SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 19, 1995
PEOPLES TELEPHONE COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 0-16479 13-2626435
(State or other jurisdiction (Commission File (IRS Employer Identification
of incorporation) Number) Number)
2300 N.W. 89TH PLACE, MIAMI, FLORIDA 33172
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 593-9667
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Item 5. Other Events.
REFINANCING
In order to extend its debt maturities and to provide increased operational
and financial flexibility to take advantage of growth opportunities in its core
public pay telephone business, the Company refinanced its indebtedness
(approximately $95.5 million) under the Third Amended and Restated Loan
Agreement by and among the Company, Creditanstalt-Bankverein ("Creditanstalt")
and other financial institutions, dated February 17, 1994 (the "Prior Credit
Agreement") and repaid a note payable issued in connection with the settlement
of certain litigation described below and the mortgage note payable on the
Company's headquarters facility (approximately $7.7 million in the aggregate)
with proceeds from the sale of the Senior Notes (as defined below) and the
Preferred Stock (as defined below) (collectively, the "Refinancing").
The Refinancing, which was consummated on July 19, 1995, included the
following elements:
Senior Notes
The Company sold $100,000,000 aggregate principal amount of its 12-1/4%
Senior Notes due 2002 (the "Senior Notes") in a private placement pursuant to
Rule 144A under the Securities Act of 1933, as amended ("the Securities Act").
The indenture governing the Senior Notes (the "Indenture") contains certain
covenants, including, but not limited to, covenants with respect to the
following matters: limitations on additional indebtedness, limitations on
restricted payments, including the payment of dividends on the Company's Common
Stock, par value $.01 per share ("Common Stock"), limitations on the incurrence
of liens, limitations on transactions with affiliates, the application of the
proceeds of certain asset sales, restrictions on the issuance of preferred stock
of certain subsidiaries, limitations on the creation of restrictions on the
ability of certain subsidiaries to make certain distributions and payments to
the Company and other subsidiaries, and limitations on the merger, consolidation
or transfer of all or substantially all of the assets of the Company and certain
subsidiaries with or to another person. Holders of Senior Notes will also have
the right to require the Company to repurchase Senior Notes in the event of
certain changes in control. The Senior Notes are senior unsecured obligations
of the Company and rank pari passu in right of payment with other senior
indebtedness of the Company.
Preferred Stock
The Company issued 150,000 shares of its Series C Cumulative Convertible
Preferred Stock (the "Preferred Stock") to UBS Partners, Inc. ("UBS"), a
wholly-owned subsidiary of Union Bank of Switzerland, for gross proceeds of
$15.0 million. The Preferred Stock cumulates dividends at an annual rate of
7%, subject to increase up to 11% under certain circumstances, including
accelerations of indebtedness of the Company and material breaches of
representations, warranties and covenants, which are payable in cash or, at the
Company's option
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during the first three years after issuance, will continue to
cumulate. The Preferred Stock is immediately convertible, at the option of the
holders, into approximately 2,857,143 shares of Common Stock (or approximately
15.1% of the outstanding Common Stock as of June 30, 1995 determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) at a conversion price of $5.25 per share, subject to
reduction pursuant to anti-dilution adjustments in connection with, among other
things, certain issuances of shares of, or rights to acquire, Common Stock at
less than the conversion price of the Preferred Stock. The Preferred Stock is
subject to (i) mandatory redemption by the Company 10 years after issuance or,
subject to the prior payment in full of the Company's indebtedness under the New
Credit Agreement (as defined below) and the Senior Notes, in the event of
certain bankruptcy or related events relating to the Company, (ii) redemption at
the Company's option, resulting in the exercisability of the contingent warrant
described below, and (iii) upon the occurrence of a change of control (as
defined in the Indenture), redemption, at the option of the holders thereof, in
all cases at its liquidation preference ($15.0 million in the aggregate) plus
accrued and unpaid dividends.
The holders of the Preferred Stock are entitled to elect two members of
the six member Board of Directors of the Company. The two directors initially
will be Charles J. Delaney, President of UBS Capital Corporation ("UBS
Capital"), also a wholly-owned subsidiary of Union Bank of Switzerland, and
Jeffrey Keenan, a Managing Director of UBS Capital and a Vice President and a
Director of UBS. Mr. Delaney was elected on July 19, 1995 to fill the vacancy
created by the resignation of Ronald Gelber and UBS has advised the Company that
it will elect Mr. Keenan at or about the time of the Company's 1995 Annual
Meeting of Shareholders. The Preferred Stock is also entitled to vote on all
other matters submitted to the stockholders for a vote together with the holders
of the Common Stock voting as a single class with each share of Preferred Stock
entitled to one vote for each share of Common Stock issuable upon conversion.
In connection with the Preferred Stock, the Company has agreed to certain
affirmative and negative covenants with respect to the conduct of its business,
among other matters. For so long as 25% of the shares of Preferred Stock or the
Common Stock into which such Preferred Stock is convertible remain outstanding
and have not been sold publicly, the Company has agreed with UBS and Appian
Capital Partners, L.L.C. ("Appian") to observe certain negative covenants,
including that the Company will not:
(a) (i) amend its Certificate of Incorporation or bylaws in a way which
would adversely affect the rights of holders of the Preferred Stock or
underlying Common Stock or subordinate the rights of the holders of the
Preferred Stock to the rights of other holders of capital stock of the Company;
(ii) to the extent not prohibited by the Company's Amended and Restated
Certificate of Incorporation, except in an underwritten public offering, or
issuances of Common Stock pursuant to options, warrants and other rights
outstanding on the date of the Securities Purchase Agreement or employee stock
options, and issuances of Common Stock in certain permitted acquisitions, sell
capital stock of the Company unless holders of the Preferred Stock, the
underlying Common Stock or the Warrants (as hereinafter defined) are given the
right to purchase such capital stock to maintain such holders' percentage
interest in the Company's Common Stock; or (iii) effect a fundamental change,
including (a) the sale or transfer of more
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than 40% of the consolidated assets of the Company and its subsidiaries and (b)
mergers and consolidations other than those in which the Preferred Stock is
unaffected and the holders of the majority of the voting power to elect the
Board of Directors continue to own such majority voting power unless such
fundamental change provides that upon the consummation thereof, the Company
shall have purchased all such shares of the Preferred Stock tendered to the
Company for purchase at a price per share equal to its liquidation preference
of $100 per share plus accrued and unpaid dividends thereon pursuant to an
offer to purchase given to the holders of the Preferred Stock not less than 15
days prior to the date such fundamental change is to be consummated; or
(b) Without the approval of 75% of the members of the Board of Directors:
(i) engage in transactions with stockholders, directors, officers, employees or
defined affiliates which transactions would require disclosure under Rule 404 of
Regulation S-K under the Securities Act; (ii) issue (a) debt securities which
are convertible into the Company's Common Stock or with equity features such as
warrants unless such equity features meet certain tests or (b) capital stock or
other equity securities senior to or on a parity with the Preferred Stock or
having a voting power equivalent to or greater than one vote per share of Common
Stock; (iii) merge or consolidate or, except for certain permitted acquisitions
or dispositions, allow a subsidiary to merge or consolidate; (iv) sell, lease or
otherwise dispose of assets of the Company or its subsidiaries involving
consideration greater than $5 million; (v) liquidate, dissolve or effect a
recapitalization or reorganization; (vi) acquire an interest in or assets of any
other company involving aggregate consideration greater than $5 million; (vii)
own, manage or operate any business other than the domestic pay telephone
business; or (vii) hire, elect or replace the Company's Chief Executive Officer,
President, Chief Financial Officer or Chief Operating Officer or change the
terms of employment or compensation thereof. Notwithstanding the foregoing, the
Company may sell certain discontinued operations and enter into and borrow under
the New Credit Agreement. So long as any shares of the Preferred Stock remain
outstanding, without the prior consent of the holders of a majority of the then
outstanding shares of Preferred Stock, the Company is prohibited from paying or
declaring any dividend or making any distribution on any other capital stock of
the Company (other than dividends payable solely in the securities in respect of
which such dividends are paid).
In addition, UBS has been issued a contingent warrant, exercisable only if
the Company redeems the Preferred Stock pursuant to its optional redemption
rights. Such warrant is exercisable initially for the same number of shares
and at the same price as provided in the conversion terms of the Preferred
Stock being redeemed, all determined as of the redemption date of such
Preferred Stock. Such contingent warrant has anti-dilution provisions
comparable to the Preferred Stock. UBS also has the right to have its Preferred
Stock and underlying Common Stock repurchased by the Company (at the original
purchase price thereof, plus accrued and unpaid dividends thereon), if the
Company violates certain regulations regarding an investee of a Small Business
Investment Company.
UBS has agreed, subject to certain limitations and restrictions, that for
up to 10 years from the date of the closing of the Preferred Stock, it will not,
without the consent of the
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Company's Board of Directors, acquire beneficial ownership (determined in
accordance with Rule 13d-3 under the Exchange Act) of more than 25% of the
Company's voting securities, offer or solicit any other person to acquire the
Company or conduct a proxy solicitation with respect to the Company.
Appian, which provided financial consulting services in connection with
the Preferred Stock, was issued warrants to purchase up to 275,000 shares of
Common Stock at an initial exercise price of $5.25 per share (the "Warrants")
and was paid a fee of $400,000.
The Company has also agreed to register for resale under the Securities Act
the Common Stock issuable upon conversion of the Preferred Stock or upon
exercise of the Warrants.
The New Credit Agreement
The Company entered into an amendment and restatement of the Prior Credit
Agreement (as amended and restated, the "New Credit Agreement"), with
Creditanstalt, providing for a revolving credit facility for the benefit of the
Company in the aggregate amount of $40.0 million. The New Credit Agreement has
a term of four years. Creditanstalt has informed the Company that it intends to
syndicate a portion of the loan. The following is a summary of the terms of the
New Credit Agreement.
Borrowing Base. The Company may use borrowings under the New Credit
Agreement for internal growth and to fund future acquisitions, although
Creditanstalt has the right to approve any acquisition for consideration in
excess of $3.0 million. Borrowings under the New Credit Agreement may not
exceed the sum of (i) 75.0% of the Company's eligible accounts receivable plus
(ii) an amount equal to $1,200 multiplied by the number of eligible installed
pay telephones, in the aggregate up to the total limit of $40.0 million.
Interest. Interest on the principal balance outstanding under the New
Credit Agreement accrues at the option of the Company at the rate of (i) 1.5%
above the greater of (a) Creditanstalt's prime lending rate at its principal
office in New York, New York and (b) the federal funds rate plus 0.5% or (ii)
3.0% above the rate quoted by Creditanstalt as the average London interbank
offered rate for one, two, three and six-month Eurodollar deposits. In the
event of a default under the New Credit Agreement, at Creditanstalt's option,
the interest rate on the borrowings under the New Credit Agreement can increase
to 2.0% per annum above the then applicable rate.
Security. As security for the indebtedness under the New Credit Agreement,
the Company has granted to Creditanstalt a first priority security interest in
substantially all existing and future assets of the Company, whether tangible or
intangible, including, without limitation, accounts receivable, inventory and
equipment.
Certain Covenants. In addition to customary covenants, the New Credit
Agreement contains various restrictive financial and other covenants including,
without limitation, (i)
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prohibitions on the incurrence of additional indebtedness, (ii) restrictions on
the creation of additional liens, (iii) certain limitations on dividends and
distributions by the Company, (iv) restrictions on mergers and sales of assets,
investments and transactions with affiliates and (v) certain financial
maintenance tests. Such financial maintenance tests, include, among others,
(i) a minimum of earnings before interest, taxes, depreciation and amortization
("EBITDA") test of $5.0 million for the quarter ending June 30, 1995, $10.0
million for the two quarter period ending September 30, 1995 and $15.0 million
for the three quarter period ending December 31, 1995, and, thereafter, a
minimum annual EBITDA test (tested quarterly for the prior four quarters)
beginning at $19.0 million for the quarter ended March 31, 1996 and increasing
over time to $26.0 million after December 31, 1997, (ii) a minimum ratio of
annual EBITDA to interest expense (tested quarterly) beginning at 1.5 to 1 and
increasing over time to 2.5 to 1 after December 31, 1997, (iii) a minimum net
worth test beginning at $47.0 million and increasing over time to $67.0 million
after December 31, 1998, (iv) a maximum ratio of debt to net worth of 3.25 to 1
for the first two years and decreasing to 3.0 to 1 for the remaining two years,
and (v) maximum ratio of bank debt to EBITDA of 2.0 to 1 (tested quarterly using
EBITDA from the prior four quarters). For purposes of the foregoing covenants,
EBITDA includes EBITDA from the Company's inmate telephone and cellular
telephone rental operations and net worth includes the Preferred Stock.
Events of Default. The events of default under the New Credit Agreement
are customary for facilities of such nature and include payment and non-payment
defaults and certain events of bankruptcy or insolvency of the Company.
Fees. In connection with the execution of the New Credit Agreement,
the Company agreed to pay a loan origination fee of $200,000. The New Credit
Agreement also provides for a monthly fee based on the unused portion of the New
Credit Agreement and an annual agency fee.
CERTAIN REGULATORY DEVELOPMENTS
Reduction in Florida Access Fees.
The Florida Legislature, during the 1995 General Session, passed a
comprehensive rewrite of the State's telecommunications law, which was enacted
into law in June 1995. As its cornerstone, the legislation provides for open
competition in the Florida local exchange markets, effective July 1, 1996. As
one of the largest customers of local exchange service in the State, the Company
expects to benefit in terms of price and service quality with the advent of
local telephone service competition permitted under this new legislation. In
addition, the new law specifically enables the Company and other independent
public pay telephone providers to obtain flat rate business line interconnection
from the LECs in lieu of the mandatory measured rate structure previously in
place. Based upon 1994 average usage of Florida public pay telephones, the
Company estimates that, if implemented, these changes may result in an
approximate average savings of $25-$30/phone/month to the Company for its
Florida operations.
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Compensation for Access Code Calls.
On May 23, 1995, the United States Court of Appeals for the District of
Columbia issued a decision overturning a prior Federal Communications Commission
("FCC") ruling that applicable federal law did not allow the FCC to prescribe
compensation to pay telephone providers on "subscriber 1-800 calls" or 1-800
calls where the recipient of the call selected the operator service provider
(for example, calls to 1-800-FLOWERS or 1-800-USA-RAIL). The FCC made this
earlier finding in the context of its initial decision to prescribe compensation
to public pay telephone providers on "carrier access code calls" (including
1-800 carrier access code calls, along with "950" and "10XXX" access code calls)
under the same federal law. The Court held that there was no legal preclusion
to the establishment of a system for compensating public pay telephone providers
on subscriber 1-800 calls initiated from independent public pay telephones. The
Court remanded the case to the FCC for further proceedings "to consider the need
to prescribe compensation for subscriber 1-800 calls routed to providers of
operator services that are other than the prescribed provider of operator
services." The Company will participate through the American Public
Communications Council industry trade group in an effort to have the FCC
expeditiously adopt a compensation mechanism that provides reasonable payment to
providers of pay telephone equipment used in making these 1-800 calls. There
can be no assurance that a compensation scheme for subscriber 1-800 calls will
be adopted on a timely basis or at all.
SETTLEMENT OF CERTAIN LEGAL PROCEEDINGS
On May 9, 1995, a complaint (as amended on May 30, 1995) was filed in the
Supreme Court of the State of New York, New York County, against the Company by
Ascom Communications, Inc. ("ACI") and ACI's sole shareholder, Ascom Holding,
Inc. ("AHI") (such litigation, the "ACI Litigation"). The complaint alleged
breach of contract by the Company for failure to make certain principal and
interest payments in respect of $6.0 million principal amount of promissory
notes which were issued by the Company to ACI (the "ACI Notes") in connection
with the November 1993 purchase by the Company of substantially all of ACI's
assets. In addition, the complaint alleged that the Company breached its
agreement with ACI to register certain shares of Common Stock of the Company
under the Securities Act within an agreed upon time frame. The Company did not
make such payments due, in part, to disputes regarding the indemnification
obligations of ACI and to conserve cash in light of the Company's working
capital requirements and amortization requirements under the Prior Credit
Agreement. The complaint also alleged that the Company failed to assume certain
obligations and pay certain amounts under an equipment lease. The Company
settled the ACI Litigation in June 1995 for approximately $5.7 million of which
$500,000 was paid on execution of the settlement and the balance was paid in
full following completion of the Refinancing.
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Item 7. Financial Statements and Exhibits
(c) Exhibits:
Exhibit Description
3 Certificate of Amendment to Certificate of Incorporation filed on July
18, 1995 authorizing the Preferred Stock
10.1 Fourth Amended and Restated Loan and Security Agreement dated as
of July 19, 1995 by and among the Company, the lenders named therein
and Creditanstalt-Bankverein
10.2 Letter Agreement, dated July 3, 1995, between the Company and
Creditanstalt American Corporation, with respect to the amendment
of the Second Amended and Restated Warrant Agreement dated
February 17, 1994
10.3 Exchange Agreement, dated as of May 3, 1995, by and between the
Company and Creditanstalt Corporate Finance, Inc.
10.4 Indenture, dated as of July 15, 1995, between the Company and
First Union National Bank of North Carolina
10.5 Registration Rights Agreement, dated July 19, 1995, between the
Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated
10.6 Letter Agreement, dated July 18, 1995, among the Company, UBS Capital
Corporation, UBS Partners, Inc. and Appian Capital Partners, L.L.C.,
amending the Securities Purchase Agreement, dated as of July 3, 1995
among the Company, UBS Capital Corporation and Appian Capital
Partners, L.L.C.
10.7 Form of Stock Purchase Warrant issued on July 19, 1995 to Appian
Capital Partners, L.L.C.
10.8 Form of Contingent Stock Purchase Warrant issued on July 19, 1995 to
UBS Partners, Inc.
10.9 Registration Rights Agreement dated as of July 19, 1995 between
the Company and UBS Partners, Inc.
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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.
PEOPLES TELEPHONE COMPANY, INC.
Registrant
Dated: July 21, 1995 /s/ Bonnie S. Biumi
________________________________________________
Bonnie S. Biumi
Chief Financial Officer
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CERTIFICATE OF AMENDMENT OF
THE CERTIFICATE OF INCORPORATION OF
PEOPLES TELEPHONE COMPANY, INC.
UNDER SECTION 805 OF
THE BUSINESS CORPORATION LAW
1. The name of the corporation is Peoples Telephone
Company, Inc. (formed under the name of Shirts Unlimited Franchise,
Inc.) (the "Corporation").
2. The Corporation originally filed its Certificate of
Incorporation with the New York Department of State on September 5,
1968.
3. The total number of authorized shares of capital
stock of the Corporation is 30,000,000, of which 25,000,000 shares
are Common Stock, par value $.01 per share, and 5,000,000 shares
are Preferred Stock, par value $01. per share ("Preferred Stock").
As of the date hereof and except as set forth herein, the
Corporation has a total of 4,300,000 shares of Preferred Stock
undesignated as to series, none of which is outstanding. The
Corporation previously authorized and issued 100,000 shares of
Preferred Stock, designated Series A Preferred Stock, par value
$.01 per share, all of which have been retired and may not be
issued, and previously authorized 600,000 shares of Preferred
Stock, designated Series B Preferred Stock, par value $.01 per
share, none of which is outstanding.
