the Registration Statement, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading. Each Holder of Warrant
Securities registered under the Registration Statement agrees by acquisition of
such Warrant Securities that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 7(e)(ii) - (iv) hereof,
such Holder will forthwith discontinue disposition of Warrant Securities
pursuant to the Registration Statement until such Holder receives copies of the
supplemented or amended Prospectus contemplated by this Section 7(j), or until
such Holder is advised in writing by the Company that the use of the Prospectus
may be resumed, and such Holder has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Warrant Securities current
at the time of receipt of such notice.
(k) Nothing contained in this Agreement shall be construed as requiring
the Holders to exercise their Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(l) The Company shall permit the inclusion of securities other than
Warrant Securities in any Registration Statement filed pursuant to Section
7.2(a) unless the managing underwriter advises the Holders in writing that the
inclusion of all securities proposed to be included in such registration
statement which are held by other holders would interfere with the successful
marketing of the Warrant Securities proposed to be registered by the Holders,
then the securities to be included in such registration shall be included in the
following order:
(a) first, the Warrant Securities proposed to be included in
such registration by the Holders; and
(b) second, the Company and holders of Common Stock entitled
to be included in such registration statement (PRO RATA among the
Company and holders requesting such registration based upon the number
of shares of Common Stock requested by the Company each such holder to
be registered).
(m) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such Registration Statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) if and to the extent
permitted by Statement of Auditing Standards No. 72, a "cold comfort" letter
dated the effective date of such Registration Statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such Registration Statement, in each case covering
substantially the same matters with respect to such Registration Statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(n) The Company shall as soon as practicable after the effective date
of the Registration Statement, and in any event within 15 months thereafter,
make "generally available to its security holders" (within the meaning of Rule
158 under the Securities Act) an earnings statement (which need not be audited)
complying with Section 11(a) of the Securities Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
Registration Statement.
## CT01/CORCA/98595.38
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<PAGE>
(o) The Company shall deliver promptly to each Holder participating in
the offering upon request, and to the managing underwriters, if any, copies of
all correspondence between the Commission and the Company, its counsel or
auditors and all non-privileged memoranda relating to discussions with the
Commission or its staff with respect to the Registration Statement and shall
permit each Holder and such underwriters to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the Registration Statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any Holder or
underwriter shall reasonably request.
(p) With respect to the registration of Warrant Securities pursuant to
Section 7.2 to be sold to an underwriter for reoffering to the public, the
Company shall enter into an underwriting agreement with the managing
underwriters selected for such underwriting by Holders holding a Majority of the
Warrant Securities requested to be included in such underwriting, which may
include the Underwriters. Such agreement shall be satisfactory in form and
substance to the Company, each Holder and such managing underwriter and shall
contain such representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Securities and may, at their
option, require that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriters shall also be made to and
for the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company except as they
may relate to such Holders and their intended methods of distribution and shall
not be requested by the Company to provide indemnification except as provided in
Section 7.3(e) hereof.
(q) For purposes of this Agreement, the term "Majority" in reference to
the Holders of Warrants and/or Warrant Securities shall mean the Holders of
Warrants and/or Warrant Securities who, assuming the immediate exercise of all
of the outstanding Warrants for Common Stock, would hold in excess of fifty
percent (50%) of the Common Stock then issued or issuable pursuant to Warrants
that (i) are not held by the Company, an affiliate or officer thereof or any of
their respective affiliates, members of their family or persons acting as their
nominees or in conjunction therewith or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission under the
Securities Act.
(r) INDEMNIFICATION AND CONTRIBUTION.
