<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996
or
/ / Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from _________ to ________
Commission File Number 1-8472
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HEXCEL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-1109521
(State of Incorporation) (I.R.S. Employer Identification No.)
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3238
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (203) 969-0666
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 / /
--- ---
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan of reorganization
confirmed by a U.S. Bankruptcy Court.
Yes /x/ No / /
--- ---
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Class Outstanding as of August 9, 1996
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COMMON STOCK 36,292,852
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<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
- Condensed Consolidated Statements of
Operations -- The Quarter and Year-to-Date Periods
Ended June 30, 1996 and July 2, 1995 2
- Condensed Consolidated Balance Sheets --
June 30, 1996 and December 31, 1995 3
- Condensed Consolidated Statements of
Cash Flows -- The Year-to-Date Periods Ended
June 30, 1996 and July 2, 1995 4
- Notes to Condensed Consolidated
Financial Statements 5
- Management's Discussion and Analysis
of Financial Condition and Results of
Operations 15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 25
<PAGE>
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
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UNAUDITED
------------------------------------------------
THE QUARTER ENDED THE YEAR-TO-DATE ENDED
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JUNE 30, July 2, JUNE 30, July 2,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales $ 166,770 $ 91,023 $ 293,188 $ 176,178
Cost of sales (131,582) (72,968) (231,217) (143,328)
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Gross margin 35,188 18,055 61,971 32,850
Selling, general and administrative
expenses (23,879) (12,106) (41,361) (24,272)
Business acquisition and consolidation
expenses (29,209) - (34,420) -
Other income, net 288 - 2,985 -
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Operating income (loss) (17,612) 5,949 (10,825) 8,578
Interest expense (4,849) (2,079) (8,482) (4,442)
Bankruptcy reorganization expenses - (826) - (2,951)
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Income (loss) from continuing operations
before income taxes (22,461) 3,044 (19,307) 1,185
Provision for income taxes (1,206) (1,094) (2,512) (1,604)
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Income (loss) from continuing
operations (23,667) 1,950 (21,819) (419)
Discontinued operations:
Losses during phase-out period - (185) - (297)
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Net income (loss) $(23,667) $ 1,765 $ (21,819) $ (716)
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Net income (loss) per share and equivalent
share:
Primary and fully diluted:
Continuing operations $ (0.65) $ 0.11 $ (0.72) $(0.03)
Discontinued operations - (0.01) - (0.02)
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Net income (loss) $ (0.65) $ 0.10 $ (0.72) $(0.05)
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Weighted average shares and equivalent shares 36,547 18,007 30,483 13,391
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
2
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HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
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UNAUDITED
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JUNE 30, December 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 8,445 $ 3,829
Accounts receivable 153,518 65,888
Inventories 148,203 55,475
Prepaid expenses 5,160 2,863
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Total current assets 315,326 128,055
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Property, plant and equipment 428,633 203,580
Less accumulated depreciation (129,718) (117,625)
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Net property, plant and equipment 298,915 85,955
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Intangible assets 48,931 1,832
Investments and other assets 11,581 14,760
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Total assets $ 674,753 $ 230,602
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of
long-term liabilities $ 19,561 $ 1,802
Accounts payable 60,324 22,904
Accrued liabilities 71,329 41,779
Accrued business consolidation costs 24,642 -
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Total current liabilities 175,856 66,485
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Notes payable and capital lease obligations,
less current maturities 246,635 88,342
Indebtedness to related parties, less current
maturities 31,528 -
Deferred liabilities 49,815 27,401
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Stockholders' equity
Common stock, $0.01 par value, 100,000 shares
authorized, shares issued and outstanding of
36,288 in 1996 and 18,091 in 1995 363 181
Additional paid-in capital 257,905 111,259
Accumulated deficit (91,800) (69,981)
Minimum pension obligation adjustment (535) (535)
Cumulative currency translation adjustment 4,986 7,450
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Total stockholders' equity 170,919 48,374
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Total liabilities and stockholders' equity $ 674,753 $ 230,602
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
3
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HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
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UNAUDITED
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JUNE 30, July 2,
THE YEAR-TO-DATE ENDED (IN THOUSANDS) 1996 1995
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<S> <C> <C>
Loss from continuing operations $ (21,819) $ (419)
Reconciliation to net cash provided (used)
by continuing operations:
Depreciation and amortization 9,977 5,855
Accrued business acquisition and consolidation
expenses 34,420 -
Business acquisition and consolidation payments (2,256) -
Working capital changes and other (21,659) (17,390)
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Net cash used by continuing operations (1,337) (11,954)
Net cash provided by discontinued operations - 548
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Net cash used by operating activities (1,337) (11,406)
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Cash flows from investing activities:
Capital expenditures (8,652) (4,585)
Proceeds from equipment sold - 17
Cash paid for the Acquired Ciba Business (25,000) -
Cash paid for the Acquired Hercules Business (135,000) -
Proceeds from sale of Chandler, Arizona
manufacturing facility and certain related
assets and technology 1,560 26,694
Proceeds from sale of discontinued European
resins business - 2,602
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Net cash provided (used) by investing
activities (167,092) 24,728
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Cash flows from financing activities:
Proceeds from issuance of long-term debt 163,703 3,891
Payments of long-term debt (8,006) (5,939)
Proceeds of short-term debt, net 15,174 17,678
Proceeds from issuance of common stock 2,191 48,739
Payments of allowed claims pursuant to the
Reorganization Plan - (78,144)
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Net cash provided (used) by financing
activities 173,062 (13,775)
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Effect of exchange rate changes on cash and equivalents (17) (478)
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Net increase (decrease) in cash and equivalents 4,616 (931)
Cash and equivalents at beginning of year 3,829 931
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Cash and equivalents at end of period $ 8,445 $ -
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS.
4
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HEXCEL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE 1 -- BASIS OF ACCOUNTING
The accompanying condensed consolidated financial statements have been
prepared from the unaudited records of Hexcel Corporation and subsidiaries
("Hexcel" or the "Company") in accordance with generally accepted accounting
principles, and, in the opinion of management, include all adjustments
necessary to present fairly the balance sheet of the Company as of June 30,
1996, and the results of operations for the quarters and year-to-date periods
ended June 30, 1996 and July 2, 1995, and the cash flows for the year-to-date
periods ended June 30, 1996 and July 2, 1995. The condensed consolidated
balance sheet of the Company as of December 31, 1995 was derived from the
audited 1995 consolidated balance sheet. Certain information and footnote
disclosures normally included in financial statements have been omitted
pursuant to rules and regulations of the Securities and Exchange Commission.
Certain prior quarter amounts in the condensed consolidated financial
statements and notes have been reclassified to conform to the 1996
presentation. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Company's 1995 Annual Report on Form 10-K.
As discussed in Note 2, Hexcel acquired the worldwide composites
division of Ciba-Geigy Limited, a Swiss corporation ("Ciba"), and Ciba-Geigy
Corporation, a New York corporation ("CGC"), including Ciba's and CGC's
composite materials, parts and structures businesses (the "Acquired Ciba
Business"), on February 29, 1996. Accordingly, the condensed consolidated
balance sheet as of June 30, 1996 includes the financial position of the
Acquired Ciba Business as of that date, and the condensed consolidated
statements of operations and cash flows for the year-to-date period ended
June 30, 1996 include the results of operations and cash flows, respectively,
of the Acquired Ciba Business for the period from March 1, 1996 through June
30, 1996.
In addition, as discussed in Note 2, Hexcel acquired the composite
products division of Hercules Incorporated ("Hercules"), including Hercules'
carbon fibers and prepreg businesses (the "Acquired Hercules Business"), on
June 27, 1996. Accordingly, the condensed consolidated balance sheet as of
June 30, 1996 includes the financial position of the Acquired Hercules
Business as of that date. The condensed consolidated statements of
operations and cash flows for the year-to-date period ended June 30, 1996 do
not include the results of operations and cash flows, respectively, of the
Acquired Hercules Business.
5
<PAGE>
NOTE 2 -- BUSINESS ACQUISITIONS
ACQUIRED CIBA BUSINESS
Hexcel acquired the worldwide composites division of Ciba and CGC on
February 29, 1996. The Acquired Ciba Business is engaged in the manufacture
and marketing of composite materials, parts and structures for aerospace,
recreation and general industrial markets. Product lines include fabrics,
prepregs, adhesives, honeycomb core, sandwich panels and fabricated
components, as well as structures and interiors primarily for the commercial
and military aerospace markets.
The acquisition of the Acquired Ciba Business was consummated pursuant
to a Strategic Alliance Agreement dated as of September 29, 1995 among Ciba,
CGC, and Hexcel, as amended (the "Strategic Alliance Agreement"). Under the
Strategic Alliance Agreement, the Company acquired the assets (including the
capital stock of certain non-U.S. subsidiaries) and assumed the liabilities
of the Acquired Ciba Business other than certain excluded assets and
liabilities in exchange for: (a) approximately 18 million newly issued
shares of Hexcel common stock; (b) $25,000 in cash; and (c) undertakings to
deliver to Ciba and/or one or more of its subsidiaries, following completion
of certain post-closing adjustment procedures contemplated by the Strategic
Alliance Agreement, senior subordinated notes in an aggregate principal
amount of approximately $43,000, subject to certain adjustments (the "Senior
Subordinated Notes"), and senior demand notes in a principal amount equal to
the cash on hand at certain of the non-U.S. subsidiaries included in the
Acquired Ciba Business (the "Senior Demand Notes").
In connection with the acquisition of the Acquired Ciba Business, Hexcel
acquired Danutec Werkstoff AG ("Danutec"), an Austrian subsidiary of Ciba, on
May 30, 1996. The acquisition of Danutec was completed pursuant to the
Strategic Alliance Agreement. Furthermore, under the terms of the Strategic
Alliance Agreement, certain assets of Ciba affiliates that continue to act as
distributors for the Acquired Ciba Business (the "Ciba Distributors") will be
acquired by the Company from time to time prior to February 28, 1997.
As of June 30, 1996, the aggregate principal amount of Senior
Subordinated Notes to be issued to Ciba, determined in accordance with the
relevant provisions of the Strategic Alliance Agreement, was estimated at
approximately $34,100. However, the actual aggregate principal amount of the
Senior Subordinated Notes is expected to exceed $34,100 as a result of the
pending acquisition from Ciba of certain assets of the Ciba Distributors that
have not yet been transferred to Hexcel. Pursuant to the Strategic Alliance
Agreement, the aggregate principal amount of the Senior Subordinated Notes
will be adjusted to reflect the acquisition of these assets at such times as
the acquisitions are completed.
In connection with the acquisition of the Acquired Ciba Business, Hexcel
obtained a three-year revolving credit facility of up to $175,000 (the
"Senior Secured Credit Facility") to: (a) fund the cash component of the
purchase price; (b) refinance outstanding indebtedness under certain U.S. and
European credit facilities; and (c) provide for the ongoing working capital
and other financing requirements of the Company, including business
consolidation activities, on a worldwide basis.
6
<PAGE>
ACQUIRED HERCULES BUSINESS
Hexcel acquired the assets of the composite products division of
Hercules (including the stock of Hercules Aerospace Espana, S.A. ("HAESA"))
on June 27, 1996. The Acquired Hercules Business, which manufactures carbon
fibers and prepregs for aerospace, recreation and general industrial markets,
was purchased for $135,000 in cash subject to certain post-closing
adjustments. Hexcel and Hercules have agreed that in the event applicable
Spanish antitrust authorities were to take certain adverse actions in respect
to the Company's acquisition of HAESA, Hexcel has the option to sell its
interest in HAESA back to Hercules for the allocated purchase price paid for
HAESA.
In connection with the acquisition of the Acquired Hercules Business,
Hexcel replaced the Senior Secured Credit Facility with a new revolving
credit facility (the "Revolving Credit Facility") of up to $310,000. As a
result of the Company's issuance of convertible subordinated notes on July
24, 1996 (see Note 6), maximum availability under the Revolving Credit
Facility was reduced from $310,000 to approximately $250,000, in accordance
with the terms of that facility. Proceeds from the Revolving Credit Facility
were used to repay approximately $70,100 of outstanding borrowings under the
Senior Secured Credit Facility and to finance the purchase of the Acquired
Hercules Business. Borrowings under the Revolving Credit Facility are also
available for ongoing working capital and other financing requirements of the
Company, including business consolidation activities (see Note 3).
HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The assets acquired and the liabilities assumed or incurred in
connection with the acquisitions of the Acquired Ciba Business and the
Acquired Hercules Business were:
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ACQUIRED ACQUIRED TOTAL
CIBA HERCULES ACQUIRED
BUSINESS BUSINESS BUSINESSES
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ASSETS ACQUIRED:
Accounts receivable $ 53,861 $ 16,819 $ 70,680
Inventories 64,498 22,289 86,787
Net property, plant and
equipment 120,823 102,720 223,543
Intangible assets 46,318 -- 46,318
Other assets 3,069 642 3,711
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Total assets acquired $ 288,569 $ 142,470 $ 431,039
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LIABILITIES ASSUMED OR INCURRED:
Accounts payable and accrued
liabilities $ 63,857 $ 6,968 $ 70,825
Notes payable and capital
lease obligations 37,851 135,003 172,854
Indebtedness to related parties,
less current maturities 31,528 -- 31,528
Deferred liabilities 14,331 499 14,830
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Total liabilities assumed
or incurred $ 147,567 $ 142,470 $ 290,037
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Increase in Common Stock and
Additional Paid-in Capital $ 141,002 -- $ 141,002
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7
<PAGE>
The pro forma net sales, net loss and net loss per share of Hexcel for the
year-to-date periods ended June 30, 1996 and July 2, 1995, giving effect to
the acquisitions of the Acquired Ciba Business and the Acquired Hercules
Business as if those acquisitions had occurred at the beginning of the
periods presented, were:
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THE YEAR-TO-DATE ENDED
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6/30/96 7/2/95
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Pro forma net sales $ 397,021 $ 394,049
Pro forma net loss (23,448) (7,807)
Pro forma net loss per share (0.65) (0.23)
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NOTE 3 -- BUSINESS CONSOLIDATION
On May 9, 1996, Hexcel announced that its Board of Directors had
approved a plan for consolidating the Company's operations over a period of
three years. The total expense of this program is estimated to be
approximately $49,000, including $5,211 and $29,209 of expenses recorded in
the first and second quarters of 1996, respectively, and another $15,000 to
be recorded in future periods. Cash expenditures necessary to complete the
business consolidation program are expected to total approximately $44,000,
net of estimated proceeds from asset sales.
The objective of the business consolidation program is to integrate
acquired assets and operations into Hexcel, and to reorganize the Company's
manufacturing and research activities around strategic centers dedicated to
select product technologies. The business consolidation is also intended to
eliminate excess manufacturing capacity and redundant administrative
functions. Specific actions contemplated by the consolidation program
include the previously announced closure of the Anaheim, California facility
acquired from Ciba, the closure of a portion of the Welkenraedt, Belgium
facility, the reorganization of the Company's manufacturing operations in
France, the consolidation of the Company's U.S. special process manufacturing
activities, and the integration of sales and marketing resources. The
business consolidation is expected to result in a net reduction of
approximately 325 employees, primarily in manufacturing. The consolidation
program calls for the elimination of approximately 470 existing positions at
certain locations, partially offset by the addition of approximately 145 new
positions at other locations.
Management expects that the business consolidation program will take up
to three years to complete, in part because of aerospace industry
requirements to "qualify" specific equipment and manufacturing facilities for
the manufacture of certain products. Based on Hexcel's experience with
previous plant consolidations, these qualification requirements necessitate
an approach to the consolidation of manufacturing facilities that will
require two to three years to complete.
8
<PAGE>
Changes in accrued business consolidation costs for the period from
December 31, 1995 to June 30, 1996 were as follows:
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EMPLOYEE FACILITY
SEVERANCE CLOSURE &
AND EQUIPMENT
RELOCATION RELOCATION OTHER TOTAL
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BALANCE AS OF 12/31/95 -- -- -- --
THE QUARTER ENDED 3/31/96:
Accrued expenses -- -- $ 5,211 $ 5,211
Cash expenditures -- -- (1,191) (1,191)
Non-cash usage -- -- (3,635) (3,635)
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BALANCE AS OF 3/31/96 -- -- 385 385
THE QUARTER ENDED 6/30/96:
Accrued expenses $ 15,587 $ 6,678 6,944 29,209
Purchase price adjustments 8,401 2,816 139 11,356
Cash expenditures -- -- (1,065) (1,065)
Non-cash usage, including
asset write-downs -- (6,678) (4,678) (11,356)
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BALANCE AS OF 6/30/96 $ 23,988 $ 2,816 $ 1,725 $ 28,529
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During the first quarter of 1996, Hexcel incurred $3,635 of compensation
expense resulting from stock options which vested in connection with the
acquisition of the Acquired Ciba Business. This compensation expense is based
on the difference between the exercise price of the stock options granted and
the market price of Hexcel's common stock on February 21, 1996, the date that
the Company's stockholders approved the incentive stock plan under which
these options were granted. The recognition of compensation expense in
connection with these stock options resulted in a corresponding $3,635
increase in the additional paid-in capital of the Company.
During the second quarter of 1996, Hexcel accrued $11,356 of business
consolidation costs that are directly attributable to the Acquired Ciba
Business. The accrual of these costs has been reflected as an adjustment to
the purchase of the Acquired Ciba Business, in accordance with generally
accepted accounting principles, resulting in a corresponding increase in the
intangible assets of the Company.
During the second quarter of 1996, Hexcel wrote down various assets by
$9,325, in connection with the decision to close a portion of one
manufacturing facility and dispose of certain manufacturing equipment, as
well as to dispose of certain research equipment and related assets. These
write-downs were required to reduce the applicable assets to estimated net
realizable value.
As of June 30, 1996, $3,887 of accrued business consolidation costs were
included in "Deferred liabilities" in the accompanying condensed consolidated
balance sheet.
9
<PAGE>
NOTE 4 -- INVENTORIES
Inventories as of June 30, 1996 and December 31, 1995 were:
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6/30/96 12/31/95
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Raw materials $ 70,127 $22,257
Work in progress 37,451 13,688
Finished goods 37,803 17,778
Supplies 2,822 1,752
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Total inventories $148,203 $55,475
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Hexcel acquired inventories totaling $86,787 in connection with the
acquisitions of the Acquired Ciba Business and the Acquired Hercules Business.
NOTE 5 -- INTANGIBLE ASSETS
Intangible assets as of June 30, 1996 are comprised primarily of
goodwill attributable to the acquisition of the Acquired Ciba Business on
February 29, 1996 and the related acquisition of Danutec on May 30, 1996.
Substantially all such assets are amortized over a period of 20 years.
NOTE 6 -- NOTES PAYABLE, CAPITAL LEASE OBLIGATIONS AND INDEBTEDNESS TO
RELATED PARTIES
Notes payable, capital lease obligations and indebtedness to related
parties as of June 30, 1996 and December 31, 1995 were:
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6/30/96 12/31/95
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Revolving Credit Facility $204,347 --
1995 U.S. credit facility -- $30,091
European credit facilities and notes payable 19,391 18,064
Senior Subordinated Notes payable to Ciba,
net of discount 31,528 --
7% convertible subordinated debentures,
due 2011 25,625 25,625
Obligations under IDRB variable rate demand
notes, due through 2024, net 8,450 11,990
Senior Demand Notes payable to Ciba 5,329 --
Capital lease obligations 1,730 3,217
Various U.S. notes payable, due through 2007 1,324 1,157
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Total notes payable, capital lease obligations
and indebtedness to related parties $297,724 $90,144
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- ---------------------------------------------------------------------------
Notes payable and current maturities of
long-term liabilities $ 19,561 $ 1,802
Notes payable and capital lease obligations,
less current maturities 246,635 88,342
Indebtedness to related parties, less current
maturities 31,528 --
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Total notes payable, capital lease obligations
and indebtedness to related parties $297,724 $90,144
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- ---------------------------------------------------------------------------
10
<PAGE>
REVOLVING CREDIT FACILITY
In connection with the acquisition of the Acquired Hercules Business
on June 27, 1996, Hexcel obtained the Revolving Credit Facility to: (a)
refinance outstanding indebtedness under the Senior Secured Credit Facility;
(b) finance the purchase of the Acquired Hercules Business; and (c) provide
for the ongoing working capital and other financing requirements of the
Company, including business consolidation activities, on a worldwide basis.
The Revolving Credit Facility initially provided for up to $310,000 in
borrowing capacity. However, as a result of the Company's issuance of
convertible subordinated notes on July 24, 1996, maximum availability under
the Revolving Credit Facility was reduced from $310,000 to approximately
$250,000, in accordance with the terms of that facility.
Interest on outstanding borrowings under the Revolving Credit
Facility is computed at an annual rate of 0.4% in excess of the applicable
London interbank rate or, at the option of Hexcel, at the base rate of the
administrative agent for the lenders. In addition, the Revolving Credit
Facility is subject to a commitment fee of approximately 0.2% per annum on
the unused portion of the facility and a letter of credit fee of up to 0.4%
per annum on the outstanding face amount of letters of credit.
The Revolving Credit Facility is secured by a pledge of stock of
certain of Hexcel's subsidiaries. In addition, the Company is subject to
various financial covenants and restrictions under the Revolving Credit
Facility, and is generally prohibited from paying dividends or redeeming
capital stock.
The Revolving Credit Facility replaced the Senior Secured Credit
Facility, which had previously replaced certain U.S. and European credit
facilities that were available to the Company and in use as of December 31,
1995. As a result of the extinguishment of the Senior Secured Credit
Facility, Hexcel wrote off $1,800 of capitalized debt financing costs in the
second quarter of 1996. The Company wrote off $1,600 of capitalized debt
financing costs in the first quarter of 1996 in connection with the
extinguishment of certain U.S. and European credit facilities. Both
write-offs are included in "Interest expense" in the accompanying condensed
consolidated statements of operations for the applicable periods.
CONVERTIBLE SUBORDINATED NOTES
On July 24, 1996, Hexcel completed an offering of $114,500 in
convertible subordinated notes due 2003 (the "Convertible Subordinated
Notes"), including $14,500 in notes sold to the underwriters pursuant to the
exercise of an over-allotment option. The Convertible Subordinated Notes
carry an annual interest rate of 7% and are convertible into Hexcel common
stock at a conversion price of $15.81 per share. Net proceeds of $111,351
from this offering were used to repay outstanding borrowings under the
Revolving Credit Facility.
OBLIGATION TO ISSUE SENIOR SUBORDINATED NOTES PAYABLE TO CIBA-GEIGY
In connection with the acquisition of the Acquired Ciba Business,
Hexcel has undertaken to deliver to Ciba the Senior Subordinated Notes. The
Senior Subordinated Notes will be general unsecured obligations of the
Company. As discussed in Note 2, the aggregate principal amount of Senior
Subordinated Notes to be issued to Ciba, determined in accordance with the
Strategic Alliance Agreement, was approximately $34,100 as of June 30, 1996.
However, the actual
11
<PAGE>
aggregate principal amount of the Senior Subordinated Notes is expected to
exceed this amount as a result of the pending acquisition of certain assets
of the Ciba Distributors that have not yet been transferred to the Company.
As of June 30, 1996, the fair value of the obligation to issue the
Senior Subordinated Notes was $31,528, which is $2,572 lower than the
aggregate principal amount as of that date. The $2,572 discount reflects the
absence of certain call protection provisions from the terms of the Senior
Subordinated Notes and the difference between the stated interest rate on the
Senior Subordinated Notes and the estimated market rate for debt obligations
of comparable quality and maturity. The Senior Subordinated Notes will bear
interest for three years at a rate of 7.5% per annum, payable semiannually,
from February 29, 1996. The interest rate will increase to 10.5% per annum on
the third anniversary of the acquisition of the Acquired Ciba Business, and
by an additional 0.5% per year thereafter until the Senior Subordinated Notes
mature in the year 2003.
As of June 30, 1996, Ciba owned 49.7% of Hexcel's issued and
outstanding common stock, and four of the Company's ten directors were
members of Ciba management. Accordingly, the Company's obligation to issue
the Senior Subordinated Notes has been classified as "Indebtedness to related
parties" in the accompanying condensed consolidated balance sheet as of June 30,
1996.
OBLIGATION TO ISSUE SENIOR DEMAND NOTES PAYABLE TO CIBA-GEIGY
Under the terms of the Strategic Alliance Agreement, the cash on hand
at certain of the European subsidiaries included in the Acquired Ciba
Business was acquired by Hexcel in exchange for an undertaking to deliver to
Ciba and/or one or more of its subsidiaries the Senior Demand Notes. The
Senior Demand Notes, totaling $5,329, are expected to be presented for
payment prior to December 31, 1996.
NOTE 7 -- DEFERRED LIABILITIES
Deferred liabilities as of June 30, 1996 and December 31, 1995 were
comprised primarily of various pension, retirement and post-retirement
benefit liabilities, as well as deferred tax liabilities and certain other
long-term obligations.
NOTE 8 -- NON-CASH FINANCING ACTIVITIES
In addition to a cash payment of $25,000 and the obligations to issue
the Senior Subordinated Notes and the Senior Demand Notes, the consideration
paid for the Acquired Ciba Business included approximately 18 million shares
of newly issued Hexcel common stock. The aggregate value of these shares was
estimated to be approximately $144,200, based on a discounted market price of
$8 per share multiplied by the number of shares issued. The discounted
market price of $8 per share was based on a market price of $10 per share
during a reasonable period before and after December 12, 1995, the date that
the terms for determining the total consideration to be paid by the Company
were finalized, and a discount rate of 20%. The 20% discount reflects the
illiquidity of the Hexcel common stock issued to Ciba caused by the size of
Ciba's holding, the contractual restrictions on transferring such shares and,
accordingly, limitations on the price Ciba
12
<PAGE>
could realize, the contractual limitation on the per share price Ciba could
realize in certain types of transactions, the fact that such shares are
"restricted securities" within the meaning of the Securities Act of 1933,
and various other factors.
NOTE 9 -- OTHER INCOME, NET
Other income of $2,985 for the year-to-date period ended June 30,
1996 was largely attributable to the receipt of an additional $1,560 of cash
in connection with the disposition of the Chandler, Arizona manufacturing
facility and certain related assets and technology in 1994, and to the
partial settlement for $1,054 of a claim arising from the sale of certain
assets in 1991.