4. Pursuant to the authority granted to the Board of
Directors of the Corporation by Section II, Article Fourth, of its
Certificate of Incorporation, the Corporation hereby amends it
Certificate of Incorporation by the addition of a provision stating
the number, designation, relative rights, preferences and
limitations of a series of the Corporation's Preferred Stock as
fixed by the Board of Directors of the Corporation, as follows
(except as otherwise indicated herein, capitalized terms used
herein are defined in Section M herein):
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SECTION A. Designation and Amount; Par Value. The
shares of such series shall be designated as "Series C Cumulative
Convertible Preferred Stock" (the "Convertible Preferred Stock")
and the number of authorized shares constituting Convertible
Preferred Stock shall be 160,000. The par value of each share of
such series shall be $.01.
SECTION B. Dividends.
1. General Obligation. When and as declared by the
Corporation's Board of Directors and to the extent permitted under
the New York Business Corporation Law (the "NYBCL"), the
Corporation will pay preferential dividends to the holders of the
Convertible Preferred Stock as provided in this Section B. Except
as otherwise provided herein, dividends on each share of
Convertible Preferred Stock (a "Share") will accrue on a daily
basis at a rate of 7% per annum of the Liquidation Value thereof
(plus all accumulated and unpaid dividends thereon) from and
including the Date of Issuance (as defined below) of such Share to
and including the date on which the Liquidation Value (plus all
accrued and unpaid dividends thereon) of such Share is paid in full
or the date on which such share is converted into shares of
Conversion Stock. Such dividends will accrue whether or not they
have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of
dividends. The date on which the Corporation initially issues any
Share will be deemed to be its "Date of Issuance" regardless of the
number of times a transfer of such Share is made on the stock
records maintained by or for the Corporation and regardless of the
number of certificates which may be issued to evidence such Share.
The dividends on each Share shall be payable on each Dividend
Reference Date during the first three years following the Date of
Issuance, at the Corporation's election either in cash or
accumulating. Commencing on June 30, 1998 and on each Dividend
Reference Date thereafter, all accrued and unpaid dividends shall
be paid in cash unless and to the extent the Corporation is
prohibited from paying such dividends in cash under the Indenture
or the Credit Agreement and, except to the extent paid in cash,
such dividends will accumulate on each such Dividend Reference
Date. Notwithstanding the foregoing, all dividends otherwise
accruing pursuant to this Section B1 will cease to accrue as of a
Dividend Termination Date, so long as the Corporation has paid in
cash all dividends which have accrued and are unpaid through such
Dividend Termination Date. Further, notwithstanding termination of
the dividend pursuant to the immediately preceding sentence, the
dividend rate is subject to increase (or, if the dividend has
previously terminated, is subject to resume accruing) pursuant to
Section L2(a) (except on account of any Event of Noncompliance
which is described in Section L1(c)(i) which occurs after dividends
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pursuant to this Section have otherwise ceased to accrue on account
of the immediately preceding sentence).
2. Dividend Reference Dates. The accrued dividends
will be payable on June 30 and December 31 of each year commencing
on December 31, 1995 (the "Dividend Reference Dates") to the
holders of record of the Convertible Preferred Stock at the close
of business on the immediately preceding June 15 and December 15.
To the extent that all accrued dividends are not paid on the
Dividend Reference Dates, all dividends which have accrued on each
Share outstanding during the six-month period (or other period in
the case of the initial Dividend Reference Date) ending upon each
such Dividend Reference Date will be accumulated and shall remain
accumulated dividends with respect to such Share until paid.
3. Distribution of Partial Dividend Payments. Except
as otherwise provided herein, if at any time the Corporation elects
to pay dividends in cash and pays less than the total amount of
dividends then accrued with respect to the Convertible Preferred
Stock, such payment will be distributed ratably among the holders
of the Convertible Preferred Stock based upon the aggregate accrued
but unpaid dividends on the Shares of Convertible Preferred Stock
held by each such holder, and any amounts of such dividends
remaining thereafter shall be accumulated and shall remain
accumulated dividends with respect to such Share until paid.
SECTION C. Liquidation. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of the
Convertible Preferred Stock will be entitled to be paid, before any
distribution or payment is made upon any of the Junior Securities,
an amount in cash equal to the aggregate Liquidation Value (plus
all accrued and unpaid dividends thereon) of all such Convertible
Preferred Stock outstanding, and the holders of Convertible
Preferred Stock will not be entitled to any further payment. If
upon any such liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the
holders of the Convertible Preferred Stock are insufficient to
permit payment to such holders of the aggregate amount which they
are entitled to be paid, then the entire assets to be distributed
shall be distributed ratably among such holders based upon the
aggregate Liquidation Value (plus all accrued and unpaid dividends)
of the Convertible Preferred Stock held by each such holder. Prior
to the time of any liquidation, dissolution or winding up of the
Corporation, the Corporation shall declare for payment all accrued
and unpaid dividends with respect to the Convertible Preferred
Stock. The Corporation will mail written notice of such
liquidation, dissolution or winding up, not less than 10 days prior
to the payment date stated therein, to each record holder of
Convertible Preferred Stock. Neither the consolidation or merger
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of the Corporation into or with any other corporation or
corporations, nor the reduction of the capital stock of the
Corporation, will be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section C.
SECTION D. Redemptions.
1. Scheduled Redemption. On July 19, 2005 (the
"Scheduled Redemption Date"), the Corporation will redeem all
issued and outstanding Shares of Convertible Preferred Stock, at a
price per Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon).
2. Optional Redemptions. The Corporation may at any
time and from time to time after the Date of Issuance redeem all or
any portion of the Shares of Convertible Preferred Stock then
outstanding. Upon any such redemption, the Corporation shall pay
a price per Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon).
3. Redemption Price. For each Share which is to be
redeemed, the Corporation will be obligated on the Redemption Date
to pay to the holder thereof (upon surrender by such holder at the
Corporation's principal office of the certificate representing such
Share) an amount in immediately available funds equal to the
Liquidation Value thereof (plus all accrued and unpaid dividends
thereon). If the Corporation's funds which are legally available
for redemption of Shares on any Redemption Date are insufficient to
redeem the total number of Shares to be redeemed on such date,
those funds which are legally available will be used to redeem the
maximum possible number of Shares ratably among the holders of the
Shares to be redeemed based upon the aggregate Liquidation Value of
such Shares (plus all accrued and unpaid dividends thereon) held by
each such holder. At any time thereafter when additional funds of
the Corporation are legally available for the redemption of Shares,
such funds will immediately be used to redeem the balance of the
Shares which the Corporation has become obligated to redeem on any
Redemption Date but which it has not redeemed.
4. Notice of Redemption. Except as otherwise provided
herein, the Corporation will mail written notice of each redemption
of Convertible Preferred Stock to each record holder not more than
60 nor less than 30 days prior to the date on which such redemption
is to be made. In case fewer than the total number of Shares
represented by any certificate are redeemed, a new certificate
representing the number of unredeemed Shares will be issued to the
holder thereof without cost to such holder within 3 business days
after surrender of the certificate representing the redeemed
Shares.
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5. Determination of the Number of Each Holder's Shares
to be Redeemed. Except as otherwise provided herein, the number of
Shares of Convertible Preferred Stock to be redeemed from each
holder thereof in redemptions hereunder will be the number of
Shares determined by multiplying the total number of Shares to be
redeemed times a fraction, the numerator of which will be the total
number of Shares then held by such holder and the denominator of
which will be the total number of Shares of Convertible Preferred
Stock then outstanding.
6. Dividends After Redemption Date. No Share is
entitled to any dividends accruing after the date on which the
Liquidation Value (plus all accrued and unpaid dividends thereon)
of such Share is paid in full. On such date all rights of the
holder of such Share will cease, and such Share will not be deemed
to be outstanding.
7. Redeemed or Otherwise Acquired Shares. Any Shares
which are redeemed or otherwise acquired by the Corporation will be
cancelled and will not be reissued, sold or transferred.
8. Special Redemptions.
If a Change of Control (as defined below) has occurred or
the Corporation obtains knowledge that a Change of Control is
proposed to occur, the Corporation shall give prompt written notice
of such Change of Control describing in reasonable detail the
material terms and date of consummation thereof to each holder of
Convertible Preferred Stock, but in any event such notice shall not
be given later than 5 days after the occurrence of such Change of
Control, and the Corporation shall give each holder of Convertible
Preferred Stock prompt written notice of any material change in the
terms or timing of such transaction. Any holder of Convertible
Preferred Stock may require the Corporation to redeem all or any
portion of the Convertible Preferred Stock owned by such holder at
a price per Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon) by giving written notice to
the Corporation of such election prior to 21 days after receipt of
the first such notice from the Corporation which confirms that a
Change of Control has occurred (the "Expiration Date"); provided
that in no event shall the Corporation be obligated to redeem
Shares unless (a) all amounts then due and payable under the Credit
Agreement (whether at maturity, by acceleration or otherwise) have
been paid in full and (b)(i) a Change of Control Offer (as defined
in the Indenture, as in effect on the Date of Issuance) has been
made to the holders of the notes outstanding under the Indenture
(if and to the extent that any such Change of Control Offer is
required to be made pursuant to the Indenture as in effect at the
time of the applicable Change of Control) and all such notes which
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have been validly tendered in accordance therewith have been
purchased in accordance with the terms of the Indenture applicable
thereto as in effect on the Date of Issuance (if and to the extent
required pursuant to the Indenture as in effect at the time of the
applicable Change of Control), and (ii) the Corporation shall not,
since the date of such Change of Control Offer, have defaulted in
the payment when due of any amount of principal, interest or
premium owing with respect to any notes outstanding pursuant to the
Indenture (except any such default which shall have been cured or
waived). The Corporation shall give prompt written notice (a
"Second Notice") of each such election to all other holders of
Convertible Preferred Stock within 5 days after the receipt
thereof, and each such holder shall have until the later of (i) the
Expiration Date or (ii) 10 days after receipt of the latest Second
Notice to request redemption hereunder (by giving written notice to
the Corporation) of all or any portion of the Convertible Preferred
Stock owned by such holder.
Subject to the proviso of the second sentence of the
preceding paragraph, upon receipt of such election(s), the
Corporation shall be obligated to redeem the aggregate number of
Shares specified therein on the later of (i) 90 days following
occurrence of the Change of Control or (ii) 5 days after the
Corporation's receipt of such election(s).
For purposes hereof, "Change of Control" has the meaning
given such term in the Indenture as in effect on the Date of
Issuance, without amendment or modification thereof and whether or
not any notes issued pursuant to the Indenture are outstanding.
Redemptions made pursuant to this Section D8 shall not
relieve the Corporation of its obligation pursuant to Section D1
above to redeem any Convertible Preferred Stock outstanding on the
Scheduled Redemption Date.
SECTION E. Priority of Convertible Preferred Stock on
Dividends and Redemptions. So long as any Convertible Preferred
Stock remains outstanding, without the prior written consent of the
holders of a majority of the outstanding shares of Convertible
Preferred Stock, the Corporation shall not, nor shall it permit any
Subsidiary to, redeem, purchase or otherwise acquire directly or
indirectly any Junior Securities, nor shall the Corporation
directly or indirectly pay or declare any dividend or make any
distribution upon any Junior Securities (other than dividends
payable solely in the securities in respect of which such dividends
are paid).
SECTION F. Election of Directors.
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1. So long as at least 50,000 shares of
Convertible Preferred Stock are outstanding and held of record by
Qualified Convertible Preferred Holders (as defined below), then
the holders of a majority of the Convertible Preferred Stock,
voting separately as a single class in the election of directors of
the Corporation, to the exclusion of all other classes of the
Corporation's capital stock and with each Share of Convertible
Preferred Stock entitled to one vote, shall be entitled to elect
two (2) directors to serve on the Corporation's Board of Directors
until his successor is duly elected by holders of a majority of
the Convertible Preferred Stock or he is removed from office by
holders of a majority of the Convertible Preferred Stock; and so
long as Qualified Convertible Preferred Holders hold of record an
aggregate of less than 50,000 but at least 25,000 shares of
Convertible Preferred Stock, then the holders of a majority of the
Convertible Preferred Stock, voting separately as a single class in
the election of directors of the Corporation, to the exclusion of
all other classes of the Corporation's capital stock and with each
Share of Convertible Preferred Stock entitled to one vote, shall be
entitled to elect one (1) director to serve on the Corporation's
Board of Directors until his successor is duly elected by holders
of a majority of the Convertible Preferred Stock or he is removed
from office by holders of a majority of the Convertible Preferred
Stock. If the holders of a majority of the Convertible Preferred
Stock for any reason fail to elect anyone to fill any such
directorship, such position shall remain vacant until such time as
the holders of a majority of the Convertible Preferred Stock elect
a director to fill such position and shall not be filled by
resolution or vote of the Corporation's Board of Directors or the
Corporation's other stockholders.
2. So long as the holders of a majority of the
Convertible Preferred Stock have the right to elect at least one
director pursuant to Section F1, the Corporation's Board of
Directors will be comprised of no more than six (6) directors, who
shall include the Corporation's Chief Executive Officer and
President. Each director elected by the holders of the Convertible
Preferred Stock will be paid fees not less than the fees paid to
any other member of the Corporation's Board of Directors (excluding
fees payable for services rendered in their capacity other than as
directors) and will be reimbursed for all reasonable expenses
relating to attending each meeting of the Corporation's Board of
Directors. For purposes of this Section F, "Qualified Convertible
Preferred Holders" means and includes, collectively, UBS, any
successor to all or substantially all of the business or assets
thereof and each Affiliate of the foregoing.
SECTION G. Other Voting Rights. The holders of the
Convertible Preferred Stock shall be entitled to notice of all
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stockholders' meetings in accordance with the Corporation's bylaws,
and the holders of the Convertible Preferred Stock shall be
entitled to vote on all matters submitted to the stockholders for
a vote together with the holders of the Common Stock voting
together as a single class with each share of Common Stock entitled
to one vote per share and each Share of Convertible Preferred Stock
entitled to one vote for each share of Common Stock issuable upon
conversion of the Convertible Preferred Stock as of the record date
for such vote or, if no record date is specified, as of the date of
such vote.
SECTION H. Conversion.
1. Conversion Procedure.
(a) At any time and from time to time, any holder
of Convertible Preferred Stock may convert all or any portion of
the Convertible Preferred Stock (including any fraction of a Share)
held by such holder into a number of shares of Conversion Stock
computed by multiplying the number of Shares to be converted by
$100.00 and dividing the result by the Conversion Price then in
effect.
(b) Except as otherwise provided herein, each
conversion of Convertible Preferred Stock shall be deemed to have
been effected as of the close of business on the date on which the
certificate or certificates representing the Convertible Preferred
Stock to be converted have been surrendered for conversion at the
principal office of the Corporation. At the time any such
conversion has been effected, the rights of the holder of the
Shares converted as a holder of Convertible Preferred Stock shall
cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to
be issued upon such conversion shall be deemed to have become the
holder or holders of record of the shares of Conversion Stock
represented thereby.
(c) The conversion rights of any Share subject to
redemption hereunder shall terminate on the Redemption Date for
such Share unless the Corporation has failed to pay to the holder
thereof the Liquidation Value of such Share (plus all accrued and
unpaid dividends thereon).
(d) Notwithstanding any other provision hereof, if
a conversion of Convertible Preferred Stock is to be made in
connection with a Change of Control or other transaction affecting
the Corporation, the conversion of any Shares of Convertible
Preferred Stock may, at the election of the holder thereof, be
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conditioned upon the consummation of such transaction, in which
case such conversion shall not be deemed to be effective until such
transaction has been consummated.
(e) As soon as possible after a conversion has been
effected (but in any event within 5 business days in the case of
subparagraph (i) below), the Corporation shall deliver to the
converting holder:
(i) a certificate or certificates represent-
ing the number of shares of Conversion Stock issuable by reason of
such conversion in such name or names and such denomination or
denominations as the converting holder has specified;
(ii) payment of cash in an amount equal to
all accrued dividends with respect to each Share converted which
have not been paid prior thereto provided that the Corporation will
not be obligated to pay such amount to the extent it is prohibited
from doing so by the NYBCL or by the terms of the Indenture or the
Credit Agreement; provided further that any dividend not paid shall
continue to accumulate, and dividends shall continue to accrue with
respect thereto, and such amount shall be paid in cash as and when,
and to the extent, the Corporation is not prohibited from doing so
by the NYBCL or by the terms of the Indenture and the Credit
Agreement, and in any event all such accrued dividends shall be
paid in cash not later than the tenth anniversary of the Date of
Issuance, to the extent not previously paid in cash, subject to the
last two sentences of Section D2 above; and
(iii) a certificate representing any Shares of
Convertible Preferred Stock which were represented by the
certificate or certificates delivered to the Corporation in
connection with such conversion but which were not converted.
(f) If for any reason the Corporation is unable to
pay any portion of the accrued and unpaid dividends on Convertible
Preferred Stock being converted, the unpaid portion of such
dividends may, at the election of the converting holder made by
giving written notice thereof to the Corporation at any time
thereafter, be converted into an additional number of shares of
Conversion Stock determined by dividing (i) the amount of the
unpaid portion of such dividends, by (ii) 95% of the Market Price
of one share of the Conversion Stock as of the date of such notice.
(g) The issuance of certificates for shares of
Conversion Stock upon conversion of Convertible Preferred Stock
shall be made without charge to the holders of such Convertible
Preferred Stock for any issuance tax in respect thereof or other
cost incurred by the Corporation in connection with such conversion
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and the related issuance of shares of Conversion Stock. Upon
conversion of each Share of Convertible Preferred Stock, the
Corporation shall take all such actions as are necessary in order
to insure that the Conversion Stock issuable with respect to such
conversion shall be validly issued, fully paid and nonassessable,
free and clear of all taxes, liens, charges and encumbrances with
respect to the issuance thereof.
(h) The Corporation shall not close its books
against the transfer of Convertible Preferred Stock or of
Conversion Stock issued or issuable upon conversion of Convertible
Preferred Stock in any manner which interferes with the timely
conversion of Convertible Preferred Stock. The Corporation shall
assist and cooperate with any holder of Shares required to make any
governmental filings or obtain any governmental approval prior to
or in connection with any conversion of Shares hereunder
(including, without limitation, making any filings required to be
made by the Corporation).
(i) The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of
Conversion Stock, solely for the purpose of issuance upon the
conversion of the Convertible Preferred Stock, such number of
shares of Conversion Stock as are issuable upon the conversion of
all outstanding Convertible Preferred Stock. All shares of
Conversion Stock which are so issuable shall, when issued, be duly
and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of
Conversion Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of
any domestic securities exchange or the NASDAQ National Market upon
which shares of Conversion Stock may be listed (except for official
notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance). The Corporation shall not
take any action which would cause the number of authorized but
unissued shares of Conversion Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon
conversion of the Convertible Preferred Stock.
(j) If any fractional interest in a share of
Conversion Stock would, except for the provisions of this
subparagraph, be delivered upon any conversion of the Convertible
Preferred Stock, at the request of the holder thereof, the
Corporation, in lieu of delivering the fractional share therefor,
shall pay an amount to the holder thereof equal to the Market Price
of such fractional interest as of the date of conversion.