(1) The Company agrees to indemnify and hold harmless each Holder (for
purposes of this Section 7(r), "Holder" shall include the officers, directors,
partners, employees and agents, and each person, if any, who controls any Holder
("controlling person") within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, from and against any and all losses, claims,
damages, expenses or liabilities, joint or several (and actions, proceedings,
suits and litigation in respect thereof), whatsoever, as the same are incurred,
to which such Holder or any such controlling person may become subject, under
the Securities Act, the Exchange Act or any other statute or at common law or
otherwise insofar as such losses, claims, damages, expenses or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any preliminary
Prospectus or Prospectus (as from time to time amended and supplemented) or
arise out of or are based upon the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein (with respect to any preliminary Prospectus or Prospectus, in the light
of the circumstances under which they were made), not misleading; PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, expense or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, or any preliminary
Prospectus or Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such Holder specifically for inclusion therein and PROVIDED,
FURTHER, that the Company shall not be liable to any such Holder under the
indemnity agreement in this subsection (1) (i) with respect to any preliminary
Prospectus or Prospectus (if such Prospectus has then been amended or
supplemented) to the extent that any such loss, liability, claim, damage or
expense of such Holder arises out of a sale
## CT01/CORCA/98595.38
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<PAGE>
of Warrant Securities by such Holder to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus (or of the Prospectus as then amended or supplemented) if the Company
has previously furnished copies thereof to such Holder a reasonable time in
advance and the loss, liability, claim, damage or expense of such Holder results
from an untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the preliminary Prospectus (or the
Prospectus) which was corrected in the Prospectus (or the Prospectus as amended
or supplemented) or (ii) to the extent that any such loss, claim, damage,
expense or liability arises out of or is based upon any action or failure to act
by such Holder that is found in a final judicial determination (or a settlement
tantamount thereto) to constitute bad faith, willful misconduct or gross
negligence on the part of such Holder. The indemnity agreement in this
subsection (1) shall be in addition to any liability which the Company may have
at common law or otherwise.
The Company also agrees to indemnify or contribute to losses of any
underwriters of Warrant Securities registered under the Registration Statement,
their officers and directors and each person, if any, who controls any such
underwriter (within the meaning of the Act) on substantially the same basis as
that of the indemnification of the Holders provided in this Section 7(r)(1) and
shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 7(o) hereof.
(2) Each Holder agrees to indemnify and hold harmless the Company, each
of its directors, each of its officers and each other person, if any, who
controls the Company within the meaning of the Securities Act, to the same
extent as the foregoing indemnity from the Company to the Holders, but only with
respect to statements or omissions, if any, made in conformity with information
relating to such Holder furnished in writing by such Holder specifically for use
in the Registration Statement in the Registration Statement, or any preliminary
Prospectus or the Prospectus or any amendment thereof or supplement thereto;
PROVIDED, HOWEVER, that the obligation to indemnify will be individual to each
Holder and will be limited to the amount of net proceeds received by such Holder
from the sale of Warrant Securities pursuant to the Registration Statement.
(3) Promptly after receipt by an indemnified party under this Section
7(r) of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7(r), notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under Sections 7(r)(1) or (2) unless and to the
extent that it has been prejudiced in a material respect by such failure or from
the forfeiture of substantial rights and defenses). In case any such action,
suit or proceeding is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party,
which may be the same counsel as counsel to the indemnifying party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded, after consultation with counsel to such
indemnified party or parties, that a conflict of interest exists which makes
representation by counsel chosen by the indemnifying party not advisable (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying parties. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7(r) to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent.
## CT01/CORCA/98595.38
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<PAGE>
(4) In order to provide for just and equitable contribution in any case
in which (i) an indemnified party makes claim for indemnification pursuant to
this Section 7(r), but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7(r) provide for indemnification in such
case, or (ii) contribution under the Securities Act may be required, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by a Holder,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, expenses or liabilities (or actions, suits, proceedings or litigation
in respect thereof) referred to above in this subsection (4) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, preparing or defending any such action,
claim, suit, proceeding or litigation. Notwithstanding the provisions of this
subsection (4), no Holder shall be required to contribute any amount in excess
of the amount by which the total price at which the Warrant Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceeds the amount of any damages that such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(r), each person, if any, who
controls the Company within the meaning of the Securities Act, each executive
officer of the Company and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to this subsection
(4). Any party entitled to contribution will, promptly after receipt of notice
of commencement of any action, suit, proceeding or litigation against such party
in respect to which a claim for contribution may be made against another party
or parties under this subsection (4), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have hereunder or otherwise than under this
subsection (4), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
(s) Notwithstanding the foregoing provisions of this Section 7.3, no
registration rights shall be extended pursuant to this Section 7 with respect to
any Warrant Securities (i) which have been sold pursuant to and in accordance
with an effective Registration Statement, (ii) sold in accordance with Rule 144
under the Securities Act or (iii) eligible for sale under Rule 144(k) under the
Securities Act.