NOTE 10 -- BANKRUPTCY REORGANIZATION
On January 12, 1995, the United States Bankruptcy Court for the
Northern District of California entered an order dated January 10, 1995
confirming the First Amended Plan of Reorganization (the "Reorganization
Plan") proposed by Hexcel and the Official Committee of Equity Security
Holders (the "Equity Committee"). On February 9, 1995, the Reorganization
Plan became effective and Hexcel emerged from the bankruptcy reorganization
proceedings which had begun on December 6, 1993, when Hexcel filed a
voluntary petition for relief under the provisions of Chapter 11 of the
United States Bankruptcy Code.
The Reorganization Plan which became effective on February 9, 1995
provided, among other things, for the reinstatement or payment in full, with
interest, of all allowed claims, including prepetition accounts payable and
notes payable. On February 9, 1995, Hexcel paid $78,144 in prepetition
claims and interest, and reinstated another $60,575 in prepetition
liabilities. The payment of claims and interest was financed with: (a) cash
proceeds of $26,694 received in the first quarter of 1995 from the sale of
the Company's Chandler, Arizona manufacturing facility and related assets and
technology; (b) cash proceeds of $2,602 received in the first quarter of 1995
from the sale of the Company's European resins business; (c) the $50,000 in
cash received from Mutual Series Fund Inc. in connection with a standby
purchase agreement with respect to a subscription rights offering for
additional shares of new common stock; and (d) borrowings under a U.S.
revolving credit facility. The subscription rights offering for additional
shares of new common stock was subsequently concluded on April 6, 1995, with
a total of 10.8 million shares of new common stock having been issued between
February 9, 1995 and April 6, 1995.
Professional fees and other costs directly related to bankruptcy
proceedings were expensed as incurred, and have been reflected in the
condensed consolidated statement of operations for the quarter and
year-to-date period ended July 2, 1995 as "Bankruptcy reorganization
expenses." Bankruptcy reorganization expenses consisted primarily of
professional fees paid to legal and financial advisors of Hexcel, the Equity
Committee and the Official Committee of Unsecured Creditors. In addition,
these expenses included incentives for employees to remain with the Company
for the duration of bankruptcy proceedings and the write-off of previously
capitalized costs related to the issuance of prepetition debt, as required by
generally accepted accounting principles. The resolution of certain
bankruptcy-related issues, including the final settlement of
13
<PAGE>
disputed claims and professional fees, resulted in bankruptcy reorganization
expenses being incurred after the effective date of the Reorganization Plan.
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
BUSINESS ACQUISITIONS
ACQUIRED CIBA BUSINESS
Hexcel Corporation and subsidiaries ("Hexcel" or the "Company")
acquired the worldwide composites division of Ciba-Geigy Limited, a Swiss
corporation ("Ciba"), and Ciba-Geigy Corporation, a New York corporation
("CGC"), including Ciba's and CGC's composite materials, parts and structures
businesses (the "Acquired Ciba Business"), on February 29, 1996. The
Acquired Ciba Business is engaged in the manufacture and marketing of
composite materials, parts and structures for aerospace, recreation and
general industrial markets. Product lines include fabrics, prepregs,
adhesives, honeycomb core, sandwich panels and fabricated components, as well
as structures and interiors primarily for the commercial and military
aerospace markets.
The acquisition of the Acquired Ciba Business was consummated
pursuant to a Strategic Alliance Agreement dated as of September 29, 1995
among Ciba, CGC, and Hexcel, as amended (the "Strategic Alliance Agreement").
Under the Strategic Alliance Agreement, the Company acquired the assets
(including the capital stock of certain non-U.S. subsidiaries) and assumed
the liabilities of the Acquired Ciba Business other than certain excluded
assets and liabilities in exchange for: (a) approximately 18 million newly
issued shares of Hexcel common stock; (b) $25 million in cash; and (c)
undertakings to deliver to Ciba and/or one or more of its subsidiaries,
following completion of certain post-closing adjustment procedures
contemplated by the Strategic Alliance Agreement, senior subordinated notes
in an aggregate principal amount of approximately $43 million, subject to
certain adjustments (the "Senior Subordinated Notes"), and senior demand
notes in a principal amount equal to the cash on hand at certain of the
non-U.S. subsidiaries included in the Acquired Ciba Business (the "Senior
Demand Notes").
In connection with the acquisition of the Acquired Ciba Business,
Hexcel acquired Danutec Werkstoff AG ("Danutec"), an Austrian subsidiary of
Ciba, on May 30, 1996. The acquisition of Danutec was completed pursuant to
the Strategic Alliance Agreement. Furthermore, under the terms of the
Strategic Alliance Agreement, certain assets of Ciba affiliates that continue
to act as distributors for the Acquired Ciba Business (the "Ciba
Distributors") will be acquired by the Company from time to time prior to
February 28, 1997.
As of June 30, 1996, the aggregate principal amount of the Senior
Subordinated Notes to be issued to Ciba, determined in accordance with the
relevant provisions of the Strategic Alliance Agreement, was estimated at
approximately $34.1 million. However, the actual aggregate principal amount
of the Senior Subordinated Notes is expected to exceed $34.1 million as a
result of the pending acquisition from Ciba of certain assets of the Ciba
Distributors that have not yet been transferred to the Company. Pursuant to
the Strategic Alliance Agreement, the aggregate principal amount of the
Senior Subordinated Notes will be adjusted to reflect the acquisition of
these assets at such times as the acquisitions are completed.
15
<PAGE>
ACQUIRED HERCULES BUSINESS
Hexcel acquired the assets of the composite products division of
Hercules Incorporated ("Hercules"), including Hercules' carbon fibers and
prepreg businesses (the "Acquired Hercules Business"), on June 27, 1996. The
Acquired Hercules Business, which manufactures carbon fibers and prepregs for
aerospace, recreation and general industrial markets, was purchased for $135
million in cash subject to certain post-closing adjustments. The assets
acquired by the Company include the stock of Hercules Aerospace Espana, S.A.
("HAESA"). Hexcel and Hercules have agreed that in the event applicable
Spanish antitrust authorities were to take certain adverse actions in respect
to the Company's acquisition of HAESA, Hexcel has the option to sell its
interest in HAESA back to Hercules for the allocated purchase price paid for
HAESA.
BUSINESS CONSOLIDATION
On May 9, 1996, Hexcel announced that its Board of Directors had
approved a plan for consolidating the Company's operations over a period of
three years. The total expense of this consolidation program is estimated to
be approximately $49 million, including $5.2 million and $29.2 million of
expenses recorded in the first and second quarters of 1996, respectively, and
another $15 million of expenses to be recorded in future periods. Cash
expenditures necessary to complete the business consolidation are expected to
total approximately $44 million, net of estimated proceeds from asset sales.
The objective of the business consolidation program is to integrate
acquired assets and operations into Hexcel, and to reorganize the Company's
manufacturing and research activities around strategic centers dedicated to
select product technologies. The consolidation program is also intended to
eliminate excess manufacturing capacity and redundant administrative
functions. Specific actions contemplated by the consolidation program
include the previously announced closure of the Anaheim, California facility
acquired from Ciba, the closure of a portion of the Welkenraedt, Belgium
facility, the reorganization of the Company's manufacturing operations in
France, the consolidation of the Company's U.S. special process manufacturing
activities, and the integration of sales and marketing resources.
Management expects that the business consolidation program will take
up to three years to complete, in part because of aerospace industry
requirements to "qualify" specific equipment and manufacturing facilities for
the manufacture of certain products. Based on Hexcel's experience with
previous plant consolidations, these qualification requirements necessitate
an approach to the consolidation of manufacturing facilities that will
require two to three years to complete. Management estimates that the
business consolidation will result in annual cost savings of approximately
$28 million when it is fully implemented in 1999. During the period from
1996 through 1998, the cash costs associated with the consolidation program,
net of estimated proceeds from asset sales, are expected to equal the
incremental cash savings generated by the program during the same period.
Further discussion of the business consolidation program is contained
in Note 3 to the Condensed Consolidated Financial Statements included in this
Quarterly Report on Form 10-Q.
16
<PAGE>
RESULTS OF OPERATIONS
SECOND QUARTER
Net sales for the second quarter of 1996 were $166.8 million,
compared with net sales for the second quarter of 1995 of $91.0 million.
Excluding approximately $69 million of sales attributable to the Acquired
Ciba Business, 1996 second quarter sales were approximately $98 million. The
$7 million increase over the comparable period of 1995 was due to improved
sales of prepregs, honeycomb and machined parts, particularly to the
commercial aerospace market. Most of this increase was in North America.
Gross margin was $35.2 million for the second quarter of 1996, or
21.1% of sales, compared with $18.1 million for the second quarter of 1995,
or 19.8% of sales. The increase reflects both higher sales volumes and
improved manufacturing productivity. Excluding the Acquired Ciba Business,
gross margin as a percentage of sales increased from 19.8% in the second
quarter of 1995 to 24.9% in the comparable quarter of 1996.
The operating loss for the second quarter of 1996 was $17.6 million,
compared with operating income of $5.9 million for the second quarter of
1995. The 1996 quarterly loss includes a previously announced charge for
business acquisition and consolidation activities of $29.2 million, of which
$9.3 million was for non-cash write-downs. Selling, general and
administrative expenses were $23.9 million in the 1996 quarter, versus $12.1
million in the comparable period of 1995. The increase primarily reflects
the acquisition of the Acquired Ciba Business.
Hexcel incurred a net loss of $23.7 million in the second quarter of
1996, or $0.65 per share, compared with net income of $1.8 million in the
second quarter of 1995, or $0.10 per share. In addition to the $29.2 million
charge for business acquisition and consolidation activities, the 1996
quarterly net loss includes $1.8 million of interest expense attributable to
the write-off of capitalized debt financing costs. This write-off resulted
from the replacement of the Company's previous revolving credit facility with
a new credit facility in connection with the acquisition of the Acquired
Hercules Business.
There were approximately 36.5 million weighted average shares and
equivalent shares outstanding during the second quarter of 1996, versus 18.0
million during the comparable quarter of 1995. The difference in the number
of weighted average shares and equivalent shares reflects the issuance of
approximately 18.0 million shares of new common stock to Ciba on February 29,
1996 in connection with the acquisition of the Acquired Ciba Business.
YEAR-TO-DATE
Net sales were $293.2 million for the first half of 1996, compared
with $176.2 million for the first half of 1995. Excluding approximately $96
million of sales attributable to the Acquired Ciba Business, 1996 first half
sales were approximately $197 million. The $21 million increase over the
comparable period of 1995 was due to increased sales of prepregs, honeycomb
and machined parts to the commercial aerospace market, as well as increased
sales of reinforcement fabrics to general industrial markets in Europe.
17
<PAGE>
Gross margin was $62.0 million for the first half of 1996, or 21.1%
of sales, compared with $32.9 million for the first half of 1995, or 18.6% of
sales. As with the second quarter, the first half improvement from 1995 to
1996 resulted from higher sales volumes and improved manufacturing
productivity. Excluding the Acquired Ciba Business, gross margin as a
percentage of sales increased from 18.6% in the first half of 1995 to 24.2%
in the comparable period of 1996.
The operating loss for the year-to-date ended June 30, 1996 was $10.8
million, versus operating income for the comparable period of 1995 of $8.6
million. The operating loss for the first half of 1996 includes business
acquisition and consolidation expenses of $34.4 million, and other income of
$3.0 million. Other income was largely attributable to the receipt of an
additional $1.6 million of cash in connection with the disposition of the
Chandler, Arizona manufacturing facility and certain related assets and
technology in 1994, and to the partial settlement for $1.1 million of a claim
arising from the sale of certain assets in 1991.
Hexcel incurred a net loss of $21.8 million in the first half of
1996, or $0.72 per share, compared with a net loss of $0.7 million in the
first half of 1995, or $0.05 per share. The 1996 first half loss includes
$3.4 million of interest expense attributable to the write-off of capitalized
debt financing costs, as well as business acquisition and consolidation
expenses of $34.4 million and other income of $3.0 million. The 1995 first
half loss includes bankruptcy reorganization expenses of $3.0 million.
There were approximately 30.5 million weighted average shares and
equivalent shares outstanding during the first half of 1996, versus 13.4
million during the first half of 1995. The difference in the number of
weighted average shares and equivalent shares reflects the issuance of 10.8
million shares of new common stock between February 9, 1995 and April 6, 1995
in connection with a subscription rights offering and standby purchase
agreement, as well as the issuance of approximately 18.0 million shares of
new common stock to Ciba on February 29, 1996 in connection with the
acquisition of the Acquired Ciba Business.
CAPITAL RESOURCES AND LIQUIDITY
FINANCIAL RESOURCES
In connection with the acquisition of the Acquired Ciba Business,
Hexcel obtained a three-year revolving credit facility of up to $175 million
(the "Senior Secured Credit Facility") to: (a) fund the cash component of the
purchase price; (b) refinance outstanding indebtedness under certain U.S. and
European credit facilities; and (c) provide for the ongoing working capital
and other financing requirements of the Company, including business
consolidation activities, on a worldwide basis. The Senior Secured Credit
Facility was replaced in the second quarter of 1996 by a new revolving credit
facility (the "Revolving Credit Facility") obtained in connection with the
acquisition of the Acquired Hercules Business.
On June 27, 1996, Hexcel obtained the Revolving Credit Facility to:
(a) refinance outstanding indebtedness under the Senior Secured Credit
Facility; (b) finance the purchase of the Acquired Hercules Business; and (c)
provide for the ongoing working capital and other financing requirements of
the Company, including business consolidation activities, on a
18
<PAGE>
worldwide basis. As of June 30, 1996, maximum availability under the
Revolving Credit Facility was $310 million, and outstanding borrowings
totaled approximately $204.3 million. The Revolving Credit Facility expires
in February 1999.
On July 24, 1996, Hexcel completed an offering of $114.5 million in
convertible subordinated notes due in 2003 (the "Convertible Subordinated
Notes"), including $14.5 million in notes sold to the underwriters pursuant
to the exercise of an over-allotment option. The Convertible Subordinated
Notes carry an annual interest rate of 7% and are convertible into Hexcel
common stock at a conversion price of $15.81 per share. The net proceeds of
$111.4 million from this offering were used to repay outstanding borrowings
under the Revolving Credit Facility. As a result of the issuance of the
Convertible Subordinated Notes, maximum availability under the Revolving
Credit Facility was reduced from an initial level of $310 million to
approximately $250 million, in accordance with the terms of that facility.
Management expects that the financial resources of Hexcel will be
sufficient to fund the Company's worldwide operations.
CASH FLOWS
Net cash used by operating activities during the first half of 1996
was $1.3 million. Earnings before business acquisition and consolidation
expenses, other income, interest, taxes, depreciation and amortization
("Adjusted EBITDA") was $30.6 million. This was more than offset by $8.5
million of interest expense, a $23.0 million increase in accounts receivable
and inventories, and $2.3 million of cash payments for business consolidation
activities. The increase in accounts receivable and inventories resulted
from higher sales and production levels. Historically, Hexcel's working
capital requirements are at the highest levels in the second quarter of the
year, reflecting the product delivery schedules of certain of the Company's
customers. Working capital acquired in connection with the acquisitions of
the Acquired Ciba Business and the Acquired Hercules Business are not an
element of operating cash flow.
During the first half of 1995, operating activities used $11.4
million of cash. Adjusted EBITDA was $11.5 million, but the Company incurred
$4.4 million of interest expense, paid $4.6 million in restructuring costs,
and experienced a net increase in accounts receivable and inventories,
largely as a result of higher sales levels. The primary restructuring
activities during the period were the consolidation of certain honeycomb
manufacturing operations at the Company's Casa Grande, Arizona facility,
which is now complete, and the implementation of a new management information
system.
Cash flows from investing and financing activities for the first half
of 1996 primarily reflect the acquisition of the Acquired Ciba Business and
Acquired Hercules Business. In addition to the cash consideration paid for
the Acquired Ciba Business, Hexcel issued approximately 18 million shares of
new common stock to Ciba and incurred obligations to issue Senior
Subordinated Notes and Senior Demand Notes payable to Ciba totaling over $39
million.
Cash flows from investing and financing activities for the first half
of 1995 consisted primarily of the proceeds from the sale of certain assets,
the proceeds from the sale of Hexcel common stock pursuant to a subscription
rights offering and standby purchase agreement, and the payment of allowed
claims pursuant to the Company's Chapter 11 reorganization plan.
19
<PAGE>
Adjusted EBITDA is presented for purposes of describing the significant
components of Hexcel's operating cash flows, and is not presented as an
alternative measure of those cash flows or of the Company's operating results
as determined in accordance with generally accepted accounting principles.
CAPITAL EXPENDITURES
Capital expenditures were $8.7 million for the first half of 1996,
compared with $4.6 million for the first half of 1995. As a result of the
reduced spending levels in recent years, the acquisitions of the Acquired
Ciba Business and the Acquired Hercules Business, and the commencement of the
business consolidation program, management expects that capital expenditures
will increase significantly throughout the remainder of 1996. Such expenditures
will be financed with cash generated from operations and borrowings under
available credit facilities.
RISKS, UNCERTAINTIES AND OTHER FACTORS WITH RESPECT TO "FORWARD-
LOOKING STATEMENTS"
Certain statements in this Quarterly Report on Form 10-Q under the
captions "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Notes to Condensed Consolidated Financial Statements"
and elsewhere constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of Hexcel, or
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: general
economic and business conditions; industry capacity; changes in customer
preferences; demographic changes; competition; changes in methods of
distribution and technology; changes in political, social and economic
conditions and local regulations, particularly in Europe and Asia; the
assimilation of the Acquired Ciba Business; the assimilation of the Acquired
Hercules Business; the loss of any significant customers; changes in business
strategy or development plans; indebtedness of the Company; quality of
management, business abilities and judgment of the Company's personnel;
availability of qualified personnel; the availability, terms and deployment
of capital; changes in, or the failure to comply with, government regulations;
and various other factors referenced in this Quarterly Report on Form 10-Q.
The Company assumes no obligation to update the forward-looking information to
reflect actual results or changes in the factors affecting such forward-looking
information.
The forward-looking information referred to above includes, but is
not limited to, the estimated total cost of Hexcel's business consolidation
program, the estimated amount of cash expenditures to complete the program
and the estimated annual cost savings resulting from the consolidation program.
In addition to the risks, uncertainties and other factors referred to above
which may cause actual amounts to differ materially from estimated amounts,
such estimates of total costs, cash expenditures and annual cost savings are
based on various factors and were derived utilizing numerous important
assumptions, including: (a) achieving estimated reductions in the number of
total employees within anticipated time frames and at currently projected
severance costs levels, while maintaining work flow in the business areas
affected; (b) the ability
20
<PAGE>
to maintain manufacturing know-how with respect to production processes
conducted at facilities that will be closed or at which the number of
employees will be reduced, including cooperation by employees who will be
terminated; (c) the assimilation and integration of the Acquired Ciba
Business with the Company's operations without disruption to manufacturing,
marketing and distribution activities; (d) the assimilation of the production
processes at closed facilities with production at other Company facilities
without undue disruption to the manufacturing, marketing and distribution
functions, including the cooperation of customers in connection with
requalifying the subject products for various customer and government
programs; and (e) selling vacated facilities within anticipated time frames
at anticipated selling prices. The failure of these assumptions to be
realized may cause the actual total cost of the consolidation program, the
actual amount of cash expenditures to complete the program and the actual
annual cost savings resulting from the program to differ materially from the
estimates.
21
<PAGE>
PART II. OTHER INFORMATION
HEXCEL CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An Annual Meeting of Stockholders of the Company was held on
May 23, 1996. Stockholders holding 34,240,987 shares of Hexcel
common stock were present, either in person or by proxy. The
following matters were submitted to the Company's stockholders for a
vote at that meeting, with the results of the vote indicated:
1. The nominees for election to the Board of Directors of the
Company received the following votes:
Votes Cast
<TABLE>
- ---------------------------------------------------------------------------------------
Broker
Director For Against Withheld Abstentions Non-votes
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John M. D. Cheesmond 34,198,168 -- 42,819 -- --
- ---------------------------------------------------------------------------------------
Marshall S. Geller 34,201,508 -- 39,479 -- --
- ---------------------------------------------------------------------------------------
Juergen Habermeier 34,207,358 -- 33,629 -- --
- ---------------------------------------------------------------------------------------
John J. Lee 34,128,842 -- 112,145 -- --
- ---------------------------------------------------------------------------------------
Stanley Sherman 34,209,008 -- 31,979 -- --
- ---------------------------------------------------------------------------------------
Martin L. Solomon 34,207,101 -- 33,886 -- --
- ---------------------------------------------------------------------------------------
George S. Springer 34,208,858 -- 32,129 -- --
- ---------------------------------------------------------------------------------------
Joseph T. Sullivan 34,196,518 -- 44,469 -- --
- ---------------------------------------------------------------------------------------
Hermann Vodicka 34,207,358 -- 33,629 -- --
- ---------------------------------------------------------------------------------------
Franklin S. Wimer 34,201,157 -- 39,830 -- --
- ---------------------------------------------------------------------------------------
</TABLE>
2. Approval of the Company's Restated Certificate of
Incorporation, which incorporates certain amendments to the
Company's Certificate of Incorporation, as described in the
Proxy Statement, received the following votes:
Votes Cast
----------------------------------------------------------
Broker
For Against Withheld Abstentions Non-votes
----------------------------------------------------------
26,764,471 3,791,095 -- 23,730 3,661,691
----------------------------------------------------------
22
<PAGE>
3. Approval of the Company's Amended and Restated Bylaws,
which incorporate certain amendments to the Company's
Bylaws, as described in the Proxy Statement, received the
following votes:
Votes Cast
----------------------------------------------------------
Broker
For Against Withheld Abstentions Non-votes
----------------------------------------------------------
26,807,953 3,744,789 -- 26,554 3,661,691
----------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2.1 Sale and Purchase Agreement dated as of April 15, 1996
among Hexcel Corporation, Hercules Incorporated, Hercules
Nederland BV and HISPAN Corporation (incorporated herein
by reference to Exhibit 2.2 to Hexcel Corporation's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1996).
2.2 Amendment Number One dated as of June 27, 1996 to the Sale
and Purchase Agreement among Hexcel Corporation, Hercules
Incorporated, Hercules Nederland BV and HISPAN Corporation
(incorporated herein by reference to Exhibit 2.2 to Hexcel
Corporation's Current Report on Form 8-K dated July 12,
1996).
2.3 Letter Agreement dated as of June 27, 1996 among Hexcel
Corporation, Hercules Incorporated, Hercules Nederland BV
and HISPAN Corporation (incorporated herein by reference
to Exhibit 2.3 to Hexcel Corporation's Current Report on
Form 8-K dated July 12, 1996).
3.1 Restated Certificate of Incorporation of Hexcel Corporation
(incorporated herein by reference to Exhibit 1 to Hexcel
Corporation's Registration Statement on Form 8-A dated
July 9, 1996).
3.2 Amended and Restated Bylaws of Hexcel Corporation
(incorporated herein by reference to Exhibit 2 to Hexcel
Corporation's Registration Statement on Form 8-A dated
July 9, 1996).
4. Indenture dated as of July 24, 1996 between Hexcel
Corporation and First Trust of California, National
Association.
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<PAGE>
10.1 Credit Agreement dated as of June 27, 1996 among Hexcel
and certain of its subsidiaries as borrowers, the
institutions party thereto as lenders, the institutions
party thereto as issuing banks, Citibank, N.A. as
collateral agent and Credit Suisse as administrative agent
(incorporated herein by reference to Exhibit 99.2 to Hexcel
Corporation's Current Report on Form 8-K dated July 12,
1996).
10.2 Consent Number 1 and First Amendment dated as of July 3,
1996 to the Credit Agreement dated as of June 27, 1996
among Hexcel Corporation and certain of its subsidiaries
as borrowers, the institution party thereto as lenders, the
institutions party thereto as issuing banks, Citibank, N.A.
as collateral agent and Credit Suisse as administrative
agent.
10.3 Modifications dated as of July 8, 1996 to the First
Amendment to the Credit Agreement among Hexcel Corporation
and certain of its subsidiaries as borrowers, the
institutions party thereto as lenders, the institutions
party thereto as issuing banks, Citibank, N.A. as
collateral agent and Credit Suisse as administrative agent.
10.4 Third Amended and Restated Reimbursement Agreement dated as
of June 27, 1996 between Hexcel Corporation and Banque
Nationale de Paris.
11. Statement Regarding Computation of Per Share Earnings.
27. Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K:
Current Report on Form 8-K/A dated April 1, 1996, relating to
the consummation of the acquisition of the worldwide Composites
Division of Ciba-Geigy Limited and Ciba-Geigy Corporation
(including financial statements of the business acquired and pro
forma financial information).
Current Report on Form 8-K dated July 12, 1996, relating to the
consummation of the acquisition of the composite products
division of Hercules Incorporated (including financial statements
of the business acquired and pro forma financial information).
Current Report on Form 8-K/A dated July 26, 1996, relating to the
consummation of the acquisition of the composite products
division of Hercules Incorporated (including financial statements
of the business acquired and pro forma financial information).
24
<PAGE>
SIGNATURES
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, and in the capacity indicated.
HEXCEL CORPORATION
(Registrant)
August 13, 1996 /s/ Wayne C. Pensky
- ------------------------ -------------------------------------
(Date) Wayne C. Pensky,
Corporate Controller and
Chief Accounting Officer
25
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HEXCEL CORPORATION,
ISSUER,
to
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION,
TRUSTEE
INDENTURE
Dated as of July 24, 1996
$100,000,000****
7% Convertible Subordinated Notes Due 2003
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------
**** Subject to increase up to an additional $15,000,000.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions............................................ 1
SECTION 1.02. Compliance Certificates and Opinions................... 9
SECTION 1.03. Form of Documents Delivered to Trustee................. 10
SECTION 1.04. Acts of Holders........................................ 11
SECTION 1.05. Notices, Etc., to Trustee and Company.................. 11
SECTION 1.06. Notices to Holders; Waiver............................. 12
SECTION 1.07. Conflict with Trust Indenture Act...................... 12
SECTION 1.08. Effect of Headings and Table of Contents............... 12
SECTION 1.09. Successors and Assigns................................. 13
SECTION 1.10. Separability Clause.................................... 13
SECTION 1.11. Benefits of Indenture.................................. 13
SECTION 1.12. Governing Law.......................................... 13
SECTION 1.13. Legal Holidays......................................... 13
SECTION 1.14. Record Date for Vote or Consent of Holders............. 13
SECTION 1.15. Incorporators, Stockholders, Officers and Directors of
the Company Exempt from Individual Liability......... 14
ARTICLE II
FORMS OF SECURITY
SECTION 2.01. Forms Generally........................................ 14
SECTION 2.02. Form of Face of Security............................... 15
SECTION 2.03. Form of Reverse of Security............................ 16
SECTION 2.04. Form of Trustee's Certificate of Authentication........ 20
SECTION 2.05. Form of Election to Convert............................ 21
SECTION 2.06. Form of Option of Holder to Elect Purchase............. 23
- ---------------------------
* This Table of Contents is not part of the Indenture.