2. Conversion Price.
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(a) The initial "Conversion Price" shall be $5.25
per share. In order to prevent dilution of the conversion rights
granted under this Section H, the Conversion Price shall be subject
to adjustment from time to time pursuant to this Section H2.
(b) If and whenever on or after the original Date
of Issuance of the Convertible Preferred Stock the Corporation
issues or sells, or in accordance with Section H3 is deemed to have
issued or sold, any shares of its Common Stock for a consideration
per share less than the Conversion Price in effect immediately
prior to the time of such issue or sale, then immediately upon such
issue or sale or deemed issue or sale the Conversion Price shall be
reduced to the Conversion Price determined by dividing (i) the sum
of (1) the product derived by multiplying the Conversion Price in
effect immediately prior to such issue or sale by the number of
shares of Common Stock Deemed Outstanding immediately prior to such
issue or sale, plus (2) the consideration, if any, received by the
Corporation upon such issue or sale, by (ii) the number of shares
of Common Stock Deemed Outstanding immediately after such issue or
sale.
(c) Notwithstanding the foregoing, there shall be
no adjustment in the Conversion Price as a result of any issue or
sale (or deemed issue or sale) of (i) shares of Common Stock upon
exercise of the Warrants in accordance with the terms thereof as in
effect at the Date of Issuance, (ii) shares of Common Stock
pursuant to stock options, warrants and other rights to acquire
Common Stock described in Schedule 4.3 to the Securities Purchase
Agreement (as such number of shares is proportionately adjusted for
subsequent stock splits, combinations of shares and stock dividends
affecting the Common Stock), in each case pursuant to the terms
thereof as in effect on the date of the Securities Purchase
Agreement or as such terms may thereafter be adjusted as described
in Schedule 4.3, (iii) shares of Common Stock upon exercise of
stock options granted to employees and directors of the Corporation
and its Subsidiaries pursuant to the terms of stock option plans
and stock ownership plans approved by the Corporation's Board of
Directors, and (iv) shares of Common Stock as consideration for the
acquisition of any interest in any business or company from a
Person other than an Affiliate (A) which acquisition is not
prohibited pursuant to the Securities Purchase Agreement, and (B)
so long as the Market Price of the Conversion Stock as of the
closing of such acquisition exceeds $4.50 per share (as such price
is proportionately adjusted for subsequent stock splits, combina-
tions of shares and stock dividends affecting the Conversion Stock)
and so long as the Market Price of the Conversion Stock has not at
any time from the Date of Issuance through such closing time been
equal to or greater than $5.25 per share (as so adjusted).
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3. Effect on Conversion Price of Certain Events. For
purposes of determining the adjusted Conversion Price under
Section H2, the following shall be applicable:
(a) Issuance of Rights or Options. If the
Corporation in any manner grants or sells any Options and the price
per share for which Common Stock is issuable upon the exercise of
such Options, or upon conversion or exchange of any Convertible
Securities issuable upon exercise of such Options, is less than the
Conversion Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such
Options for such price per share. For purposes of this paragraph,
the "price per share for which Common Stock is issuable" shall be
determined by dividing (i) the total amount, if any, received or
receivable by the Corporation as consideration for the granting or
sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon exercise
of all such Options, plus in the case of such Options which relate
to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon
the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options
or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options. No further
adjustment of the Conversion Price shall be made when Convertible
Securities are actually issued upon the exercise of such Options or
when Common Stock is actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
(b) Issuance of Convertible Securities. If the
Corporation in any manner issues or sells any Convertible
Securities and the price per share for which Common Stock is
issuable upon conversion or exchange thereof is less than the
Conversion Price in effect immediately prior to the time of such
issue or sale, then the maximum number of shares of Common Stock
issuable upon conversion or exchange of such Convertible Securities
shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes
of this paragraph, the "price per share for which Common Stock is
issuable" shall be determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the
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issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to
the Corporation upon the conversion or exchange thereof, by
(ii) the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of all such Convertible Securities.
No further adjustment of the Conversion Price shall be made when
Common Stock is actually issued upon the conversion or exchange of
such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be
made pursuant to other provisions of this Section H, no further
adjustment of the Conversion Price shall be made by reason of such
issue or sale.
(c) Change in Option Price or Conversion Rate. If
the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
changes at any time, the Conversion Price in effect at the time of
such change shall be immediately adjusted to the Conversion Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section H3, if the terms of any Option or
Convertible Security which was outstanding as of the Date of
Issuance of the Convertible Preferred Stock are changed in the
manner described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed issuable
upon exercise, conversion or exchange thereof shall be deemed to
have been issued as of the date of such change; provided that no
such change shall at any time cause the Conversion Price hereunder
to be increased.
(d) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Security without the exercise of any such Option or right, the
Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect
at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued. For purposes
of this Section H3, the expiration or termination of any Option or
Convertible Security which was outstanding as of the Date of
Issuance of the Convertible Preferred Stock shall not cause the
conversion Price hereunder to be adjusted unless, and only to the
extent that, a change in the terms of such Option or Convertible
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Security caused it to be deemed to have been issued after the Date
of Issuance of the Convertible Preferred Stock.
(e) Calculation of Consideration Received. If any
Common Stock, Option or Convertible Security is issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the
Corporation therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is
issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Corporation shall
be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Corporation shall be the Market Price
thereof as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued to the owners of the non-surviving
entity in connection with any merger in which the Corporation is
the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable
to such Common Stock, Option or Convertible Security, as the case
may be. The fair value of any consideration other than cash and
securities shall be determined jointly by the Corporation and the
holders of a majority of the outstanding Convertible Preferred
Stock. If such parties are unable to reach agreement within a
reasonable period of time, the fair value of such consideration
shall be determined by an independent appraiser experienced in
valuing such type of consideration jointly selected by the
Corporation and the holders of a majority of the outstanding
Convertible Preferred Stock. The determination of such appraiser
shall be final and binding upon the parties, and the fees and
expenses of such appraiser shall be borne by the Corporation.
(f) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other securities of
the Corporation, together comprising one integrated transaction in
which no specific consideration is allocated to such Option by the
parties thereto, the Option shall be deemed to have been issued for
a consideration of $.01.
(g) Treasury Shares. The number of shares of
Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Corporation or any
Subsidiary, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock.
(h) Record Date. If the Corporation takes a record
of the holders of Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
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Stock, Options or in Convertible Securities or (ii) to subscribe
for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of
such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
4. Subdivision or Combination of Common Stock. If the
Corporation at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and if the
Corporation at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in
effect immediately prior to such combination shall be
proportionately increased.
5. Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization, reclassifi-
cation, consolidation, merger, sale of all or substantially all of
the Corporation's assets or other transaction, in each case which
is effected in such a manner that the holders of Common Stock are
entitled to receive (either directly or upon subsequent liquida-
tion) stock, securities or assets with respect to or in exchange
for Common Stock, is referred to herein as an "Organic Change".
Prior to the consummation of any Organic Change, the Corporation
shall make appropriate provisions (in form and substance
satisfactory to the holders of a majority of the Convertible
Preferred Stock then outstanding) to insure that each of the
holders of Convertible Preferred Stock shall thereafter have the
right to acquire and receive, in lieu of or in addition to (as the
case may be) the shares of Conversion Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's
Convertible Preferred Stock, such shares of stock, securities or
assets as such holder would have received in connection with such
Organic Change if such holder had converted its Convertible
Preferred Stock immediately prior to such Organic Change. In each
such case, the Corporation shall also make appropriate provisions
(in form and substance satisfactory to the holders of a majority of
the Convertible Preferred Stock then outstanding) to insure that
the provisions of this Section H and Section I hereof shall
thereafter be applicable to the Convertible Preferred Stock
(including, in the case of any such consolidation, merger or sale
in which the successor entity or purchasing entity is other than
the Corporation an immediate adjustment of the Conversion Price to
the value for the Common Stock reflected by the terms of such
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consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Conversion Stock acquirable
and receivable upon conversion of Convertible Preferred Stock, if
the value so reflected is less than the Conversion Price in effect
immediately prior to such consolidation, merger or sale). The
Corporation shall not effect any such consolidation, merger or
sale, unless prior to the consummation thereof, the successor
entity (if other than the Corporation) resulting from consolidation
or merger or the entity purchasing such assets assumes by written
instrument (in form and substance reasonably satisfactory to the
holders of a majority of the Convertible Preferred Stock then
outstanding), the obligation to deliver to each such holder such
shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
6. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section H but not expressly
provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Corporation's Board of
Directors shall make an appropriate adjustment in the Conversion
Price so as to protect the rights of the holders of Convertible
Preferred Stock; provided that no adjustment shall be made in
connection with any stock appreciation rights or phantom stock
rights granted to employees pursuant to employee benefit plans
approved by the Corporation's Board of Directors; and provided
further that no such adjustment shall increase the Conversion Price
as otherwise determined pursuant to this Section H or decrease the
number of shares of Conversion Stock issuable upon conversion of
each Share of Convertible Preferred Stock.
7. Notices.
(a) Promptly after any adjustment of the Conversion
Price, the Corporation shall give written notice thereof to all
holders of Convertible Preferred Stock, setting forth in reasonable
detail and certifying the calculation of such adjustment.
(b) The Corporation shall give written notice to
all holders of Convertible Preferred Stock at least 20 days prior
to the date on which the Corporation closes its books or takes a
record (a) with respect to any dividend or distribution upon Common
Stock, (b) with respect to any pro rata subscription offer to
holders of Common Stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(c) The Corporation shall also give written notice
to the holders of Convertible Preferred Stock at least 20 days
prior to the date on which any Organic Change shall take place.
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SECTION I. Purchase Rights. To the extent not
prohibited by paragraph EIGHTH of the Corporation's Certificate of
Amendment if at any time the Corporation grants, issues or sells
any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "Purchase Rights"), then
each holder of Convertible Preferred Stock shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if
such holder had held the number of shares of Conversion Stock
acquirable upon conversion of such holder's Convertible Preferred
Stock immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
SECTION J. Registration of Transfer. The Corporation
will keep at its principal office a register for the registration
of Convertible Preferred Stock. Upon the surrender of any
certificate representing Convertible Preferred Stock at such place,
the Corporation will, at the request of the record holder of such
certificate, execute and deliver (at the Corporation's expense) a
new certificate or certificates in exchange therefor representing
in the aggregate the number of Shares represented by the
surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of Shares as
is requested by the holder of the surrendered certificate and will
be substantially identical in form to the surrendered certificate,
and dividends will accrue on the Convertible Preferred Stock
represented by such new certificate from the date to which
dividends have been fully paid on such Convertible Preferred Stock
represented by the surrendered certificate.
SECTION K. Replacement. Upon receipt of evidence
reasonably satisfactory to the Corporation (an affidavit of the
registered holder will be satisfactory) of the ownership and the
loss, theft, destruction or mutilation of any certificate
evidencing Shares of any class of Convertible Preferred Stock, and
in the case of any such loss, theft or destruction, upon receipt of
indemnity reasonably satisfactory to the Corporation (provided that
if the holder is a Purchaser or other institutional investor its
own agreement will be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Corporation will
(at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the number of Shares of
such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or
mutilated certificate, and dividends will accrue on the Convertible
Preferred Stock represented by such new certificate from the date
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to which dividends have been fully paid on such lost, stolen,
destroyed or mutilated certificate.
SECTION L. Events of Noncompliance.
1. Definitions. An Event of Noncompliance shall have
occurred if:
(a) the Corporation fails on any Dividend Reference
Date on or after the third anniversary of the Date of Issuance to
pay in cash the full amount of dividends then accrued on the
Convertible Preferred Stock, whether or not legally permissible,
except to the extent prohibited by the Indenture or Credit
Agreement;
(b) the Corporation fails to make any redemption
payment with respect to the Convertible Preferred Stock which it is
required to make hereunder, whether or not such payment is legally
permissible or is prohibited by any agreement to which the
Corporation is subject;
(c) the Corporation (i) breaches any material
representation or warranty, or (ii) otherwise breaches or fails to
perform or observe any material covenant or agreement set forth
herein or in the Definitive Agreements, which breach or failure
continues for 30 days after the Corporation first becomes aware
thereof;
(d) the Corporation fails to pay when due any
amount owing under the Indenture or Credit Agreement, and such
failure continues after any grace period applicable thereunder;
(e) any event described in any of paragraphs (h),
(i) or (j) of Section 5.01 of the Indenture, as in effect on the
Date of Issuance, shall have occurred and be continuing with
respect to the Corporation;
(f) any event described in paragraph (g) of Section
5.01 of the Indenture, as in effect on the Date of Issuance, shall
have occurred and be continuing;
(g) a judgment in excess of $2,500,000 is rendered
against the Corporation or any Subsidiary and, within 60 days after
entry thereof, such judgment is not discharged or execution thereof
stayed pending appeal, or within 60 days after the expiration of
any such stay, such judgment is not discharged; provided that the
Event of Noncompliance will be continuing only to the extent such
amounts remain unpaid; or
18
<PAGE>
(h) the Corporation or any Subsidiary becomes in
default of any obligation or agreement evidencing or relating to
indebtedness and the result of such default is that an amount
exceeding $2,500,000 has become due prior to its stated maturity;
provided that the Event of Noncompliance will be continuing only to
the extent such amounts remain unpaid.
2. Consequences of Events of Noncompliance.
(a) If an Event of Noncompliance has occurred, the
dividend rate on the Convertible Preferred Stock shall increase
immediately by an increment of 50 basis points (1/2 percentage
point). Thereafter, until such time as no Event of Noncompliance
exists, the dividend rate shall increase automatically at the end
of each succeeding 90-day period by an additional increment of 50
basis points (1/2 percentage point) up to a maximum of 400 basis
points (4 percentage points). Any increase of the dividend rate
resulting from the operation of this subparagraph shall terminate
as of the close of business on the date on which no Event of
Noncompliance exists, subject to subsequent increases pursuant to
this paragraph.
(b) If an Event of Noncompliance of the type
described in Section L1(e) has occurred, all of the Convertible
Preferred Stock then outstanding shall be subject to immediate
redemption by the Corporation (without any action on the part of
the holders of the Convertible Preferred Stock) at a price per
Share equal to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon). The Corporation shall immediately
redeem all Convertible Preferred Stock upon the occurrence of such
Event of Noncompliance, and subject, however, to the prior payment
in full of all amounts due and payable under the Credit Agreement
and the Indenture.
(c) If any Event of Noncompliance exists, each
holder of the Convertible Preferred Stock shall also have any other
rights which such holder is entitled to under any contract with the
Corporation or agreement and any other rights which such holder may
have pursuant to applicable law; provided that any payment with
respect to any claim arising from such rights shall be subordinated
to the prior payment in full of all amounts then owing and due
under the Credit Agreement and the Indenture.
19
<PAGE>
SECTION M. Definitions. Unless defined below or
elsewhere herein, each capitalized term used herein shall have the
meaning given such term in the Securities Purchase Agreement.
"ACP" means Appian Capital Partners, L.L.C., a Delaware
limited liability company.
"Common Stock" means, all shares of the Corporation's
Common Stock, par value $.01 per share, as adjusted for any stock
split, stock dividend, share combination, share exchange,
recapitalization, merger, consolidation or other reorganization.
"Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock actually outstanding at
such time, plus the number of shares of Common Stock deemed to be
outstanding pursuant to Sections H3(a) and H3(b) hereof.
"Conversion Stock" means shares of the Common Stock;
provided that if there is a change such that the securities
issuable upon conversion of the Convertible Preferred Stock are
issued by an entity other than the Corporation or there is a change
in the type or class of securities so issuable, then the term
"Conversion Stock" shall mean one share of the security issuable
upon conversion of the Convertible Preferred Stock if such security
is issuable in shares, or shall mean the smallest unit in which
such security is issuable if such security is not issuable in
shares.
"Convertible Securities" means any stock or securities
directly or indirectly convertible into or exchangeable for Common
Stock.
"Credit Agreement" means the Fourth Amended and Restated
Loan and Security Agreement dated as of July 19, 1995, by and among
the Corporation, as borrower, the lenders party thereto from time
to time, and Creditanstalt-Bankverein, as agent for the lenders,
as amended, supplemented or otherwise modified from time to time or
any agreement evidencing a refinancing of such indebtedness,
including any agreement extending the maturity of, refinancing or
restructuring indebtedness thereunder.
"Definitive Agreements" means the Securities Purchase
Agreement, the Warrants and the Registration Rights Agreement, in
each case as amended from time to time in accordance with its
respective terms.
"Dividend Termination Date" means any date following a
period of 45 consecutive trading days (a "Trading Period") during
which the average of the closing prices for the Common Stock on the
20
<PAGE>
NASDAQ market exceeded: (x) in the case of any Trading Period of
which the first 23 or more days occur during the fourth year after
the closing, 200% of the conversion price for the Convertible
Preferred Stock in effect as of the end of such Trading Period (the
"First Target"), provided that such closing price for the Common
Stock on each of the final 15 trading days of such Trading Period
shall equal or exceed 90% of the First Target; (y) in the case of
any Trading Period of which the last 23 or more trading days occur
during the fifth year after the closing, 175% of the conversion
price for the Convertible Preferred Stock in effect as of the end
of such Trading Period (the "Second Target"), provided that such
closing price for the Common Stock on each of the final 15 trading
days of such Trading Period shall equal or exceed 90% of the Second
Target; and (z) in the case of any Trading Period of which the last
23 or more trading days occur during the sixth or any subsequent
year after the closing, 150% of the conversion price for the
Convertible Preferred Stock in effect as of the end of such Trading
Period (the "Third Target"), provided that such closing price for
the Common Stock on each of the final 15 trading days of such
Trading Period shall equal or exceed 90% of the Third Target.
"Indenture" means the Indenture governing $100,000,000 in
aggregate principal amount of any series of the Corporation's 12-1/4%
Senior Notes due 2002, dated as of July 15, 1995 between the
Corporation and First Union National Bank of North Carolina, as
trustee, as amended, supplemented or otherwise modified from time
to time or any agreement evidencing a refinancing of such
indebtedness, including any agreement extending the maturity of,
refinancing or restructuring indebtedness thereunder.
"Junior Securities" means any of the Corporation's Stock,
except for the Convertible Preferred Stock.
"Liquidation Value" of any Share as of any particular
date will be equal to $100.00.
"Market Price" of any security means the average of the
closing prices of such security's sales on all securities exchanges
on which such security may at the time be listed or as reported on
the NASDAQ National Market, or, if there has been no sales on any
such exchange or reported on the NASDAQ National Market on any day,
the average of the highest bid and lowest asked prices on all such
exchanges or reported at the end of such day, or, if on any day
such security is not so listed or included in the NASDAQ National
Market, the average of the representative bid and asked prices
quoted in the NASDAQ Stock Market as of 4:00 P.M., New York time,
or, if on any day such security is not quoted in the NASDAQ Stock
Market, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the
21
<PAGE>
National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being
determined and the 20 consecutive business days prior to such day.
If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ National Market, the NASDAQ Stock
Market or the over-the-counter market, the "Market Price" shall be
the fair value thereof determined jointly by the Corporation and
the holders of a majority of the Convertible Preferred Stock. If
such parties are unable to reach agreement within a reasonable
period of time, such fair value shall be determined by an
independent appraiser experienced in valuing securities jointly
selected by the Corporation and the holders of a majority of the
Convertible Preferred Stock. The determination of such appraiser
shall be final and binding upon the parties, and the Corporation
shall pay the fees and expenses of such appraiser.
"Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities
other than rights, warrants or options referred to clauses (i),
(ii) or (iii) of Section H2(c) above.
"Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint
stock corporation, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or
political subdivision thereof.
"Purchaser" means UBS.
"Redemption Date" as to any Share means the date
specified in the notice of any redemption at the Corporation's
option or the applicable date specified herein in the case of any
other redemption; provided, that no such date will be a Redemption
Date unless the applicable Liquidation Value (plus all accrued and
unpaid dividends thereon) is actually paid in cash, and if not so
paid, the Redemption Date will be the date on which such
Liquidation Value (plus all accrued and unpaid dividends thereon)
is fully paid in cash.
"Registration Rights Agreement" means the Registration
Rights Agreement as defined in the Securities Purchase Agreement,
as such Registration Rights Agreement may be amended from time to
time in accordance with its terms.
"Securities Purchase Agreement" means the Securities
Purchase Agreement, dated as of July 3, 1995 among the Corporation,
UBS and ACP, as amended from time to time in accordance with its
terms.
22
<PAGE>
"Stock" of any Person means any shares, equity or profits
interests, participations or other equivalents (however designated)
of capital stock, whether voting or nonvoting, including any
securities with profit participation features, and any rights,
warrants, options or other securities convertible into or
exercisable or exchangeable for any such shares, equity or profits
interests, participations or other equivalents, or such other
securities, directly or indirectly (or any equivalent ownership
interests, in the case of a Person which is not a corporation).
"Subsidiary" means any corporation of which the shares of
outstanding capital stock possessing the voting power (under
ordinary circumstances) in electing the board of directors are, at
the time as of which any determination is being made, owned by the
Corporation either directly or indirectly through Subsidiaries.
"UBS" means UBS Capital Corporation, a New York
corporation.
"Warrants" means the Warrants issued pursuant to the
Securities Purchase Agreement, as they may be amended from time to
time in accordance with their terms.
SECTION N. Amendment and Waiver No amendment,
modification or waiver will be binding or effective with respect to
any of the provisions of this amendment to the Corporation's
Certificate of Incorporation stating the number, designation,
relative rights, preferences and limitations of the Convertible
Preferred Stock, without the prior written consent of the holders
of at least 80% of the Shares of Convertible Preferred Stock then
outstanding.
SECTION O. Notices. Except as otherwise expressly
provided herein, all notices referred to herein will be in writing
and will be delivered by registered or certified mail, return
receipt requested, postage prepaid and will be deemed to have been
given when so mailed (i) to the Corporation, at its principal
executive offices and (ii) to any stockholder, at such holder's
address as it appears in the stock records of the Corporation
(unless otherwise indicated by any such holder).
5. The provision amending the Corporation's Certificate
of Incorporation as set forth above was duly adopted at a
telephonic meeting (as permitted by Section 12 of the Bylaws of the
Corporation) of the Board of Directors of the Corporation held on
June 6, 1995, and has not been modified, rescinded or amended and
remains in full force and effect as of this day.
23
<PAGE>
IN WITNESS WHEREOF, the undersigned President
and Assistant Secretary of the Corporation have executed this
Certificate as of this 18th day of July, 1995.
PEOPLES TELEPHONE COMPANY, INC.
By:________________________
Name:
Title:
By:________________________
Name:
Title:
NOTARIZED:
24
________________________________________________
FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF JULY 19, 1995
________________________________________________
BY AND AMONG
PEOPLES TELEPHONE COMPANY, INC.
AS BORROWER,
THE LENDERS NAMED HEREIN
AND
CREDITANSTALT-BANKVEREIN
AS AGENT
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS, TERMS AND REFERENCES
1.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Use of Defined Terms. . . . . . . . . . . . . . . . . . . . . . 18
1.3 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . 18
1.4 Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.5 Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.6 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2. THE LOANS
2.1 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.2 Borrowing Procedures. . . . . . . . . . . . . . . . . . . . . . 19
2.3 Loan Account; Statements of Account . . . . . . . . . . . . . . 20
2.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 20
2.5 Several Obligations of the Lenders; Remedies Independent. . . . 20
2.6 Term; Termination . . . . . . . . . . . . . . . . . . . . . . . 21
2.7 Loans in Excess of Borrowing Base.. . . . . . . . . . . . . . . 21
2.8 Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 Prorata Treatment . . . . . . . . . . . . . . . . . . . . . . . 22
2.10 Prepayments/Commitment Reduction. . . . . . . . . . . . . . . . 22
2.11 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . 23
2.12 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . 24
3. FEES AND INTEREST
3.1 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Limitations on Interest Periods . . . . . . . . . . . . . . . . 26
3.3 Conversions and Continuations . . . . . . . . . . . . . . . . . 26
3.4 Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.6 Inability to Determine Fixed Rate . . . . . . . . . . . . . . . 27
3.7 Increased Costs and Reduced Return. . . . . . . . . . . . . . . 27
3.8 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.9 Notice of Amounts Payable to Lenders. . . . . . . . . . . . . . 28
3.10 Interest Savings Clause . . . . . . . . . . . . . . . . . . . . 29
4. SECURITY INTEREST - COLLATERAL
<PAGE>
4.1 Security Interest . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Additional Security . . . . . . . . . . . . . . . . . . . . . . 30
4.3 Perfection of Security Interest . . . . . . . . . . . . . . . . 30
4.4 Right to Inspect; Verifications . . . . . . . . . . . . . . . . 30
5. REPRESENTATIONS AND WARRANTIES
5.1 Corporate Existence and Qualification . . . . . . . . . . . . . 31
5.2 Corporate Authority; Valid and Binding Effect . . . . . . . . . 31
5.3 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Governmental Action . . . . . . . . . . . . . . . . . . . . . . 31
5.5 No Material Litigation. . . . . . . . . . . . . . . . . . . . . 32
5.6 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.8 Financial Information . . . . . . . . . . . . . . . . . . . . . 32
5.9 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . 33
5.10 Violations of Law . . . . . . . . . . . . . . . . . . . . . . . 33
5.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.12 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . 33
5.13 Margin Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.14 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.15 Chief Executive Office; Collateral Locations. . . . . . . . . . 34
5.16 Corporate and Trade or Fictitious Names . . . . . . . . . . . . 35
5.17 Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.18 Adequacy of Intangible Assets . . . . . . . . . . . . . . . . . 35
5.19 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.20 Inventory.. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.21 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.22 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.23 Existing Liens. . . . . . . . . . . . . . . . . . . . . . . . . 36
5.24 Security Interest . . . . . . . . . . . . . . . . . . . . . . . 36
5.25 Transmitting Utility. . . . . . . . . . . . . . . . . . . . . . 36
5.26 Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . 37
5.27 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.28 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 37
6. AFFIRMATIVE COVENANTS
6.1 Records Respecting Collateral; Lockbox or Blocked Account
Arrangement . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2 Reporting Requirements. . . . . . . . . . . . . . . . . . . . . 37
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6.3 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.4 Compliance With Laws. . . . . . . . . . . . . . . . . . . . . . 40
6.5 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . 40
6.6 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.7 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 41
6.8 Notifications to the Agent and the Lenders. . . . . . . . . . . 41
6.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Maintenance of Property . . . . . . . . . . . . . . . . . . . . 42
6.11 Preservation of Corporate Existence . . . . . . . . . . . . . . 42
6.12 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7. NEGATIVE COVENANTS
7.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.2 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.3 Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.4 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.6 Prohibition of Fundamental Changes. . . . . . . . . . . . . . . 44
7.7 Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . 45
7.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.10 Relocations; Use of Name. . . . . . . . . . . . . . . . . . . . 45
7.11 Affiliate Transactions. . . . . . . . . . . . . . . . . . . . . 45
7.12 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.13 Prepayment and Redemption . . . . . . . . . . . . . . . . . . . 46
7.14 Amendment of Certain Documents. . . . . . . . . . . . . . . . . 46
8. FINANCIAL COVENANTS
8.1 Net Worth.. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2 Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . 47
8.3 Loans/Operating Cash Flow Ratio . . . . . . . . . . . . . . . . 47
8.4 Operating Cash Flow . . . . . . . . . . . . . . . . . . . . . . 47
8.5 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . 48
9. EVENTS OF DEFAULT
9.1 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.2 Misrepresentations. . . . . . . . . . . . . . . . . . . . . . . 48
iii
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9.3 Negative and Financial Covenants. . . . . . . . . . . . . . . . 48
9.4 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . 48
9.5 Other Debts . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.6 Certificate of Amendment. . . . . . . . . . . . . . . . . . . . 49
9.7 Tax Lien. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.8 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.9 Voluntary Bankruptcy. . . . . . . . . . . . . . . . . . . . . . 49
9.10 Involuntary Bankruptcy. . . . . . . . . . . . . . . . . . . . . 50
9.11 Suspension of Business. . . . . . . . . . . . . . . . . . . . . 50
9.12 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.13 Change of Control . . . . . . . . . . . . . . . . . . . . . . . 50
9.14 RICO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.15 Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.16 Failure of Security . . . . . . . . . . . . . . . . . . . . . . 51
10. REMEDIES
10.1 Default Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.2 Termination; Acceleration of the Obligations. . . . . . . . . . 51
10.3 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.4 Rights and Remedies of a Secured Party. . . . . . . . . . . . . 52
10.5 Take Possession of Collateral . . . . . . . . . . . . . . . . . 52
10.6 Sale of Collateral. . . . . . . . . . . . . . . . . . . . . . . 52
10.7 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.8 Appointment of Agent as Borrower's Lawful Attorney. . . . . . . 53
11. CONDITIONS PRECEDENT
11.1 Conditions Precedent to Initial Loan. . . . . . . . . . . . . . 53
11.2 All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.3 Delay in Satisfaction of Conditions Precedent . . . . . . . . . 56
12. THE AGENT
12.1 Appointment, Powers and Immunities. . . . . . . . . . . . . . . 57
12.2 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . 57
12.3 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.4 Rights as a Lender. . . . . . . . . . . . . . . . . . . . . . . 58
12.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 58
12.6 Non-Reliance on Agent and other Lenders . . . . . . . . . . . . 58
iv
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12.7 Failure to Act. . . . . . . . . . . . . . . . . . . . . . . . . 59
12.8 Resignation or Removal of Agent; Co-Agent . . . . . . . . . . . 59
12.9 Collateral Matters. . . . . . . . . . . . . . . . . . . . . . . 60
12.10 Borrower Not a Beneficiary . . . . . . . . . . . . . . . . . . 61
13. MISCELLANEOUS
13.1 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.3 Assignments; Successors and Assigns . . . . . . . . . . . . . . 62
13.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 64
13.5 Expense Reimbursement . . . . . . . . . . . . . . . . . . . . . 64
13.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
13.8 Entire Agreement - Amendment. . . . . . . . . . . . . . . . . . 65
13.9 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . 66
13.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 66
13.11 Lenders Not a Joint Venturer . . . . . . . . . . . . . . . . . 66
13.12 Cure of Defaults by Lenders. . . . . . . . . . . . . . . . . . 66
13.13 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.14 Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . 67
13.15 Sole Benefit . . . . . . . . . . . . . . . . . . . . . . . . . 67
13.16 Financing Statements . . . . . . . . . . . . . . . . . . . . . 67
13.17 Governing Law; Jurisdiction. . . . . . . . . . . . . . . . . . 68
13.18 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 68
v
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Schedule 5.5 - Litigation and Related Proceedings
Schedule 5.11 - ERISA Matters
Schedule 5.12 - Environmental Permits, Etc. Not Secured; Hazardous
Substances Used with Regard to Borrower's Assets
Schedule 5.14 - Payment Disputes
Schedule 5.15 - Executive Offices; Business and Collateral Locations
Schedule 5.16 - Corporate and Trade or Fictitious Names
Schedule 5.18 - Intangible Assets
Schedule 5.21 - Investments
Schedule 5.22 - Indebtedness
Schedule 5.23 - Existing Liens
Schedule 11.1 - Foreign Qualifications
Exhibit A - Form of Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Borrowing Base Certificate
Exhibit E - Form of Opinion of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
Exhibit F - Form of Assignment
vi
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FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the
"Agreement") is made and entered into as of the 19th day of July, 1995, by and
among PEOPLES TELEPHONE COMPANY, INC., a New York corporation ("Borrower"), each
of the Lenders signatory hereto (hereinafter referred to individually as a
"Lender" and collectively as the "Lenders"), and CREDITANSTALT-BANKVEREIN, an
Austrian banking corporation, as agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, hereinafter referred
to as the "Agent");
W I T N E S S E T H:
WHEREAS, on March 12, 1990, Borrower entered into a certain Loan and
Security Agreement, dated as of March 12, 1990, as amended (as so amended, the
"Original Loan Agreement"), among Borrower, the banks party thereto and the
Agent, pursuant to which such banks made available to Borrower a revolving
credit facility; and
WHEREAS, on May 4, 1992, Borrower entered into that certain Amended and
Restated Loan and Security Agreement, dated as of May 4, 1992 (the "First
Restated Agreement") among Borrower, the banks party thereto and the Agent to
extend the credit facility under the Original Loan Agreement and to provide to
Borrower additional acquisition financing and make certain other modifications
to the financial accommodations extended to Borrower under the Original Loan
Agreement, as theretofore amended;
WHEREAS, on March 29, 1993, Borrower and PTC Cellular, Inc., a Delaware
corporation ("PTCC"), entered into a Second Amended and Restated Loan and
Security Agreement, dated as of March 29, 1993 (the "Second Restated Agreement")
with the banks party thereto and the Agent, as agent for such Banks, pursuant to
which the credit facilities were amended to add PTCC as a borrower, to further
increase the credit facilities to permit loans and advances to Borrower and
PTCC;
WHEREAS, pursuant to a First Amendment to Second Amended and Restated Loan
and Security Agreement, dated as of November 5, 1993, the Second Restated
Agreement was amended to provide for a bridge loan from Creditanstalt to
Borrower;
WHEREAS, on February 17, 1994, Borrower entered into a Third Amended and
Restated Loan and Security Agreement, dated as of February 17, 1994 (the "Third
Restated Agreement") with the banks party thereto and the Agent, as agent for
such Banks, pursuant to which the credit facilities were amended to increase the
revolving line of credit provided for therein to One Hundred Twenty-Five
Million Dollars ($125,000,000), to eliminate PTCC as a Borrower, to eliminate
the Facility B
<PAGE>
Loans and Facility C Loans (as such terms are defined in the Second Restated
Agreement), to add additional Banks thereto and to make certain other changes
thereto (the "Existing Facility");
WHEREAS, pursuant to a Consent, Waiver and First Amendment to Third Amended
and Restated Loan and Security Agreement, dated as of June 10, 1994, the Third
Restated Agreement was amended to increase the Borrowing Base and to consent to
the acquisition by Borrower of substantially all of the pay telephone assets of
Atlantic Telco Joint Venture and of Telso, Inc.;
WHEREAS, pursuant to a Consent, Waiver and Second Amendment to Third Amended
and Restated Loan and Security Agreement, dated as of September 28, 1994, the
Third Restated Agreement was amended to consent to the acquisition by Borrower
of Telecoin Communications, Ltd., to amend certain financial covenants and to
waive certain financial covenant defaults;
WHEREAS, pursuant to a Consent, Waiver and Third Amendment to Third Amended
and Restated Loan and Security Agreement, dated as of March 22, 1995, the Third
Restated Agreement was amended to reduce the credit facility to One Hundred
Million Dollars ($100,000,000), to amend certain financial covenants and to
waive certain financial covenant defaults;
WHEREAS, Borrower wishes to amend the Third Restated Agreement, as
previously amended, to restructure the Existing Facility provided for therein in
order to reduce the revolving line of credit provided for therein to Forty
Million Dollars ($40,000,000), to provide for the issuance by Borrower of the
Senior Notes (as defined herein), to eliminate certain Banks party thereto and
to make certain other changes thereto;
WHEREAS, for the sake of convenience, Borrowers, the Banks and the Agent
desire to restate in its entirety the Third Restated Agreement;
WHEREAS, this Agreement represents a continuation of the Existing Facility,
as previously amended and as amended hereby, and is not a replacement,
satisfaction or repayment of the Existing Facility;
NOW, THEREFORE, in consideration of the foregoing premises, to induce the
Lenders to extend the financing provided for herein, and for other good and
valuable consideration, the sufficiency and receipt of all of which are
acknowledged by Borrower, Borrower, the Lenders and Agent agree as follows:
1. DEFINITIONS, TERMS AND REFERENCES
1.1 CERTAIN DEFINITIONS. When used herein, the following terms
shall have the following meanings:
2
<PAGE>
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated after the Effective Date, by which (i) Borrower and/or
any of its Subsidiaries acquires the business or all or substantially all of the
assets of any Person, or any division of any Person, whether through Investment,
purchase of assets, merger or otherwise or (ii) any Person that was not
theretofore a Subsidiary of Borrower becomes a Subsidiary of Borrower and is
consolidated with Borrower for financial reporting purposes.
"Accounts" shall mean all of Borrower's accounts, contract rights,
chattel paper and instruments (whether now existing or hereafter acquired or
arising or in which Borrower now has or hereafter acquires any rights),
including, without limitation, all present and future rights to payments for
goods, merchandise or Inventory sold or leased or for services rendered, whether
or not represented by instruments, chattel paper, invoices or other billing, and
whether or not earned by performance; proceeds of any letter of credit on which
Borrower is a beneficiary and all forms of obligations whatsoever owing to
Borrower, together with all instruments and documents of title representing any
of the foregoing, all rights in any goods, merchandise or Inventory which any of
the foregoing may represent, all rights in any returned or repossessed goods,
merchandise or Inventory, and all rights, security and guaranties with respect
to each of the foregoing, including, without limitation, any rights of stoppage
in transit.
"Account Debtor" shall mean any Person who is or may become obligated
to Borrower or its predecessors on any Account.
"Affiliate" shall mean, as to any Person, any other Person which,
directly or indirectly, owns or controls, on an aggregate basis, including all
beneficial ownership and ownership or control as a trustee, guardian or other
fiduciary, at least five percent (5%) of the outstanding shares of capital stock
or other equivalent ownership interests having ordinary voting power to elect
the board of directors or other governing body (irrespective of whether, at the
time, stock or securities of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any contingency)
of such Person, or which controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management and policies, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" shall mean this Fourth Amended and Restated Loan and
Security Agreement, as amended or supplemented from time to time.
"Applicable Law" shall mean, in respect of a Person, all provisions of
statutes, rules, regulations and orders of any Governmental Authority applicable
to such Person, and all orders and decrees of all courts and arbitrators in
proceedings or actions in which the Person in question is a party.
3
<PAGE>
"Bankruptcy Code" shall mean the Bankruptcy Reform Act of 1978, as may
be amended from time to time.
"Base Lending Rate" shall mean an interest rate per annum, fluctuating
daily, equal to the higher of (a) the rate announced by Creditanstalt from time
to time at its principal office in New York City, New York, as its prime rate
for domestic (United States) commercial loans in effect on such day; and (b) the
Federal Funds Rate in effect on such day plus one-half of one percent (1/2 of
1%). The Base Lending Rate is not necessarily intended to be the lowest rate of
interest charged by Creditanstalt in connection with extensions of credit. Each
change in the Base Lending Rate shall result in a corresponding change in the
interest rate hereunder with respect to a Base Rate Loan and such change shall
be effective on the effective date of such change in the Base Lending Rate.