8. BUYOUT OF REGISTRATION RIGHTS. If at any time Holders of Warrants
request registration pursuant to Section 7.1 of Warrant Securities constituting
less than 15% of the aggregate number of Warrant Securities issuable upon
exercise of the aggregate number of Warrants purchased hereunder, the Company
may, in lieu of carrying out its obligations to effect a registration pursuant
to Section 7.1, purchase those Warrant Securities for which the Holders thereof
have requested registration, at a purchase price per share, payable in cash,
equal to the difference between (a) 100% of the last sale price of the Common
Stock on the day the request for registration is made and (b) the Exercise Price
in effect on such day.
## CT01/CORCA/98595.38
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<PAGE>
9. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
9.1 ADJUSTMENTS.
(a) In the event that the Company shall subdivide its outstanding
shares of Common Stock into a greater number of shares or combine its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior thereto shall be forthwith proportionately
decreased in the case of a subdivision or increased in the case of a
combination. An adjustment made pursuant to this Section 9.1(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the date of such subdivision or combination, as the
case may be.
(b) In the event that the Company shall (i) issue or distribute (for no
consideration or at a price per share less than the Current Market Price (as
defined below) per share on the date of such issuance or distribution) shares of
any class of capital stock of the Company (such shares being hereafter referred
to as "Capital Stock") generally to holders of Common Stock or to holders of any
class or series of Capital Stock which is convertible into or exchangeable or
exercisable for Common Stock (excluding an issuance or distribution of Common
Stock described in Section 9.1(a)) or (ii) issue or distribute generally to such
holders rights, warrants, options or convertible or exchangeable securities
entitling the holder thereof to subscribe for, purchase, convert into or
exchange for Capital Stock at a price per share less than the Current Market
Price per share of such Capital Stock on the date of such issuance or
distribution, then, in each such case, at the earliest of (A) the date the
Company enters into a firm contract for such issuance or distribution, (B) the
record date for the determination of stockholders entitled to receive any such
Capital Stock or any such rights, warrants, options or convertible or
exchangeable securities or (C) the date of actual issuance or distribution of
any such Capital Stock or any such rights, warrants, options or convertible or
exchangeable securities, the Exercise Price shall be reduced by multiplying the
Exercise Price in effect immediately prior to such earliest date by:
(x) if such Capital Stock is Common Stock, a fraction the numerator of
which is the number of shares of Common Stock outstanding on such
earliest date plus the number of shares of Common Stock which could be
purchased at the Current Market Price per share of Common Stock on the
date of such issuance or distribution with the aggregate consideration
(based on the Fair Market Value thereof) received or receivable by the
Company either (A) in connection with such issuance or distribution or
(B) upon the conversion, exchange, purchase or subscription of all such
rights, warrants, options or convertible or exchangeable securities
(the "Aggregate Consideration"), and the denominator of which is the
number of shares of Common Stock outstanding on such earliest date plus
the number of shares of Common Stock to be so issued or distributed or
to be issued upon the conversion, exchange, purchase or subscription of
all such rights, warrants, options or convertible or exchangeable
securities; or
(y) if such Capital Stock is other than Common Stock, a fraction the
numerator of which is the Current Market Price per share of Common
Stock on such earliest date minus an amount equal to (A) the difference
between (1) the Current Market Price per share of such Capital Stock
multiplied by the number of shares of such Capital Stock to be so
issued and (2) the Aggregate Consideration, divided by (B) the number
of shares of Common Stock outstanding on such date, and the denominator
of which is the Current Market Price per share of Common Stock on such
earliest date.