<PAGE>
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ARTICLE III
THE SECURITIES
SECTION 3.01. Title and Terms........................................ 23
SECTION 3.02. Denominations.......................................... 24
SECTION 3.03. Execution, Authentication, Delivery and Dating......... 24
SECTION 3.04. Temporary Securities................................... 25
SECTION 3.05. Registration, Registration of Transfer and Exchange.... 25
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities....... 26
SECTION 3.07. Payment of Interest; Interest Rights Preserved......... 27
SECTION 3.08. Persons Deemed Owners.................................. 28
SECTION 3.09. Cancellation........................................... 28
SECTION 3.10. Computation of Interest................................ 29
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture................ 29
SECTION 4.02. Application of Trust Money............................. 30
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default...................................... 30
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment..... 32
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee........................................... 33
SECTION 5.04. Trustee May File Proofs of Claim....................... 34
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities........................................... 35
SECTION 5.06. Application of Money Collected......................... 35
SECTION 5.07. Limitation on Suits.................................... 35
SECTION 5.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert.................. 36
SECTION 5.09. Restoration of Rights and Remedies..................... 36
SECTION 5.10. Rights and Remedies Cumulative......................... 36
<PAGE>
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SECTION 5.11. Delay or Omission Not Waiver........................... 37
SECTION 5.12. Control by Holders..................................... 37
SECTION 5.13. Waiver of Past Defaults................................ 37
SECTION 5.14. Undertaking for Costs.................................. 38
SECTION 5.15. Waiver of Stay or Extension Laws....................... 38
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.................... 38
SECTION 6.02. Notice of Defaults..................................... 40
SECTION 6.03. Certain Rights of Trustee.............................. 40
SECTION 6.04. Not Responsible for Recitals or Issuance of
Securities........................................... 41
SECTION 6.05. May Hold Securities.................................... 41
SECTION 6.06. Money Held in Trust.................................... 41
SECTION 6.07. Compensation and Reimbursement......................... 42
SECTION 6.08. Disqualification; Conflicting Interest................. 42
SECTION 6.09. Corporate Trustee Required; Eligibility................ 42
SECTION 6.10. Resignation and Removal; Appointment of Successor...... 43
SECTION 6.11. Acceptance of Appointment by Successor................. 44
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business............................................. 45
SECTION 6.13. Preferential Collection of Claims Against Company...... 45
SECTION 6.14. Appointment of Authenticating Agent.................... 45
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. Company To Furnish Trustee Names and Addresses of
Holders.............................................. 47
SECTION 7.02. Preservation of Information; Communications to
Holders.............................................. 47
SECTION 7.03. Reports by Trustee..................................... 48
SECTION 7.04. Reports by Company..................................... 48
<PAGE>
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. Company May Consolidate, Etc., Only on Certain
Terms................................................ 49
SECTION 8.02. Successor Substituted for Company...................... 50
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Holders..... 50
SECTION 9.02. Supplemental Indentures With Consent of Holders........ 51
SECTION 9.03. Execution of Supplemental Indentures................... 51
SECTION 9.04. Effect of Supplemental Indentures...................... 52
SECTION 9.05. Conformity With Trust Indenture Act.................... 52
SECTION 9.06. Reference in Securities to Supplemental Indentures..... 52
SECTION 9.07. No Impairment of Subordinates.......................... 52
ARTICLE X
COVENANTS
SECTION 10.01. Payment of Principal, Premium and Interest............. 52
SECTION 10.02. Maintenance of Office or Agency........................ 53
SECTION 10.03. Money for Security Payments to be Held in Trust........ 53
SECTION 10.04. Statements of Officers of Company as to Default........ 55
SECTION 10.05. Existence.............................................. 55
SECTION 10.06. Maintenance of Properties.............................. 55
SECTION 10.07. Payment of Taxes and Other Claims...................... 55
SECTION 10.08. Further Instruments and Acts........................... 56
SECTION 10.09. Waiver of Certain Covenants............................ 56
<PAGE>
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.01. Right of Redemption.................................... 56
SECTION 11.02. Applicability of Article............................... 56
SECTION 11.03. Election to Redeem; Notice to Trustee.................. 57
SECTION 11.04. Selection by Trustee of Securities to be Redeemed...... 57
SECTION 11.05. Notice of Redemption................................... 57
SECTION 11.06. Deposit of Redemption Price............................ 58
SECTION 11.07. Securities Payable on Redemption Date.................. 58
SECTION 11.08. Securities Redeemed in Part............................ 59
SECTION 11.09. Conversion Arrangements on Call for Redemption......... 59
ARTICLE XII
CONVERSION OF SECURITIES
SECTION 12.01. Conversion of Privilege and Conversion Price........... 60
SECTION 12.02. Exercise of Conversion Privilege....................... 61
SECTION 12.03. Fractions of Shares.................................... 62
SECTION 12.04. Adjustment of Conversion Price......................... 62
SECTION 12.05. Notice of Adjustments of Conversion Price.............. 70
SECTION 12.06. Notice of Certain Corporate Activities................. 70
SECTION 12.07. Company to Reserve Common Stock........................ 71
SECTION 12.08. Taxes on Conversions................................... 71
SECTION 12.09. Covenant as to Common Stock............................ 71
SECTION 12.10. Cancellation of Converted Securities................... 71
SECTION 12.11. Provisions in Case of Consolidation, Merger, Share
Exchange or conveyance of Assets..................... 71
SECTION 12.12. Trustee Adjustment Disclaimer.......................... 73
SECTION 12.13. When No Adjustment Required............................ 73
<PAGE>
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ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.01. Agreement to Subordinate by Company.................... 73
SECTION 13.02. Distribution on Dissolution, Liquidation and
Reorganization; Subrogation.......................... 73
SECTION 13.03. No Payment in Event of Default on Senior
Indebtedness......................................... 75
SECTION 13.04. Payments Permitted..................................... 76
SECTION 13.05. Authorization to Trustee to Effect Subordination....... 77
SECTION 13.06. Notices to Trustee..................................... 77
SECTION 13.07. Trustee as Holder of Senior Indebtedness............... 77
SECTION 13.08. Modification of Terms of Senior Indebtedness........... 78
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 14.01. Repurchase of Securities at Option of the Holder Upon
Change of Control.................................... 78
SECTION 14.02. Effect of Change of Control Purchase Notice............ 80
SECTION 14.03. Deposit of Repurchase Price............................ 81
SECTION 14.04. Securities Purchased in Part........................... 82
SECTION 14.05. Covenant to Comply with Securities Laws Upon
Purchase of Securities............................... 82
ARTICLE XV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 15.01. Company's Option to Effect Defeasance or Covenant
Defeasance........................................... 82
SECTION 15.02. Defeasance and Discharge............................... 82
SECTION 15.03. Covenant Defeasance.................................... 83
SECTION 15.04. Conditions to Defeasance or Covenant Defeasance........ 83
SECTION 15.05. Deposited Money and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions..... 86
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SECTION 15.06 Reinstatement.......................................... 87
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture dated as of July, 1996.
TRUST INDENTURE ACT SECTION INDENTURE SECTION
- --------------------------- ---------------------
Section 310(a)(1)...................................... 6.09
(a)(2)...................................... 6.09
(a)(3)...................................... N.A.
(a)(4)...................................... N.A.
(a)(5)...................................... 6.09
(b)......................................... 6.08
(c)......................................... N.A.
Section 311(a)......................................... 6.13
(b)......................................... 6.13
(b)(2)...................................... 6.13
(c)......................................... N.A.
Section 312(a)......................................... 7.01; 7.02(a)
(b)......................................... 7.02(b)
(c)......................................... 7.02(b)
Section 313(a)......................................... 7.03(a)
(b)......................................... 7.03(a)
(c)......................................... 7.03(a)
(d)......................................... 7.03(b)
Section 314(a)......................................... 7.04; 10.04
(b)......................................... N.A.
(c)(1)...................................... 1.02
(c)(2)...................................... 1.02
(c)(3)...................................... N.A.
(d)......................................... N.A.
(e)......................................... 1.02
(f)......................................... N.A.
Section 315(a)......................................... 6.01(a)
(b)......................................... 6.02; 7.03
(c)......................................... 6.01(b)
(d)......................................... 6.01(c)
(d)(1)...................................... 6.01(c)(1)
(d)(2)...................................... 6.01(c)(2)
(d)(3)...................................... 6.01(c)(3)
(e)......................................... 5.14
<PAGE>
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TRUST INDENTURE ACT SECTION INDENTURE SECTION
- --------------------------- ---------------------
Section 316(a)(1)(A)................................... 5.12
(a)(1)(B)................................... 5.13
(a)(2)...................................... N.A.
(b)......................................... 5.08
(c)......................................... 1.14
Section 317(a)(1)...................................... 5.03
(a)(2)...................................... 5.04
(b)......................................... 10.03
Section 318(a)......................................... 1.07
<PAGE>
INDENTURE dated as of July 24, 1996, between HEXCEL
CORPORATION, a Delaware corporation (the "Company"), and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION , as Trustee
(the "Trustee").
The Company and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the 7%
Convertible Subordinated Notes Due 2003:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) 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;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles;
(d) 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
(e) unless otherwise specifically stated herein, the words
"Article" and "Section" refer to an Article and Section, respectively,
of this Indenture.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.04.
"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
<PAGE>
2
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 Securities.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"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 the city in which the
Corporate Trust Office of the Trustee is located or The City of New York, New
York are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and
all shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests (however designated) in stock issued by that
corporation.
A "Change of Control" shall occur when: (i) all or substantially
all the Company's assets are sold as an entirety to any person or related group
of persons other than a Permitted Holder; (ii) there shall be consummated any
consolidation or merger of the Company other than with or into a Permitted
Holder (A) in which the Company is not the continuing or surviving corporation
(other than a consolidation or merger with a wholly owned subsidiary of the
Company in which all shares of Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same consideration)
or (B) pursuant to which the Common Stock is converted into cash, securities or
other property, in each case other than a consolidation or merger of the Company
in which the holders of the Common Stock immediately prior to the consolidation
or merger have, directly or indirectly, at least a majority of the common stock
of the continuing or surviving corporation immediately after such consolidation
or merger; or (iii) any person, or persons acting together that would constitute
a "group" for purposes of Section 13(d) of the Exchange Act, together with any
affiliates thereof, other than one or more Permitted Holders, shall beneficially
own (as defined in Rule 13d-3 under the Exchange Act) at least 50% of the total
voting power of all classes of capital stock of the Company entitled to vote
generally in the election of directors of the Company. Notwithstanding
clause (iii) of the foregoing sentence, a Change of Control shall not be deemed
to have occurred
<PAGE>
3
solely by virtue of the Company, any subsidiary of the Company, any employee
stock purchase plan, stock option plan or other stock incentive plan or program,
retirement plan or automatic dividend reinvestment plan or any substantially
similar plan of the Company or any subsidiary of the Company or any person
holding securities of the Company for or pursuant to the terms of any such
employee benefit plan filing or becoming obligated to file a report under or in
response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form or
report) under the Exchange Act disclosing beneficial ownership by it of shares
or securities of the Company, whether in excess of 50% or otherwise.
Notwithstanding the foregoing, a Change of Control shall not be deemed to have
occurred if (i) the current market price (as defined in Section 12.04(B)) of the
Common Stock is at least equal to 105% of the conversion price of the Securities
in effect immediately preceding the time of such Change of Control, or (ii) all
the consideration to the holders of Common Stock (excluding cash payments for
fractional shares) in the transaction giving rise to such Change of Control
consists of shares of common stock that are, or immediately upon issuance will
be, listed on a national securities exchange or quoted on the Nasdaq National
Market, and as a result of such transaction the Securities become convertible
solely into such common stock, or (iii) the consideration to the holders of
Common Stock in the transaction giving rise to such Change of Control consists
of cash or securities that are, or immediately upon issuance will be, listed on
a national securities exchange or quoted on the Nasdaq National Market, or a
combination of cash and such securities, and the aggregate fair market value of
such consideration (which, in the case of such securities, shall be equal to the
average of the daily Closing Prices of such securities during the ten
consecutive Trading Days commencing with the sixth Trading Day following
consummation of such transaction) is at least 105% of the conversion price of
the Securities in effect on the date immediately preceding the closing date of
such transaction.
"Change of Control Notice" has the meaning specified in Section
14.01.
"Ciba" means Ciba-Geigy Limited, a Swiss Corporation.
"Closing Price" on any Trading Day with respect to the per share
price of Common Stock or any other security means the last reported sales price
regular way for a share of such Common Stock or a trading unit of such other
security or, in case no such reported sale takes place on such Trading Day, the
average of the reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange or, if the Common Stock or such other security is
not listed or admitted to trading on such exchange, on the principal national
securities exchange on which the Common Stock or such other security is listed
or admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq
<PAGE>
4
National Market or, if the Common Stock or such other security is not listed or
admitted to trading on any national securities exchange or the Nasdaq National
Market, the average of the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm that is selected
from time to time by the Company for that purpose.
"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" includes any stock of any class of the Company that
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Section 12.11, shares issuable on conversions of Securities
shall include only shares of the class designated as Common Stock of the Company
at the date of this Indenture or shares of any class or classes resulting from
any reclassification or reclassifications thereof and that have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and that are
not subject to redemption by the Company; PROVIDED that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion that the total number of
shares of such class resulting from all such reclassification bears to the total
number of shares of all such classes resulting from all such reclassifications.
"Company" means the Person named as the "Company" in the preamble
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its
President or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee at which
at any particular time its corporate trust business shall be administered.
<PAGE>
5
"Corporation" means a corporation, association, company,
joint-stock company or business trust.
"Covenant Defeasance" has the meaning specified in Section 15.03.
"Credit Facility" means the revolving credit facility dated as of
June 27, 1996 among the Company and certain subsidiaries of the Company, as
borrowers, the lenders party thereto and Credit Suisse as managing agent for the
lenders, as the same may be amended, modified, restated, supplemented, replaced,
renewed, refunded or refinanced from time to time (including subsequent or
successive refundings, refinacings, replacements or renewals).
"Defaulted Interest" has the meaning specified in Section 3.07.
"Defeasance" has the meaning specified in Section 15.02.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated by the
Commission thereunder.
"Fair Value" means the fair value as determined in good faith by
the Board of Directors of the Company after consultation with a nationally
recognized investment banking firm.
"Holder" means a Person in whose name a Security is registered in
the Security 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
including, for all purposes of this instrument, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this instrument.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
<PAGE>
6
"Non-Payment Default" means, at any time when the Company has
outstanding obligations constituting Senior Indebtedness, the occurrence or
existence of any event, circumstance, condition or state of facts that, by the
terms of such Senior Indebtedness, permits one or more holders of such
obligations (or a trustee or agent on behalf of the holders thereof) to declare
such obligations immediately due and payable prior to the date on which they
would otherwise become due and payable, other than a Payment Default.
"Obligation" of any Person means any obligation of such Person to
pay principal, premium, interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company, whether or not a claim for such post-petition interest is allowed in
such proceeding), penalties, reimbursement or indemnification amounts, fees,
expenses or other amounts.
"Officers' Certificate" means a certificate signed by the 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.
"Opinion of Counsel" means a written opinion of counsel reasonably
acceptable to the Trustee, which may be an employee of or counsel for the
Company.
"Optional Closing Date" means each time the Optional Securities
are delivered to and paid for by the underwriters of the Securities initially
issued hereunder.
"Optional Securities" means an aggregate of not more than
$15,000,000 additional principal amount of Securities.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities as to which money for the payment or redemption in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; PROVIDED that, if
such Securities are to be
<PAGE>
7
redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.06 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Company proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid
obligations of the Company and the Trustee shall have received notice
from the Company that such Securities are Outstanding;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities 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 Securities which the Trustee actually knows to be so
owned shall be so disregarded. Securities 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
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Payment Blockage Period" has the meaning specified in Section 13.03.
"Payment Default" means a default in the payment of any principal of
or premium, if any, interest or sinking fund on, or other payment obligation of
the Company constituting, Senior Indebtedness when due, whether at the Stated
Maturity of any such payment or by declaration of acceleration, call for
redemption or otherwise.
"Permitted Holder" means (i) Ciba and its successors and their
affiliates, (ii) any Person formerly described in clause (i) that was spun off
or otherwise distributed to the shareholders of its parent company and (iii) any
corporation owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
<PAGE>
8
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or agency or political
subdivision thereof.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.06 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture, including as applicable without duplication, any premium or accrued
interest due upon such redemption pursuant to the terms of this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the January 15 or July 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in Section 14.01.
"Repurchase Price" has the meaning specified in Section 14.01.
"Responsible Officer", when used with respect to the Trustee, means
the chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller 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" means the 7% Convertible Subordinated Notes Due 2003 of
the Company authenticated and delivered under this Indenture.
<PAGE>
9
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Senior Indebtedness" means the principal of and premium, if any, and
unpaid interest on, and any reasonable fees or costs related to,
(a) indebtedness of the Company (including indebtedness of others guaranteed by
the Company) other than the Securities, whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed (i) for money owing to
banks or their subsidiaries or their affiliates, (ii) for money borrowed other
than from banks evidenced by notes, bonds, debentures or other similar
instruments or (iii) arising under a lease of property, equipment or other
assets, which indebtedness, pursuant to generally accepted accounting principles
then in effect, is classified upon the balance sheet of the Company as a
liability of the Company, unless, in each case, the instrument creating or
evidencing the same or pursuant to which the same is outstanding provides that
such indebtedness is not superior in right of payment to the Securities; (b) to
the extent not otherwise described in clause (a) above, any obligations under
the Credit Facility; and (c) renewals, extensions, modifications and refundings
of any such indebtedness; PROVIDED, HOWEVER, that Senior Indebtedness shall not
include (i) indebtedness to a subsidiary of the Company or (ii) the
7% Convertible Subordinated Debentures of the Company Due 2011.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee as the record date for the payment of Defaulted
Interest pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable security market.
<PAGE>
10
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument is qualified thereunder, except as
provided in Section 9.05; PROVIDED that in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by such amendment, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person names as the "Trustee" in the preamble 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.
"U.S. Government Obligations" has the meaning specified in
Section 15.04.
"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".
SECTION 1.02. 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 an
Officers' Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(b) 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;
(c) a statement that, in the opinion of each such person, he has made
such examination or investigation as is necessary to enable him to express an
<PAGE>
11
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such person,
such condition or covenant has been complied with.
SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case
where several matters are required to be certified by, or covered by 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 related 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
erroneous. Any such certificate or opinion or representations may be based,
insofar as they relate to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers 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 1.04. ACTS OF HOLDERS. (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
<PAGE>
12
(subject to Section 6.01) 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 ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security 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 Security. Without limiting the foregoing, a Holder entitled to give or
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
SECTION 1.05. NOTICES, ETC., TO TRUSTEE AND COMPANY. Any request,
demand, authorization, direction, notice, consent, waiver or other Act of
Holders or other document provided or permitted by this Indenture to be made
upon, given or furnished to, or filed with,
(a) 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 First Trust of California, National Association, 1
California Street, Fourth Floor, San Francisco, California 94111, Corporate
Trust Office, Attention: Corporate Trust Department, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing
<PAGE>
13
and mailed, first-class postage prepaid, to the Company, addressed to it at
Hexcel Corporation, Two Stamford Plaza, 281 Tresser Boulevard, Stamford,
Connecticut 06901 or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 1.06. 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 his
address as it appears in the Security 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 1.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act that is required under such Act to be a part of and govern this Indenture,
the latter provision shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the provisions of the Trust Indenture Act shall be deemed to apply to
this Indenture as so modified, or if excluded shall not be deemed to apply to
this Indenture, as the case may be.
SECTION 1.08. 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 of any of the terms or provisions hereof.
SECTION. 1.09. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture by the Company and the Trustee shall bind their respective
successors and assigns, whether so expressed or not.
<PAGE>
14
SECTION 1.10. SEPARABILITY CLAUSE. In case any provision to this
Indenture or in the Securities 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 1.11. BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Securities, 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 Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.12. GOVERNING LAW. This Indenture and the Securities shall
be governed by and construed in accordance with the laws of the State of New
York, without regard to principles of conflicts of laws.
SECTION 1.13. LEGAL HOLIDAYS. In any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Security or the last date on
which a Holder has the right to convert his Securities shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) or conversion
of the Securities 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 or Redemption Date, or at the Stated Maturity, or on such
last day for conversion; 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, if such payment is made or duly provided for on the next
succeeding Business Day.
SECTION 1.14. RECORD DATE FOR VOTE OR CONSENT OF HOLDERS. The
Company (or, in the event deposits have been made pursuant to Articles IV or XV
or after the occurrence of an Event of Default the Trustee has called for action
by the Holders, the Trustee) may set a record date for purposes of determining
the identity of Holders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture, which record date shall be
the later of ten days prior to the first solicitation of such vote or consent or
the date of the most recent list of Holders furnished to the Trustee pursuant to
Section 7.01 hereof prior to such solicitation. If a record date is fixed,
those persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
<PAGE>
15
SECTION 1.15. INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS OF
THE COMPANY EXEMPT FROM INDIVIDUAL LIABILITY. No recourse under or upon any
obligation, covenant or agreement of this Indenture or any indenture
supplemental hereto or of any Security, or for any claim based thereon or
otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor Person, either directly or through the Company or
any successor Person, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that this Indenture and the obligations issued hereunder
are solely corporate obligations, and that no such personal liability, whatever
shall attach to, or is or shall be incurred by the incorporators, or past,
present or future stockholders, officers or directors, as such, of the Company
or of any successor Person, or any of them, because of the creation of the
indebtedness hereby authorized, or under or by reason of the obligations,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom; and that any and all such personal liability of every name
and nature, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
stockholder, officer or director, as such, because of the creation of the
indebtedness hereby authorized, or unless or by reason of the obligation,
covenants or agreements contained in this Indenture or in any of the Securities
or implied therefrom are hereby expressly waived and released as a condition of,
and as a consideration for, the execution of this Indenture and the issue of
such Securities.
ARTICLE II
FORMS OF SECURITIES
SECTION 2.01. FORMS GENERALLY. The Securities and the Trustee's
certificates of authentication 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 Securities, as evidenced by their execution thereof,
with the consent of the Trustee. The terms and provisions of the Securities set
forth herein shall constitute, and are hereby expressly made, a part of this
Indenture and the Company and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and such provisions and to be
bound thereby.
<PAGE>
16
The definitive Securities relating thereto shall be printed,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Securities may be listed, all as determined by the
officers executing such Securities, as evidenced by their execution thereof,
with the consent of the Trustee.
SECTION 2.02. FORM OF FACE OF SECURITY.
HEXCEL CORPORATION
7% Convertible Subordinated Note Due 2003
No. _______ $_____
Hexcel Corporation, a Delaware corporation (herein called the
"Company," which term includes any successor corporation under the Indenture
hereinafter referenced), for value received, hereby promises to pay to ________
or registered assigns, the principal sum of _______ Dollars on August 1, 2003,
and to pay interest thereon from July 24, 1996 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on February 1 and August 1 in each year, commencing February 1, 1997, until the
principal hereof is paid or made available for payment, at the rate per annum of
7% from and including the date of issuance of this Security until maturity or
earlier redemption. 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 Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the January 15 and July 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment 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 Security (or one or more Predecessor
Securities) 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 Securities 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
Securities 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 premium, if any) and interest on this Security will be made at
the office or agency of the Company in the Borough of Manhattan, The City of New
York, or at any other office or agency maintained by the Company for such
purpose, in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of
<PAGE>
17
public and private debts; 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 Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereof has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
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.
HEXCEL CORPORATION
(seal)
By:__________________
Attest: (Title)
_________________
(Title)
SECTION 2.03. FORM OF REVERSE OF SECURITY. This Security is one of a
duly authorized issue of Securities of the Company designated as its 7%
Convertible Subordinated Notes Due 2003 (herein called the "Securities"),
limited in aggregate principal amount of $100,000,000 (subject to increase as
provided in the Indenture up to $115,000,000 aggregate principal amount), issued
and to be issued under an Indenture, dated as of July 24, 1996 (herein called
the "Indenture"), between the Company and First Trust of California, National
Association, 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
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or before
the close of business on August 1, 2003, or in case this Security or a portion
hereof is called
<PAGE>
18
for redemption, then in respect of this Security or such portion hereof until
and including, but (unless the Company defaults in making the payment due upon
redemption) not after, the close of business on the last Business Day preceding
the Redemption Date, to convert this Security (or any portion of the principal
amount hereof which is $1,000 or an integral multiple thereof), at the principal
amount hereof, or of such portion, into fully paid and non-assessable shares
(calculated as to each conversion to the nearest 1/100 of a share) of Common
Stock of the Company at a conversion price equal to $15.81 aggregate principal
amount of Securities for each share of Common Stock (or at the current adjusted
conversion price if an adjustment has been made as provided in the Indenture) by
surrender of this Security, duly endorsed or assigned to the Company or in
blank, to the Company at its office or agency in the Borough of Manhattan, The
City of New York, or at any other office or agency maintained by the Company for
such purpose, accompanied by written notice to the Company that the Holder
hereof elects to convert this Security, or if less than the entire principal
amount hereof is to be converted, the portion hereof to be converted, and, in
case such surrender shall be made during the period from the close of business
on any Regular Record Date next preceding any Interest Payment Date to the
opening of business on such Interest Payment Date, also accompanied by payment
in New York Clearing House or other funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted. Subject to the aforesaid
requirement for payment and, in the case of a conversion after the Regular
Record Date next preceding any Interest Payment Date and on or before such
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (with certain exceptions provided in the Indenture), no
payment or adjustment is to be made on conversion for interest accrued hereon or
for dividends on the Common Stock issued on conversion. No fractions of shares
or scrip representing fractions of shares will be issued on conversion, but
instead of any fractional interest the Company shall pay a cash adjustment as
provided in the Indenture. The conversion price is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of
certain consolidations, mergers or share exchanges to which the Company is a
party or the conveyance, transfer or lease of all or substantially all of its
assets, the Indenture shall be amended, without the consent of any Holders of
Securities, so that this Security, if then outstanding, will be convertible
thereafter, during the period this Security shall be convertible as specified
above, only into the kind and amount of securities, cash and other property
receivable upon the consolidation, merger, share exchange, conveyance, transfer
or lease by a holder of the number of shares of Common Stock into which this
Security might have been converted immediately prior to such consolidation,
merger, share exchange, conveyance, transfer or lease (assuming such holder of
Common Stock failed to exercise any rights of election and
<PAGE>
19
received per share the kind and amount received per share by a plurality of non-
electing shares).