"Base Rate Loan" shall mean a Loan bearing interest at a rate based on
the Base Lending Rate.
"Borrowing Base" shall mean the sum of (a) up to seventy-five percent
(75%) of the net amount of Borrower's Eligible Accounts; plus (b) an amount
equal to $1,200 multiplied by the number of Eligible Pay Telephones.
"Borrowing Base Certificate" shall have the meaning given such term in
Section 6.2(b)(i) hereof.
"Bridge Loan" shall mean the $2,500,000 bridge loan made to PTCC by
Creditanstalt Corporate Finance, Inc.
"Business Day" shall mean a day on which banks are not required or
authorized to close in New York City, New York and, if such day relates to a
borrowing of, a payment or prepayment of principal or interest on a Continuation
or Conversion of or into, or an Interest Period for, a Eurodollar Loan or a
notice by Borrower with respect to any such borrowing, payment, prepayment,
Continuation, Conversion or Interest Period, which is also a day on which
dealings by and between banks in U.S. dollar deposits are carried out in the
London interbank Eurodollar market.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board) and,
for the purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP (including such
Statement No. 13).
"Capital Stock" shall mean, as to any Person, any and all shares,
interests, warrants, participations or other equivalents (however designated) of
corporate stock of such Person.
4
<PAGE>
"Change of Control" shall mean the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934), other than a Permitted
Holder, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-
5 under the Securities Exchange Act of 1934, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has a
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
Voting Stock of the Borrower; (b) the Borrower consolidates with, or merges with
or into, another Person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any Person, or
any Person consolidates with, or merges with or into, the Borrower, in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Borrower is converted into or exchanged for cash, securities or other property;
or (c) the directors of Borrower (or the executive committee thereof)
constituting that percentage necessary to approve corporate action not being
current directors of Borrower or directors designated or approved by such
directors or directors approved by such directors. For Purposes of this
definition, (a) "Permitted Holder" shall mean any of the following, individually
or collectively: (i) Union Bank of Switzerland ("UBS"), any of its Subsidiaries
or any Person owning directly or indirectly 50% or more of the capital stock of
UBS or any Subsidiary of UBS; (ii) Jeffrey Hanft, the Chairman of the Board and
the Chief Executive Officer of the Company; (iii) Robert D. Rubin, the President
of the Company; and (iv) any other Person directly or indirectly controlled by
the above specified persons, respectively, and (b) "Voting Stock" shall mean any
class or classes of Capital Stock pursuant to which the holders thereof have the
general voting power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of any Person (irrespective of
whether or not, at the time, stock of any other class or classes shall have, or
might have, voting power by reason of the happening of any contingency).
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder from time to time.
"Collateral" shall mean the property of Borrower described in Section
4.1, or any part thereof, as the context shall require, in which Agent has, or
is to have, a Lien on pursuant thereto or pursuant to any of the Loan Documents,
as security for payment of the Obligations.
"Commitment" shall mean the aggregate obligation of the Lenders to make
Loans to Borrower, subject to the terms and conditions hereof, up to an
aggregate principal amount not to exceed at any one time outstanding as to all
the Lenders equal to Forty Million Dollars ($40,000,000), subject to reduction
as set forth in Section 2.10 hereof.
"Commitment Fee" shall mean that amount due and payable to the Lenders
from Borrower pursuant to and in the amount specified in Section 3.4 hereof.
"Commitment Percentage" shall mean, as to each Lender, that amount,
expressed as a percentage, equal to the ratio of the amount set forth opposite
the name of such Lender on the signature pages hereto under the heading
"Commitment" to the aggregate amount of the
5
<PAGE>
Commitment; provided that the Commitment Percentage of each Lender shall be
increased or decreased, as appropriate, to reflect any assignments made by such
Lender pursuant to Section 13.3(c) hereof.
"Common Stock" shall mean the common stock of the Borrower, as
currently authorized by the Articles of Incorporation of Borrower, together with
all shares of the same class of common stock as are hereafter authorized.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 3.3 hereof of a Loan as a Eurodollar Loan from
one Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 3.3 hereof of a Base Rate Loan into a Eurodollar Loan or of
a Eurodollar Loan into a Base Rate Loan.
"Creditanstalt" shall mean Creditanstalt-Bankverein, an Austrian
banking corporation, and its successors and assigns.
"Default" shall mean the occurrence of any event or condition which,
after satisfaction of any requirement for the giving of notice or the lapse of
time, or both, would become an Event of Default.
"Default Rate" shall mean, with respect to the unpaid portion of any
Loan, an interest rate per annum equal to (a) two percent (2%) above the
interest rate set forth for such Loan in Section 3.1(a) hereof or (b) two
percent (2%) above the rate set forth in Section 3.1(a)(ii) hereof with respect
to any portion of the Obligations other than Loans.
"Effective Date" shall mean the date that this Agreement has been
signed by Borrower, the Lenders and the Agent and the conditions precedent set
forth in Section 11.1 have been satisfied.
"Eligible Accounts" shall mean the Accounts consisting of trade
accounts receivable arising in the ordinary course of Borrower's business
pursuant to contracts between Borrower and the Account Debtors providing for the
bona fide sale or delivery of goods to or performance of services for the
Account Debtors, net of all returns, discounts, offsets, claims, credits,
charges and allowances of any nature and net of all reserves, limits and
deductions set forth below or set forth elsewhere in this Agreement or in any
Loan Document. Unless Agent specifically consents in writing otherwise, no
Account shall be an Eligible Account if:
(a) the Agent does not have a first priority perfected Lien in such
Account or the Account is subject to any Lien whatsoever, other than Liens
in favor of the Agent; or
6
<PAGE>
(b) it arises out of a sale made by Borrower to an Affiliate of
Borrower or to a Person controlled by an Affiliate of Borrower; or
(c) it remains due and unpaid more than ninety (90) days after (i)
the date of the original invoice sent to the local exchange carrier
("LEC"), in the case of Accounts collected by an LEC or (ii) the date of
the invoice to the Account Debtor in respect of such Account, in the case
of all other Accounts; or
(d) fifty percent (50%) or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(e) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached; or
(f) the Account Debtor is also a creditor or supplier to Borrower or
any of Borrower's Subsidiaries, or the Account Debtor has disputed
liability, or the Account Debtor has made any claim with respect to any
other Account due from such Account Debtor to Borrower or any of Borrower's
Subsidiaries, or the Account otherwise is or is likely to become subject to
any right or set-off (actual or asserted) by the Account Debtor, whether by
virtue of the terms of the contract between Borrower and the Account
Debtor, or by virtue of any other defense or claim of the Account Debtor
against Borrower (including, without limitation, by virtue of guaranties by
such account debtor of Borrower's trade obligations, or otherwise);
provided, however, that the Accounts of such Account Debtor shall only be
ineligible to the extent of such offset or asserted offset; or
(g) the Account Debtor has commenced a voluntary case under the
Bankruptcy Code, as now constituted or hereafter amended, or made an
assignment for the benefit of creditors, or if a decree or order for relief
has been entered by a court having jurisdiction in the premises in respect
of the Account Debtor in an involuntary case under the Bankruptcy Code, as
now constituted or hereafter amended, or if any other petition or other
application for relief under the Bankruptcy Code has been filed against the
Account Debtor or if the Account Debtor has failed, suspended business,
ceased to be Solvent, or consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs; or
(h) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower assigns its
right to payment of such Account to Agent pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. section 3727); or
(i) the Account is denominated in other than United States dollars
or is payable outside the United States, or the sale represented by such
Account is to an Account Debtor outside the United States unless the sale
is on letter of credit or acceptance terms reasonably
7
<PAGE>
acceptable to the Agent and the Agent has received an assignment of
Borrower's rights under such letter of credit or acceptance or has been
irrevocably designated the payee of such letter of credit or acceptance; or
(j) the Account Debtor is located in any state imposing the
condition on the right of a creditor to collect accounts receivable that
such creditor has either qualified to do business in such state or filed a
Business Activities Report or other appropriate report with the taxing or
other designated authorities of such state for the then current year,
unless Borrower has complied with such conditions on or prior to the date
when such compliance is required under applicable state law; or
(k) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by Borrower with respect thereto
and accepted by the Account Debtor or the Account otherwise does not
represent a final sale; or
(l) the Account is evidenced by chattel paper or other instrument;
or
(m) the Accounts of any Account Debtor exceed a credit limit
determined by the Agent, in its sole discretion based on its credit and
collateral considerations, to the extent such Accounts exceed such limit;
or
(n) Agent believes, in its credit and collateral judgment, that
collection of such Account is insecure or that such Account may not be
paid.
"Eligible Assignee" shall mean any bank or other entity to which a
Lender assigns all or any part of any Loan pursuant to Section 13.3(c) and
"Eligible Assignees" shall mean, collectively, all banks and other entities to
which any Lender assigns all or any part of any Loan pursuant to Section 13.3(c)
hereof provided such entity is acceptable to both Agent and Borrower.
"Eligible Pay Telephones" shall mean and include only such Pay
Telephones (a) in which Agent has a first priority security interest; (b) which
are located in the continental United States; (c) which are scheduled to Agent
in accordance with Section 6.2(b) hereof; (d) which, in Agent's opinion, are in
good operating condition and are not obsolete or unmerchantable; and (e) which
Agent, in its credit and collateral judgment, deems to be Eligible Pay
Telephones.
"Environmental Laws" shall mean all federal, state, local and foreign
laws relating to pollution or protection of the environment, including laws
relating to emissions, discharges, releases or threatened releases of any
Hazardous Substance into the environment (including without limitation ambient
air, surface water, ground water or land), or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Substances and any and all
regulations, codes, standards, plans, orders, decrees,
8
<PAGE>
judgments, injunctions, notices or demand letters issued, entered, promulgated
or approved thereunder.
"Equipment" shall mean all of Borrower's equipment, fixtures and
leasehold improvements, whether now existing or hereafter acquired or arising or
in which Borrower now has or hereafter acquires any rights, including, without
limitation, all furniture, machinery, Telephone Equipment, vehicles and trade
fixtures, together with any and all accessories, accessions, parts and
appurtenances thereto, substitutions therefor and replacements thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and all rules and regulations from time to time
promulgated thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with Borrower, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loan" shall mean a Loan bearing interest for a particular
Interest Period at a rate based on a Quoted Rate.
"Event of Default" shall mean any of the events or conditions described
in Article 9 hereof.
"Federal Funds Rate" shall mean, for any day, the overnight federal
funds rate in New York City, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) in the Federal Reserve
Statistical Release H.15 (519) or any successor publication, or if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on overnight federal funds transactions in New York City
received by Agent from three federal funds brokers of recognized standing
selected by Agent.
"Foreign Tax" shall mean and include any present or future tax, levy,
cost or charge of any nature imposed by any Governmental Authority, excluding
taxes on or measured by the net income of any Lender imposed by any jurisdiction
in which the principal or relevant lending office of any Lender is located.
"Funded Debt" shall mean, for any Person, collectively, (a) the
aggregate principal amount of Indebtedness for borrowed money which would, in
accordance with GAAP, be classified as long-term debt, together with the current
maturities thereof; (b) all Indebtedness outstanding under any revolving credit,
line of credit or similar agreement providing for borrowings (and any extensions
or renewals thereof), notwithstanding that any such Indebtedness is created
within one year of the expiration of such agreement; (c) the principal component
of Capital Lease Obligations; and (d) any other Indebtedness bearing interest or
carrying a similar payment requirement (including (i) any outstanding Capital
Stock constituting Indebtedness under clause (d) of the definition thereof and
(ii)
9
<PAGE>
any Indebtedness issued at a discount to its face amount), calculated in
all cases for such Person and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles consistently
applied and maintained throughout the period indicated and consistent with the
prior financial practice of Borrower, as reflected in the financial information
referred to in Section 5.8 hereof.
"General Intangibles" shall mean all of Borrower's general intangibles,
whether now existing or acquired or arising or in which Borrower now has or
hereafter acquires any rights, including, without limitation, Telephone
Placement Agreements, all rights under escrow agreements (including, without
limitation, that certain Software Escrow Agreement and that certain Schematics
Escrow Agreement, each dated July 28, 1992, each among Borrower, Agent and
Intellicall, Inc.) and in all property held pursuant thereto, choses in action,
causes of action, corporate or other business records, inventions, designs,
patents, patent applications, service marks, trademarks, trade names, trade
secrets, good will, copyrights, registrations, licenses, franchises, customer
lists, agency and other contracts, tax refund claims, computer programs, all
claims under guaranties, security interests or other security held by or granted
to Borrower to secure payment of any of the Accounts by an Account Debtor, all
rights to indemnification, and all other intangible property of every kind and
nature (other than Accounts).
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to any government.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding (a) endorsements for collection or deposit in the ordinary
course of business and (b) any such agreement pursuant to which the obligation
is fulfilled solely by the issuance of common stock of the guarantor. The terms
"Guarantee" and "Guaranteed" used as a verb shall have a correlative meaning.
"Hazardous Substances" shall mean any pollutant, contaminant,
hazardous, toxic or dangerous waste, substance or material, or any other
substance or material regulated or controlled pursuant to any Environmental Law,
including, without limiting the generality of the foregoing, asbestos, PCBs,
petroleum products (including crude oil, natural gas, natural gas liquids,
liquified natural gas or synthetic gas) or any other substance defined as a
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste," "hazardous material," "hazardous chemical,"
10
<PAGE>
"hazardous waste," "regulated substance," "toxic chemical," "toxic substance" or
other similar term in any Environmental Law.
"Indebtedness" shall mean, as applied to any Person at any time, (a)
all indebtedness, obligations or other liabilities of such Person, contingent or
otherwise (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto; (ii) under profit payment agreements or similar
agreements; (iii) with respect to letters of credit issued for such Person's
account; (iv) to pay the deferred purchase price of property or services, except
unsecured accounts payable and accrued expenses arising in the ordinary course
of business which are not more than 60 days past due; or (v) Capital Lease
Obligations; (b) all indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any property of such Person, whether or
not such indebtedness, obligations or liabilities are assumed by such Person,
all as of such time; (c) all indebtedness, obligations or other liabilities of
such Person in respect of any foreign exchange contract or Interest Hedge
Agreement, net of liabilities owed to such Person by the counterparties thereon;
(d) all shares of Capital Stock (other than the Preferred Stock) subject (upon
the occurrence of any contingency or otherwise) to mandatory redemption prior to
the Maturity Date; and (e) indebtedness of others Guaranteed by such Person.
"Interest Coverage Ratio" shall mean, for any fiscal quarter of
Borrower for which the same is computed, the ratio of (a) Borrower's Operating
Cash Flow for such fiscal quarter to (b) Borrower's Interest Expense for such
fiscal quarter, in each case calculated on a consolidated basis for Borrower and
its Subsidiaries in accordance with GAAP.
"Interest Hedge Agreement" shall mean, for any Person, an interest rate
swap, cap or collar agreement or similar arrangement between such Person and one
or more financial institutions providing for the transfer or mitigation of
interest risks either generally or under specific contingencies.
"Interest Expense" shall mean, for any period, total interest expense,
whether paid, accrued or capitalized (including the interest component of
Capital Lease Obligations), of the Borrower, including, but not limited to, all
origination and other fees, all amortization of original issue discount and the
net amount payable under any Interest Hedge Agreement between Borrower and any
Person, all as calculated on a consolidated basis for Borrower and its
Subsidiaries in accordance with GAAP.
"Interest Period" shall mean, in connection with any Eurodollar Loan,
the period beginning on the date such Eurodollar Loan is made, Continued or
Converted and continuing for one (1), two (2), three (3) or six (6) months as
selected by Borrower by notice to the Agent. Notwithstanding the foregoing,
however, (a) any applicable Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day, (b) any
applicable Interest Period which begins on a day
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for which there is no numerically corresponding day in the calendar month during
which such Interest Period is to end shall (subject to clause (a) above) end on
the last day of such calendar month, and (c) no Interest Period shall extend
beyond either the Maturity Date or such other date as would interfere with the
repayment obligations of Borrower hereunder.
"Inventory" shall mean all of Borrower's inventory, whether now
existing or acquired or arising or in which Borrower now has or hereafter
acquires any rights, including, without limitation, any and all goods,
merchandise and other personal property, wheresoever located and whether or not
in transit, which is or may at any time be held for sale or lease or to be
furnished under any contract of service or held as raw materials, work in
process, finished goods or materials, and supplies of any kind, nature or
description used or consumed in Borrower's business, including, without
limitation, all such property the sale or other disposition of which has given
rise to an Account and which may have been returned to or repossessed or stopped
in transit by Borrower.
"Investment" shall mean, for any Person: (a) the acquisition (whether
for cash, property, services or securities or otherwise) of Capital Stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition
(including, without limitation, any "short sale" or any sale of any securities
at a time when such securities are not owned by the Person entering into such
short sale); (b) any deposit with, or advance, loan or other extension of credit
to, such Person (other than any such advance, loan or extension of credit
representing the purchase price of goods, intangibles or services sold or
supplied in the ordinary course of business) or Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of such
Person and (without duplication) any amount committed to be advanced, lent or
extended to such Person; (c) any Acquisition other than the acquisition of
goods, intangibles or services purchased in the ordinary course of business and
accounted for as an expense in accordance with GAAP or as a Capital Expenditure
or (d) the entering into of any Interest Hedge Agreement.
"Leverage Ratio" shall mean, on any date, the ratio of (a) the
Borrower's Funded Debt, as of such date, to (b) Borrower's Net Worth as of such
date, in each case computed on a consolidated basis for Borrower and its
Subsidiaries in accordance with GAAP.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the UCC or comparable law of any jurisdiction).
"Loans" shall mean, collectively, the loans made pursuant to Section
2.1 hereof, and "Loan" shall mean any loan made pursuant to Section 2.1 hereof.
Loans may be either a Eurodollar Loan or a Base Rate Loan, each of which is a
"type" of Loan.
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"Loan Documents" shall mean this Agreement, the Notes, the Stock Pledge
Agreement dated of even date herewith, executed by the Borrower in favor of
Agent on behalf of the Lenders, the documents executed by Borrower or its
Subsidiaries pursuant to Section 4.2 hereof, any financing statements covering
portions of the Collateral and any and all other instruments, documents, and
agreements now or hereafter executed and/or delivered by Borrower or its
Affiliates in connection herewith, or any one, more, or all of the foregoing, as
the context shall require, and "Loan Document" shall mean any one of the Loan
Documents.
"Majority Lenders" shall mean, subject to the terms of the last
paragraph of Section 13.8 hereof, Lenders holding at least sixty-seven percent
(67%) of the aggregate outstanding principal amount of the Loans or, if no Loans
are outstanding at such time, Lenders holding at least sixty-seven percent (67%)
of the Commitment.