Such adjustment shall be made successively whenever any such Capital Stock,
rights, warrants, options or convertible or exchangeable securities are so
issued or distributed. In determining whether any rights, warrants, options or
convertible or exchangeable securities entitle the holders thereof to subscribe
for, purchase, convert into or exchange for shares of such Capital Stock at less
than such Current Market Price, there shall be taken into account the Fair
Market Value of any consideration received or receivable by the Company for such
rights, warrants, options or convertible or exchangeable securities (including
upon exercise thereof.) If any right, warrant, option or convertible or
exchangeable securities, the issuance of which resulted in an adjustment in the
Exercise Price pursuant to this Section 9.1(b), shall expire and shall not have
been exercised, the Exercise Price shall immediately upon such expiration be
recomputed to the Exercise Price which would have been in effect if such right,
warrant, option or convertible or exchangeable
## CT01/CORCA/98595.38
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<PAGE>
securities had never been distributed or issued. Notwithstanding anything
contained in this paragraph to the contrary, the issuance of Capital Stock upon
the exercise of such rights, warrants or options or the conversion or exchange
of such convertible or exchangeable securities will not cause an adjustment in
the Exercise Price if no such adjustment would have been required at the time
such right, warrant, option or convertible or exchangeable security was issued
or distributed; PROVIDED, HOWEVER, that, if the consideration payable upon such
exercise, conversion or exchange and/or the Capital Stock receivable thereupon
are changed after the time of the issuance or distribution of such right,
warrant, option or convertible or exchangeable security, then such change shall
be deemed to be the expiration thereof without having been exercised and the
issuance or distribution of new options, rights, warrants or convertible or
exchangeable securities.
Notwithstanding anything contained in this Agreement to the contrary,
options, rights or warrants issued or distributed by the Company, including
options, rights or warrants distributed prior to the date of this Agreement, to
holders of Common Stock generally which, until the occurrence of a specified
event or events (a "Trigger Event"), (i) are deemed to be transferred with
Common Stock, (ii) are not exercisable and (iii) are also issued on a pro rata
basis with respect to future issuances of Common Stock, shall be deemed not to
have been issued or distributed for purposes of this Section 9.1 (and no
adjustment to the Exercise Price under this Section 9.1 will be required) until
the occurrence of the earliest Trigger Event. Upon the occurrence of a Trigger
Event, such options, rights or warrants shall continue to be deemed not to have
been issued or distributed for purposes of this Section 9.1 (and no adjustment
to the Conversion Price under this Section 9.1 will be required) if and for so
long as each Holder who thereafter exercises such Holder's Warrants shall be
entitled to receive upon such exercise, in addition to the shares of Common
Stock issuable upon such conversion, a number of such options, rights or
warrants, as the case may be, equal to the number of options, rights or warrants
to which a holder of the number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon exercise of such Holder's Warrants is
entitled to receive at the time of such exercise in accordance with the terms
and provisions of and applicable to such options, rights or warrants. Upon the
expiration of any such options, rights or warrants or at such time, if any, as a
Holder is not entitled to receive such options, rights or warrants upon exercise
of such Holder's Warrants, an adjustment (if any is required) to the Conversion
Price shall be made in accordance with this Section 9.1 with respect to the
issuance of all such options, rights and warrants as of the date of issuance
thereof, but subject to the provisions of the preceding paragraph. If any such
option, right or warrant, including any such options, rights or warrants
distributed prior to the date of this Agreement, are subject to events, upon the
occurrence of which such options, rights or warrants become exercisable to
purchase different securities, evidences of indebtedness, cash, properties or
other assets or different amounts thereof, then, subject to the preceding
provisions of this paragraph, the date of the occurrence of any and each such
event shall be deemed to be the date of distribution and record date with
respect to new options, rights or warrants with such new purchase rights (and a
termination or expiration of the existing options, rights or warrants without
exercise thereof). In addition, in the event of any distribution (or deemed
distribution) of options, rights or warrants, or any Trigger Event or other
event of the type described in the preceding sentence, that required (or would
have required but for the provisions of Section 9.3) an adjustment to the
Exercise Price under this Section 9.1 and such options, rights or warrants shall
thereafter have been redeemed or repurchased without having been exercised, then
the Exercise Price shall be adjusted upon such redemption or repurchase to give
effect to such distribution, Trigger Event or other event, as the case may be,
as though it had instead been a cash distribution, equal on a per share basis to
the result of the aggregate redemption or repurchase price received by holders
of such options, rights or warrants divided by the number of shares of Common
Stock outstanding as of the date of such repurchase or redemption, made to
holders of Common Stock generally as of the date of such redemption or
repurchase.