The Securities are redeemable, at the Company's option, as a whole or
from time to time in part (in denominations of $1,000 or integral multiples
thereof), on or after August 9, 1999, and prior to maturity, upon not less than
30 nor more than 60 days' notice mailed to the registered Holder thereof. The
redemption price shall be equal to 103.5% of the principal amount of the
Securities redeemed during the period commencing on August 9, 1999 and ending
August 8, 2000, 102.33% of the principal amount of the Securities redeemed
during the period commencing August 9, 2000 and ending August 8, 2001, 101.17%
of the principal amount of the Securities redeemed during the period commencing
August 9, 2001 and ending August 8, 2002, and 100% of the principal amount of
the Securities redeemed thereafter, together, in each case, 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
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.
In the event of redemption or conversion of this Security in part
only, a new Security or Securities for the unredeemed or unconverted portion
thereof will be issued in the name of the Holder thereof upon the cancellation
hereof.
The Indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and subject in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
In the event there shall occur any Change of Control with respect to
the Company, each Holder of Securities shall have the right, at such Holder's
option but subject to the conditions set forth in the Indenture, to require the
Company to purchase on the Repurchase Date all or any part of such Holder's
Securities at a Repurchase Price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest to the Repurchase Date and in the
manner specified in the Indenture. Failure by the Company to repurchase the
Notes when required under the preceding sentence will result in an Event of
Default whether or not such repurchase is permitted by the subordination
provisions of the Indenture.
<PAGE>
20
If an Event of Default shall occur and be continuing, the principal of
all the Securities may be declared due and payable in the manner and with the
effect provided in the Indenture.
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 Securities 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 Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, 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 Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 or any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities 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.
Prior to due presentment of this Security 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 Security is registered as the owner
hereof for all purposes whether or not this Security be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of New York as applied to contracts made
and
<PAGE>
21
performed within the State of New York, without regard to principles of
conflicts of laws.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ASSIGNMENT FORM
To Assign this Security, fill in the form below:
I or we assign and transfer this Security to ________ whose tax identification
number or social security number is __________, and whose address is (print or
type below, including zip code):
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
I or we irrevocably appoint ___________ agent to transfer this Security on the
books of the Company. The Agent may substitute another to act for him.
Date: __________
Your signature: -------------------------
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee(1):
- ------------------------------
(1) Participant in a recognized signature guarantee medallion program (or
other signature guarantor satisfactory to the Trustee).
<PAGE>
22
SECTION 2.04. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned Indenture.
First Trust of California, National
Association, as Trustee
by
------------------------------------
Authorized Signatory
Date of Authentication:
-----------------
SECTION 2.05. ELECTION TO EXERCISE CONVERSION RIGHT. The
undersigned Holder of this Security hereby irrevocably exercises the option to
convert this Security, or the portion (which is $1,000 or an integral multiple
thereof) below designated, into shares of Common Stock of Hexcel Corporation in
accordance with the terms of the Indenture referred to in this Security, and
directs that the shares issuable and deliverable upon conversion, together with
any check in payment for fractional shares, be issued in the name of and
delivered to the undersigned registered Holder hereof, unless a different name
has been indicated in the assignment 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 and shall cause the undersigned's
signature to be guaranteed. Any amount required to be paid by the undersigned
on account of interest accompanies this Security.
<PAGE>
23
Portion of Security to be converted
($1,000 or an integral multiple thereof):
$__________________
Date: _____________
Signature: ---------------------------------------------
(Sign exactly as your name appears on the
other side of this Security)
If shares of Common Stock are to be
issued and registered otherwise than to
the registered Holder named above, please
have the above signature guaranteed and
print or typewrite name and address,
including zip code, and social security or
other taxpayer identification number of
the person in whose name such Common Stock
will be registered.
------------------------------------------
------------------------------------------
------------------------------------------
Signature Guarantee(2)
- ------------------------------
(2) Participant in a recognized signature guarantee medallion program (or
other signature guarantor satisfactory to the Trustee).
<PAGE>
24
Election to Exercise Purchase Right. If you wish to elect to have
this Security purchased by the Company pursuant to Article XIV of the Indenture,
check the box: / /
If you wish to elect to have only part of this Security purchased by
the Company pursuant to Article XIV of the Indenture, state the amount you elect
to have purchased:
$
Date:
Signature: ---------------------------------
(Sign exactly as your name appears on the
other side of this Security)
Signature Guarantee(3)
- -------------------------------------
ARTICLE III
THE SECURITIES
SECTION 3.01. TITLE AND TERMS. The aggregate principal amount of
Securities that may be authenticated and delivered under this Indenture is
limited to (a) $100,000,000, plus (b) such aggregate principal amount (which may
not exceed $15,000,000 principal amount) of Securities as shall be purchased by
the Underwriters on one or more Optional Closing Dates pursuant to the
Underwriting Agreement dated July 18, 1996 among the Company and CS First
Boston Corporation and Bear, Stearns & Co. Inc., as Underwriters, except for
Securities authenticated and delivered upon registration of transfer of, or
exchange for, or in lieu of, other Securities pursuant to Sections 3.04, 3.05,
3.06, 9.06, 11.08, 12.02 or 14.04.
The Securities shall be known and designated as the "7% Convertible
Subordinated Notes Due 2003" of the Company. Their Stated Maturity shall be
- ----------------------
Participant in a recognized signature guarantee medallion program (or other
signature guarantor satisfactory to the Trustee).
<PAGE>
25
August 1, 2003, and they shall bear interest at the rate of 7% per annum, from
and including the date of issuance thereof until maturity or earlier redemption,
payable semi-annually on February 1 and August 1 commencing February 1, 1997,
until the principal thereof is paid or made available for payment.
The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Company in the Borough of
Manhattan, The City of New York, 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 Security Register.
The Securities shall be redeemable as provided in Article XI.
The Securities shall be convertible as provided in Article XII.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
The Securities shall be subject to repurchase by the Company, at the
option of the Holders as provided in Article XIV.
SECTION 3.02. DENOMINATIONS. The Securities shall be issuable only
in registered form without coupons and only in denominations of $1,000 or any
integral multiple thereof.
SECTION 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Securities shall be executed on behalf of the Company by its Chairman of the
Board, its President or one of its Vice Presidents, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile. Securities 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 Securities or
did not hold such offices at the date of such Securities. At any time and from
time to time after the execution and delivery of this Indenture, the Company may
deliver Securities executed by the Company up to an aggregate principal amount
stated in the Securities, to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such Securities; and an
authorized officer of the Trustee in accordance with such Company Order shall
authenticate and deliver such Securities as provided in this Indenture and not
otherwise. Each Security shall be dated the date of its authentication. No
Security
<PAGE>
26
shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of
authentication substantially in the form provided for herein executed by an
authorized officer of the Trustee by manual signature, and such certificate upon
any Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture.
SECTION 3.04. TEMPORARY SECURITIES. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions, and other variations as the officers executing such Securities
may determine, as evidenced by their execution of such Securities with the
consent of the Trustee.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 10.02, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Securities of
authorized denominations. Until so exchanged, the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as definitive
Securities.
SECTION 3.05. 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 Section 10.02 being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Trustee is hereby appointed
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided. Upon surrender for registration of transfer of
any Security at an office or agency of the Company designated pursuant to
Section 10.02 for such purpose, the Company shall execute, and an authorized
officer of the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount. At the
option of the Holder, Securities may be exchanged for other Securities of any
authorized
<PAGE>
27
denominations and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and an authorized
officer of the Trustee shall authenticate and deliver, the Securities which the
Holder making the exchange is entitled to receive. All Securities issued upon
any registration or transfer or exchange of Securities shall be the valid
obligations of the Company evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange. Every Security 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 or transfer in form satisfactory to the Company and the Security
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 Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.04, 3.06, 9.06, 11.08, 12.02 or 14.04 not
involving any transfer. The Company shall not be required (i) to issue,
register the transfer of or exchange any Security during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities selected for redemption under Section 11.04 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES. If
any mutilated Security is surrendered to the Trustee, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security 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
Security 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 to the Company or the Trustee that such Security 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
Security, a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
<PAGE>
28
Upon the issuance of any new Security 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 Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security 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 Securities 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 Securities.
SECTION 3.07. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security 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 Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.
Any interest on any Security 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 notwithstanding the fact that such Holder was a
Holder on such Regular Record Date, and such Defaulted Interest may be paid by
the Company at its election, as provided in Clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Security 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
<PAGE>
29
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
Security 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 Securities (or their respective Predecessor
Securities) are registered at the close of business on such Special Record Date
and shall no longer be payable pursuant to the following Clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities 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 Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date,
subject to the obligation to deliver funds pursuant to Section 12.02, 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 Security (or one or more Predecessor Securities) is
registered at the close of business on such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable.
SECTION 3.08. PERSONS DEEMED OWNERS. Prior to due presentment of a
Security 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 Security is
registered as the owner of such Security for the purpose of receiving payment of
<PAGE>
30
principal of (and premium, if any) and (subject to Section 3.07) interest on
such Security and for all other purposes whatsoever, whether or not such
Security 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 3.09. CANCELLATION. All Securities 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 canceled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all securities so delivered shall be promptly canceled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Securities held by the Trustee shall be
disposed of by the Trustee and a certificate of destruction shall be delivered
to the Company.
SECTION 3.10. COMPUTATION OF INTEREST. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall upon Company Request cease to be of further effect (except as to
any surviving rights of conversion, registration of transfer or exchange of
Securities and rights of the Trustee 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) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.06 and
(ii) Securities 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 10.03) have been delivered to the Trustee for cancellation; or
<PAGE>
31
(B) all such Securities not theretofore delivered to the Trustee
for cancellation have become due and payable and the Company has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Trustee has not received any notice pursuant to the terms of
Section 13.06; and
(4) 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.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 3.05, 3.06, 6.07, 7.02, 10.01, 10.02 and
10.03 and in Article XII shall survive until the Securities are no longer
outstanding and the obligations of the Company in Section 6.07 shall survive
termination of this Indenture.
SECTION 4.02. APPLICATION OF TRUST MONEY. Subject to the provisions
of the last paragraph of Section 10.03, all money deposited with the Trustee
pursuant to Section 4.01 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee. All moneys deposited with the Trustee
pursuant to Section 4.01 (and held by it or any Paying Agent) for the payment of
Securities subsequently converted shall be returned to the Company upon Company
Request.
<PAGE>
32
ARTICLE V
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of
Article XIII or 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 Security when it
becomes due and payable, and continuance of such default for a period of
30 days, whether or not such payment is prohibited by Article XIIII; or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity, whether or not such payment is prohibited
by Article XIII; or
(3) default in the payment of the Redemption Price in respect of any
Security on the Redemption Date therefor in accordance with the provisions
of Article XI, whether or not such payment is prohibited by Article XIII;
or
(4) default in the payment of the Repurchase Price in respect of any
Security on the Repurchase Date therefore in accordance with the provision
of Article XIV, whether or not such payment is prohibited by Article XIII;
or
(5) 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 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities in 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
(6) default, beyond any applicable grace period, if any, in the
payment of amounts due under any mortgage, indenture or instrument under
which there is outstanding, or by which there is secured or evidenced, any
indebtedness of the Company in excess of an aggregate of $25 million at its
stated maturity either for borrowed money or representing any Senior
<PAGE>
33
Indebtedness or default under any such indebtedness that results in the
acceleration of such indebtedness prior to its express maturity; PROVIDED,
HOWEVER, that if such default under such mortgage, indenture or instrument
shall be remedied or cured by the Company or waived by the holders of such
indebtedness prior to an acceleration under this Indenture, then the Event
of Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon the
part of either the Trustee or any of the Holders of the Securities; or
(7) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of
60 consecutive days; or
(8) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated as bankrupt or insolvent, or the consent by the Company to
the entry of a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action.
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
an Event of Default (other than an Event of Default specified in clause (7) or
(8) of
<PAGE>
34
Section 5.01) 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
Securities may declare the principal of all the Securities to be due and payable
by a notice in writing to the Company (and to the Trustee if given by a Holder),
and such principal shall become immediately due and payable. If an Event of
Default specified in clause (7) or (8) of Section 5.01 occurs, all unpaid
principal and accrued interest on the Securities then outstanding shall 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 a declaration of acceleration has been made as a
result of any Event of Default described in Section 5.01, 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 Securities, 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 interest on all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Securities,
(C) to the extent the payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
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 nonpayment of the principal
of Securities which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if
<PAGE>
35
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for a
period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof, including payment of the
Redemption Price on any Redemption Date, or
(3) default is made in the payment of the Change in Control Purchase
Price in respect of any Security on the Change in Control Purchase Date
thereof in accordance with the provisions of Article XIV.
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
borne by the Securities, 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 Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, 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
appropriate 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 5.04. 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 Securities or
the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by
<PAGE>
36
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
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
and to take any and all actions authorized under the Trust Indenture Act or
any other applicable law as may be appropriate 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
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payment 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 6.07.
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 Securities
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 5.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities 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 Securities in respect of which such
judgment has been recovered.
SECTION 5.06. APPLICATION OF MONEY COLLECTED. Subject to
Article XIII, any money collected by the Trustee pursuant to this Article shall
be
<PAGE>
37
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities 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 6.07; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities 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 Securities for principal (and premium, if any) and interest,
respectively; and
THIRD: To the payment of the remainder, if any, to whomsoever may be
lawfully entitled thereto, or as a court of competent jurisdiction may direct.
SECTION 5.07. LIMITATION ON SUITS. No Holder of any Security 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 Securities 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 Securities;
<PAGE>
38
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 5.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST AND TO CONVERT. Notwithstanding any other provision in
this Indenture, the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal of (and premium,
if any) and (subject to Section 3.07) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to convert such Security in accordance
with Article XII and to institute suit for the enforcement of any such payment
and right to convert, and such rights shall not be impaired without the consent
of such Holder.
SECTION 5.09. 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 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 5.10. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in the last paragraph of Section 3.06, 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 5.11. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Trustee or of any Holder of any Security 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
<PAGE>
39
be exercised from time to time, and as often may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 5.12. CONTROL BY HOLDERS. The Holders of a majority in
principal amount of the Outstanding Securities 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 5.13. WAIVER OF PAST DEFAULTS. The Holders of not less than
a majority in principal amount of the Outstanding Securities may on behalf of
the Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security,
(2) in respect of a covenant or provision hereof which under Article X
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected, or
(3) in respect of the conversion rights under Article XII.
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 5.14. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this
<PAGE>
40
Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
on any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date) or for
the enforcement of the right to convert any Security in accordance with
Article XII.
SECTION 5.15. 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 hereinafter 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 VI
THE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except
during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case 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
<PAGE>
41
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders of a majority in principal amount of the Outstanding
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.02. NOTICE OF DEFAULTS. Within 90 days after the
occurrence of any default hereunder, the Trustee shall transmit by mail to all
Holders, as their names and addresses appear in the Security Register, notice of
such default hereunder known to the Trustee, unless such default shall have been
cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest on any Security,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors or
Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interest of the Holders. The Trustee shall not be
deemed to have knowledge of any default
<PAGE>
42
except (i) a payment default under Section 5.01(1), (2), (3) or (4) so long as
the Trustee is the Paying Agent or (ii) any default of which the Trustee shall
have received written notification or a Responsible Officer charged with the
administration of this Indenture shall have obtained actual knowledge, and such
notification shall not be deemed to include receipt of information obtained in
any report or other documents furnished under Section 7.04 of this Indenture,
which reports and documents the Trustee shall have no duty to examine. 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 6.03. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions
of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) 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, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(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 security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
<PAGE>
43
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the relevant books, records and premises of
the Company, personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in the Securities, 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
representation as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee shall not be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 6.05. MAY HOLD SECURITIES. The Trustee, any Authenticating
Agent, any Paying Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal
with the Company with the same rights it would have if it were not the Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.
SECTION 6.06. 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 or any
money received by it hereunder except as otherwise agreed with the Company.
<PAGE>
44
SECTION 6.07. 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 compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advances as may be attributable to any action or failure to
act by the Trustee that breaches the applicable standard of care relating
thereto; and
(3) to indemnify the Trustee (including its officers, directors,
employees and agents) for, and to hold it harmless against, any loss,
liability or expense incurred, unless incurred in connection with any
action or failure to act by the Trustee that breaches the applicable
standard of care relating thereto, arising out of or in connection with the
acceptance or administration of the trust hereunder, 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.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in clauses (7) and (8) of Section 5.01, the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 6.08. DISQUALIFICATION; CONFLICTING INTEREST. The Trustee
shall be subject to the provisions of Section 3.10(b) of the Trust Indenture
Act. Nothing herein shall prevent the Trustee from filing with the Commission
the application referred to in the penultimate paragraph of Section 3.10(b) of
the Trust Indenture Act.
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45
SECTION 6.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall
at all times be a Trustee hereunder who satisfies the requirements of
paragraphs (1), (2) and (5) of Section 3.10(a) of the Trust Indenture Act and
which shall 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 exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 and subject to supervision or
examination by Federal or state authority. If such corporation 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 6.10. 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 in accordance with the applicable
requirements of Section 6.11.
(b) The Trustee may resign at any time by giving written notice to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 6.11 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.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) The Trustee shall fail to comply with Section 6.08 ,
(2) the Trustee shall cease to be eligible under Section 6.09, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or 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,
<PAGE>
46
then in any such case, (i) the Company may remove the Trustee or (ii) subject to
Section 5.14, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
(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 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 Securities 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 required by Section 6.11 within 60 days after the retiring Trustee
resigns or is removed, the retiring Trustee, the Company or any Holder who has
been a bona fide Holder of a Security for at least six months 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 Security Register. Each
notice shall include the name of the successor Trustee and the address of its
Corporate Trust Office.
SECTION 6.11. 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, the retiring Trustee shall be released from all
obligations for future actions under this Indenture and such successor Trustee,
without any further act, deed or conveyance, shall become vested, with all the
rights, powers, trusts and duties of the retiring Trustee under this Indenture;
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. Upon
request of any such successor Trustee, the Company shall execute any and all
<PAGE>
47
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 6.12. 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 Securities 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 Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee is subject to Section 3.11(a) of the Trust Indenture Act, excluding any
creditor relationship listed in Section 3.11(b) of the Trust Indenture Act. A
trustee who has resigned or been removed shall be subject to Section 3.11(a) of
the Trust Indenture Act to the extent indicated therein.
SECTION 6.14. APPOINTMENT OF AUTHENTICATING AGENT. The Trustee may
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon original issue and
upon exchange, registration of transfer, partial conversion or partial
redemption thereof or pursuant to Section 3.06, and Securities 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.
Whatever reference is made in this Indenture to the authentication and delivery
of Securities 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 $100,000,000 and subject to supervision or examination
by Federal or state authority.
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48
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 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 Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. 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 6.07.
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49
If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Securities described in the within mentioned
Indenture.
First Trust of California, National
Association, as Trustee
by
-----------------------------
As Authenticating Agent
by
-----------------------------
As Authorized Signatory
ARTICLE VII
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS. If the Trustee is not the Security Registrar, the Company will furnish
or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date, and
(b) at such other times as the Trustee may request in writing, within
10 Business 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.
SECTION 7.02. 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 7.01 or the names and
addresses of
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50
Holders received by the Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided in Section 7.01 upon
receipt of a new list so furnished.
(b) Holders may communicate pursuant to Section 3.12(b) of the Trust
Indenture Act with other Holders with respect to their rights under this
Indenture or the Securities. The Company, the Security Trustee, the Registrar
and any other person shall have the protection of Section 3.12(c) of the Trust
Indenture Act.
SECTION 7.03. REPORTS BY TRUSTEE. (a) If such report is required by
Section 3.13 of the Trust Indenture Act, within 60 days after each May 15,
beginning with May 15 following the date of this Indenture, and so long as the
Securities shall remain outstanding the Trustee shall mail to each Holder a
brief report dated as of such May 15 that complies with Section 3.13(a) of the
Trust Indenture Act. The Trustee also shall comply with Section 3.13(b)(2), (c)
and (d) of the Trust Indenture Act.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each securities exchange
upon which the Securities are listed, with the Commission and with the Company.
The Company will notify the Trustee when the Securities are listed on any
securities exchange.
SECTION 7.04. REPORTS BY COMPANY. The Company shall:
(1) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Company is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file with the
Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary
and periodic information, documents, and reports which may be required
pursuant to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be prescribed from
time to time in such rules and regulations including, in the case of annual
reports, if required by such rules and regulations, certificates or
opinions of independent public accountants, conforming to the requirements
of Section 1.02, as to compliance with
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51
conditions or covenants, compliance with which is subject to verification
by accountants;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, in the manner and to the extent
provided in Section 7.03(a), such summaries of any information, documents
and reports required to be filed by the Company pursuant to paragraphs (1)
and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merger into any other Person or
convey, transfer or lease all or substantially all of its assets to any Person,
and the Company shall not permit any Person to consolidate with or merge into
the Company unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease all or substantially all of its assets
to any Person, the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer,
or which leases, all or substantially all of the assets of the Company
shall be a corporation, partnership or trust, organized or validly 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 premium, if any) and interest on all the Securities and the
performance of every covenant of this Indenture on the part of the Company
to be performed or observed and shall have provided for conversion rights
in accordance with Section 12.11;
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(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 happened and be continuing;
(3) 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, if a supplemental indenture is required
in connection with such transaction, such supplemental indenture, comply
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.
SECTION 8.02. SUCCESSOR SUBSTITUTED FOR COMPANY. Upon any
consolidation of the Company with, or merger of the Company into, any other
Person or any conveyance, transfer or lease of all or substantially all of the
assets of the Company in accordance with Section 8.01, the successor Person
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 Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, 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:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities in accordance with Article VIII; 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; or
(3) to add any additional Events of Default; or
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(4) to secure the Securities; or
(5) to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Section 12.11; or
(6) 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 provision of
this Indenture, PROVIDED such action pursuant to this Clause (6) shall not
adversely affect the interests of the Holders in any material respect.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities, by 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 Security
affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security or, once a Repurchase Notice has been sent
following a Change of Control, the date on which the Securities are subject
to repurchase pursuant to Article XIV, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof or the price payable upon repurchase pursuant to
Article XIV, or change the place of payment where, or the coin or currency
in which, any Security or any premium or purchase price 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 a repurchase pursuant to Article XIV, on or after the Repurchase
Date), or adversely affect the right to convert any Security as provided in
Article XII (except as permitted by Section 9.01(5)) or modify the
provisions of this Indenture with respect to the subordination of the
Securities in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of
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54
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section or Section 5.13 or
Section 10.09, 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 Security affected
thereby.
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.
SECTION 9.03. 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
6.01) shall be fully protected in relying upon, an Opinion of Counsel of the
Company 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 9.04. 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, subject to Section 9.02, every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.05. 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 9.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities 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 or the Trustee shall so determine,
new Securities so modified as to conform, in the opinion of the Company, to any
such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
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55
SECTION 9.07. NO IMPAIRMENT OF SUBORDINATES. No supplemental
indenture which modifies the provisions of Article XIV in any manner which
alters the subordination of the Securities shall be effective against any holder
of outstanding Senior Indebtedness without the consent of such holder.
ARTICLE X
COVENANTS
SECTION 10.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company shall duly and punctually pay or cause to be paid the principal of (and
premium, if any) and interest on the Securities and the Redemption Price and the
Repurchase Price, if any, each in accordance with the terms of the Securities
and this Indenture.
To the extent permitted by applicable law, the Company shall pay
interest on overdue amounts at the rate set forth in paragraph 1 of the
Securities, and it shall pay interest on overdue interest at the same rate
compounded semi-annually (to the extent that the payment of such interest shall
be legally enforceable), which interest on overdue interest shall accrue from
the date such amounts became overdue.
SECTION 10.02. MAINTENANCE OF OFFICE OR AGENCY. The Company shall
maintain in the Borough of Manhattan, The City of New York an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange, where Securities
may be surrendered for conversion or purchase pursuant to Article XIV and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall 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 fails to maintain any such required office
or agency or fails 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 of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes and may from time
to time rescind such designation; PROVIDED, HOWEVER, that no such designation or
rescission shall in any manner relieve the Company of its obligations to
maintain an office or agency in the Borough of Manhattan, The City of New York
for such purposes. The
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56
Company shall 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 10.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST. If
the Company at any time acts as its own Paying Agent, it shall, on or before
each due date of the principal of (and premium, if any) or interest on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums are paid to such Persons or otherwise
disposed of as herein provided and shall promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it shall,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal, premium 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 shall 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 (and
premium, if any) or interest on Securities 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 Securities) in the making of any payment of
principal (and premium, if any) 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 sums were held by the Company or such
Paying
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57
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent 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 (and premium, if
any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) 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 Security 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.
SECTION 10.04. STATEMENTS OF OFFICERS OF COMPANY AS TO DEFAULT.
(a) The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof (but no later than
the time of filing of the annual report of the Company with the Trustee pursuant
to Section 7.04), an Officers' Certificate, stating whether or not to the best
knowledge of the signers thereof the Company is in compliance with all
conditions and covenants hereunder, without regard to any period of grace or
requirements of notice provided hereunder, and if the Company shall be in
default, specifying all such defaults and the nature and status thereof of which
they may have knowledge. The Officers' Certificate need not comply with
Section 1.02 hereof.