"Margin Stock" shall mean "margin stock" as such term is defined from
time to time in Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
"Material Adverse Effect" shall mean any event or condition which,
alone or when taken with other events or conditions occurring or existing
concurrently therewith (a) has or is reasonably expected to have a material
adverse effect on the business, operations, condition (financial or otherwise),
assets, liabilities, properties or prospects of Borrower; (b) has or is
reasonably expected to have any material adverse effect whatsoever on the
validity or enforceability of this Agreement or any Loan Document; (c)
materially impairs or is reasonably expected to materially impair the ability of
Borrower to pay and perform the Obligations; (d) materially impairs or is
reasonably expected to materially impair the ability of the Agent or the Lenders
to enforce their respective rights and remedies under this Agreement and the
Loan Documents; or (e) has or is reasonably expected to have any material
adverse effect on the Collateral, the Liens of the Agent in the Collateral or
the priority of such Liens.
"Maturity Date" shall mean July 19, 1999.
"MPPAA" shall mean the Multiemployer Pension Plan Amendments Act of
1980, amending Title IV of ERISA.
"Multiemployer Plan" shall have the same meaning as set forth in
Section 4001(a)(3) of ERISA.
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"Net Worth" shall mean (a) Borrower's total assets minus (b) Total
Liabilities, plus (c) to the extent included in Total Liabilities, the book
value of the Preferred Stock, excluding, however, from the definition of assets
the amount of (x) any write-up in the book value of any assets resulting from a
revaluation thereof subsequent to the later to occur of (i) September 30, 1993
and (ii) the date Borrower acquired such assets; (y) treasury stock; and (z)
receivables from Affiliates of Borrower, calculated in each case on a
consolidated basis for Borrower and its Subsidiaries in accordance with GAAP;
provided, however, that in no event shall Total Liabilities include the
Preferred Stock.
"Note" or "Notes" shall have the meanings given to such terms in
Section 2.1 hereof.
"Notice of Borrowing" shall have the meaning given such term in Section
2.12 hereof.
"Obligations" shall mean the Loans and any and all other indebtedness,
liabilities and obligations of Borrower to the Agent or any Lender of every kind
and nature (including, without limitation, interest, charges, expenses,
attorneys' fees and other sums chargeable to Borrower by Agent or any Lender and
future advances made to or for the benefit of Borrower), arising under this
Agreement or under any of the other Loan Documents, or acquired by the Agent
from any other source, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, lease, guaranty, indemnification, Interest
Hedge Agreement or in any other manner, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter acquired.
"Loans/Operating Cash Flow Ratio" shall mean, as of any date, the ratio
of (a) the aggregate outstanding principal amount of the Loans as of such date
to (b) Borrower's Operating Cash Flow for the four fiscal quarter period ending
on or most recently ended prior to such date, in each case calculated on a
consolidated basis for Borrower and its Subsidiaries in accordance with GAAP
(provided that, for purposes of this definition, Persons that become
Subsidiaries of Borrower at any time after the first day of such four fiscal
quarter period and prior to or on the date of such calculation shall be deemed
to have been Subsidiaries of Borrower during such four fiscal quarter period on
a pro forma basis).
"Operating Cash Flow" shall mean, for any period for which the same is
computed, the sum of (a) Borrower's net income (loss) for such period plus (b)
Borrower's Interest Expense for such period plus (c) Borrower's depreciation and
amortization for financial reporting purposes for such period; plus (d)
Borrower's income tax expense for such period, as each such item is computed on
a consolidated basis for Borrower and its Subsidiaries in accordance with GAAP.
"Participant" shall mean any bank or other entity to which a Lender
sells a participating interest in any Loan or Loans pursuant to Section 13.3(b)
hereof, and "Participants" shall mean, collectively, all banks or other entities
to which any Lender sells a participating interest in any Loan or Loans pursuant
to Section 13.3(b) hereof.
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"Pay Telephone" shall mean a non-cellular installed telephone through
which a user may initiate a call payable only by coins or by credit card,
collect or third number billing procedures.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor agency or Person performing substantially the same
functions.
"Permitted Liens" shall mean: (a) those existing on the date hereof
with respect to specific items of Equipment and described on SCHEDULE 5.23
attached hereto; (b) liens, security interests and encumbrances in favor of
Agent; (c) liens on the real property of Borrower located at 2300 N.W. 89th
Place, Miami, Dade County, Florida, securing Indebtedness permitted by Section
7.2(d) hereof; (d) liens for (i) property taxes not delinquent, (ii) taxes not
yet subject to penalties, (iii) pledges or deposits made under Workmen's
Compensation, Unemployment Insurance, Social Security and similar legislation,
or in connection with appeal or surety bonds incident to litigation, or to
secure statutory obligations, and (iv) mechanics' and materialmen's liens with
respect to liabilities which are not yet due or which are being contested in
good faith; and (e) purchase money liens on Equipment and related software;
provided, however, that (i) such lien is created contemporaneously with the
acquisition of such Equipment and related software; (ii) such lien attaches only
to the specific items of Equipment and related software so acquired; (iii) such
lien secures only the Indebtedness incurred to acquire such Equipment and
related software; and (iv) the Indebtedness secured by such lien is permitted by
the terms of Section 7.2 hereof.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party or government (whether national,
federal, state, county, city, municipal, or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof).
"Plan" shall mean any employee benefit plan, program, arrangement,
practice or contract, maintained by or on behalf of Borrower or an ERISA
Affiliate, which provides benefits or compensation to or on behalf of employees
or former employees, whether formal or informal, whether or not written,
including but not limited to the following types of plans:
(i) Executive Arrangements - any bonus, incentive compensation, stock
option, deferred compensation, commission, severance, "golden parachute,"
"rabbi trust," or other executive compensation plan, program, contract,
arrangement or practice ("Executive Arrangements");
(ii) ERISA Plans - any "employee benefit plan", except any
Multiemployer Plan, as defined in Section 3(3) of ERISA, whether maintained
by or for a single employee or by or for multiple employees, including, but
not limited to, any defined benefit pension plan, profit sharing plan,
money purchase plan, savings or thrift plan, stock bonus plan, employee
stock ownership plan, or any plan, fund, program, arrangement or practice
providing for medical (including post-retirement
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medical), hospitalization, accident, sickness, disability, or life
insurance benefits ("ERISA Plans");
(iii) Other Employee Fringe Benefits - any stock purchase, vacation,
scholarship, day care, prepaid legal services, severance pay or other
fringe benefit plan, program, arrangement, contract or practice ("Fringe
Benefit Plans"); and
(iv) Multiemployer Plan - any Multiemployer Plan.
"Preferred Stock" shall mean the Series C Cumulative Convertible
Preferred Stock of Borrower, having a par value of $.01 per share.
"Prison Telephone Business" shall mean the business of Borrower of
operating non-coin operated telephones installed at prisons, penitentiaries or
similar penal institutions or correctional facilities for the incarceration or
confinement of criminal offenders.
"PTCC" shall mean PTC Cellular, Inc., a Delaware corporation and
majority-owned Subsidiary of Borrower.
"Quoted Rate" shall mean, when used with respect to an Interest Period
for a Eurodollar Loan, the quotient of (i) the offered rate quoted by Agent in
the interbank Eurodollar market in New York City, New York or London, England on
or about 11:00 a.m. (New York or London time, as the case may be) two Business
Days prior to such Interest Period for U.S. dollar deposits of an aggregate
amount comparable to the principal amount of the Eurodollar Loan to which the
Quoted Rate is to be applicable and for a period comparable to such Interest
Period, divided by (ii) one minus the Reserve Percentage. For purposes of this
definition, (a) "Reserve Percentage" shall mean with respect to any Interest
Period, the percentage which is in effect on the first day of such Interest
Period under Regulation D as the maximum reserve requirement for member banks of
the Federal Reserve System in New York City with deposits comparable in amount
to those of Agent against Eurocurrency Liabilities and (b) "Eurocurrency
Liabilities" has the meaning assigned to that term in Regulation D, as in effect
from time to time. The Quoted Rate for the applicable period shall be adjusted
automatically on and as of the effective date of any change in the applicable
Reserve Percentage.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as it may be amended from time to time.
"Regulatory Change" shall mean, with respect to any Lender, the
adoption on or after the Effective Date of any applicable federal, state, or
foreign law, rule or regulation or any change after such date in any such
federal, state or foreign law, rule or regulation (including, without
limitation, Regulation D), or any adoption or change in the interpretation or
administration thereof by any court, Governmental Authority, central bank or
comparable agency or monetary authority charged with the interpretation or
administration thereof, or compliance
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by such Lender with any request or directive made after such date (whether or
not having the force of law) of any such court, authority, central bank or
comparable agency or monetary authority.
"Reportable Event" shall have the meaning set forth in Section 4043 of
ERISA.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement dated as of July 3, 1995, among Borrower, UBS Capital
Corporation and Appian Capital Partners, L.L.C.
"Senior Notes" shall mean, collectively, the 12-1/4% Senior Notes due
2002 and 12-1/4% Senior Notes due 2002, Series B, issued pursuant to, and on the
terms and conditions set forth in, the Senior Notes Indenture, as in effect on
the date hereof, in an aggregate principal amount not exceeding $100,000,000.
"Senior Notes Indenture" shall mean the Indenture, dated as of July 15,
1995, between Borrower and First Union National Bank of North Carolina, as
trustee, as such Indenture is in effect on the date hereof.
"Solvent" shall mean, as to any Person, that such Person (a) has
capital sufficient to carry on its business and transactions and all business
and transactions in which it is about to engage, (b) is able to pay its debts as
they mature and (c) owns property whose fair saleable value is greater than the
amount required to pay its Indebtedness.
"Subordinated Debt" shall mean Indebtedness of Borrower which has been
subordinated in writing in right of payment to the prior payment to the
Obligations, on terms and conditions satisfactory to the Agent and the Majority
Lenders in their sole discretion.
"Subsidiary" shall mean, as to any Person, any other Person, of which
more than fifty percent (50%) of the outstanding shares of Capital Stock or
other ownership interest having ordinary voting power to elect a majority of the
board of directors of such corporation or similar governing body of such other
Person (irrespective of whether or not at the time stock or other ownership
interests of any other class or classes of such other Person shall have or might
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or by one or more
"Subsidiaries" of such Person.
"Telephone Equipment" shall mean all of that Equipment of Borrower
constituting, relating to or used in connection with Pay Telephones of Borrower
installed at various locations pursuant to Telephone Placement Agreements,
including, but not limited to, uninstalled telephones and replacement parts for
telephones.
"Telephone Placement Agreements" shall mean (i) all those agreements of
Borrower with various property owners pursuant to which Borrower installs one or
more Pay Telephones on the property owner's property and pays to the property
owner a percentage of revenues earned from
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such Pay Telephones, in return for such installation right and (ii) those
placement agreements for Pay Telephones which were acquired by Borrower pursuant
to an acquisition permitted by Section 7.5 hereof.
"Termination Date" shall mean the earliest of (a) the Maturity Date;
(b) the date the Commitment is reduced to zero pursuant to Section 2.10 hereof;
and (c) the date the Commitment is terminated pursuant to Section 10.2 hereof.
"Third Restated Agreement" shall mean that certain Third Amended and
Restated Loan and Security Agreement dated as of February 17, 1994, by and among
Borrower, the banks party thereto and Creditanstalt, as agent for such banks, as
amended.
"Total Liabilities" shall mean all obligations, indebtedness or other
liabilities of any kind or nature, fixed or contingent, due or not due, which,
in accordance with GAAP, would be classified as a liability on the balance sheet
of Borrower. In no event shall "Total Liabilities" include Preferred Stock.
"Transferee" shall mean any Participant or Eligible Assignee under this
Agreement, and "Transferees" shall mean all Participants and Eligible Assignees
under this Agreement.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.
0.1 USE OF DEFINED TERMS. All terms defined in this Agreement and
the Exhibits hereto shall have the same defined meanings when used in any other
Loan Document, unless the context shall require otherwise.
0.2 ACCOUNTING TERMS; CALCULATIONS. All accounting terms not
specifically defined herein shall have the meanings generally attributed to such
terms under GAAP. Calculations hereunder shall be made and financial data
required hereby shall be prepared, both as to classification of items and as to
amounts, in accordance with GAAP.
0.3 OTHER TERMS. All other terms used in this Agreement which are
not specifically defined herein but which are defined in the UCC shall have the
meanings set forth therein.
0.4 TERMINOLOGY. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of this
Agreement, and all references in this Agreement to Articles, Sections,
Subsections, paragraphs, clauses, subclauses, Exhibits or Schedules shall refer
to the corresponding Article, Section, Subsection, paragraph, clause, subclause
of, Exhibit or Schedule attached to, this Agreement, unless specific reference
is made to the articles, sections or other subdivisions of, Exhibits or
Schedules to, another document or
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instrument. All references to instrument, document or agreement shall, unless
the context otherwise requires, refer to such instrument, document or agreement
as the same may be, from time to time, amended, modified, supplemented, renewed,
extended, replaced or restated.
0.5 EXHIBITS. All Exhibits and Schedules attached hereto are by
reference made a part hereof.
1. THE LOANS
1.1 LOANS. Subject to the terms and conditions hereof and provided
that there exists no Default or Event of Default, each Lender severally agrees
to make loans (each a "Loan" and collectively the "Loans"), as requested by
Borrower in accordance with the provisions of Section 2.2 hereof, to Borrower
from time to time on and after the Effective Date and up to, but not including,
the Termination Date in an aggregate principal amount not to exceed at any one
time outstanding an amount equal to such Lender's Commitment Percentage of the
lesser of (i) the Borrowing Base and (ii) the Commitment. All Loans outstanding
on the Effective Date under, and as such term is defined in, the Third Restated
Agreement shall be Loans under this Agreement. The Loans made by each Lender
shall be evidenced by a promissory note, substantially in the form of EXHIBIT A
attached hereto, payable to such Lender in the principal face amount of such
Lender's Commitment Percentage of the Commitment (together with any and all
amendments, modifications and supplements thereto, and any renewals,
replacements or extensions thereof (including, but not limited to, pursuant to
Section 13.3(c)(ii) hereof), in whole or in part, individually, a "Note" and,
collectively, the "Notes"). Loans may be borrowed, repaid and reborrowed in
accordance with the terms hereof.
1.2 BORROWING PROCEDURES.
(a) Borrower shall give Agent a Notice of Borrowing in connection each
request for a Loan hereunder in accordance with Section 2.12 hereof. The Agent
shall promptly notify each Lender of any Notice of Borrowing received hereunder.
Not later than 11:00 a.m (New York time), on the date specified for each
borrowing hereunder, each Lender shall make available to the Agent the amount of
the Loan to be made by such Lender in accordance with such Lender's Commitment
Percentage, in immediately available funds at an account with Creditanstalt
designated by the Agent. The Agent shall, subject to the terms and conditions of
this Agreement, not later than 1:00 p.m. (New York time) on the Business Day
specified for such borrowing, make such amount available to Borrower at the
Agent's office in New York, New York.
(b) Unless the Agent shall have been notified by any Lender at least
one Business Day prior to the date on which any Eurodollar Loan is to be made to
Borrower and not later than 11:00 a.m. (New York time) on the date any Base Rate
Loan is to be made, that such Lender does not intend to make available to the
Agent such Lender's Commitment Percentage of such Loan, the Agent may assume
that such Lender has made such amount available to the Agent on the date of such
Loan and the Agent may, in reliance upon such assumption, make available to
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to Agent by such Lender, the
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Agent shall be entitled to recover such corresponding amount on demand from such
Lender, which demand shall be made in a reasonably prompt manner. If such
Lender does not pay such a corresponding amount forthwith upon the Agent's
demand therefor, the Agent shall promptly notify Borrower and Borrower shall pay
such corresponding amount to the Agent. The Agent shall also be entitled to
recover from such Lender interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by the Agent
to Borrower to the date such corresponding amount as recovered by the Agent at a
rate per annum equal to the Federal Funds Rate, for the first two Business Days,
and then thereafter at the rate per annum then in effect with respect to Base
Rate Loans. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment Percentage of the Commitment hereunder or
to prejudice any rights which the Agent or Borrower may have against any Lender
as a result of any Default by such Lender hereunder.
1.3 LOAN ACCOUNT; STATEMENTS OF ACCOUNT. The Agent will maintain
one or more loan accounts for Borrower to which the Agent will charge all
amounts advanced to or for the benefit of Borrower hereunder or under any of the
other Loan Documents and to which the Agent will credit all amounts collected
under each such credit facility from or on behalf of Borrower. The Agent will
account to Borrower periodically with a statement of charges and payments made
pursuant to this Agreement, and each such account statement shall be deemed
final, binding and conclusive, absent manifest error, unless the Agent is
notified by Borrower in writing to the contrary within thirty (30) days of the
date of each account statement. Any such notice shall only be deemed an
objection to those items specifically objected to therein. The unpaid principal
amount of the Loans, the unpaid interest accrued thereon, the interest rate or
rates applicable to such unpaid principal amount, and the accrued and unpaid
fees, premiums and other amounts due hereunder shall at all times be ascertained
from the records of the Agent and such records shall constitute prima facie
evidence of the amounts so due and payable.
1.4 USE OF PROCEEDS. The proceeds of the Loans shall be used for
(a) Borrower's general working capital needs; and (b) Acquisitions permitted by
Section 7.5 hereof. No portion of the proceeds of any Loan may be used to
"purchase" or "carry," as such terms are defined in Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System, any Margin Stock, or to
extend credit for the purpose of purchasing or carrying Margin Stocks.
1.5 SEVERAL OBLIGATIONS OF THE LENDERS; REMEDIES INDEPENDENT. The
failure of any Lender to make any Loan to be made by it on the date specified
therefor shall not relieve any other Lender of its obligation to make any Loan
to be made by it on such date, but neither any Lender nor the Agent shall be
responsible for the failure of any other Lender to make a Loan to be made by
such other Lender. The amounts payable by the Borrower at any time hereunder
and under the Notes to each Lender shall be a separate and independent debt and
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement and its Note, and it shall not be necessary for any other Lender
or the Agent to consent to, or be joined as an additional party in, any
proceeding for such purposes.
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1.6 TERM; TERMINATION. This Agreement shall terminate upon the
latest to occur of (a) the Termination Date or (b) the repayment and
satisfaction of all Obligations.
1.7 LOANS IN EXCESS OF BORROWING BASE. Borrower acknowledges that
the Lenders are not obligated and do not presently intend to make Loans or other
extensions of credit to Borrower in a principal amount at any time exceeding the
Borrowing Base or the other limits set forth herein. However, it is agreed
that, should the Loans or other extensions of credit incurred under Section 2.1
hereof exceed the Borrowing Base or any other limitation set forth herein, all
of Borrower's obligations to the Lenders with respect to such Loans or
extensions of credit shall nevertheless constitute Obligations under this
Agreement and shall be entitled to the benefit of all Liens granted under this
Agreement and all other Loan Documents. Notwithstanding the foregoing, if any
amounts outstanding hereunder shall exceed any of such limitations, Borrower
shall immediately repay such excess amounts to the Lenders.
1.8 PAYMENTS.
(a) Each payment by the Borrower pursuant to this Agreement or the
Notes shall be made prior to 1:00 p.m. (New York time) on the date due and shall
be made without set-off or counterclaim to the Agent at its principal U.S.
office located at 245 Park Avenue, New York, New York or at such other place or
places as Agent may designate from time to time in writing to Borrower. Each
such payment shall be in lawful currency of the United States of America and in
immediately available funds. The Agent shall promptly remit to each Lender such
Lender's share of any payment received by the Agent from Borrower.