(c) If the Company shall pay or distribute, as a dividend or otherwise,
generally to holders of Common Stock or any class or series of Capital Stock
which is convertible into or exercisable or exchangeable for Common Stock any
assets, properties or rights (including, without limitation, evidences of
indebtedness of the Company, any subsidiary or any other person or entity, cash
or Capital Stock or other securities of the Company, any subsidiary or any other
person or entity, but excluding payments and distributions as described in
Section 9.1(a) or 8.1(b), dividends and distributions in connection with the
liquidation, dissolution or winding up of the Company in its entirety and
distributions consisting solely of cash described in Section 9.1(d)), then in
each such case the Exercise Price shall be reduced by multiplying the Exercise
Price in effect immediately prior to the date of such payment or distribution by
a
## CT01/CORCA/98595.38
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<PAGE>
fraction, the numerator of which is the Current Market Price per share of Common
Stock on the record date for the determination of stockholders entitled to
receive such payment or distribution less the Fair Market Value per share on
such record date of the assets, properties or rights so paid or distributed and
the denominator shall be the Current Market Price per share of Common Stock on
such record date. For purposes of this Section 9.1(c), such Fair Market Value
per share shall equal the aggregate Fair Market Value on such record date of the
assets, properties or rights to paid or distributed divided by the number of
shares of Common Stock outstanding on such record date. Such adjustment shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(d) If the Company shall, by dividend or otherwise, make a distribution
(other than in connection with the liquidation, dissolution or winding up of the
Company in its entirety), generally to holders of Common Stock or any class or
series of Capital Stock which is convertible into or exercisable or exchangeable
for Common Stock, consisting solely of cash where (x) the sum of (i) the
aggregate amount of such cash plus (ii) the aggregate amount of all cash so
distributed (by dividend or otherwise) to such holders within the 12-month
period ending on the record date for determining stockholders entitled to
receive such distribution with respect to which no adjustment has been made to
the Exercise Price pursuant to this Section 9.1(d) exceeds (y) 10% of the result
of the multiplication of (1) the Current Market Price per share of Common Stock
on such record date times (2) the number of shares of Common Stock outstanding
on such record date, then the Exercise Price shall be reduced, effective
immediately prior to the opening of business on the day following such record
date, by multiplying the Exercise Price in effect immediately prior to the close
of business on the day prior to such record date by a fraction, the numerator of
which is the Current Market Price per share of Common Stock on such record date
less the aggregate amount of cash per share so distributed and the denominator
of which is such Current Market Price; PROVIDED, HOWEVER, that, if the aggregate
amount of cash per share is equal to or greater than such Current Market Price,
then, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive upon conversion (with respect
to each share of Common Stock issued upon such conversion and in addition to the
Common Stock issuable upon conversion) the aggregate amount of cash per share
such Holder would have received had such Holder's Warrants been exercised
immediately prior to such record date. In no event shall the Exercise Price be
increased pursuant to this Section 9.1(d); PROVIDED, HOWEVER, that if such
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price which would have been in effect if such distribution had not been
declared. For purposes of this paragraph of this Section 9.1(d), such aggregate
amount of cash per share shall equal such sum divided by the number of shares of
Common Stock outstanding on such record date.
(e) Anything in this Section 9 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those required by this Section 9.1, as it in its discretion shall
determine to be advisable.