(b) The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within five Business Days of its
becoming aware of any such default or Event of Default.
SECTION 10.05. EXISTENCE. Subject to Article VIII, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect it existence, rights (charter and statutory) and franchise; PROVIDED,
HOWEVER, that the Company shall not be required to preserve any such right or
franchise if its Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company.
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SECTION 10.06. MAINTENANCE OF PROPERTIES. The Company will cause all
properties material to the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times while any Securities are Outstanding; PROVIDED, HOWEVER, that
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, in
the judgment of the Company, desirable in the conduct of its business or the
business of any Subsidiary.
SECTION 10.07. PAYMENT OF TAXES AND OTHER CLAIMS. The Company shall
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all material taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to taxes)
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 material lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary, in each case material to the
Company and its Subsidiaries taken as a whole; 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 have been made.
SECTION 10.08. FURTHER INSTRUMENTS AND ACTS. Upon reasonable request
of the Trustee, the Company will execute and deliver such further instruments
and perform such further acts as may be reasonably necessary or proper to carry
out more effectively the purposes of this Indenture.
SECTION 10.09. WAIVER OF CERTAIN COVENANTS. The Company may omit in
any particular instance to comply with any term, provision or condition set
forth in this Article X (other than Sections 10.01 through 10.05, inclusive), if
before the time for such compliance the Holders of at least a majority (or such
greater amount as may be specified in any such term, provision or condition) in
principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in
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respect of any such term, provision or condition shall remain in full force and
effect.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.01. RIGHT OF REDEMPTION. The Securities may be redeemed
at the election of the Company, as a whole or from time to time in part, at any
time on or after August 9, 1999, and prior to maturity at the Redemption Prices
specified in the form of Security hereinbefore set forth for redemptions,
together with accrued interest to the Redemption Date (subject to the provisions
of Section 11.07); PROVIDED, HOWEVER, if an Event of Default shall have occurred
and be continuing, the Securities may be redeemed in part only if redeemed pro
rata as to all Holders thereof.
SECTION 11.02. APPLICABILITY OF ARTICLE. Redemption of Securities at
the election of the Company, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and this Article.
SECTION 11.03. ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election
of the Company to redeem any Securities pursuant to Section 11.01 shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company, the Company shall, at least 45 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and of the principal amount
of Securities to be redeemed.
SECTION 11.04. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED. If
less than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities not previously called for
redemption, pro rata or by lot or by a method that complies with the
requirements of any exchange on which the Securities are listed 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 Securities of a denomination larger than $1,000.
If any Securities selected for partial redemption are converted in
part before termination of the conversion right with respect to the portion of
the Security so selected, the converted portion of such Security shall be deemed
(so far as may be)
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to be the portion selected for redemption. Securities which have been converted
during a selection of Securities to be redeemed shall be treated by the Trustee
as Outstanding for the purpose of such selection notwithstanding that any such
Security is converted in whole or in part before the mailing of the notice of
redemption.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
SECTION 11.05. 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 Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption, the principal
amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(5) the conversion price, the date on which the right to convert the
principal of the Securities to be redeemed will terminate and the place or
places where such Securities may be surrendered for conversion, and
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
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Notice of redemption of Securities 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 11.06. DEPOSIT OF REDEMPTION PRICE. Prior to 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 10.03) an amount of money sufficient to pay the Redemption
Price of, and (except if the Redemption Date shall be an Interest Payment Date)
accrued interest on, all the Securities which are to be redeemed on that date
other than any Securities called for redemption on that date which have been
converted prior to the date of such deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.07) be returned to the Company or,
if then held by the Company, shall be discharged from such trust.
SECTION 11.07. SECURITIES PAYABLE ON REDEMPTION DATE. Notice of
redemption having been given as aforesaid, the Securities 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
Securities shall cease to bear interest. Upon surrender of any such Security
for redemption in accordance with said notice, such Security 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 Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Security.
Section 11.08. SECURITIES REDEEMED IN PART. Any Security 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 10.02 (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
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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
Security without service charge, a new Security or Securities 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 Security so
surrendered.
SECTION 11.09. CONVERSION ARRANGEMENTS ON CALL FOR REDEMPTION.
Notwithstanding anything to the contrary contained in this Indenture, in
connection with any redemption of Securities, the Company, by an agreement with
one or more investment bankers or other purchasers, may arrange for such
purchasers to purchase all Securities called for redemption (the "Called
Securities") which are either (i) surrendered for redemption or (ii) not duly
surrendered for redemption or conversion prior to the close of business on the
Redemption Date, and to convert the same into shares of Common Stock, by the
purchasers' depositing with the Trustee (acting as Paying Agent with respect to
the deposit of such amount and as conversion agent with respect to the
conversion of such Called Securities), in trust for the Holders of the Called
Securities, on or prior to the Redemption Date in the manner agreed to by the
Company and such purchasers, an amount sufficient to pay the Redemption Price,
payable by the Company on redemption of such Called Securities. In connection
with any such arrangement for purchase and conversion, the Trustee as Paying
Agent shall pay on or after the Redemption Date such amounts to deposited by the
purchasers in exchange for Called Securities surrendered for redemption prior to
the close of business on the Redemption Date and for all Called Securities
surrendered after such Redemption Date. Notwithstanding anything to the
contrary contained in this Article XI, the obligation of the Company to pay the
Redemption Price of such Called Securities shall be satisfied and discharged to
the extent such amount is so paid by such purchasers; PROVIDED, HOWEVER, that
nothing in this Section 11.09 shall in any way relieve the Company of the
obligation to pay such Redemption Price on all Called Securities to the extent
such amount is not so paid by said purchasers. For all purposes of this
Indenture, any Called Securities surrendered by the Holders for redemption, and
any Called Securities not duly surrendered for redemption or conversion prior to
the close of business on the Redemption Date, shall be deemed acquired by such
purchasers from such Holders and surrendered by such purchasers for conversion
and shall in all respects be deemed to have been converted, all as of
immediately prior to the close of business on the Redemption Date, subject to
the deposit by the purchasers of the above amount as aforesaid. Nothing in this
Section 11.09 shall in any way limit the right of any Holder of a Security to
convert his Security pursuant to the terms of this Indenture any time prior to
the close of business on the tenth day preceding the Redemption Date (or, if
such day is not a Business Day, on the next succeeding Business Day).
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ARTICLE XII
CONVERSION OF SECURITIES
SECTION 12.01. CONVERSION PRIVILEGE AND CONVERSION PRICE. Subject to
and upon compliance with the provisions of this Article, at the option of the
Holder thereof, any Security or any portion of the principal amount thereof
which is $1,000 or an integral multiple of $1,000 may be converted into fully
paid and nonassessable shares (calculated as to each conversion to the nearest
1/100 of a share) of Common Stock of the Company which equals the quotient
obtained by dividing such principal amount by the conversion price, determined
as hereinafter provided, in effect at the time of conversion. In case a
Security or portion thereof is called for redemption, such conversion right in
respect of the Security or portion so called shall expire at the close of
business on the last Business Day preceding the Redemption Date, unless the
Company defaults in making the payment due upon redemption.
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially $15.81 per
share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in Section 12.04.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in paragraph (5) of Section 12.04,
the Holder of each Security, upon the conversion thereof pursuant to this
Article subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution and prior to
the effectiveness of the conversion price adjustment in respect of such
distribution pursuant to paragraph (5) of Section 12.04, shall also be entitled
to receive for each share of Common Stock into which such Security is converted,
the portion of the cash so distributed applicable to one share of Common Stock.
If any conversion of a Security described in the immediately preceding sentence
occurs prior to the payment date for a distribution to holders of Common Stock
which the Holder of the Security so converted is entitled to receive in
accordance with the immediately preceding sentence, the Company may elect (such
election to be evidenced by a Board Resolution) to distribute to such Holder a
due bill for the cash which such Holder is so entitled; PROVIDED that such due
bill (i) meets any applicable requirements of the principal national securities
exchange or other market on which the Common Stock is then traded and
(ii) requires payment or delivery of such cash no later than the date of payment
or delivery thereof to holders of Common Stock receiving such distribution.
SECTION 12.02. EXERCISE OF CONVERSION PRIVILEGE. In order to
exercise the conversion privilege, the Holder of any Security to be converted
shall
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surrender such Security, duly endorsed or assigned to the Company or in blank,
at any office or agency maintained by the Company pursuant to Section 10.02,
accompanied by written notice to the Company at such office or agency that the
Holder elects to convert such Security or, if less than the entire principal
amount thereof is to be converted, the portion thereof to be converted.
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date (except Securities or
portions thereof called for redemption on a Redemption Date within such period
between and including a Regular Record Date and a related Interest Payment Date)
shall be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Securities being surrendered
for conversion. Except as provided in the preceding sentence and subject to the
last paragraph of Section 3.07, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Securities surrendered for
conversion or on account of any dividends on the Common Stock issued upon
conversion.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 12.03.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities, of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security.
SECTION 12.03. FRACTIONS OF SHARES. No fractional shares of Common
Stock shall be issued upon conversion of Securities. If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any Security or
Securities (or
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specified portions thereof), the Company shall pay a cash adjustment (rounded to
the nearest cent) in respect of such fraction in an amount equal to the same
fraction of the Closing Price per share of the Common Stock at the close of
business on the day of conversion (or, if such day is not a Trading Day, on the
Trading Day immediately preceding such day).
SECTION 12.04. ADJUSTMENT OF CONVERSION PRICE. (1) In case the
Company shall pay or make a dividend or other distribution on its Common Stock
exclusively in Common Stock or shall pay or make a dividend or other
distribution on any other class of capital stock of the Company, which dividend
or distribution includes Common Stock, the conversion price in effect at the
opening of business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such conversion price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purposes of this paragraph (1), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company shall not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
(2) Subject to the last sentence of paragraph (7) of this Section, in
case the Company shall pay or make a dividend or other distribution on its
Common Stock consisting exclusively of, or shall otherwise issue to all holders
of its Common Stock, rights, warrants or options entitling the holders thereof
to subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (determined as provided in paragraph (8)
of this Section) of the Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, warrants or options the conversion
price in effect at the opening of business on the day following the date fixed
for such determination shall be reduced by multiplying such conversion price by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock that the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such reduction to become
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effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company shall not issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company. If at the end of the
period during which such rights or warrants are convertible into Common Stock,
not all such rights or warrants have been converted into Common Stock, the
conversion price shall be immediately readjusted to what the conversion price
would have been based on the number of additional shares of Common Stock
actually issued.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock or combined into a smaller
number of shares of Common Stock, the conversion price in effect at the opening
of business on the date following the day upon which such subdivision or
combination becomes effective shall be proportionately reduced or increased, as
the case may be, such adjustment to become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(4) Subject to the last sentence of this paragraph (4), in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class of capital stock, cash
or assets (including securities, but excluding (x) any rights, warrants or
options referred to in paragraph (2) of this Section, (y) any dividend or
distribution paid exclusively in cash out of the net profits of the Company for
the twelve full calendar months preceding the calendar month in which such
dividend or distribution is to be made and (z) any dividend or distribution
referred to in paragraph (1) of this Section), the conversion price shall be
reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to such distribution
by a fraction of which the numerator shall be the current market price per share
(determined as provided in paragraph (8) of this Section) of the Common Stock on
such date less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board Resolution), on
the date of such effectiveness, of the portion of the evidences of indebtedness,
shares of capital stock, cash and assets so distributed applicable to one share
of Common Stock and the denominator shall be such current market price per share
of the Common Stock, such reduction to become effective immediately prior to the
opening of business on the date following the day fixed for the determination of
stockholders entitled to receive such distribution (the "Reference Date");
PROVIDED, HOWEVER that in the event the fair market value (as so determined) of
the portion of the evidences of indebtedness,
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shares of capital stock, cash and assets so distributed applicable to one share
of Common Stock is equal to greater than such current market price per share of
Common Stock, or if the excess of such current market price per share over such
fair market value is less than $1.00, then adequate provision shall be made so
that the Holders shall have the right to receive upon conversion of the
Securities the amount of evidences of indebtedness, shares of capital stock,
cash and assets such Holder would have received had the Holder converted the
Securities immediately prior to the Reference Date. If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph (4) by reference to the actual or when issued trading market for any
securities included in such distribution, it shall in doing so consider the
prices in such market over the same period used in computing the current market
price per share pursuant to paragraph (8) of this Section. For purposes of this
paragraph (4), any dividend or distribution that includes shares of Common
Stock, rights, warrants or options to subscribe for or purchase shares of Common
Stock or other securities convertible into or exchangeable for shares of Common
Stock shall be deemed instead to be (a) a dividend or distribution of the
evidences of indebtedness, cash, assets or shares of capital stock other than
such shares of Common Stock, such rights, warrants or options or such other
convertible or exchangeable securities (making any conversion price reduction
required by this paragraph (4) immediately followed by (b) in the case of such
shares of Common Stock or such rights, warrants or options, a dividend or
distribution thereof (making any further conversion price reduction required by
paragraph (1) or (2) of this Section, except (i) the Reference Date of such
dividend or distribution as defined in this paragraph (4) shall be substituted
as "the date fixed for the determination of stockholders entitled to receive
such distribution" and "the date fixed for such determination" within the
meaning of paragraphs (1) and (2) of this Section and (ii) any shares of Common
Stock included in such dividend or distribution shall not be deemed "outstanding
at the close of business on the date fixed for such determination" within the
meaning of paragraph (1) of this Section) or (c) in the case of such other
convertible or exchangeable securities, a dividend or distribution of such
number of shares of Common Stock as would then be issuable upon the conversion
of exchange thereof, whether or not the conversion or exchange of such
securities is subject to any conditions (making any further conversion price
reduction required by paragraph (1) of this Section, except (i) the Reference
Date of such dividend or distribution as defined in this paragraph (4) shall be
substituted as "the date fixed for the determination of stockholders entitled to
receive such distribution" and "the date fixed for such determination" and
(ii) the shares deemed to constitute such dividend or distribution shall not be
deemed "outstanding at the close of business on the date fixed for such
determination," each within the meaning of paragraph (1) of this Section).
(5) In case the Company shall, by dividend or otherwise, at any time
distribute to all holders of its Common Stock cash (including any distribution
of cash
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out of the retained earnings of the Company but excluding any cash that is
distributed as part of a distribution requiring a conversion price adjustment
pursuant to paragraph (4) of this Section) in an aggregate amount that, together
with (i) the aggregate amount of any other distributions to all holders of its
Common Stock made exclusively in cash within the 12 months preceding the date of
payment of such distribution and in respect of which no conversion price
adjustment pursuant to paragraph (4) of this Section or this paragraph (5) has
been made and (ii) the portion of the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of consideration payable in
respect of any tender offer or exchange offers by the Company or a Subsidiary of
all or any portion of the Company's Common Stock concluded within the 12 months
preceding the date of payment of such distribution and in respect of which no
conversion price adjustment pursuant to paragraph (6) of this Section or this
paragraph (5) of this Section has been made that is in excess of an amount equal
to the product of (x) the number of shares of Common Stock with respect to which
the aggregate tender or exchange offer or negotiated purchase consideration is
payable multiplied by (y) the average of the daily Closing Prices per share of
Common Stock on the five consecutive Trading Days selected by the Company out of
the 10 consecutive Trading Days next succeeding the date of payment of such the
negotiated purchase consideration or expiration of the tender or exchange offer,
as the case may be, exceeds 20% of the product of the current market price per
share (determined as provided in paragraph (8) of this Section) of the Common
Stock on the date fixed for determining stockholders entitled to receive such
distribution multiplied by the number of shares of Common Stock outstanding on
such date (excluding shares held in the treasury of the Company), the conversion
price shall be reduced so that the same shall equal the price determined by
multiplying such conversion price in effect immediately prior to the close of
business on the date fixed for such distribution by a fraction of which the
numerator shall be the current market price per share (determined as provided in
paragraph (8) of this Section) of the Common Stock on the date of such
distribution less the amount of cash so distributed applicable to one share of
Common Stock and the denominator shall be such current market price per share
(determined as provided in paragraph (8) of this Section) of the Common Stock on
the date of such distribution, such reduction to become effective immediately
prior to the opening of business on the day following the date fixed for the
payment of such distribution.
(6) In case a tender or exchange offer (the "Current Purchase") made
by the Company or any Subsidiary for all or any portion of the Company's
outstanding Common Stock shall be consummated, if the aggregate of any cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) of
consideration payable in respect of such tender offer or exchange offer is in
excess of an amount equal to the
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product of (a) the number of shares of Common Stock with respect to which the
aggregate tender offer or exchange offer consideration is payable multiplied by
(b) the average of the daily Closing Prices per share of Common Stock on the
five consecutive Trading Days selected by the Company out of the 10 consecutive
Trading Days next succeeding the date of payment of the purchase consideration
or expiration of the tender offer or exchange offer, as the case may be (the
"Reference Price"), and the amount of such excess, together with (i) the portion
of the aggregate of the cash, plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution) of consideration payable in respect of any tender offer or
exchange offer (the "Prior Purchase") by the Company or a Subsidiary for all or
any portion of the Company's Common Stock concluded within the 12 months
preceding the expiration of a tender offer or exchange offer or the consummation
of any negotiated purchase, as the case may be, that is the subject of the
Current Purchase (the "Current Purchase Expiration Time") and in respect of
which no conversion price adjustment pursuant to paragraph (5) of this Section
or this paragraph (6) has been made, that is in excess of an amount equal to the
product of (a) the number of shares of Common Stock with respect to which the
aggregate consideration for the Prior Purchase was payable multiplied by (b) the
average of the daily Closing Prices per share of Common Stock on the five
consecutive Trading Days selected by the Company out of the 10 consecutive
Trading Days next succeeding the date of payment of the purchase consideration
or expiration of the tender or exchange offer, as the case may be, with respect
to the negotiated purchase, tender offer or exchange offer that was the subject
of the Prior Purchase, and (ii) the aggregate amount of any distributions to all
holders of the Company's Common Stock made exclusively in cash (specifically
including distributions of cash out of retained or current earnings) within the
12 months preceding the expiration of the tender offer or exchange offer and as
to which no adjustment pursuant to paragraph (4) or paragraph (5) of this
Section 12.04 has been made, exceeds 20% of the product of the Reference Price
multiplied by the number of shares of Common Stock outstanding (including any
tendered shares but excluding any shares held in the Treasury of the Company) on
the Current Purchase Expiration Time, the conversion price shall be reduced so
that the same shall equal the price determined by multiplying such conversion
price in effect immediately prior to the Current Purchase Expiration Time by a
fraction of which the numerator shall be (i) the product of the Reference Price
multiplied by the number of shares of Common Stock outstanding (including any
tendered shares but excluding any shares held in the treasury of the Company) on
the Current Purchase Expiration Time minus (ii) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the tender
offer or other negotiated purchase) of all shares validly tendered and not
withdrawn or purchased in any negotiated purchase as of the Current Purchase
Expiration Time (the shares deemed so accepted, purchased or exchanged, up to
any
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such maximum, being referred to as the "Purchased Shares") and the denominator
shall be the product of (i) such Reference Price multiplied by (ii) such number
of outstanding shares (excluding any shares held in the treasury of the Company)
on the Current Purchase Expiration Time less the number of Purchased Shares,
such reduction to become effective immediately prior to the opening of business
on the day following the Current Purchase Expiration Time.
(7) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or merger to
which Section 12.11 applies) shall be deemed to involve (a) a distribution of
such securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the Reference
Date" within the meaning of paragraph (4) of this Section), and (b) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into the
number of shares of Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon which such
combination becomes effective," as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
paragraph (3) of this Section). Rights, warrants or options issued by the
Company to all holders of its Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock or Preferred Stock, which
rights, warrants or options (i) are deemed to be transferred with such shares of
Common Stock, (ii) are not exercisable and (iii) are also issued in respect of
future issuances of Common Stock, in each case in clauses (i) through (iii)
until occurrence of a specified event or events ("Trigger Event"), shall for
purposes of this Section 12.04 not be deemed issued until the occurrence of the
earliest Trigger Event.
(8) For the purpose of any computation under this paragraph and
paragraphs (2), (4) and (5) of this Section, the current market price per share
of Common Stock on any date shall be deemed to be the average of the daily
Closing Prices for the five consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than the
relevant date; PROVIDED, HOWEVER, that (i) if the "ex" date for any event (other
than the issuance or distribution requiring such computation) that requires an
adjustment to the conversion price pursuant to paragraph (1), (2), (3), (4), (5)
or (6) above occurs on or after the 20th Trading Day prior to the day in
question and prior to the "ex" date for the issuance or distribution requiring
such computation, the Closing Price for each Trading Day prior to the "ex" date
for such other event shall be adjusted by multiplying such Closing Price by the
same fraction by which the conversion price is so required to be adjusted as a
result of such other event, (ii) if the "ex" date for any event (other than the
issuance or distribution requiring such computation) that requires
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an adjustment to the conversion price pursuant to paragraph (1), (2), (3), (4),
(5) or (6) above occurs on or after the "ex" date for the issuance or
distribution requiring such computation and on or prior to the day in question,
the Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the conversion price is so required to be adjusted as a
result of such other event, and (iii) if the "ex" date for the issuance or
distribution requiring such computation is on or prior to the day in question,
after taking into account any adjustment required pursuant to clause (i) or (ii)
of this proviso, the Closing Price for each Trading Day on or after such "ex"
date shall be adjusted by adding thereto the amount of any cash and the fair
market value on the day in question (as determined by the Board of Directors in
a manner consistent with any determination of such value for purposes of
paragraph (4) or (5) of this Section, whose determination shall be conclusive
and described in a Board Resolution) of the evidences of indebtedness, shares of
capital stock or assets being distributed applicable to one share of Common
Stock as of the close of business on the day before such "ex" date. For the
purpose of any computation under paragraph (6) of this Section, the current
market price per share of Common Stock on any date shall be deemed to be the
average Closing Prices for the five consecutive Trading Days selected by the
Company commencing on or after the latest (the "Commencement Date") of (i) the
date 20 Trading Days before the date in question, (ii) the date of commencement
of a tender offer requiring such computation and (iii) the date of the last
amendment, if any, of such a tender offer involving a change in the maximum
number of shares for which tenders are sought or a change in the consideration
offered, and ending not later than the expiration time with respect to the
tender offer or negotiated purchase, as the case may be; PROVIDED, HOWEVER, that
if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the conversion price pursuant to
paragraph (1), (2), (3), (4), (5) or (6) above occurs on or after the
Commencement Date and prior to the expiration time for the tender offer
requiring such computation, the Closing Price for each Trading Day prior to the
"ex" date, for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the conversion price is so required to be
adjusted as a result of such other event. For purposes of this paragraph, the
term "ex" date, (i) when used with respect to any issuance or distribution,
means the first day on which the Common Stock trades regular way on the relevant
exchange or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance or distribution, (ii) when used with
respect to any subdivision or combination of shares of Common Stock, means the
first day on which the Common Stock trades regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective, and (iii) when used with respect to any tender offer means the first
date on which the Common Stock trades regular way on such exchange or in such
market after the expiration time of such tender offer.
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(9) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (1), (2), (3), (4), (5), (6), (7) and
(8) of this Section, as it considers to be advisable in order to avoid or
diminish any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for Federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to the recipients.
(10) 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; PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph (11) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All adjustments to the
conversion price shall be to the nearest cent.
(11) Anything herein to the contrary notwithstanding, in the event
the Company shall declare any dividend or distribution requiring an adjustment
in the conversion price hereunder and shall, thereafter and before the payment
of such dividend or distribution to stockholders, legally abandon its plan to
pay such dividend or distribution or, if such dividend or distribution was
contingent on the occurrence of one or more events, not pay such dividend or
distribution upon the failure of such condition, the conversion price then in
effect hereunder, if changed to reflect such dividend or distribution, shall
upon the legal abandonment of such plan or such nonpayment of such contingent
dividend or distribution, be changed (on a prospective basis for any Securities
not theretofore converted) to the conversion price which would have been in
effect at the time of such abandonment (after giving effect to all other
adjustments not so legally abandoned pursuant to the provisions of this
Article XII) had such dividend or distribution never been declared.
(12) Notwithstanding any other provision of this Section 12.04, no
adjustment to the conversion price shall reduce the conversion price below the
then par value per share of the Common Stock, and any such purported adjustment
shall instead reduce the conversion price to such par value. The Company hereby
covenants not to take any action (i) to increase the par value per share of the
Common Stock or (ii) that would or does result in any adjustment in the
conversion price that, if made without giving effect to the previous sentence,
would cause the conversion price to be less than the then par value per share of
the Common Stock.
SECTION 12.05. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever
the conversion price is adjusted as herein provided:
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(a) the Company shall compute the adjusted conversion price in
accordance with Section 12.04 and shall prepare a certificate signed by the
Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed (with a copy to the Trustee)
at each office or agency maintained for the purpose of conversion of
Securities pursuant to Section 10.02; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required,
and as soon as practicable after it is required, such notice shall be
mailed by the Company to all Holders at their last addresses as they shall
appear in the Security Register.
SECTION 12.06. NOTICE OF CERTAIN CORPORATE ACTIVITIES. In case:
(a) the Company takes any action that would require an adjustment in
the conversion price pursuant to paragraphs (1) through (7) of
Section 12.04; or
(b) of any consolidation, merger or share exchange to which the
Company is a party and for which approval of stockholders of the Company is
required or of the conveyance or transfer of all or substantially all of
the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company:
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.02, and shall
cause to be mailed to the Trustee and all Holders at their last addresses as
they shall appear in the Security Register, at least 20 days prior to the
applicable record, effective or expiration date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or granting of rights, warrants or options, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, warrants or
options are to be determined, or (y) the date on which any reclassification,
consolidation, merger, share exchange, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share exchange,
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conveyance, transfer, dissolution, liquidation or winding up, or (z) the date on
which any tender offer commenced, the date on which such tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto).
SECTION 12.07. COMPANY TO RESERVE COMMON STOCK. The Company shall at
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock for the purpose of effecting the conversion
of Securities, the full number of shares of Common Stock then issuable upon the
conversion of all outstanding Securities.
SECTION 12.08. TAXES ON CONVERSIONS. The Company will pay any and
all taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company or Securities Registrar the amount of any
such tax, or has established to the satisfaction of the Company or Securities
Registrar that such tax has been paid.