(b) Each payment made by Borrower hereunder shall either (i) be
exempt from, and be made without reduction by reason of, any Foreign Tax or (ii)
to the extent that any such payment shall be subject to any Foreign Tax, be
accompanied by an additional payment by Borrower of such amount as may be
necessary so that the net amount received by each Lender (after deducting all
applicable Foreign Taxes) is the same as each such Lender would have received
had such payment not been subject to such Foreign Tax. Upon any payment of
Foreign Tax by Borrower, Borrower shall promptly (and in any event within 30
days) furnish to the Agent such tax receipts, certificates and other evidence of
such payment as Borrower may have or the Agent or any Lender may reasonably
request.
(c) If the due date of any payment hereunder or under any of the
Notes would otherwise fall on a day which is not a Business Day, then such
payment shall be due on the next succeeding Business Day and interest shall be
payable on the principal amount of such payment for the period of such
extension. If Agent has not received any payment due hereunder by the close of
business on the date such payment is due, Borrower authorizes the Lenders, at
their option, to charge such payment as a Loan.
1.9 PRORATA TREATMENT. Except to the extent otherwise provided
herein: (a) each borrowing from the Lenders under Section 2.1 hereof shall be
made from the relevant
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Lenders and each payment of Commitment Fee under Section 3.4 hereof shall be
made to the Agent for the account of the Lenders, prorata according to the
unused amounts of their respective Commitment Percentage of the Commitment;
(b) each termination or reduction of the amount of the Commitment under
Section 2.10 hereof shall be applied to the Lenders, prorata according to
their Commitment Percentage of the Commitment; (c) the making, Conversion and
Continuation of Loans of a particular type shall be made prorata among the
relevant Lenders according to their Commitment Percentage of the Commitment and
the then current Interest Period for each Eurodollar Loan shall be coterminous;
(d) each payment or prepayment of principal of Loans by Borrower shall be made
for the account of relevant Lenders prorata in accordance with their Commitment
Percentages; provided that if immediately prior to giving effect to any such
payment in respect of any Loans the outstanding principal amount of the Loans
shall not be held by the Lenders prorata in accordance with their Commitment
Percentage in effect at the time such Loans were made (by reason of a failure of
a Lender to make a Loan hereunder in the circumstances described in the last
paragraph of Section 13.8 hereof), then such payment shall be applied to the
Loans in such manner as shall result, as nearly as is practicable, in the
outstanding principal amount of the Loans being held by the Lenders prorata in
accordance with their respective Commitment Percentages; and (e) each payment of
interest on Loans by Borrower shall be made for account of the Lenders prorata
in accordance with the amounts of interest on such Loans then due and payable to
the respective Lenders.
1.10 PREPAYMENTS/COMMITMENT REDUCTION.
(a) Upon written notice to the Agent in accordance with Section 2.12
hereof, Borrower may, at its option, terminate the Commitment in its entirety or
reduce the Commitment in part, in integral multiples of $1,000,000, on the date
specified in such notice, by paying to Agent for the benefit of the Lenders the
accrued amount of Commitment Fee applicable to the Commitment, in the case of a
termination, or applicable to the amount of the Commitment reduction, in the
case of a partial reduction.
(b) In no event may Borrower reduce the Commitment below the
aggregate principal amount of Loans outstanding, unless, simultaneously with
such reduction, the principal amount of the Loans in excess of the Commitment,
as so reduced, is paid in full.
(c) The amount of the Commitment shall be automatically reduced to
zero on the Termination Date.
(d) The Commitment, once terminated or reduced, may not be
reinstated.
(e) Upon the receipt of proceeds from the sale or other disposition
of any Collateral or other assets of Borrower or its Subsidiaries in which the
Agent or any Lender holds a Lien (including the sale or other disposition of the
stock of any Subsidiary or other Investment but excluding (except as provided in
clause (g) below) any sale of PTCC, the Prison Telephone Business and asset
sales permitted by Section 7.3(a)), Borrower shall prepay the Loans, and the
Commitment shall automatically be reduced on the date of such sale or other
disposition, in each case by an amount
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equal to the proceeds received by the Borrower or such Subsidiary, net of all
reasonable expenses incurred by Borrower or such Subsidiary in connection with
such sale or disposition.
(f) Upon the prepayment or repurchase of any Senior Notes pursuant
to Section 10.14 of the Senior Notes Indenture, out of the net proceeds of any
sale or other disposition of assets of Borrower or its Subsidiaries, the
Borrower shall prepay the Agent, for the benefit of the Lenders, an amount equal
to the Other Senior Debt Pro Rata Shares (as such term is defined in the Senior
Notes Indenture as in effect on the date hereof) of the Net Proceeds (as such
term is defined in the Senior Notes Indenture as in effect on the date hereof)
from which such prepayment or repurchase is to be made and the Commitment shall
automatically be reduced by an amount equal to such prepayment.
(g) Without duplication of any payment obligation of Borrower under
clause (e) or (f) of this Section 2.10, if Borrower or any of its Subsidiaries
would, but for the operation of this clause (g), be required to apply any amount
to the redemption or payment of the Senior Notes by reason of any sale, transfer
or other disposition of any assets of Borrower or any of its Subsidiaries in
which the Agent has been granted a Lien for the benefit of the Lenders, Borrower
shall prepay the Loans on the date such application would otherwise occur by an
aggregate amount equal to the amount that would otherwise be so applied and the
Commitment shall be reduced by an amount equal to such payment.
(h) In the event that the aggregate principal amount of Loans
outstanding hereunder exceeds the amount of the Commitment, giving effect to any
reduction required hereunder or which is requested by Borrower hereunder, the
Borrower shall, on or prior to the date such reduction is to occur, repay in
full the principal amount of the Loans in excess of the Commitment, as so
reduced.
1.11 SHARING OF PAYMENTS, ETC.
(a) Borrower agrees that, in addition to (and without limitation of)
any right of set-off, banker's lien or counterclaim a Lender may otherwise have,
each Lender shall be entitled, at its option, to offset balances held by it for
account of Borrower at any of its offices, in dollars or in any other currency,
against any principal of or interest on any of such Lender's Loans or any other
amount payable to such Lender hereunder, that is not paid when due (regardless
of whether such balances are then due to Borrower), in which case it shall
promptly notify Borrower and the Agent thereof, provided that such Lender's
failure to give such notice shall not affect the validity thereof.
(b) If any Lender shall obtain from Borrower payment of any principal
of or interest on any Loan owing to it or payment of any other amount under this
Agreement through the exercise of any right of set-off, banker's lien or
counterclaim or similar right or otherwise (other than from the Agent as
provided herein), and, as a result of such payment, such Lender shall have
received more than its Commitment Percentage of the principal of or interest on
the Loans or such other amounts then due hereunder by Borrower, it shall
promptly notify the Agent of such payment and promptly
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purchase from such other Lenders participations in (or, if and to the extent
specified by such Lender, direct interests in) the Loans or such other amounts,
respectively, owing to such other Lenders (or in interest due thereon, as the
case may be) in such amounts, and make such other adjustments from time to time
as shall be equitable, to the end that all the Lenders shall share the benefit
of such excess payment (net of any expenses that may be incurred by such Lender
in obtaining or preserving such excess payment) prorata in accordance with the
unpaid principal of and/or interest on the Loans or such other amounts,
respectively, owing to each of the Lenders, provided that if at the time of such
payment the outstanding principal amount of the Loans shall not be held by the
Lenders prorata in accordance with their respective Commitment Percentages in
effect at the time such Loans were made (by reason of a failure of a Lender to
make a Loan hereunder in the circumstances described in the last paragraph of
Section 13.8 hereof), then such purchases of participations and/or direct
interests shall be made in such manner as will result, as nearly as is
practicable, in the outstanding principal amount of the Loans being held by the
Lenders prorata according to each Lender's Commitment Percentage. To such end
all the Lenders shall make appropriate adjustments among themselves (by the
resale of participations sold or otherwise) if such payment is rescinded or must
otherwise be restored.
(c) Borrower agrees that any Lender so purchasing such a participation
(or direct interest) may exercise all rights of set-off, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of Borrower. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 2.11 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 2.11 to share in the
benefits of any recovery on such secured claim.
1.12 CERTAIN NOTICES. All notices given by Borrower to the Agent of
terminations or reductions of the Commitment, or of borrowings, Conversions,
Continuations or prepayments of Loans hereunder shall either be oral, with
prompt written confirmation by telecopy, or in writing, with such written
confirmation or writing, in the case of a borrowing, to be substantially in the
form of EXHIBIT B attached hereto (a "Notice of Borrowing"); shall be
irrevocable; shall be effective only if received by Agent prior to 10:00 a.m.
(New York time) on a Business Day which is: (a) at least fifteen (15) days prior
to such termination or reduction of the Commitment; (b) at not later than the
date such Loan is to be made as, Converted to or Continued as a Base Rate Loan;
(c) at least three (3) Business Days prior to the date such Loan is to be made
as, Converted to or Continued as a Eurodollar Loan; (d) at least five (5) days
prior to any such prepayment, in the case of a prepayment of a Eurodollar Loan;
or (e) not later than the date of any such prepayment, in the case of a
prepayment of a Base Rate Loan. Each such notice to reduce the Commitment or to
prepay the Loans shall specify the amount of the Commitment to be reduced or of
the Loans to be prepaid and
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the date of such reduction or prepayment. Each such notice of borrowing,
Conversion or Continuation shall specify: (i) the amount of such borrowing,
Conversion or Continuation (which shall be an integral multiple of $100,000 and,
if a Eurodollar Loan, shall be in a minimum principal amount of $1,000,000);
(ii) that the amount of the Loan to be made, Converted or Continued, when
aggregated with all other Loans to be outstanding following the funding,
Conversion or Continuation of such Loan, does not exceed the Borrowing Base;
(iii) whether such Loan will be made, Converted or Continued as a Eurodollar
Loan or as a Base Rate Loan; (iv) the date such Loan is to be made, Converted or
Continued (which shall be a Business Day and, if such Loan is to Convert or
Continue a Eurodollar Loan then outstanding, shall not be prior to the then
current Interest Period for such outstanding Loan); and (v) if such Loan is a
Eurodollar Loan, the duration of the Interest Period with respect thereto.
If Borrower fails to specify the duration of the Interest Period for any
Eurodollar Loan, Borrower shall instead be deemed to have requested that
such Loan be made as, Converted to or Continued as a Base Rate Loan. Each
request for a borrowing, Conversion or Continuation of a Loan or for any other
financial accommodation by Borrower pursuant to this Agreement or the other Loan
Documents shall constitute (x) an automatic warranty and representation by
Borrower to each Lender that there does not then exist a Default or Event of
Default or any event or condition which, with the making of such Loan, would
constitute a Default or Event of Default and (y) an affirmation that as of the
date of such request all of the representations and warranties of Borrower
contained in this Agreement and the other Loan Documents are true and correct in
all material respects, both before and after giving effect to the application of
the proceeds of the Loan except for such changes in such representations and
warranties which do not constitute a Default or Event of Default hereunder,
which do not, individually or in the aggregate, have a Material Adverse Effect
and which have, to the extent required, been disclosed to the Agent and the
Lenders pursuant to Section 6.2 hereof or otherwise. If on the last day of the
Interest Period of any Eurodollar Loan hereunder, Agent has not received a
timely notice hereunder to Convert, Continue or prepay such Loan, Borrower shall
be deemed to have submitted a notice to Convert such Loan to a Base Rate Loan.
2. FEES AND INTEREST
2.1 INTEREST.
(a) Subject to modification pursuant to Subsection (b) below and
Section 10.1 hereof, the average daily outstanding principal amount of the Loans
and all other sums payable by Borrower hereunder shall bear interest from the
date thereof until paid in full at the following rates:
(i) the outstanding principal amount of each Eurodollar Loan
shall bear interest at a fixed rate of interest per annum equal to the
Quoted Rate for the then-current Interest Period for such Loan plus three
percent (3%), calculated on the basis of a 360-day year and actual days
elapsed; and
(ii) the outstanding principal amount of each Base Rate Loan
and all other sums payable by Borrower hereunder shall bear interest at
a fluctuating rate
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per annum equal to the Base Lending Rate plus one and one-half percent
(1-1/2%), calculated daily on the basis of a 360-day year and actual days
elapsed.
(b) Accrued interest shall be payable (i) in the case of Base Rate
Loans, monthly on the first day of each month hereafter for the previous month,
commencing with the first such day following the Effective Date; (ii) in the
case of a Eurodollar Loan, on the last day of each Interest Period, provided,
however, that if any Interest Period in respect of a Eurodollar Loan is longer
than three (3) months, such interest prior to maturity shall be paid on the last
Business Day of each three (3) month interval within such Interest Period as
well as on the last day of such Interest Period; (iii) in the case of any Loan,
upon the payment or prepayment thereof; (iv) in the case of any other sum
payable hereunder as set forth elsewhere in this Agreement or, if not so set
forth, on demand; and (v) in the case of interest payable at the Default Rate,
on demand.
2.2 LIMITATIONS ON INTEREST PERIODS. Borrower may not select any
Interest Period which extends beyond the Maturity Date. Borrower shall not have
more than three (3) different Interest Periods for Eurodollar Loans outstanding
at any given time during the term of this Agreement; provided, however, that so
long as no Base Rate Loans are outstanding, Borrower may have up to four (4)
different Interest Periods for Eurodollar Loans outstanding.
2.3 CONVERSIONS AND CONTINUATIONS. So long as there then exists no
Default or Event of Default, Borrower shall have the right, from time to time,
to Convert Loans of one type to Loans of the other type and to Continue Loans of
one type as Loans of the same type; provided, however, that Eurodollar Loans may
not be Continued or Converted prior to the end of the Interest Period applicable
thereto.
2.4 COMMITMENT FEE. Beginning on the Effective Date and continuing
until the day immediately prior to the Termination Date, Borrower shall pay to
the Agent for the account of each Lender a commitment fee equal to one-half of
one percent (1/2 of 1%) per annum of the sum of the aggregate average daily
unused amount of such Lender's Commitment Percentage of the Commitment,
calculated on the basis of a 360-day year and actual days elapsed, payable in
arrears on the first day of each calendar quarter for the previous calendar
quarter or portion thereof (commencing on the first such date to occur following
the Effective Date) and on the Termination Date (or such earlier date on which
the obligation of the Lenders to make Loans under such credit facility hereunder
shall terminate).
2.5 ILLEGALITY. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it shall become unlawful for any
Lender to obtain funds in the London interbank market or for such Lender to
maintain a Eurodollar Loan, then such Lender shall promptly notify Borrower
whereupon (a) the right of Borrower to request any Eurodollar Loan shall
thereupon terminate and (b) any Eurodollar Loan then outstanding shall commence
to bear interest at the rate applicable to Base Rate Loans on the last day of
the then applicable Interest Period or at such earlier time as may be required
by Applicable Law.
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2.6 INABILITY TO DETERMINE FIXED RATE. In the event that Agent
determines (which determination shall be conclusive absent manifest error) that,
by reason of circumstances affecting the London interbank market, quotation of
interest rates for the relevant deposits referred to in the definition of the
"Quoted Rate" herein are not being provided in the relevant amounts or for the
relevant maturities for the purpose of determining rates of interest for a
Eurodollar Loan, Agent will give notice of such determination to Borrower and
each Lender at least one day prior to the date specified in such notice of
borrowing, Conversion or Continuation for such Loan to be made. If any such
notice is given, no Lender shall have any obligation to make available,
maintain, Convert or Continue Eurodollar Loans. Until the earlier of the date
any such notice has been withdrawn by Agent or the date when Agent and the
Lenders and Borrower have mutually agreed upon an alternate method of
determining the rates of interest payable on a Eurodollar Loan, as the case may
be, Borrower shall not have the right to have or maintain any Eurodollar Loan.
2.7 INCREASED COSTS AND REDUCED RETURN.
(a) If any Regulatory Change shall:
(i) subject any Lender to any tax, duty or other charge with
respect to any Eurodollar Loan, or shall change the basis of taxation
of payments to such Lender of the principal of or interest on any
Eurodollar Loan (except for changes in the rate of tax on the overall
net income of such Lender imposed by the jurisdiction in which such
Lender's principal office is located); or
(ii) impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve
System) against assets of, deposits with or for the account of, or
credit extended by, any Lender; or
(iii) impose on any Lender or on the London interbank market
any other condition or expense with respect to this Agreement, the
Notes or their making, issuance or maintenance of such Lender's
Commitment hereunder or of any Eurodollar Loan;
and the result of any such Regulatory Change is, in such Lender's reasonable
judgment, to increase the costs which such Lender determines are attributable to
its making or maintaining any Loan, or its obligation to make available any
Loan, or to reduce the amount of any sum received or receivable by such Lender
under this Agreement or the Notes with respect to any Loan, then, Borrower shall
pay to such Lender such additional amount or amounts as will compensate such
Lender for such increased cost or reduction.
(b) In addition to any amounts payable pursuant to subsection (a)
above, if any Lender shall have determined that the applicability of any law,
rule, regulation or guideline heretofore or hereafter adopted pursuant to or
arising out of the July 1988 report of the Basle Committee on
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Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards," or the adoption after
the Effective Date of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the enforcement or
interpretation or administration of any of the foregoing by any court or any
Governmental Authority, central bank or comparable agency charged with the
enforcement or interpretation or administration thereof, or compliance by such
Lender (or any lending office of such Lender) or such Lender's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence of
its making or maintaining any Loan or its obligations under this Agreement to a
level below that which such Lender or such Lender's holding company could have
achieved but for such applicability, adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then, upon demand by such Lender, Borrower shall pay to such Lender
from time to time such additional amount or amounts as will compensate such
Lender or such Lender's holding company for any such reduction suffered.
2.8 COMPENSATION. Borrower shall pay to each Lender, upon the
request of such Lender therefor, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Lender) to compensate it for any and all
losses or expenses which such Lender may sustain or incur as a consequence of
(a) failure by Borrower to consummate (including, without limitation, as a
result of the failure of any of the conditions precedent specified in Section 11
hereof to be satisfied) any prepayment, borrowing, Conversion or Continuation
made by Borrower in respect of any Eurodollar Loan after notice therefor has
been given; or (b) payment, prepayment or Conversion of any Eurodollar Loan on
any day other than the last day of the Interest Period for such Loan (including,
without limitation, any prepayment pursuant to Sections 2.7, 2.10, 3.5 or 3.10
hereof or any payment resulting from an acceleration of the Loans pursuant to
Section 10.2 hereof). Borrower's obligations under this Section shall survive
the termination of this Agreement and the repayment of the Obligations.
2.9 NOTICE OF AMOUNTS PAYABLE TO LENDERS. If any Lender shall seek
payment of any amounts from Borrower pursuant to Sections 2.8(b), 3.7 or 3.8
hereof, it shall notify Borrower of the amount payable by Borrower to such
Lender thereunder. A certificate of such Lender seeking payment pursuant to
Sections 2.8(b), 3.7 or 3.8 hereof, setting forth in reasonable detail the
factual basis for and the computation of the amounts specified, shall be
conclusive, absent manifest error, as to the amounts owed. Borrower's
obligations under this Section shall survive the termination of this Agreement
and the repayment of the Obligations.