(f) For purposes of this Agreement, "Current Market Price" means, when
used with respect to any security as of any date, the last sale price, regular
way, of such security as reported for consolidated transactions on the New York
Stock Exchange or, if such security is not listed or admitted to trading on the
New York Stock Exchange, as reported for consolidated transactions with respect
to securities listed on the principal national securities exchange on which such
security is listed or admitted to trading or, if such security is not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices, regular way, as reported on the Nasdaq National
Market, or, if such security is not listed or admitted to trading on the Nasdaq
National Market, as reported on the Nasdaq SmallCap Market, or if such security
is not listed or admitted to trading on any national securities exchange or the
Nasdaq National Market or the Nasdaq SmallCap Market, the average of the high
bid and low asked prices of such security in the over-the-counter market as
reported by the NASD Automated Quotations System or such other system then in
use or, if such security is not quoted by any such organization, the average of
the closing bid and asked prices of such security furnished by a New York Stock
Exchange member firm selected by the Company. If such security is not quoted by
any such organization and no such New York Stock Exchange member firm is able to
provide such prices, the Current Market Price of such security shall be the Fair
Market Value thereof.
## CT01/CORCA/98595.38
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<PAGE>
(g) For purposes of this Agreement, "Fair Market Value" means, at any
date as to any asset, property or right (including without limitation, capital
stock or any person, evidences of indebtedness or other securities, but
excluding cash), the fair market value of such item as determined in good faith
by the Board of Directors, whose determination shall be conclusive; PROVIDED,
HOWEVER, that, if there is a Current Market Price for such item on such date,
"Fair Market Value" means such Current Market Price (without giving effect to
the last sentence of the definition thereof).
9.2 MERGER OR CONSOLIDATION. In the event of (i) any reclassification
(including, without limitation, a reclassification effected by means of an
exchange or tender offer by the Company or any Subsidiary) or change of
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation, merger or combination of the Company
with another corporation as a result of which holders of Common Stock shall be
entitled to receive securities or other assets (including cash) with respect to
or in exchange for Common Stock or (iii) any sale or conveyance of the assets of
the Company as, or substantially as, an entirety to any other corporation as a
result of which holders of Common Stock shall be entitled to receive securities
or other assets (including cash) with respect to or in exchange for Common
Stock, then the Company or the successor or purchasing corporation, as the case
may be, shall execute and deliver to the Holder upon surrender of the Warrant
Certificate held by such Holder a supplemental warrant agreement providing that
the holder of each Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant) to receive, upon full
exercise of such Warrant, the kind and amount of shares of stock and/or other
securities and/or property receivable upon such consolidation or merger, by a
holder of the number of shares of Common Stock for which such Warrant might have
been exercised immediately prior to such reclassification, change,
consolidation, merger, combination, sale or conveyance. Such supplemental
warrant agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 9. The
above provision of this subsection shall similarly apply to successive events of
the type described in this Section 9.2.
9.3 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of
the Exercise Price shall be made if the amount of said adjustment shall be less
than two cents ($0.02) per Warrant Security, PROVIDED, HOWEVER, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents ($0.02) per Warrant Security.
9.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Exercise Price pursuant to the provisions of Section 9.1(a) or (b), the number
of shares of Common Stock issuable upon exercise at the adjusted Exercise Price
of each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise of
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
9.5 CERTIFICATE OF ADJUSTMENT. After each adjustment of the Exercise
Price or the amount of Warrant Securities purchasable upon exercise of Warrants
pursuant to this Section 9, the Company will promptly prepare a certificate
signed by the Chairman or President, and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, of the Company setting
forth: (i) the Exercise Price, as so adjusted; (ii) the amount of Warrant
Securities purchasable upon exercise of each Warrant after such adjustment; and
(iii) a brief statement of the facts accounting for such adjustment. The Company
will promptly file such certificate with its records and cause a brief summary
thereof to be sent by ordinary first class mail to each Holder at his or her
last address as it shall appear on the registry books of the Company.
9.6 VALIDITY OF WARRANT CERTIFICATE. Irrespective of any adjustments or
changes in the Exercise Price or the amount of Warrant Securities purchasable
upon exercise of Warrants, Warrant Certificates theretofore and thereafter
issued shall continue to express the Exercise Price per share and the amount of
Warrant Securities purchasable thereunder as of the date such Warrant
Certificates were originally issued; provided, the Holders shall be entitled to
exercise Warrants represented by such Warrant Certificates after giving effect
to each such adjustment and change, and
## CT01/CORCA/98595.38
-13-
<PAGE>
such Warrant Certificate shall be deemed to incorporate each such adjustment and
change as if new Warrant Certificates reflecting each such adjustment and change
had been issued to the Holders.
10. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable, without expense, upon the surrender thereof by the
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Securities in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant
Certificates, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor in lieu thereof.
11. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants to purchase Common Stock, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares of Common Stock
or other securities, properties or rights.
12. RESERVATION AND LISTING OF SECURITIES. The Company shall at all
times reserve and keep available out of its authorized capital stock, solely for
the purpose of issuance upon the exercise of the Warrants, such number of shares
of Common Stock or other securities, property or rights as shall be issuable
upon exercise thereof. The Company covenants and agrees that, upon exercise of
the Warrants and payment of the Exercise Price therefor, all shares of Common
Stock and other securities issued by the Company upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any security holder of the Company. As long as the Warrants
shall be outstanding, the Company shall use its reasonable best efforts to cause
the Common Stock issuable upon the exercise of the Warrants to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock may then be listed and/or quoted on the Nasdaq Stock Market if
the Common Stock issued to the public is so quoted.
13. NOTICES TO HOLDERS. Nothing contained in this Agreement shall be
construed as conferring upon the Holders the right to receive dividends or to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter or as
having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall set a record date for the purpose of
entitling them to receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable otherwise than
out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company;
or
(b) the Company shall offer to all the holders of shares of
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock
of the Company, or any option, right or warrant to subscribe therefor;
or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event to each Holder at least 15 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the
## CT01/CORCA/98595.38
-14-
<PAGE>
stockholders entitled to such dividend, distribution or offer, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with any of the events described
in this Section 13.
14. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a Holder, to the address of such Holder as shown
on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice
to the Holders.
15. SUPPLEMENTS AND AMENDMENTS. The Company and the Underwriters may
from time to time supplement or amend this Agreement without the approval of any
Holders (other than the Underwriters) in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Initial Purchaser may deem necessary or desirable and which the Company and the
Underwriters deem shall not adversely affect the interests of the Holders in any
material respect.
16. SUCCESSORS. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders
and their respective successors and assigns hereunder.
17. TERMINATION. This Agreement shall terminate at the close of
business on April 24, 2004. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination
until the close of business on April 24, 2009.
18. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Underwriters and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Underwriters and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum and
also hereby irrevocably waive any right or claim to trial by jury in connection
with any such action, proceeding or claim. Any such process or summons to be
served upon any of the Company, the Underwriters and the Holders (at the option
of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
14 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, the Underwriters and the Holders agree that the prevailing party(ies)
in any such action or proceeding shall be entitled to recover from the other
party(ies) all of its/their reasonable legal costs and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.
19. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof. Except as set forth in Section 15 hereof, this Agreement
may not be modified or amended except by a writing duly signed by the party
against whom enforcement of the modification or amendment is sought.
## CT01/CORCA/98595.38
-15-
<PAGE>
20. SEVERABILITY. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. CAPTIONS. The caption headings of the Sections of this Agreement
are for convenience of reference only, and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no
substantive effect.
22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person, corporation or entity other than the Company
and the Underwriters and any other Holders of Warrants and/or Warrant Securities
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Underwriters and any other Holders of Warrants and/or Warrant Securities.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed
to be an original and such counterparts shall together constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[SEAL]
WESTBRIDGE CAPITAL CORP.
By: /s/ Patrick J. Mitchell
Name: Patrick J. Mitchell
Title: Executive Vice President,
Attest: Chief Financial Officer
and Treasurer
/S/ MICHAEL D. NORRIS
Name: Michael D. Norris
Title: Secretary
FORUM CAPITAL MARKETS L. P.
By: /s/ Terence M. York
Name: Terence M. York
Title: President
RAYMOND JAMES & ASSOCIATES, INC.