SECTION 12.09. COVENANT AS TO COMMON STOCK. The Company covenants
that all shares of Common Stock which may be issued upon conversion of
Securities will upon issue be fully paid and nonassessable and, except as
provided in Section 12.08, the Company will pay all taxes, liens and charges
with respect to the issue thereof.
The Company will endeavor promptly to comply with all federal and
state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or in
the over-the-counter market or such other market on which the Common Stock is
then listed or quoted.
SECTION 12.10. CANCELLATION OF CONVERTED SECURITIES. All Securities
delivered for conversion shall be delivered to the Trustee to be canceled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 3.09.
SECTION 12.11. PROVISIONS IN CASE OF CONSOLIDATION, MERGER, SHARE
EXCHANGE OR CONVEYANCE OF ASSETS. In case of any consolidation of the Company
with, or merger of the Company into, any other Person, any merger of another
Person into the Company (other than a merger which does not result in any
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75
reclassification, conversion, exchange, or cancellation of outstanding shares of
Common Stock ) any exchange of shares of Common Stock of the Company with any
Person pursuant to a plan of exchange or any conveyance, transfer or lease of
all or substantially all of the Company's assets, the Person formed by such
consolidation or resulting from such merger or which acquires shares of Common
Stock of the Company pursuant to a share exchange or which acquires or leases
such assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right thereafter, during the period such Security
shall be convertible as specified in Section 12.01, to convert such Security
only into the kind and amount of securities, cash and other property receivable,
if any, upon such consolidation, merger, share exchange, conveyance, transfer or
lease by a holder of the number of shares of Common Stock of the Company into
which such Security might have been converted immediately prior to such
consolidation, merger, share exchange, conveyance, transfer or lease, assuming
such holder of Common Stock of the Company (i) is not a Person with which the
Company consolidated or into which the Company merged or which merged into the
Company or with which the Company consummated a share exchange or to which such
conveyance, transfer or lease was made, as the case may be ("Constituent
Person"), or an Affiliate of a Constituent Person and (ii) failed to exercise
his rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, share exchange,
conveyance, transfer or lease (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
share exchange, conveyance, transfer or lease is not the same for each share of
Common Stock of the Company held immediately prior to such consolidation,
merger, conveyance, transfer or lease by other than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("non-electing share"), then for the purpose of this Section the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, share exchange, conveyance, transfer or lease by each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such supplemental indenture
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. If the issuer of
any such securities is an Affiliate of the Person formed by such consolidation,
resulting from such merger consummating such share exchange or acquiring such
assets, such issuer shall join in such supplemental indenture for the purpose of
making the provisions required by this Section. The above provisions of this
Section shall similarly apply to successive consolidations, merger, share
exchanges, conveyances, transfers and leases.
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SECTION 12.12. TRUSTEE ADJUSTMENT DISCLAIMER. The Trustee has no
duty to determine when an adjustment under this Article XII should be made, how
it should be made or what it should be. The Trustee has no duty to determine
whether a supplemental indenture under Section 12.11 need be entered into or
whether any provisions of any supplemental indenture are correct. The Trustee
shall not be accountable for and makes no representation as to the validity or
value of any securities or assets issued upon conversion of Securities. The
Trustee shall not be responsible for the Company's failure to comply with this
Article XII.
SECTION 12.13. WHEN NO ADJUSTMENT REQUIRED. (a) Except as expressly
set forth in Section 12.04, no adjustment in the conversion price shall be made
because the Company issues, in exchange for cash, property or services, shares
of Common Stock, or any securities convertible into or exchangeable for shares
of Common Stock, or securities (including warrants, rights and options) carrying
the right to subscribe for or purchase shares of Common Stock or such
convertible or exchangeable securities.
(b) No adjustment in the conversion price shall be made pursuant to
Section 12.04 in respect of any dividend or distribution if the Holders may
participate therein (on a basis determined in good faith to be fair by the Board
of Directors) and receive the same consideration they would have received if
they had converted the Securities immediately prior to the record date with
respect to such dividend or distribution (a "Non-Adjustment Distribution"). All
Non-Adjustment Distributions shall be ignored for purposes of any computation.
ARTICLE XIII
Subordination of Securities
SECTION 13.01. AGREEMENT TO SUBORDINATE BY COMPANY. Notwithstanding
anything in this Indenture to the contrary (other than the last paragraph of
Section 15.05), the Company, for itself, its successors and assigns, covenants
and agrees, and each Holder of Securities, by his acceptance thereof, likewise
covenants and agrees, that payment by the Company of the principal of and
premium, if any, and interest on each and all of the Securities, and payment in
respect of any repurchase of the Securities pursuant to Section 14.01, are
hereby expressly subordinated, to the extent and in the manner hereinafter set
forth, in right of payment to the prior payment in full of all Senior
Indebtedness.
SECTION 13.02. DISTRIBUTION ON DISSOLUTION, LIQUIDATION AND
REORGANIZATION; SUBROGATION. Upon any distribution of assets of the Company
upon
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any dissolution, winding up, liquidation or reorganization of the Company,
whether in bankruptcy, insolvency, reorganization or receivership proceedings or
upon an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of the Company or otherwise (subject to the power of a
court of competent jurisdiction to make other equitable provision reflecting the
rights conferred in this Indenture upon the Senior Indebtedness and the holders
thereof, with respect to the Securities and the holders thereof, by a lawful
plan of reorganization under applicable bankruptcy law),
(a) the holders of all Senior Indebtedness shall be entitled to
receive payment in full of the Senior Indebtedness before the Holders of
the Securities are entitled to receive any payment upon the principal of or
premium, if any, or interest on indebtedness evidenced by the Securities;
and
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to which the Holders
of the Securities or the Trustee would be entitled except for the
provisions of this Article XIII shall be paid by the liquidating trustee or
agent or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of the Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in
cash, property or securities, shall be received by the Holders of the
Securities or by the Trustee before all Senior Indebtedness is paid in
full, such payment or distribution shall be paid over to the holders of
such Senior Indebtedness, or their representative or representatives or to
the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably as
aforesaid, for application to the payment of all Senior Indebtedness
remaining unpaid until all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to
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receive payments or distributions of cash, property or securities of the
Company, applicable to Senior Indebtedness until the principal of, premium, if
any, and interest on the Securities shall be paid in full and no such payments
or distributions to the Holders of the Securities of cash, property or
securities otherwise distributable to the holders of Senior Indebtedness and the
Holders of the Securities be deemed to be a payment by the Company to or on
account of the Securities. It is understood that the provisions of this
Article XIII are and are intended solely for the purpose of defining the
relative rights of the Holders of the Securities on the one hand, and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article XIII or elsewhere in this Indenture or in the Securities is intended to
or shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness and the Holders of the Securities, as the case may be, the
obligations of the Company, which are unconditional and absolute, to pay to the
Holders of the Securities the principal of, premium, if any, and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms, or to affect the relative rights of the Holders of the Securities
and creditors of the Company other than the holders of Senior Indebtedness, nor
shall anything herein or in the Securities prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XIII of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in this
Article XIII, the Trustee, subject to the provisions of Section 6.01, shall be
entitled to rely upon a certificate of the liquidating trustee or agent or other
person making any distribution to the Trustee for the purpose of ascertaining
the persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article XIII.
The Trustee, however, shall not be deemed to owe any fiduciary duty to
the holders of Senior Indebtedness. In the absence of its gross negligence or
willful misconduct, the Trustee shall not be liable to any such holder if it
shall pay over or distribute to or on behalf of Holders of Securities or the
Company moneys or assets to which any holder of Senior Indebtedness shall be
entitled by virtue of this Article XIII.
If the Trustee or any Holder of Securities does not file a proper
claim or proof of debt in the form required in any proceeding referred to above
prior to 30 days before the expiration of the time to file of such claim in such
proceeding, then the holder of any Senior Indebtedness is hereby authorized, and
has the right, to file an appropriate claim or claims for or on behalf of such
Holder of Securities.
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SECTION 13.03. NO PAYMENT IN EVENT OF DEFAULT ON SENIOR INDEBTEDNESS.
In the event that any Payment Default shall have occurred and be continuing,
then no payment of account of any principal, premium (if any), interest,
redemption or repurchase of the Securities shall be made unless and until such
Payment Default shall have been cured or waived or shall have ceased to exist or
all amounts then due and payable in respect of Senior Indebtedness shall have
been paid in full, or provisions shall have been made for such payment in cash
or cash equivalents or otherwise in a manner satisfactory to the holders of
Senior Indebtedness.
In the event that any Non-Payment Default shall have occurred with
respect to any Designated Senior Indebtedness and be continuing, then, upon the
receipt by the Trustee of written notice of such Non-Payment Default from
holders of Designated Senior Indebtedness (as defined below) or a representative
thereof, no payment on account of any principal, premium (if any), interest,
redemption or repurchase of the Securities shall be made during the period (the
"Payment Blockage Period") commencing on the date of such receipt of such
written notice and ending on the earlier of (i) the date on which the Trustee
shall have received written notice of such Non-Payment Default shall have been
cured or waived or shall have ceased to exist or any acceleration of the
Designated Senior Indebtedness to which such Non-Payment Default relates shall
have been rescinded or annulled or such Senior Indebtedness shall have been
discharged and (ii) the 180th day after the date of such receipt of such written
notice PROVIDED, HOWEVER, during any 360-day period the aggregate of all Payment
Blockage Periods shall not exceed 180 days and there shall be a period of at
least 180 consecutive days in each 360-period when no Payment Blockage Period is
in effect. For all purposes of this paragraph, no Non-Payment Default that
existed or was continuing on the date of commencement of any Payment Blockage
Period shall be, or be made, the basis for the commence of a subsequent Payment
Blockage Period by Holders of Senior Indebtedness on their representatives
unless such Non-Payment Default shall have been cured for a period of not less
than 90 consecutive days. "Designated Senior Indebtedness" means (i) any
indebtedness under the Credit Facility and (ii) any other Senior Indebtedness of
the Company which, at the date of determination, has an aggregate principal
amount of, or under which, at the date of determination, the holders thereof are
committed to lend up to, at least $35 million and is specifically designated by
the Company in the instrument evidencing or governing such Senior Indebtedness
as "Designated Senior Indebtedness" for purposes of the Indenture.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such
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Holder, then and in such event such payment shall be paid over and delivered
forthwith to the holders of the relevant Designated Senior Indebtedness (or
their respective representatives).
The provisions of this Section shall not apply to any payment with
respect to which Section 13.02 would be applied.
SECTION 13.04. PAYMENTS PERMITTED. Nothing contained in this
Indenture or in any of the Securities shall (a) affect the obligation of the
Company to make, or prevent the Company from making, at any time except as
provided in Sections 13.02 and 13.03, payments of principal of, premium, if any,
or interest on the Securities or (b) prevent the application by the Trustee of
any moneys deposited with it hereunder to the payment of or on account of the
principal of, premium, if any, or interest on the Securities unless the Trustee
shall have received at its Corporate Trust Office written notice of any event
prohibiting the making of such payment more than three Business Days prior to
the date fixed for such payment.
SECTION 13.05. AUTHORIZATION TO TRUSTEE TO EFFECT SUBORDINATION.
Each Holder of Securities by his acceptance thereof authorizes and directs the
Trustee in his behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article XIII and appoints the
Trustee to his attorney-in-fact for any and all such purposes.
SECTION 13.06. NOTICES TO TRUSTEE. Notwithstanding the provisions of
this Article or any other provisions of this Indenture, neither the Trustee nor
any Paying Agent (other than the Company) shall be charged with knowledge of the
existence of any Senior Indebtedness or of any event which would prohibit the
making of any payment of moneys to or by the Trustee or such Paying Agent,
unless and until the Trustee or such Paying Agent shall have received (in the
case of the Trustee, at its Corporate Trust Office) written notice thereof from
the Company or from the holder of any Senior Indebtedness or from the trustee
for any such holder, together with proof reasonably satisfactory to the Trustee
of such holding of Senior Indebtedness or of the authority of such trustee;
PROVIDED, HOWEVER, that if at least three Business Days prior to the date upon
which by the terms hereof any such moneys may become payable for any purpose
(including, without limitation, the payment of either the principal of, premium,
if any, or interest on any Security) the Trustee shall not have received with
respect to any such moneys the notice provided for in this Section 13.06, then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have the full power and authority to receive such moneys and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary, which may be received by it on or after such three
Business Days prior to such date. The Trustee shall be entitled to rely on
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the delivery to it of a written notice by a person representing himself to be a
holder of Senior Indebtedness (or a trustee on behalf of such holder) to
establish that such a notice has been given by a holder of Senior Indebtedness
or a trustee on behalf of any such holder. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article XIII, 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 XIII 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 13.07. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS. The Trustee
shall be entitled to all the rights set forth in this Article XIII in respect of
any Senior Indebtedness at any time held by it to the same extent as any other
holder of Senior Indebtedness and nothing in Section 6.13 or elsewhere in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 13.08. MODIFICATION OF TERMS OF SENIOR INDEBTEDNESS. Any
renewal or extension of the time of payment of any Senior Indebtedness or the
exercise by the holders of Senior Indebtedness of any of their rights under any
instrument creating or evidencing Senior Indebtedness, including, without
limitation, the waiver of default thereunder, may be made or done all without
notice to or assent from the Holders of the Securities or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal
or other change of, or waiver, consent or other action in respect of, any
liability or obligation under or in respect of, or of any of the terms,
covenants or conditions of any indenture or other instrument under which any
Senior Indebtedness is outstanding or of such Senior Indebtedness, whether or
not such action is in accordance with the provisions of any applicable document,
shall in any way alter or affect any of the provisions of this Article XIII or
of the Securities relating to the subordination thereof.
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ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 14.01. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON
CHANGE OF CONTROL. (a) If at any time there shall have occurred a Change of
Control with respect to the Company, each Holder shall have the right, at such
Holder's option, subject to the terms and conditions of this Indenture, to
require the Company to repurchase all or a portion of such Holder's Securities
(in denominations of $1,000 or integral multiples thereof), at the purchase
price equal to 100% of the principal amount plus accrued interest (the
"Repurchase Price") to the Repurchase Date (the "Repurchase Date") that is
75 days after the date the Company's Change of Control Notice (as defined below)
is mailed (or such earlier or later date as is required by law, rule or
regulation), subject to substantial satisfaction by or on behalf of the Holder
of the requirements set forth in Section 14.01(c). Promptly, but in any event
within 29 days following any such Change of Control, the Company hereby
covenants, with respect to any Senior Indebtedness that would prohibit the
repurchase of Securities by the Company in the event of such Change of Control,
to: either (i) repay all such Senior Indebtedness in full, in cash, or
(ii) obtain the requisite consents under such Senior Indebtedness or any
agreement pursuant to which any such Senior Indebtedness is issued to permit the
repurchase of the Securities as provided below. The foregoing shall in no way
limit the occurrence of an Event of Default, including an Event of Default
arising from a default under the covenants of the second sentence of this
Section 14.01(a), and the right to demand payment of the Securities upon
acceleration thereafter.
(b) Within 15 days after the Company knows or reasonably should know
the Change of Control has occurred, the Company covenants that it shall mail a
written notice (the "Change of Control Notice") of Change of Control by first-
class mail to the Trustee and to each Holder (and to beneficial owners as
required by applicable law) and shall cause a copy of such notice to be
published in a daily newspaper of national circulation. The notice shall state:
(i) the events causing a Change of Control (specifying such event) and
the date of such Change of Control;
(ii) the date by which the Change of Control Purchase Notice to this
Section 14.01 must be given;
(iii) the Repurchase Date;
(iv) the Repurchase Price;
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(v) the name and address of the Paying Agent and the conversion agent;
(vi) the conversion price and any adjustments thereto;
(vii) that Securities as to which a Change of Control Purchase Notice
has been given may be converted into Common Stock only if the Change of
Control Purchase Notice has been withdrawn in accordance with the terms of
this Indenture;
(viii) the procedures the Holder must follow to exercise the rights
under this Section 14.01 and a brief description of such rights:
(ix) that brief description of the conversion rights of the
Securities; and
(x) the procedures for withdrawing a Change of Control Purchase
Notice.
The Change of Control Notice shall also state whether or not the Company has
satisfied its obligations to the holders of the Senior Indebtedness of the type
referred to in Section 14.01(a) as required pursuant to Section 14.01(a). If
the Company is unable to satisfy such obligations, the Change of Control Notice
shall also state that the Company is or will be in default under Section 5.01(4)
of the Indenture, that receipt by the Company of one or more Change of Control
Purchase Notices by Holders of at least 25% of the outstanding Securities will
constitute a Notice of Default thereunder, and that the failure of the Company
to cure such default within 60 days (or the then applicable time period) shall
be an Event of Default allowing the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding Securities to declare the principal of
all the Securities to be due and payable immediately.
(c) A Holder may exercise its rights specified in Section 14.01(a)
upon delivery of a written notice of purchase (a "Change of Control Purchase
Notice") to the Company or an agent designated by the Company for such purpose
on or before the third Business Day prior to the Repurchase Date, stating:
(i) the certificate number or numbers of the Security or Securities
which the Holder will deliver to be purchased;
(ii) the portion of the principal amount of the Security or Securities
which the Holder will deliver to be repurchased, which portion must be
$1,000 or an integral multiple thereof; and
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(iii) that such Security or Securities shall be repurchased pursuant
to the terms and conditions specified in this Article XIV.
The delivery of such Security or Securities to the Paying Agent (together with
all necessary endorsements) at the offices of the Paying Agent shall be a
condition to the receipt by the Holder of the Repurchase Price therefor;
PROVIDED, HOWEVER, that such Repurchase Price shall be so paid pursuant to this
Section 14.01 only if the Security or Securities so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change of Control Purchase Notice. The Company shall repurchase from
the Holder thereof, pursuant to this Section 14.01, a portion of a Security if
the principal amount of such portion is $1,000 or an integral multiple of
$1,000. Any repurchase by the Company contemplated pursuant to the provisions
of this Section 14.01 shall be consummated by the delivery of the consideration
to be received by the Holder promptly following the Repurchase Date.
Notwithstanding anything herein to the contrary, any Holder delivering to the
Paying Agent the Change of Control Purchase Notice contemplated by this
Section 14.01(c) shall have the right to withdraw such Change of Control
Purchase Notice at any time prior to the close of business on the Repurchase
Date by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 14.02.
SECTION 14.02 EFFECT OF CHANGE OF CONTROL PURCHASE NOTICE. Upon
receipt by the Company of the Change of Control Purchase Notice specified in
Section 14.01, the Holder of the Security in respect of which such notice was
given shall (unless such notice is withdrawn as specified in the following
paragraph) thereafter be entitled to receive solely the Repurchase Price with
respect to such Security. Such price shall be paid to such Holder (provided the
conditions in Section 14.01 have been satisfied) promptly following the
Repurchase Date with respect to such Security delivery of such Security.
Securities in respect of which a Change of Control Purchase Notice has been
given by the Holder thereof may not be converted into shares of Common Stock on
or after the date of the delivery of such Change of Control Purchase Notice
unless such notice has first been validly withdrawn as specified in the
following paragraph.
A Change of Control Purchase Notice may be withdrawn by means of a
written notice of withdrawal delivered to the office of the Paying Agent at any
time prior to the close of business on the Repurchase Date specifying:
(i) the certificate number or numbers of the Security or Securities in
respect of which such notice of withdrawal is being submitted;
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(ii) the portion of the principal amount of the Security or Securities
with respect to which such notice of withdrawal is being submitted, which
amount must be $1,000 or an integral multiple thereof; and
(iii) the portion of the principal amount, if any, of such Security or
Securities which remains subject to the original Change of Control Purchase
Notice and which has been or will be delivered for purchase by the Company,
which amount must be $1,000 or an integral multiple thereof.
In addition to the requirement that the Company must first comply with the
covenants set forth in Section 14.01, there shall be no repurchase of any
Securities pursuant to Section 14.01 if there has occurred (prior to, on or
after the giving, by the Holders of such Securities, of the required Change of
Control Purchase Notice) and is continuing an Event of Default. The foregoing
shall in no way limit the occurrence of an Event of Default, including an Event
of Default arising from a default under the covenants in this Article XIV and
the right to demand payment of the Securities upon acceleration thereafter.
SECTION 14.03. DEPOSIT OF REPURCHASE PRICE. On or before the
Business Day following the Repurchase Date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an
Affiliate of either of them is the Paying Agent, shall segregate and hold in
trust as provided in Section 10.03) an amount of money sufficient to pay the
Securities or portions thereof which are to be purchased as of the Repurchase
Date.
SECTION 14.04. SECURITIES PURCHASED IN PART. Any Security which is
to be purchased only in part shall be surrendered at the office of the Paying
Agent (with, if the Company or the Trustee so requires, due endorsement by, or
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and make available for delivery to the Holder of such Security,
without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal amount equal to,
and in exchange for, the portion of the principal amount of the Security so
surrendered which is not purchased.
SECTION 14.05. COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE
OF SECURITIES. In connection with any purchase of Securities under
Section 14.01 hereof, the Company shall, to the extent then applicable and
required by law: (i) comply with Rule 13e-4 and Rule 14e-1 (which terms, as
used herein, includes any successor provision thereto) under the Exchange Act;
(ii) file the related Schedule 13E-4 (or any successor or similar schedule, form
or report) under the
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Exchange Act; and (iii) otherwise comply with all federal and state securities
laws so as to permit the rights and obligations under Section 14.01 to be
exercised in the time and in the manner specified in Section 14.01.
ARTICLE XV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 15.01. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE. The Company may at its option by Board Resolution, at any time,
elect to have either Section 15.02 or Section 15.03 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this
Article XV.
SECTION 15.02. DEFEASANCE AND DISCHARGE. Upon the Company's exercise
of the option provided in Section 15.01 applicable to this Section and
satisfaction of the conditions set forth in Section 15.04, the Company shall be
deemed to have been discharged from its obligations with respect to the
Outstanding Securities (including the provision of Article XIII hereof) on the
date the conditions set forth below 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 the Outstanding
Securities and to have satisfied all its other obligations under such Securities
and this Indenture insofar as such Securities are concerned (and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of Outstanding Securities to
receive, solely from the trust fund described in Section 15.04 and as more fully
set forth in such Section, payments in respect of the principal of and premium,
if any, and interest on such Securities when such payments are due; (B) the
Company's obligations with respect to such Securities under Sections 3.05, 3.06,
6.07, 7.01, 7.04, 10.02 and 10.03; (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations with respect
thereto; (D) the Company's obligations under Article XII; and (E) this Article
XV.
Subject to compliance with this Article XV, the Company may exercise
its option under this Section 15.02 notwithstanding the prior exercise of its
option under Section 15.03.
SECTION 15.03. COVENANT DEFEASANCE. Upon the Company's exercise of
the option provided in Section 15.01 applicable to this Section and satisfaction
of the conditions set forth in Section 15.04, the Company (i) shall be released
from its obligations under Section 10.07, Section 10.08 and the provisions of
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Article XIII hereof and (ii) the occurrence of an event specified in
Section 5.01(6) shall not constitute an Event of Default, and such Sections and
Articles shall no longer apply with respect to or for the benefit of the
Company, the Securities, the Holders of Securities and the holders of Senior
Indebtedness on and after the date the conditions set forth below are satisfied
(hereinafter, "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that 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
Sections or Article whether directly or indirectly by reason of any reference
elsewhere herein to any such Sections or Article or by reason of any reference
in any such Sections or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
SECTION 15.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to application of either Section 15.02 or
Section 15.03 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.09 who shall agree to comply with the provisions of this
Article XV 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 Securities,
(A) money 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 and without further reinvestment thereof will
provide, not later than one day before the due date of any payment, money
in an amount, or (C) a combination thereof in an aggregate amount,
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 premium, if any, on and each installment of interest on the Securities
on the Stated Maturity of such principal or installment of interest on the
day on which such payments are due and payable in accordance with the terms
of this Indenture and of such Securities. For this purpose, "U.S.
Government Obligations" means securities that are (x) direct obligations of
the United States of America for the payment of which its full faith and
credit is pledged or (y) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof,
and shall also
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include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
U.S. Government Obligation on a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the Trustee (or such other trustee) as holder of such depository receipt;
PROVIDED that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 15.02, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (y) 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 shall confirm that, the
Holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit,
Defeasance and discharge 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.
(3) In the case of an election under Section 15.03, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities will not recognize income, gain or
loss for the 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 deposit and Covenant Defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit, in
the case of an election under Section 15.02 or 15.03.
(5) At the time such Defeasance or Covenant Defeasance is effective:
(A) no default in the payment of all or a portion of principal of (or
premium, if any) or interest in respect of any Senior Indebtedness shall
have occurred and be continuing, and no event of default with respect to
any Senior Indebtedness shall have occurred and be continuing and shall
have resulted in
<PAGE>
89
such Senior Indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable and
(B) (i) no other event of default with respect to any Senior Indebtedness
shall have occurred and be continuing permitting the holders of such Senior
Indebtedness (or a trustee on behalf of the holders thereof) to declare
such Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, (ii) no judicial proceeding
shall be pending with respect to any such event of default and (iii) the
Company and the Trustee shall not have received a notice with respect to
any such event of default from any holder of Senior Indebtedness (or their
representative or representatives), or, in the case of either clause (A) or
clause (B) above, each such default or event of default shall have been
cured or waived or shall have ceased to exist.
(6) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 5.01(7)
and (8) are concerned, at any time during the period ending on the 90th day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(7) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that after the 90th day following the deposit, such
deposit (and the trust funds) will not be subject to avoidance under
Section 547 of the United States Bankruptcy Code (or any successor
provision thereto) and related judicial decisions.
(8) Such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 6.08 and for
purposes of the Trust Indenture Act with respect to any securities of the
Company.
(9) Such Defeasance or Covenant Defeasance shall 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.
(10) 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 15.02 or the Covenant Defeasance under Section 15.03 (as the case
may be) have been complied with.
<PAGE>
90
(11) Such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit to constitute,unless it is qualified as, a
regulated investment company under the Investment Company Act of 1940, as
amended.
SECTION 15.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to the provisions of the
last paragraph of Section 10.03. all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee--collectively, for purposes of this Section 15.05, the "Trustee")
pursuant to Section 15.04 shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon, in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except in the event required by law. Money so held
in trust, to the extent allocated for the payment of Securities, shall not be
subject to the provisions of Article XIII.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 15.04 or the principal and interest received in
respect thereof other than any such tax, fee, or other charge which by law is
for the account of the Holders of the Outstanding Securities.
Anything in this Article XV to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
request any money or U.S. Government Obligations held by it as provided in
Section 15.04 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount hereof which would then be
required to be deposited to the effect an equivalent Defeasance or Covenant
Defeasance.
The provisions for subordination of the Securities set forth in
Article XIII are hereby expressly made subject to the provisions for Defeasance
or Covenant Defeasance in this Article XV and, anything herein to the contrary
notwithstanding, upon the effectiveness of such Defeasance or Covenant
Defeasance, such Securities shall thereupon cease to be so subordinated.
SECTION 15.06. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any money in accordance with Section 15.02 or 15.03 by reason of
any order or judgment of any court or governmental authority enjoining,
restraining
<PAGE>
91
or otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article XV until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with
Section 15.02 or 15.03; PROVIDED, HOWEVER, that if the Company makes any payment
of principal of (or premium, if any) or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
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.
<PAGE>
92
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.
HEXCEL CORPORATION,
by /s/ STEPHEN C. FORSYTH
-------------------------------
Name: Stephen C. Forsyth
Title: Senior Vice President of Finance
and Administration
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION,
by /s/ KERRI S. JONES
----------------------------
Name: Kerri S. Jones
Title: Assistant Vice President
Attest:
- ---------------------------
Name:
Title:
<PAGE>
CONSENT NUMBER 1 AND FIRST AMENDMENT
CONSENT NUMBER 1 AND FIRST AMENDMENT, dated as of July 3, 1996 (this
"AMENDMENT "), to the Credit Agreement, dated as of June 27, 1996 (the "CREDIT
AGREEMENT "), among Hexcel Corporation (the "COMPANY "), the Foreign Borrowers
from time to time parties thereto (together with the Company, the "BORROWERS "),
the banks and other financial institutions from time to time parties thereto
(the "LENDERS "), the Collateral Agent named therein and Credit Suisse, as
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT "; together
with the Collateral Agent, the "AGENTS ").
W I T N E S S E T H :
WHEREAS, the Borrowers are parties to the Credit Agreement;
WHEREAS, the Borrowers have requested that the Lenders amend certain
provisions of the Credit Agreement and consent to the amendment of certain
provisions of the Collateral Agency Agreement, as more fully described herein;
WHEREAS, the Lenders and the Agents are willing to amend such
provisions of the Credit Agreement and consent to such amendment of the
Collateral Agency Agreement only upon the terms and subject to the conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Borrowers, the Lenders and the Agents hereby
agree as follows:
3. DEFINITIONS . All terms defined in the Credit Agreement shall
have such defined meanings when used herein unless otherwise defined herein.
3. AMENDMENT OF SECTION 8.2 . Section 8.2 of the Credit Agreement
hereby is amended by:
(a) deleting from clauses (a)(i), (a)(ii), (a)(iii) and (c) thereof the
phrase "(A) quarterly in arrears on the first Business Day of each
January, April, July and October, commencing on October 1, 1996"; and
(b) substituting therefor (in each such instance) the phrase "(A)
quarterly in arrears on the third Business Day of each January, April,
July and October, commencing on October 3, 1996, for the period ending
on (and including) the last day of the immediately preceding December,
March, June or September, respectively".
3. AMENDMENT OF SECTION 8.10 . Section 8.10 of the Credit Agreement
hereby is amended by:
<PAGE>
2
(a) deleting from clause (a) thereof the phrase "in each case payable
quarterly in arrears on the first Business Day of each January, April,
July and October, commencing on October 1, 1996," and by substituting
therefor the phrase "in each case payable (in the currency in which
the relevant Letter of Credit is denominated) on the third Business
Day of each January, April, July and October, commencing on October 3,
1996 for the period ending on (and including) the last day of the
immediately preceding December, March, June or September,
respectively,".
(b) deleting from clauses (b) and (c) thereof the phrase "(A) quarterly in
arrears on the first Business Day of each January, April, July and
October, commencing on October 1, 1996" and by substituting therefor
(in each such instance) the phrase "(A) quarterly in arrears on the
third Business Day of each January, April, July and October,
commencing on October 3, 1996, for the period ending on (and
including) the last day of the immediately preceding December, March,
June or September, respectively".
4. AMENDMENT OF SECTION 17.7 . Section 17.7 of the Credit
Agreement hereby is amended by:
(a) deleting from clause (a) thereof the phrase "without the written
concurrence of the Requisite Lenders and the Borrowers" and by
substituting therefor the phrase "without the written concurrence of
the Requisite Lenders and each Borrower directly affected thereby";
and
(b) deleting from clause (b) thereof the phrase "signed by each Borrower,
each Syndicated Lender and each other Lender which is directly
affected thereby" and by substituting therefor the phrase "signed by
each Syndicated Lender, the European Overdraft Bank, each other Lender
which is directly affected thereby and each Borrower which is directly
affected thereby".
5. AMENDMENT OF SCHEDULES . The Schedules to the Credit
Agreement hereby are amended to reflect the changes which are blacklined on the
pages attached hereto as Exhibit A.
6. CONSENT TO AMENDMENT OF COLLATERAL AGENCY AGREEMENT . Each
Lender hereby consents to the amendment of the Collateral Agency Agreement upon
substantially the terms set forth in Exhibit B hereto and hereby instructs each
of the Administrative Agent and the Collateral Agent to execute and deliver an
amendment document substantially in such form.
7. CONDITIONS TO EFFECTIVENESS . This Amendment shall become
effective on and as of the date that the Administrative Agent shall have
received counterparts of this Amendment, duly executed by each Borrower, each
Syndicated Lender and the European Overdraft Bank.
<PAGE>
3
8. REPRESENTATIONS AND WARRANTIES . The Company, as of the
date hereof and after giving effect to the amendments contained herein, hereby
confirms, reaffirms and restates the representations and warranties made by it
and each Foreign Borrower in Section 10 of the Credit Agreement and otherwise in
the Loan Documents to which it is a party; PROVIDED that each reference to the
Credit Agreement therein shall be deemed to be a reference to the Credit
Agreement after giving effect to this Amendment.
9. LIMITED EFFECT . The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Lender or the Agent under any of the
Loan Documents, nor constitute a waiver or amendment of any provisions of any of
the Loan Documents. Except as expressly modified herein, all of the provisions
and covenants of the Credit Agreement and the other Loan Documents are and shall
continue to remain in full force and effect in accordance with the terms thereof
and are hereby in all respects ratified and confirmed.
10. COUNTERPARTS . This Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts (which may
include counterparts delivered by facsimile transmission) and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Any executed counterpart delivered by facsimile transmission shall
be effective as for all purposes hereof.
11. GOVERNING LAW . THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
HEXCEL CORPORATION
HEXCEL S.A. [Belgium]
HEXCEL S.A. [Lyon]
BROCHIER S.A.
SALVER S.R.L.
DANUTEC WERKSTOFF AKTIENGESELLSCHAFT
By:
---------------------------------
Name:
Title:
<PAGE>
4
HEXCEL (U.K.) LIMITED
HEXCEL COMPOSITES LIMITED
HEXCEL COMPOSITES GMBH
By:
-----------------------------------
Name:
Title:
HERCULES AEROSPACE ESPANA S.A.
By:
------------------------------------
Name:
Title:
CREDIT SUISSE, as the Administrative Agent
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
CITIBANK, N.A.. as Collateral Agent and as a
Lender (including, without limitation, as
European Overdraft Bank)
By:
----------------------------------
Name:
Title:
CREDIT SUISSE, as the Swing Loan Bank, the
Issuing Bank and a Lender
By:
-----------------------------------
Name:
Title:
<PAGE>
5
By:
-----------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS, SAN FRANCISCO
BRANCH
By:
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.
By:
-----------------------------------
Name:
Title:
CREDIT LYONNAIS
By:
-----------------------------------
Name:
Title:
ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.P.A.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
<PAGE>
6
SOCIETE GENERALE
By:
-------------------------------------
Name:
Title:
SWISS BANK CORPORATION, New York and Cayman
Island Branches
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND
By:
--------------------------------------
Name:
Title:
CREDIT SUISSE (LUXEMBOURG) S.A., as a Local
Lender
By:
---------------------------------------
Name:
Title:
CREDIT SUISSE, as a Local Lender
By:
--------------------------------
Name:
Title:
<PAGE>
7
By:
---------------------------------
Name:
Title:
<PAGE>
[letterhead]
July 8, 1996
BY TELECOPIER
TO: The Persons listed on the attached Distribution List
FROM: Charles H. F. Garner (212/455-7280)
Michele D. Pinder (212/455-7155)
RE: Hexcel Corporation
Modification to First Amendment
- -------------------------------------------------------------------------------
You should receive a package this morning containing executivion copies
of the First Amendment, dated as of July 3, 1996 (the "First Amendment"), to
the Credit Agreement, dated as of June 27, 1996 (the "Credit Agreement"),
with Hexcel Corporation, the Foreign Borrowers from time to time parties
thereto, the Lenders from time to time parties thereto, the Collarteral Agent
named therein and Credit Suisse, as administrative agent. Unless otherwise
defined herein, capitalized terms which are used herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Administrative Agent and the Borrowers have requested that certain
modifications be made to the terms of the First Amendement, as follows:
(a) in Section 3(a) of the First Amendment (i.e. "AMENDMENT OF SECTION
8.10"), the phrase "(in the currency in which the relevant Letter of
Credit is denominated)" should be deleted and the following phrase
should be substituted therefor:
"(in the currency in which the relevent Letter of Credit is
denominated, unless the amount of such payment is reasonably
determined by the Administrative Agent to be DE MINIMIS, in which
case the Administrative Agent and the relevant Borrower may elect to
cause such payment to be payable in Dollars)"; and
(b) in Section 4(a) of the First Amendment (i.e., "AMENDMENT OF SECTION
17.7"), the reference to the phrase "written concurrence" should be
modified to read "written agreement".
If these changes are acceptable to you, you should:
- - sign BOTH this memo where indicated below AND the complete hard copies
of the First Amendment which were sent to you for arrival today (i.e.,
the document which this memo is revising); and
<PAGE>
- - return this memo AND all of the executed hard copies of the First
Amendement to Michele Pinder in accordance with the instructions
distributed with the First Amendment.
Please feel free to call either of us if you have any questions concerning
these changes or it we can otherwise be of further assistance.
C. G.
M. P.
ACKNOWLEDGED AND AGREED:
Bank: Credit Suisse, as Administrative Agent
--------------------------------------
By: RIEKENBERG
----------------------------------------
Name: HEATHER RIEKENBERG
Title: Member of Senior Management
By: /s/ Ira Lubinsky
----------------------------------------
Name: IRA LUBINSKY
Title: Associate
<PAGE>
THIRD RESTATED
AND AMENDED
REIMBURSEMENT AGREEMENT
HEXCEL CORPORATION
BANQUE NATIONALE DE PARIS
acting through its
SAN FRANCISCO BRANCH
Relating to:
California Pollution Control Financing
Authority Multi-Modal Interchangeable Rate
Pollution Control Revenue Refunding Bonds
(Hexcel Corporation Project), Series 1988;
Industrial Development Authority of the City of
Casa Grande Multi-Modal Interchangeable Rate
Industrial Development Revenue Refunding Bonds
(Hexcel Corporation Project), Series 1988;
Guadalupe-Blanco River Authority Industrial
Development Corporation Multi-Modal
Interchangeable Rate Industrial Development
Revenue Refunding Bonds, Series 1988 (Hexcel
Corporation Project); and
Port of Skagit Industrial Development
Corporation Variable Rate Demand Revenue Bonds,
1989 (Hexcel Corporation Project)
June 27, 1996
<PAGE>
THIRD RESTATED AND AMENDED
REIMBURSEMENT AGREEMENT
This THIRD RESTATED AND AMENDED REIMBURSEMENT AGREEMENT (this
"Agreement") dated as of June 27, 1996, is made by and between HEXCEL
CORPORATION, a Delaware corporation (the "Company"), and BANQUE NATIONALE
DE PARIS, a banking corporation organized and existing under the laws of
The Republic of France, acting through its San Francisco Branch (the
"Bank").
RECITALS
WHEREAS, the Bank has issued those certain Irrevocable Standby Letters
of Credit listed on Exhibit B to this Agreement (the "Bond Letters of
Credit") pursuant to that certain Restated and Amended Reimbursement
Agreement, dated as of February 1, 1995, between the Bank and the Company,
as restated and amended pursuant to that certain Second Restated and
Amended Reimbursement Agreement, dated as of February 29, 1996, between the
Bank and the Company (the "Second Restated Agreement");
WHEREAS, the Company, certain affiliates of the Company named therein,
the institutions from time to time party thereto as "Lenders," including
the Bank, and Credit Suisse, as "Administrative Agent," have entered into
that certain Credit Agreement, dated as of June 27, 1996 (as amended from
time to time, the "Credit Agreement"), which provides, INTER ALIA, that the
Bond Letters of Credit be deemed issued and outstanding under the terms of
the Credit Agreement;
WHEREAS, the Bank and the Company agree that, subject to satisfaction
of the conditions hereof, the Bond Letters of Credit shall be deemed issued
under and in accordance with Article 5 of the Credit Agreement; and
WHEREAS, the Bank and the Company wish to modify the Second Restated
Agreement and the obligations of Hexcel thereunder to be consistent with
the terms of the Credit Agreement, except as otherwise expressly provided
in this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. CERTAIN DEFINED TERMS. As used in this Agreement,
including the preceding recitals, terms defined in Exhibit A hereto shall
have the meanings assigned to such terms in such exhibit. Capitalized terms
used in this Agreement and not defined herein, shall have the meanings
assigned to such terms in the Credit Agreement.
SECTION 2. CREDIT AGREEMENT. Subject to satisfaction of the
conditions precedent to the effectiveness of this Agreement, the Bond
Letters of Credit shall be deemed issued and outstanding pursuant to the
Credit Agreement and the Bank shall be entitled to the rights and benefits
of an Issuing Bank under the Credit Agreement. In case of any conflict or
discrepancy between the terms
-1-
<PAGE>
and provisions of any Bond Letter of Credit, on the one hand, and
terms and provisions of this Agreement or the Credit Agreement, on the
other hand, the terms of the Bond Letter of Credit shall determine the
actual meaning of such Letter of Credit, this Agreement and the Credit
Agreement.
SECTION 3. AMOUNTS AND TERMS OF BOND LETTERS OF CREDIT. The Stated
Amount, Principal Component and Interest Component of each Bond Letter of
Credit as of the Effective Date is as set forth in Exhibit B. The Stated
Amount, Principal Component and Interest Component of each Bond Letter of
Credit shall be reduced and reinstated pursuant to and in accordance with
the provisions of such Bond Letter of Credit. Drawings will be permitted
to the extent and as provided in each Bond Letter of Credit. No Drawing
under any Bond Letter of Credit shall be permitted for the payment of
principal (whether due at maturity or upon redemption or acceleration),
interest or the purchase price of Pledged Bonds unless such Pledged Bonds
have been remarketed and the Stated Amount of such Bond Letter of Credit
has been consequently reinstated as provided in such Bond Letter of Credit.
The Bond Letters of Credit shall expire on December 31, 1998. The Bank
agrees that all Drawings honored by the Bank shall be paid from Bank funds.
SECTION 4. FEES. Fees in connection with the Bond Letters of Credit
shall be paid in accordance with the provisions of the Credit Agreement
and, with respect to matters referred to in Section 5.8 of the Credit
Agreement, as agreed from time to time by the Bank and the Company.
SECTION 5. CONDITION TO OPTIONAL REDEMPTION DRAWINGS. The Bank shall
not be required to consent to, or make any payment to an LOC Beneficiary in
connection with, an Optional Redemption Drawing unless the Company shall
have notified the Bank of the intended optional redemption at least 30 days
in advance of the date on which the Company wishes to cause the Optional
Redemption Drawing to occur.
SECTION 6. REIMBURSEMENT FOR DEBT SERVICE DRAWINGS. Anything to the
contrary in Section 5.5(a)(i) of the Credit Agreement notwithstanding, each
Debt Service Drawing paid by the Bank shall constitute a Debt Service
Reimbursement Obligation which obligation shall be due and payable by the
Company in the amount of each such Debt Service Drawing on the date on
which such Debt Service Drawing is paid by the Bank to the LOC Beneficiary
and shall bear interest from the date such obligation becomes due until
paid in full at the per annum rate of interest equal to the Base Rate
(applicable to Dollar denominated Base Rate Loans) plus two percent (2.0%)
until paid in full, which interest shall be payable on demand.
SECTION 7. REIMBURSEMENT FOR LIQUIDITY DRAWINGS. Anything to the
contrary in Section 5.5(a)(i) of the Credit Agreement notwithstanding, each
Liquidity Drawing paid by the Bank (a) during the existence of a Default or
an Event of Default or (b) pursuant to a mandatory tender of any Hexcel
Bonds (i) in connection with conversion of the interest rate payable on any
Hexcel Bonds to a Fixed Rate, (ii) pursuant to Section 2.04(e) of the
Indenture/Standard Terms of any Indenture other than the Skagit Indenture,
(iii) pursuant to Section 2.06(h) of the Indenture/Standard Terms of any
Indenture other than the Skagit Indenture, or (iv) pursuant to Section 4.02
of the Skagit Indenture, shall constitute a Debt Service Reimbursement
Obligation which obligation shall be due and payable in the amount of each
such Liquidity Drawing on the date on which such Liquidity Drawing is paid
by the Bank to the LOC Beneficiary and shall bear interest from the date
such obligation
-2-
<PAGE>
becomes due until paid in full at the per annum rate of interest equal to
the Base Rate (applicable to Dollar denominated Base Rate Loans) plus two
percent (2.0%) until paid in full, which interest shall be payable on
demand. Each other Liquidity Drawing paid by the Bank under a Bond Letter
of Credit shall constitute a Liquidity Reimbursement Obligation.
Anything to the contrary in Section 5.5(a)(i) of the Credit Agreement
notwithstanding, the principal amount of each Liquidity Reimbursement
Obligation incurred pursuant to this Section shall be due and payable to
the Bank in full not later than the earliest of (a) the remarketing of the
Pledged Bonds purchased with the proceeds of an unreimbursed Liquidity
Drawing (see Section 8), (b) six months following the date on which the
Liquidity Drawing which resulted in such Liquidity Reimbursement Obligation
was paid by the Bank, (c) the earliest date on which the Pledged Bonds
purchased with the proceeds of an unreimbursed Liquidity Drawing can be
redeemed, other than by an optional redemption, (d) the maturity date of
the Pledged Bonds purchased with the proceeds of an unreimbursed Liquidity
Drawing, and (e) expiration or termination of the Bond Letter of Credit
relating to such Pledged Bonds. Each Liquidity Reimbursement Obligation
shall bear interest at the Base Rate for Dollar denominated Base Rate Loans
from the date of the Liquidity Drawing resulting in such Liquidity
Reimbursement Obligation until paid in full, which interest shall be
payable at the times and in the manner provided in Section 8.2(a)(i) of the
Credit Agreement; PROVIDED, HOWEVER, that if a Liquidity Reimbursement
Obligation is not paid when due, such Liquidity Reimbursement Obligation
together with any accrued but unpaid interest thereon shall thereafter bear
interest at the per annum rate of interest equal to the Base Rate
(applicable to Dollar denominated Base Rate Loans) plus two percent (2.0%)
until paid in full, which interest shall be payable on demand.
The LOC Beneficiary for the purposes of making Liquidity Drawings
shall use the proceeds of Liquidity Drawings only for the purpose of
purchasing Hexcel Bonds tendered or deemed tendered for purchase pursuant
to Section 2.06 of the Indenture/Standard Terms of any Indenture other than
the Skagit Indenture, or Section 4.01 or 4.02 of the Skagit Indenture.
Until remarketed in accordance with the terms of the applicable Indenture,
Pledged Bonds shall be registered in the name of the Bank as holder of a
pledge and security interest therein. Pledged Bonds shall be entitled to
all of the rights and privileges of Hexcel Bonds outstanding under the
applicable Indenture and shall be governed by all of the terms and
conditions of such Indenture; PROVIDED, HOWEVER, that Pledged Bonds: (1)
may not be tendered for purchase pursuant to Section 2.06 of the
Indenture/Standard Terms of any Indenture other than the Skagit Indenture
or Section 4.01 of the Skagit Indenture; (2) shall be redeemed, in the
event of a redemption pursuant to Section 2.18 of the Indenture/Standard
Terms of any Indenture other than the Skagit Indenture or Section 3.01 of
the Skagit Indenture or any other redemption thereunder, prior to
redemption of other Hexcel Bonds issued in connection with such Indenture;
and (3) shall not be entitled to payment of any premium upon redemption.
SECTION 8. PAYMENT OF LIQUIDITY REIMBURSEMENT OBLIGATIONS FOLLOWING
THE REMARKETING OF PLEDGED BONDS. Prior to or simultaneously with the
remarketing of Pledged Bonds by the Placement Agent (as provided in Section
2.07 of the Indenture/Standard Terms of any Indenture other than the Skagit
Indenture or Section 4.04 of the Skagit Indenture), the Company shall
prepay the then outstanding Liquidity Reimbursement Obligations incurred in
connection with
-3-
<PAGE>
the purchase of such Pledged Bonds by (1) causing the Trustee or Agent, as
applicable, to pay directly to the Bank the entire purchase price for the
remarketed Pledged Bonds, consisting of:
(a) the aggregate principal amount of the remarketed Pledged Bonds,
PLUS
(b) the aggregate amount of accrued and unpaid interest on such
Pledged Bonds received by the Trustee or Agent, as applicable, upon
placement of the Pledged Bonds in the form of due bills or otherwise,
calculated to the date of placement of such Pledged Bonds; and
(2) paying to the Bank the difference between interest accrued to the date
of such payment on the Liquidity Reimbursement Obligation (calculated at
the Base Rate for Dollar denominated Base Rate Loans) and the amount of
interest received by the Bank from the Trustee or Agent pursuant to clause
(b) of this Section 8. Payments received by the Bank from the Trustee or
Agent when accompanied by a certificate completed and signed by the Agent
or Trustee, as applicable, in substantially the form of Annex G to each
Bond Letter of Credit shall be applied by the Bank in reimbursement of
Liquidity Reimbursement Obligations in the manner described above. The
Company irrevocably authorizes the Bank to rely on such certificates and to
reinstate the Bond Letter of Credit relating to such Pledged Bonds in
accordance therewith.
SECTION 9. PREPAYMENTS. The Company may, upon at least five Business
Day's written notice to the Bank, prepay the outstanding amount of any
Liquidity Reimbursement Obligation in whole or in part (but not in sums of
less than $50,000 per prepayment) with accrued interest to the date of such
prepayment on the amount prepaid; PROVIDED, HOWEVER, that prepayments shall
be credited first to interest due and owing on any Debt Service
Reimbursement Obligation, then to principal due and owing on any Debt
Service Reimbursement Obligation, then to interest due and owing on any
Liquidity Reimbursement Obligation, and finally to principal due and owing
on any Liquidity Reimbursement Obligation. The provisions of this Section
9 shall not apply to prepayments made from the proceeds of the placement of
Pledged Bonds as provided in Section 8, or as a result of the redemption or
maturity of Pledged Bonds.
SECTION 10. CONDITIONS PRECEDENT. This Agreement shall become
effective when and only when each of the following conditions shall have
been satisfied in a manner acceptable to the Bank or shall have been waived
in writing by the Bank:
(a) the Bank shall have received from the Company this Agreement,
duly executed on behalf of the Company;
(b) the conditions precedent set forth in Section 9.1 of
the Credit Agreement shall have been satisfied or waived on
behalf of the Lenders and the Administrative Agent shall have
so notified the Bank in writing;
(c) the Bank shall have received an opinion
addressed to the Bank from Bond Counsel acceptable to the Bank
to the effect that the transactions contemplated
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by this Agreement and the Credit Agreement will not adversely
affect the exclusion of interest received in connection with the
Hexcel Bonds from gross income for federal income tax purposes;
(d) the Bank shall have received from the Company the
reasonable legal fees and expenses of counsel to the Bank
incurred in connection with this Agreement and the Bond
Letters of Credit; and
(e) the Bank and the Company shall have entered into a
written agreement satisfactory to the Bank with respect to
fees and expenses which may be paid directly to the Bank for
the sole account of the Bank pursuant to Section 5.8 of the
Credit Agreement.
SECTION 11. TERMINATION OF THE SECOND RESTATED AGREEMENT. Upon this
Agreement becoming effective as provided in Section 10 of this Agreement,
the Second Restated Agreement shall automatically terminate.
SECTION 12. PLEDGE AGREEMENTS. The Pledge Agreements shall remain in
full force and effect without interruption following the effectiveness of
this Agreement.
SECTION 13. EVENTS OF DEFAULT. The occurrence of any of the
following events shall be a "Reimbursement Agreement Event of Default"
under this Agreement:
(a) the Company shall fail to reimburse the Bank for any
Interest Drawing when due and such failure continues for a
period of five Business Days after the due date thereof; or
(b) the Company shall fail to pay when due any amount
payable under any provision of this Agreement (other than
reimbursement for Interest Drawings and for expenses the
payment of which is being contested in good faith by the
Company) or any Loan Agreement and such failure continues for
a period of 30 days after the due date thereof; or
(c) an Event of Default shall exist and be continuing
under the Credit Agreement; or
(d) an Event of Default shall exist and be continuing
under any Related Document which event of default may, in the
reasonable judgment of the Bank, have a Material Adverse
Effect, and such situation continues for a period of 60 days;
or
(e) any material provision of this Agreement or any
Related Document shall at any time for any reason cease to be
valid and binding on the Company, or shall be declared to be
null and void, or the validity or enforceability thereof shall
be contested by the Company or any Governmental Authority or
the Company shall deny that it has any or further liability or
obligation under this Agreement or such
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Related Document, and, in any such instance, such circumstance
shall have a Material Adverse Effect.
SECTION 14. REMEDIES UPON A REIMBURSEMENT AGREEMENT EVENT OF DEFAULT.