By: /s/ Jan Sirota
Name: Jan Sirota
Title: Managing Director
## CT01/CORCA/98595.38
-16-
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON AND AFTER APRIL 24, 1998 UNTIL
5:30 P.M., NEW YORK TIME, APRIL 24, 2002
No. W- Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from
April 24, 1998 until 5:30 p.m. New York time on April 24, 2002
(the "Expiration Date"), up to __________ fully-paid and non-assessable shares
of Common Stock, par value $.10 per share (the "Common Stock"), of WESTBRIDGE
CAPITAL CORP. (the "Company"), at the initial exercise price, subject to
adjustment in certain events (as adjusted, the "Exercise Price"), of $10.92 per
share upon surrender of this Warrant Certificate and payment of the aggregate
Exercise Price, at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of April 29,
1997 by and among the Company, Forum Capital Markets L.P. and Raymond James &
Associates, Inc. (the "Warrant Agreement"). Payment of the aggregate Exercise
Price, shall be made by certified or official bank check in New York Clearing
House funds payable to the order of the Company and by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the amount the type and/or number of the Company's
securities issuable hereunder may, subject to certain conditions, be adjusted.
Subject to Section 9.6 of the Warrant Agreement, in such event, the Company
will, at the request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; PROVIDED, HOWEVER, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter or otherwise impair the rights of the holder as set forth in the
Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the permitted transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax or other governmental
charge imposed in connection with such transfer.
## CT01/CORCA/98595.38
A-1
<PAGE>
Upon the exercise of less than all of the Warrants evidenced by this
Warrant Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of _______________________
WESTBRIDGE CAPITAL CORP.
[SEAL]
By:
Name:
Title:
Attest:
Name:
Title:
## CT01/CORCA/98595.38
A-2
<PAGE>
ANNEX A
TO WARRANT CERTIFICATE
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of Common Stock and
herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of Westbridge
Capital Corp. in the amount of $ , all in accordance with the terms of Section 3
of the Underwriters' Warrant Agreement dated as of April 29, 1997 by and among
Westbridge Capital Corp., Forum Capital Markets L.P and Raymond James &
Associates, Inc. The undersigned requests that a certificate for such securities
be registered in the name of whose address is
and that such certificate be delivered to
whose address is
.
Dated: ___________________________
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
## CT01/CORCA/98595.38
A-3
<PAGE>
ANNEX B
TO WARRANT CERTIFICATE
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of Common Stock all
in accordance with the terms of Section 3.2 of the Underwriters' Warrant
Agreement dated as of April 29, 1997 by and among Westbridge Capital Corp.,
Forum Capital Markets L.P. and Raymond James & Associates, Inc. The undersigned
requests that a certificate for such securities be registered in the name of
whose address is
and that such certificate be delivered to
whose address is
.
Dated:
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
## CT01/CORCA/98595.38
A-4
<PAGE>
ANNEX C
TO WARRANT CERTIFICATE
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED
------------------------------------------
hereby sells, assigns and transfers unto
- -----------------------------------------
- -----------------------------------------
(Please print name and address of transferee)
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint Attorney to transfer
the within Warrant Certificate on the books of the within-named Company, with
full power of substitution.
Dated:
Signature:
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
(Insert Social Security or Other
Identifying Number of Assignee)
## CT01/CORCA/98595.38
A-5
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<DEBT-HELD-FOR-SALE> 79,584
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,696
<MORTGAGE> 423
<REAL-ESTATE> 0
<TOTAL-INVEST> 88,278
<CASH> 202
<RECOVER-REINSURE> 23,131
<DEFERRED-ACQUISITION> 87,663
<TOTAL-ASSETS> 233,965
<POLICY-LOSSES> 87,307
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 388
<NOTES-PAYABLE> 39,868
19,400
0
<COMMON> 613
<OTHER-SE> 48,136
<TOTAL-LIABILITY-AND-EQUITY> 233,965
40,820
<INVESTMENT-INCOME> 2,226
<INVESTMENT-GAINS> (60)
<OTHER-INCOME> 3,502
<BENEFITS> 25,295
<UNDERWRITING-AMORTIZATION> 5,240
<UNDERWRITING-OTHER> 7,322
<INCOME-PRETAX> 2,662
<INCOME-TAX> 932
<INCOME-CONTINUING> 1,730
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,334
<EPS-PRIMARY> .21
<EPS-DILUTED> .20
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