If any Event of Default shall have occurred and be continuing, the Bank
shall, if so directed in writing by the Administrative Agent or the
Requisite Banks:
(a) by notice to the Company, declare any or all
Liquidity Reimbursement Obligations to be immediately due and
payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived
by the Company;
(b) take such action with respect to the Pledged Bonds
pursuant to any Pledge Agreement as may be permitted under
that agreement or at law;
(c) notify any or all of the Trustees (with a copy to
the appropriate Agent or Agents) of such Event of Default and
instruct such Trustee or Trustees to declare the appropriate
Hexcel Bonds to be immediately due and payable in accordance
with the terms of the applicable Indenture; and
(d) exercise any rights and remedies available to the
Bank at law or in equity or under any other Related Document.
Nothing herein shall be deemed or construed to limit the rights and
remedies available pursuant to the Credit Agreement, which rights and
remedies shall be cumulative with the rights and remedies of the Bank
hereunder.
SECTION 15. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement or any Related Document, nor consent to any departure by
the Company therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Bank and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given. No amendment to this Agreement affecting the
obligations of the Company hereunder or the rights of the Bank with respect
to the Pledged Bonds or any additional collateral and no amendment to any
Bond Letter of Credit (except for substitution of a successor beneficiary
of such Bond Letter of Credit or extension of the term of such Bond Letter
of Credit as provided in paragraph 2 of such Bond Letter of Credit) shall
be entered into or approved by the parties unless the parties shall have
obtained an opinion of counsel experienced in bankruptcy matters to the
effect that such amendment will not subject the Trustee or holders of
Hexcel Bonds in connection with such Bond Letter of Credit to claims that
the proceeds of the Bond Letter of Credit may be recoverable from the
Trustee or the holders of Hexcel Bonds as voidable preferences of the
Company under Section 547(b) of the Bankruptcy Code.
SECTION 16. NOTICES, ETC. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, facsimile transmission or similar writing) and shall be given
to such party at its address, telecopy or telex number set forth below or
such other
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address or telecopy number as such party may hereafter specify for the
purpose of notice to the other party. Each such notice, request or other
communication shall be effective (a) if given by mail, 72 hours after such
communication is deposited in the mails with first class air mail postage
prepaid, addressed as aforesaid or (b) if given by any other means, when
delivered at the address specified in this Section.
Company: Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
Attn: Treasurer
Telephone: (203) 323-7456
Telecopy: (203) 969-0666
Bank: Banque Nationale de Paris
San Francisco Branch
180 Montgomery Street, 3rd Floor
San Francisco, California 94104
Attn: Katherine Wolfe
Telephone: (415) 956-0707
Telecopy: (415) 296-8954
SECTION 17. NO WAIVER; REMEDIES. No failure on the part of the Bank
to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 18. RIGHT OF SET OFF.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
indebtedness at any time owing by the Bank to or for the credit or the
account of the Company against any and all of the obligations of the
Company now or hereafter existing under this Agreement. Any amount
received by the Bank by way of set off shall be subject to sharing with the
Lenders as provided in the Credit Agreement.
(b) Anything in clause (a) of this Section to the contrary
notwithstanding but without modifying any other provision of this
Agreement, the Bank waives any such right referred to in clause (a), and
any other right which it may have at law or otherwise to set off and apply
such deposits or indebtedness referred to in clause (a), if, when and after
there shall be a Drawing under a Bond Letter of Credit during the pendency
of any proceeding by or against the Company seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for
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<PAGE>
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property; PROVIDED, HOWEVER, that
such waiver shall terminate and be of no force and effect either
(i) when and to the extent the exercise of such right
would not result in the Bank's being released, prevented or
restrained from or delayed in fulfilling the Bank's
obligations under any Bond Letter of Credit or
(ii) when and if the absence of such waiver would not
result in the lowering or suspension by the Rating Agency of
its rating of the Hexcel Bonds.
(c) The Bank agrees promptly to notify the Company after any such
setoff and application referred to in clause (a) of this Section; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity
of such setoff and application. Subject to the provisions of clause (b) of
this Section, the rights of the Bank under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
setoff or banker's Lien) which the Bank may have.
SECTION 19. INDEMNIFICATION. In addition to such indemnifications as
are contained in the Credit Agreement, the Company hereby indemnifies and
holds the Bank harmless from and against any and all claims, damages,
losses, liabilities, costs or expenses which the Bank may incur or which
may be claimed against the Bank by any person or entity:
(a) by reason of any inaccuracy or alleged inaccuracy in
any material respect, or any untrue statement or alleged
untrue statement of any material fact, contained in any
official statement, placement memorandum, or any amendment or
supplement thereto, or by reason of the omission or alleged
omission to provide notice or to state therein a material fact
necessary to make such statements, in the light of the
circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that, in the case of any action or
proceeding alleging an inaccuracy in a material respect, or an
untrue statement, with respect to information supplied by and
describing the Bank in any official statement, placement
memorandum or any supplement or amendment thereto (the "Bank
Information")
(i) indemnification by the Company
pursuant to clause (a) of this Section shall be
limited to the costs and expenses of the Bank
(including fees and expenses of the Bank's
counsel) of defending itself against such
allegation,
(ii) if in any such action or proceeding
it is finally determined that the Bank
Information contained an untrue statement in a
material respect, then the Company shall not be
required to indemnify the Bank pursuant to
clause (a) of this Section for any claims,
damages, losses, liabilities, costs or expenses
to the extent caused by such inaccuracy or
untrue statement, and
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(iii) if any such action or proceeding
shall be settled by the Bank without there
being a final determination to the effect
described in the preceding sub-clause (ii),
then the Company shall be required to indemnify
the Bank pursuant to clause (a) of this Section
only if such action or proceeding is settled
with the Company's consent; and
(b) by reason of or in connection with the execution,
delivery or performance of the Hexcel Bonds, any Remarketing
Agreement, or any transactions contemplated thereby; and
(c) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure
to make payment under, any Bond Letter of Credit; PROVIDED,
HOWEVER, that the Company shall not be required to indemnify
the Bank pursuant to clause (c) of this Section for any
claims, damages, losses, liabilities, costs or expenses to the
extent caused by
(i) the Bank's willful misconduct or
gross negligence in determining whether
documents presented under a Bond Letter of
Credit comply with the terms of such Bond
Letter of Credit; or
(ii) the Bank's willful failure to make
lawful payment under a Bond Letter of Credit
after the presentation to it by the LOC
Beneficiary or a transferee beneficiary under
such Bond Letter of Credit of a draft and
certificate complying with the terms and
conditions of such Bond Letter of Credit; and
(d) by reason of or in connection with any claims,
damages, losses, liabilities, costs or expenses asserted
against the Bank by or on behalf of J.P. Morgan Securities,
Inc., relating in any way to Hexcel Bonds, including, without
limitation, claims asserted in connection with that certain
letter agreement between J.P. Morgan Securities, Inc., and the
Bank dated December 30, 1993.
Nothing in this Section is intended to limit the Company's
reimbursement obligations contained herein. Without prejudice to the
survival of any other obligation of the Company hereunder, the indemnities
and obligations of the Company contained in this Section shall survive
payment in full of reimbursement amounts and fees payable pursuant to this
Agreement and the termination of the Bond Letters of Credit.
SECTION 20. COSTS AND EXPENSES. The Company agrees to pay on demand
all costs and expenses in connection with the administration of this
Agreement, the Pledge Agreements, and any other documents which may be
delivered in connection therewith, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Bank with
respect thereto and with respect to advising the Bank as to its rights and
responsibilities under this Agreement, the Pledge Agreements and the
Related Documents. The Company shall also pay on demand all costs and
expenses (including counsel fees and expenses) in connection with: (a)
amendments to this
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Agreement, any Related Document, any Bond Letter of Credit, or consents to
or waivers of any provision thereof requested by the Company, (b)
enforcement of this Agreement, the Pledge Agreement, or such other
documents as may be delivered in connection therewith, or (c) any action or
proceeding relating to a court order, injunction, or other process or
decree restraining or seeking to restrain the Bank from paying any amount
under any Bond Letter of Credit.
SECTION 21. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Company and the Bank and thereafter
shall be binding upon and inure to the benefit of the Company and the Bank
and their respective successors and assigns, except that the Company shall
not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Bank.
SECTION 22. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
SECTION 23. GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California. Any legal action or proceeding with respect to this Agreement
or any Related Document may be brought in the courts of the State of
California or of the United States of America for the Northern District of
California, and, by execution and delivery of this Agreement, the Company
and the Bank each accepts, for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
Nothing herein shall prevent either party from commencing legal proceedings
or from otherwise proceeding against the other party or its property in any
other jurisdiction.
SECTION 24. CURRENT RATING. The Bank makes no promise,
representation or warranty that its current long and short term debt
ratings with any Rating Agency shall continue until the Expiration Date.
SECTION 25. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
HEXCEL CORPORATION
-------------------------------------
By:
Title:
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BANQUE NATIONALE DE PARIS, acting
through its San Francisco Branch
-------------------------------------
By:
Title:
-------------------------------------
By:
Title:
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EXHIBIT A
to
Third Restated and Amended Reimbursement Agreement
CERTAIN DEFINED TERMS
"AGENT", as used in connection with any Indenture or any Hexcel Bonds,
shall have the meaning given to that Indenture; PROVIDED, that in
connection with the Skagit Indenture the term "Agent" shall refer to the
"Tender Agent" as that term is used in the Skagit Indenture.
"AGREEMENT" means this Third Restated and Amended Reimbursement
Agreement, dated as of June 27, 1996, between the Company and the Bank, as
amended from time to time in accordance with its terms.
"BANK" means Banque Nationale de Paris, a banking corporation
organized under the laws of the Republic of France, acting through its San
Francisco Branch, its successors and assigns.
"BANK INFORMATION" has the meaning assigned to that term in Section 19
of this Agreement.
"BANKRUPTCY CODE" means the Federal Bankruptcy Code, 11 U.S.C.
Sections 101 ET SEQ., as amended from time to time, and any other successor
federal legislation hereafter enacted serving substantially similar
purposes.
"BOND LETTERS OF CREDIT" means those letters of credit issued by the
Bank in support of Hexcel Bonds, each as amended from time to time in
accordance with its terms. The Bond Letters of Credit are described in
Exhibit B attached to this Agreement.
"BUSINESS DAY" means a day of the year which is not a Saturday or
Sunday or a day on which banking institutions located in New York or
California are required or authorized to remain closed or on which any
applicable Placement Agent or the New York Stock Exchange is closed.
"CODE" means the United States Internal Revenue Code of 1986 (or any
successor statute containing the United States income tax law), as amended,
and the rulings and regulations (including temporary and proposed
regulations) promulgated thereunder.
"COMPANY" means the Hexcel Corporation, a Delaware corporation, its
successors and assigns.
"CREDIT AGREEMENT" has the meaning given to that term in the second
recital to this Agreement.
Exhibit A
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"DEBT SERVICE DRAWING" refers to Interest, Maturity, Mandatory
Redemption, Optional Redemption, and Acceleration Drawings, as each of
those terms is defined in the Bond Letters of Credit.
"DEBT SERVICE REIMBURSEMENT OBLIGATION" means the reimbursement
obligation of the Company to the Bank arising out of each Debt Service
Drawing and, to the extent provided in the first paragraph of Section 7 of
this Agreement, each Liquidity Drawing.
"DEFAULT" has the meaning assigned to that term in the Credit
Agreement.
"DOLLARS" and "$" means the lawful currency of the United States of
America and, in relation to any payment under this Agreement, same day or
immediately available funds.
"DRAWING" means any Debt Service Drawing or any Liquidity Drawing.
"EVENT OF DEFAULT" has the meaning assigned to that term in the Credit
Agreement.
"EXPIRATION DATE" means, for each Bond Letter of Credit, the date on
which such Bond Letter of Credit shall expire in accordance with its terms,
subject to extension as provided in paragraph 2 of such Bond Letter of
Credit.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state or local government or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to such government or political
subdivision.
"HEXCEL BONDS" means any Bond issued in connection with any or all of
the following series of bonds:
(a) California Pollution Control Financing Authority
Multi-Modal Interchangeable Rate Pollution Control Revenue
Refunding Bonds (Hexcel Corporation Project), Series 1988;
(b) Industrial Development Authority of the City of Casa
Grande Multi-Modal Interchangeable Rate Industrial Development
Revenue Refunding Bonds (Hexcel Corporation Project), Series
1988;
(c) Guadalupe-Blanco River Authority Industrial
Development Corporation Multi-Modal Interchangeable Rate
Industrial Development Revenue Refunding Bonds, Series 1988
(Hexcel Corporation Project); and
(d) Port of Skagit Industrial Development Corporation
Variable Rate Demand Revenue Bonds, 1989 (Hexcel Corporation
Project).
Exhibit A
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"INDENTURE" or "INDENTURES" refers to the following indentures of
trust:
(a) that certain Indenture of Trust, dated as of April 1,
1988, between the Company and the Bank of California, with
respect to $750,000 California Pollution Control Financing
Authority Multi-Modal Interchangeable Rate Pollution Control
Revenue Refunding Bonds (Hexcel Corporation Project), Series
1988, including the Standard Terms incorporated therein, as
amended from to time in accordance with the terms thereof;
(b) that certain Indenture of Trust, dated as of March 1,
1988, between the Company and the Bank of California, with
respect to $2,050,000 Industrial Development Authority of the
City of Casa Grande Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation
Project), Series 1988, including the Standard Terms
incorporated therein, as amended from time to time in
accordance with the terms thereof;
(c) that certain Indenture of Trust, dated as of April 1,
1988, between the Company and the Bank of California, with
respect to $3,150,000 Guadalupe-Blanco River Authority
Industrial Development Corporation Multi-Modal Interchangeable
Rate Industrial Development Revenue Refunding Bonds, Series
1988 (Hexcel Corporation Project), including the Standard Terms
incorporated therein, as amended from time to time in
accordance with the terms thereof;
(d) the Skagit Indenture.
"INDENTURE/STANDARD TERMS" means the Standard Terms and Conditions of
Trust, with respect to each of the Indentures (except the Skagit
Indenture), dated the date of the applicable Indenture, incorporated by
reference into such Indenture, as amended from time to time in accordance
with the terms of such Indenture.
"INTEREST COMPONENT", with respect to each Bond Letter of Credit, has
the meaning given to such term in such Bond Letter of Credit.
"INTEREST DRAWING", with respect to each Bond Letter of Credit, has
the meaning given to such term in such Bond Letter of Credit.
"LIQUIDITY DRAWING" has the meaning assigned to that term in paragraph
3 of the Bond Letters of Credit.
"LIQUIDITY REIMBURSEMENT OBLIGATION" means the reimbursement
obligation of the Company to the Bank resulting from each Liquidity
Drawing, except to the extent that a Liquidity Drawing shall result in a
Debt Service Reimbursement Obligation as provided in the first paragraph of
Section 7 of this Agreement.
"LOAN AGREEMENT" means each Loan Agreement as defined in each of the
Indentures.
Exhibit A
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"LOC BENEFICIARY" means (i) with respect to each Bond Letter of Credit
other than the Bond Letter of Credit issued in connection with the Skagit
Indenture, either of the Trustee or the Agent, as joint beneficiaries of
the Bond Letter of Credit, and their respective transferees as provided in
the Bond Letter of Credit, and (ii) with respect to the Bond Letter of
Credit issued in connection with the Skagit Indenture, the Trustee.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
operations or financial condition of the Company alone or the Company and
the Subsidiaries on a combined basis, or (b) the ability of the Company to
pay or perform its obligations in accordance with the terms of this
Agreement and the other Related Documents.
"MOODY'S" means Moody's Investors Service, Inc., a Delaware
corporation, its successors and assigns and, if such corporation shall be
dissolved or liquidated or no longer perform the functions of a securities
rating agency, "Moody's" shall be deemed to refer to any other nationally
recognized securities rating agency designated by the Company with the
approval of the Bank.
"OPTIONAL REDEMPTION DRAWING" has the meaning given to that term in
paragraph 3 of each of the Bond Letters of Credit.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"PLACEMENT AGENT" means (a) U.S. Bank of Washington, National
Association, with respect to the Hexcel Bonds issued pursuant to the Skagit
Indenture, and any successor Placement Agent appointed pursuant to the
terms of the Skagit Indenture and acceptable to the Bank, and (b) Bear,
Stearns & Co. Inc. with respect to the Hexcel Bonds issued pursuant to the
Indentures other than the Skagit Indenture, and any successor Placement
Agent or Placement Agents appointed pursuant to the terms of the applicable
Indenture and acceptable to the Bank.
"PLACEMENT AGREEMENTS" means the following documents:
(a) that certain Remarketing and Interest Services
Agreement, dated as of January 21, 1995, between the Company
and Bear, Stearns & Co. Inc. as Placement Agent, with respect
to $750,000 California Pollution Control Financing Authority
Multi-Modal Interchangeable Rate Pollution Control Revenue
Refunding Bonds (Hexcel Corporation Project), Series 1988;
(b) that certain Remarketing and Interest Services
Agreement, dated as of January 21, 1995, between the Company
and Bear, Stearns & Co. Inc. as Placement Agent, with respect
to $2,050,000 Industrial Development Authority of the City of
Casa Grande Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation
Project), Series 1988;
Exhibit A
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(c) that certain Remarketing and Interest Services
Agreement, dated as of January 21, 1995, between the Company
and Bear, Stearns & Co. Inc. as Placement Agent, with respect
to $3,150,000 Guadalupe-Blanco River Authority Industrial
Development Corporation Multi-Modal Interchangeable Rate
Industrial Development Revenue Refunding Bonds, Series 1988
(Hexcel Corporation Project); and
(d) that certain Remarketing Agreement, dated as of
December 1, 1989, by and among the Company, the Port of Skagit
County Industrial Development Corporation and Security
Pacific Securities, Inc. (and its successor in interest),
with respect to $3,000,000 Port of Skagit County Industrial
Development Corporation Variable Rate Demand Revenue Bond
Series 1989 (Hexcel Corporation Project).
"PLEDGE AGREEMENT" or "PLEDGE AGREEMENTS" means any or all of the
following documents:
(a) that certain Pledge and Security Agreement, dated as
of April 1, 1988, by and among the Company, the Bank, and
Morgan Guaranty Trust Company of New York relating to $750,000
California Pollution Control Financing Authority Multi-Modal
Interchangeable Rate Pollution Control Revenue Refunding Bonds
(Hexcel Corporation Project), Series 1988;
(b) that certain Pledge and Security Agreement, dated as
of March 1, 1988, by and among the Company, the Bank, and
Morgan Guaranty Trust Company of New York relating to
$2,050,000 Industrial Development Authority of the City of
Casa Grande Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation
Project), Series 1988;
(c) that certain Pledge and Security Agreement, dated as
of April 1, 1988, by and among the Company, the Bank, and
Morgan Guaranty Trust Company of New York relating to
$3,150,000 Guadalupe-Blanco River Authority Industrial
Development Corporation Multi-Modal Interchangeable Rate
Industrial Development Revenue Refunding Bonds, Series 1988
(Hexcel Corporation Project); and
(d) that certain Pledge and Security Agreement, dated as
of December 1, 1989, by and among the Company, the Bank, and
Bankers Trust Company of New York, National Association,
relating to $3,000,000 Port of Skagit County Industrial
Development Corporation Variable Rate Demand Revenue Bond
Series 1989 (Hexcel Corporation Project).
"PLEDGED BONDS" means the Hexcel Bonds purchased or deemed to be
purchased or otherwise acquired for the account of the Company with the
proceeds of Liquidity Drawings during any period in which the Bank has not
been reimbursed for such Liquidity Drawings.
"PRINCIPAL COMPONENT", with respect to each Bond Letter of Credit, has
the meaning given to such term in such Bond Letter of Credit.
Exhibit A
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"RATING AGENCY" means Moody's and/or S&P.
"REIMBURSEMENT AGREEMENT EVENT OF DEFAULT" has the meaning assigned to
that term in Section 13 of this Agreement.
"REIMBURSEMENT OBLIGATION" means any and all Debt Service
Reimbursement Obligations and Liquidity Reimbursement Obligations.
"RELATED DOCUMENTS" means the Indentures, the Resolutions, the Hexcel
Bonds, the Loan Agreements, the Pledge Agreements, the Placement
Agreements, and such other agreements, documents or certificates as were or
will be delivered to the Bank in connection with the issuance of the Bond
Letters of Credit and this Agreement.
"RESOLUTIONS" refers to each resolution adopted by the issuer of each
series of Hexcel Bonds, authorizing the issuance of such series of Hexcel
Bonds.
"S&P" means Standard and Poor's Corporation, a New York corporation,
its successors and assigns and, if such corporation shall be dissolved or
liquidated or no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Company with the approval of the
Bank.
"SECOND RESTATED AGREEMENT" has the meaning given to that term in the
first recital to this Agreement.
"SKAGIT INDENTURE" means that certain Indenture of Trust, dated as of
December 1, 1989, between the Company and Bankers Trust Company of
California, with respect to $3,000,000 Port of Skagit Industrial
Development Corporation Variable Rate Demand Revenue Bonds, 1989 (Hexcel
Corporation Project), as amended from time to time in accordance with the
terms thereof.
"STATED AMOUNT", with respect to each Bond Letter of Credit, has the
meaning given to such term in such Bond Letter of Credit.
"TRUSTEE" has the meaning assigned to that term in each of the
Indentures.
Exhibit A
-6-
<PAGE>
EXHIBIT B
to
Third Restated and Amended Reimbursement Agreement
LETTER OF CREDIT STATED AMOUNTS
Letter of Credit No. 86063, issued April 21, 1988, relating to $750,000
California Pollution Control Financing Authority Multi-Modal
Interchangeable Rate Pollution Control Revenue Refunding Bonds Series 1988
(Hexcel Corporation Project), as amended.
Stated Amount: $802,500
Letter of Credit No. 86057, issued March 1, 1988, relating to $2,050,000
Industrial Development Authority of the City of Casa Grande Arizona
Multi-Modal Interchangeable Rate Industrial Development Revenue Refunding
Bonds Series 1988 (Hexcel Corporation Project), as amended.
Stated Amount: $2,193,500
Letter of Credit No. 86066, issued April 21, 1988, relating to $3,150,000
Guadalupe-Blanco River Authority Industrial Development Corporation
Multi-Modal Interchangeable Rate Industrial Development Revenue Refunding
Bonds, Series 1988 (Hexcel Corporation Project), as amended.
Stated Amount: $3,370,500
Letter of Credit No. 086166, issued December 7, 1989, relating to
$3,000,000 Port of Skagit County Industrial Development Corporation
Variable Rate Demand Revenue Bond Series 1989 (Hexcel Corporation Project),
as amended.
Stated Amount: $2,598,630
Exhibit B
-1-
<PAGE>
Exhibit 11
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS - UNAUDITED
The Company reports net income (loss) per share data on primary and fully
diluted bases. Primary net income (loss) per share is based upon the weighted
average number of outstanding common shares and common equivalent shares from
stock options. Fully diluted net income (loss) per share is based upon (a) the
weighted average number of outstanding common shares and common equivalent
shares from stock options and adjusted for the assumed conversion of the 7%
convertible subordinated debentures and (b) net income (loss) increased by the
expenses on the debentures, due 2011. Computations of net income (loss) per
share on the primary and fully diluted bases for the second quarter and first
half of 1996 and 1995 were:
<TABLE>
<CAPTION>
THE QUARTER ENDED THE YEAR-TO-DATE ENDED
------------------------------------- -----------------------------------
June 30, July 2, June 30, July 2,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Primary Net Income (Loss) Per Share and
Equivalent Share
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations $ (23,667) $ 1,950 $ (21,819) $ (419)
Loss from discontinued operations - (185) - (297)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (23,667) $ 1,765 $ (21,819) $ (716)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 36,547 18,007 30,483 13,391
Weighted average common equivalent shares
from stock options - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares and equivalent
shares 36,547 18,007 30,483 13,391
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Primary net income (loss) per share and
equivalent share from (1):
Continuing operations $ (0.65) $ 0.11 $ (0.72) $ (0.03)
Discontinued operations - (0.01) - (0.02)
- ----------------------------------------------------------------------------------------------------------------------------------
Primary net income (loss) per share and $ (0.65) $ 0.10 $ (0.72) $ (0.05)
equivalent share (1)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Fully Diluted Net Income (Loss) Per Share
and Equivalent Share
- ----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations $ (23,667) $ 1,950 $ (21,819) $ (419)
Loss from discontinued operations - (185) - (297)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) (23,667) 1,765 (21,819) (716)
Interest and issuance costs - 7% convertible
debentures, due 2011 295 295 590 594
- ----------------------------------------------------------------------------------------------------------------------------------
Adjusted net income (loss) $ (23,372) $ 2,060 $ (21,229) $ (122)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 36,547 18,007 30,483 13,391
Weighted average common equivalent shares
Stock options - - - -
7% convertible debentures, due 2011 834 804 834 804
- ----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares and equivalent shares 37,381 18,811 31,317 14,195
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Fully diluted net income (loss) per share and
equivalent share from (1):
Continuing operations $ (0.65) $ 0.11 $ (0.72) $ (0.03)
Discontinued operations - (0.01) - (0.02)
- ----------------------------------------------------------------------------------------------------------------------------------
Fully diluted net income (loss) per share and $ (0.65) $ 0.10 $ (0.72) $ (0.05)
equivalent share(1)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the second quarter and first half of 1996 and 1995, the primary and
fully diluted net income (loss) per share were the same because both the
primary and fully diluted computation was antidilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,445
<SECURITIES> 0
<RECEIVABLES> 6,744
<ALLOWANCES> 6,774
<INVENTORY> 148,203
<CURRENT-ASSETS> 315,326
<PP&E> 428,633
<DEPRECIATION> 129,718
<TOTAL-ASSETS> 674,753
<CURRENT-LIABILITIES> 175,856
<BONDS> 246,635
0
0
<COMMON> 363
<OTHER-SE> 170,556
<TOTAL-LIABILITY-AND-EQUITY> 674,753
<SALES> 293,188
<TOTAL-REVENUES> 293,188
<CGS> 231,217
<TOTAL-COSTS> 231,217
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,482
<INCOME-PRETAX> (19,307)
<INCOME-TAX> 2,512
<INCOME-CONTINUING> (21,819)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,819)
<EPS-PRIMARY> (0.72)
<EPS-DILUTED> (0.72)
</TABLE>