2.10 INTEREST SAVINGS CLAUSE. Nothing contained in this Agreement
or in any of the Notes or in any of the other Loan Documents shall be construed
to permit any Lender to receive at any time interest, fees or other charges in
excess of the amounts which such Lender is
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legally entitled to charge and receive under any law to which such interest,
fees or charges are subject. In no contingency or event whatsoever shall the
compensation payable to any Lender by Borrower, howsoever characterized or
computed, hereunder or under the Note issued to such Lender or under any other
agreement or instrument evidencing or relating to the Obligations, exceed the
highest rate permissible under any law to which such compensation is subject.
There is no intention that any Lender shall contract for, charge or receive
compensation in excess of the highest lawful rate, and, in the event it should
be determined that any excess has been charged or received, then, ipso facto,
such rate shall be reduced to the highest lawful rate so that no amounts shall
be charged which are in excess thereof; and such Lender shall apply such excess
against the Loans then outstanding (with such application being made first
against the Base Rate Loans, to the extent thereof, second against the
Eurodollar Loans, to the extent thereof, and then to any other Obligations
hereunder) and, to the extent of any amounts remaining thereafter, refund such
excess to Borrower.
3. SECURITY INTEREST - COLLATERAL
3.1 SECURITY INTEREST. As security for the Obligations, Borrower
hereby grants to Agent, for the benefit of the Lenders, a continuing Lien on and
security interest in and to the following described property, whether now owned
or existing or hereafter acquired or arising or in which Borrower now has or
hereafter acquires any rights and wheresoever located (sometimes herein
collectively referred to as "Collateral"):
(a) Accounts;
(b) Inventory;
(c) Equipment;
(d) General Intangibles;
(e) all monies, residues and property of any kind of Borrower, now
or at any time or times hereafter, in the possession or under the control of the
Agent or any Lender or a bailee of the Agent or any Lender;
(f) all accessions to, substitutions for and all replacements,
products and proceeds of the foregoing, including, without limitation, proceeds
of insurance policies insuring the Collateral;
(g) all books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs and other computer materials
and records) of Borrower pertaining to any of the foregoing; and
(h) any and all other property of Borrower.
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3.2 ADDITIONAL SECURITY. As additional security for the
Obligations, Borrower shall pledge to Agent, for the benefit of the Lenders, all
of the issued and outstanding shares of Capital Stock of each Subsidiary which
it currently holds or holds subsequent to the Effective Date (the "Subsidiary
Stock").
3.3 PERFECTION OF SECURITY INTEREST. Until the termination of the
Commitment and the payment and satisfaction in full of all Obligations,
whichever last occurs, Agent's security interest in the Collateral and all
products and proceeds thereof shall continue in full force and effect. Borrower
shall perform any and all steps requested by Agent or the Majority Lenders to
perfect, maintain or protect Agent's security interest in the Collateral,
including, without limitation, executing and filing financing or continuation
statements, or amendments thereof, in form and substance satisfactory to Agent;
delivering to Agent all documents, instruments or chattel paper included in the
Collateral, the possession of which is necessary or appropriate to perfect
Agent's security interest therein; and delivering to Agent all letters of credit
on which Borrower is named as a beneficiary. Agent may file one or more
financing statements disclosing Agent's security interest under this Agreement
without Borrower's signatures appearing thereon and Borrower shall pay the costs
of, or incidental to, any recording or filing of any financing statements
concerning the Collateral. Borrower agrees that a carbon, photographic,
photostatic, or other reproduction of this Agreement or of a financing statement
is sufficient as a financing statement.
3.4 RIGHT TO INSPECT; VERIFICATIONS. Agent and each Lender (or any
person or persons designated by it), in its sole discretion, shall have the
right to call at any place of business or property location of Borrower at any
reasonable time, and, without hindrance or delay, to inspect the Collateral and
to inspect, audit, check and make extracts from Borrower's books, records,
journals, orders, receipts and any correspondence and other data relating to the
Collateral, to Borrower's business or to any other transactions between the
parties hereto and to discuss any of the foregoing with any of Borrower's
employees, officers and directors and with its independent accountants.
Additionally, Agent may, at any time and from time to time in its sole
discretion, require Borrower to verify the individual Account Debtors
immediately upon its request therefor; provided, however, that unless and until
there occurs an Event of Default, the Agent and the Lenders agree not to contact
directly any Account Debtor for purposes of account verification except with the
prior consent of Borrower. To facilitate the foregoing, upon request from Agent
made at any time and from time to time hereafter, Borrower shall furnish the
Agent and the Lenders with a then current Account Debtor address list.
4. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement
and to make Loans hereunder, Borrower hereby makes the following representations
and warranties to the Agent and the Lenders which shall be true and correct on
the Effective Date and shall continue to be true and correct at the time of the
making of any Loan and until the Loans have been repaid in full:
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4.1 CORPORATE EXISTENCE AND QUALIFICATION. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation. Borrower is duly
qualified as a foreign corporation in good standing in the State of Florida and
in each other state wherein the conduct of its business or the ownership of its
property requires such qualification and each Subsidiary is duly qualified as a
foreign corporation in good standing in each state wherein the conduct of its
business or the ownership of its property requires such qualification, in each
case which the failure to so qualify as a foreign corporation could have a
Material Adverse Effect.
4.2 CORPORATE AUTHORITY; VALID AND BINDING EFFECT. Borrower has the
corporate power and authority to execute, deliver and perform under this
Agreement and the other Loan Documents to which it is a party, and to borrow
hereunder, and has taken all necessary and appropriate corporate action to
authorize the execution, delivery and performance of this Agreement and such
other Loan Documents. This Agreement and the other Loan Documents to which
Borrower is a party constitute the valid and legally binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.
4.3 NO CONFLICT. The execution, delivery and performance by
Borrower and its Subsidiaries of this Agreement and the other Loan Documents (a)
are not in contravention of any provisions of Applicable Law; (b) will not
violate or result in a default under any agreement or indenture to which the
Borrower or any of its Subsidiaries is a party or by which Borrower or any of
its Subsidiaries is bound, the violation or default of which might have a
Material Adverse Effect; (c) do not contravene the Certificate or Articles of
Incorporation or By-laws of Borrower or any of its Subsidiaries; and (d) will
not result in or require the creation or imposition of any Lien on any of the
property or assets of Borrower or any of its Subsidiaries other than Liens in
favor of the Agent created by this Agreement or the Loan Documents.
4.4 GOVERNMENTAL ACTION. The execution, delivery and performance of
this Agreement and the other Loan Documents do not require any registration
with, consent or approval of, or any notice to, or other action to, with or by
any Governmental Authority except (a) filings, consent or notices which have
been obtained and a copy thereof furnished to Agent; (b) filings necessary to
perfect the Liens granted by this Agreement and the Loan Documents;
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and (c) filings with the Securities Exchange Commission and the principal
exchanges on which the Borrower's Common Stock is traded.
4.5 NO MATERIAL LITIGATION. Except as set forth on SCHEDULE 5.5
hereof, there are no proceedings pending or threatened before any court or
administrative agency which, if decided adversely to the Borrower, might have a
Material Adverse Effect.
4.6 SOLVENCY. Giving effect to the execution and delivery of the
Loan Documents and the making of each Loan hereunder, Borrower is Solvent.
4.7 TAXES. Borrower and each of its Subsidiaries has filed all
federal, state, local and foreign tax returns, reports and estimates which are
required to be filed, and all taxes (including penalties and interest, if any)
shown on such returns, reports and estimates which are due and not yet
delinquent or which are otherwise due and payable have been fully paid. Such
tax returns properly and correctly reflect the income and taxes of Borrower and
its Subsidiaries for the periods covered thereby except for such amounts which
in the aggregate are immaterial except where such taxes are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established. Borrower's federal tax identification number is 13-2626435.
4.8 FINANCIAL INFORMATION.
(a) The audited consolidated annual financial statement of Borrower
and its Subsidiaries for the fiscal years ended December 31, 1992 and December
31, 1993, the restated audited consolidated annual financial statement of
Borrower and its Subsidiaries for the fiscal year ended December 31, 1994, and
the restated unaudited interim financial statements for the Borrower for the
fiscal quarter ended March 31, 1995, in each case consisting of a consolidated
balance sheet, consolidated statement of operations, consolidated statement of
changes in stockholders equity, consolidated statement of cash flows and
accompanying notes, certified, in the case of such annual financial statements,
by Price Waterhouse LLP, certified public accountants, are true and correct in
all material respects and contain no material misstatement or omission, and
fairly present the consolidated financial position, assets and liabilities of
Borrower and its Subsidiaries as of the respective dates thereof, and the
consolidated results of operations of Borrower and its Subsidiaries for the
respective periods then ended and as of the dates thereof, there were no
liabilities of Borrower or any of its Subsidiaries, fixed or contingent, which
are material that are not reflected or disclosed in such financial statements.
(b) Since the date of the restated audited financial statements for
the fiscal year ended December 31, 1994 referred to in subsection (a), there has
been no material adverse change in the assets, liabilities, financial position
or results of operations of Borrower or any of its Subsidiaries, and neither
Borrower nor any of its Subsidiaries have (i) incurred any obligation or
liability, fixed or contingent, which could have a Material Adverse Effect; (ii)
incurred any Indebtedness other than (A) the Bridge Loan; (B) the Obligations;
and (C) the Senior Notes; or (iii) guaranteed the obligations of any other
Person.
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4.9 TITLE TO ASSETS. Borrower has good and marketable title to and
ownership of the Collateral, including, but not limited to, the Pay Telephones
and the Telephone Placement Agreements, and Borrower and its Subsidiaries have
good and marketable title to and ownership of all of their other assets, free
and clear of all liens, claims, security interests and encumbrances except for
Permitted Liens.
4.10 VIOLATIONS OF LAW. Neither Borrower nor any of its Subsidiaries
are in violation of any applicable statute, regulation or ordinance of any
Governmental Authority in any respect which could have a Material Adverse
Effect.
4.11 ERISA. Except as disclosed on SCHEDULE 5.11 attached hereto and
incorporated herein by reference:
(a) Identification of Plans. Neither Borrower nor any ERISA
Affiliate maintains or contributes to, or has maintained or contributed to, any
Plan or Multiemployer Plan that is subject to regulation by Title IV of ERISA;
(b) Compliance. Each Plan has at all times been maintained, by its
terms and in operation, in accordance with all Applicable Laws, except for such
noncompliance (when taken as a whole) that will not have a Material Adverse
Effect;
(c) Liabilities. Neither Borrower nor any ERISA Affiliate is
currently or to the best knowledge of Borrower or any ERISA Affiliate will
become subject to any liability (including withdrawal liability), tax or penalty
whatsoever to any person whomsoever with respect to any Plan including, but not
limited to, any tax, penalty or liability arising under Title I or Title IV of
ERISA or Chapter 43 of the Code, except such liabilities (when taken as a whole)
as will not have a Material Adverse Effect; and
(d) Funding. The Borrower and each ERISA Affiliate has made full
and timely payment of (i) all amounts required to be contributed under the
terms of each Plan and Applicable Law and (ii) all material amounts required to
be paid as expenses of each Plan. No Plan has any "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA).
(e) Insolvency; Reorganization. No Plan is insolvent (within the
meaning of Section 4245 of ERISA) or in reorganization (within the meaning of
Section 4241 of ERISA).
4.12 ENVIRONMENTAL LAWS.
(a) Except as set forth on SCHEDULE 5.12 hereto, Borrower and its
Subsidiaries have obtained all permits, licenses and other authorizations, if
any, which are required under Environmental Laws and Borrower and its
Subsidiaries are in compliance in all material respects with all terms and
conditions of the required permits, licenses and authorizations, and are also in
compliance in all material respects with all other limitations, restrictions,
conditions, standards,
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prohibitions, requirements, obligations, notifications, schedules and timetables
contained in the Environmental Laws;
(b) Neither Borrower nor any of its Subsidiaries are aware of, and
has not received notice of, the disposal or release or presence of Hazardous
Substances on any of its properties, or of any past, present or future events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent compliance or continued compliance on the
part of Borrower or such Subsidiary in any material respect with Environmental
Laws, or may give rise to any material common law or legal liability, or
otherwise form the basis of any material claim, action, demand, suit, lien,
proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any Hazardous Substance;
(c) All assets of Borrower and its Subsidiaries are free from
Hazardous Substances except as disclosed in SCHEDULE 5.12 hereto and the use and
disposal of any and all such Hazardous Substances is effected by Borrower and
its Subsidiaries in compliance with all applicable Environmental Laws; and
(d) There is not pending or, to the best of Borrower's knowledge,
threatened against Borrower or any of its Subsidiaries, and Borrower knows of no
facts or circumstances that might give rise to, any civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, environmental lien, investigation, or proceeding relating
in any way to Environmental Laws.
4.13 MARGIN STOCK. Neither Borrower nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for buying or carrying Margin Stock. Not more than 25% of the
aggregate fair market value of the assets of Borrower and its Subsidiaries
consists of Margin Stock.
4.14 NO DEFAULT. Except for matters in dispute and described on
SCHEDULE 5.14 hereof, neither Borrower nor any of its Subsidiaries are in
default with respect to (a) any note, indenture, loan agreement, mortgage,
lease, deed or other similar agreement relating to Indebtedness to which
Borrower or such Subsidiaries are a party or by which Borrower or such
Subsidiaries are bound or (b) any other instrument, document or agreement to
which Borrower or such Subsidiaries are a party or by which Borrower or such
Subsidiaries or any of their respective properties are bound, the default of
which would have a Material Adverse Effect.
4.15 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. Borrower's and
each of its Subsidiaries' principal place of business, chief executive office
and office where it keeps all of its books and records is located at 2300 N.W.
89th Place, Miami, Florida 33172, and except as set forth on SCHEDULE 5.15
attached hereto neither Borrower nor any of its Subsidiaries nor any of their
respective predecessors has had any other chief executive office or principal
place of business outside
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Dade County, Florida during the preceding five (5) years. SCHEDULE 5.15 attached
hereto and incorporated herein by reference sets forth a true, correct and
complete list of all places of business and all locations at which Collateral is
located.
4.16 CORPORATE AND TRADE OR FICTITIOUS NAMES. During the five (5)
years immediately preceding the date of this Agreement, neither Borrower nor any
of its Subsidiaries nor any of their respective predecessors has been known as
or used any corporate, trade or fictitious name other than its current corporate
name and except as disclosed on SCHEDULE 5.16 hereto.
4.17 ACCOUNTS. With regard to each Account now or hereafter shown on
any schedule or aging of Accounts provided to the Agent hereunder:
(a) Such Account arises or will arise under a contract between
Borrower and the Account Debtor in each case providing for the bona fide sale of
goods or performance of services by Borrower in the ordinary course of its
business for or on behalf of the Account Debtor except to the extent otherwise
expressly indicated on such schedule or aging of accounts;
(b) Borrower has made delivery of the goods or has rendered the
services ordered to which such Account relates and the Account Debtor has
accepted such goods and/or services;
(c) The amount of the face value of such Accounts is actually and
absolutely owing to Borrower, is not contingent for any reason and, except as
otherwise expressly noted on such schedule or aging of accounts, there are no
setoffs, counterclaims, disputes or deductions existing or asserted with respect
thereto (except to the extent, if any, that such Account Debtor(s) may be
entitled to normal trade discounts, adjustments, returns and allowances).
(d) Borrower will have preserved and will continue to preserve any
Liens and any rights to Liens available by virtue of the sales giving rise to
such Account;
(e) Such Account is free and clear of all Liens other than the Lien
in favor of the Agent; and
(f) Borrower has full right, power and authority to assign such
Account.
4.18 ADEQUACY OF INTANGIBLE ASSETS. Borrower and its Subsidiaries
possess all intellectual property licenses, patents, patent applications,
copyrights, trademarks, trademark applications, and trade names and all
governmental registrations and licenses reasonably necessary to continue to
conduct their respective businesses as heretofore conducted by them and all such
intellectual property licenses, patents, patent applications, copyrights,
trademarks, trademark applications, trade names, licenses and registrations
which have been registered with any Governmental Authority are listed on
SCHEDULE 5.18 hereto.
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4.19 EQUIPMENT. The Equipment, including all Pay Telephones and
Telephone Equipment, is and shall remain in good condition, normal wear and tear
excepted, meets all standards imposed by any Governmental Authority having
regulatory authority over such material and its use and is currently usable in
the normal course of Borrower's business.
4.20 INVENTORY. The Inventory is and shall remain in good condition,
meets all material standards imposed by any Governmental Authority having
regulatory authority over such goods, their use and/or sale, is either currently
usable or currently saleable in the normal course of Borrower's business and is
not subject to any output contract or similar agreement between Borrower and any
other Person.
4.21 INVESTMENTS. Except as set forth in SCHEDULE 5.21 hereof,
Borrower has no Subsidiaries or other Investments, directly or indirectly, in
any Person.
4.22 INDEBTEDNESS; INTEREST HEDGE AGREEMENT.
(a) SCHEDULE 5.22 hereto is a complete and correct list, as of the
date of this Agreement, of each credit agreement, loan agreement, indenture,
note purchase agreement, guarantee or other arrangement providing for or
otherwise relating to any Indebtedness to, or guarantee by, Borrower or any of
its Subsidiaries and the aggregate principal or face amount outstanding as of
the date hereof or which may become outstanding under each such arrangement is
correctly described in said Schedule.
(b) Borrower has entered into an Interest Hedge Agreement, pursuant
to which Borrower has obtained a cap on the London Interbank Offered Rate of
6-1/2% for three years in a notional amount of $40,000,000 of Indebtedness.
4.23 EXISTING LIENS. SCHEDULE 5.23 hereto is a complete and correct
list, as of the date of this Agreement, of each Lien existing on the date hereof
securing Indebtedness and the aggregate principal amount of Indebtedness secured
by each such Lien is correctly described in such SCHEDULE 5.23.
4.24 SECURITY INTEREST. This Agreement creates a valid security
interest in the Collateral securing payment of the Obligations, subject only to
Permitted Liens, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been taken except in respect of
states or counties within a state in which the only Collateral located therein
consists of either (a) fewer than twenty (20) installed Pay Telephones or (b)
other Inventory having a value not in excess of Fifty Thousand Dollars
($50,000), as to any one location, or Two Hundred Fifty Thousand Dollars
($250,000) as to all such locations, and, except for the Collateral located in
such states, Agent has a valid and perfected first priority security interest in
the Collateral, subject only to Permitted Liens.
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4.25 TRANSMITTING UTILITY. Borrower is a "transmitting utility," as
such term is defined by Section 9-105 of the UCC.
4.26 REGULATORY MATTERS. Borrower is not subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce
Act or any other federal or state statute or regulation which materially limits
its ability to incur Indebtedness or its ability to consummate the transactions
contemplated hereby.
4.27 DISCLOSURE. Neither this Agreement, the Offering Memorandum
relating to the Senior Notes, nor any other instrument, document, agreement,
financial statement or certificate furnished to the Agent, any of the Lenders or
any holder of any of the Senior Notes contain an untrue statement of a material
fact or omits to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or omits to state any fact which, insofar as Borrower can now
foresee, may in the future have a Material Adverse Effect.
4.28 CAPITALIZATION. Borrower has authorized capital stock
consisting of 25,000,000 shares of Common Stock, par value $.01 per share, of
which as of July 17, 1995, 16,073,176 shares were issued and outstanding, and
5,000,000 shares of Preferred Stock, $.01 par value, 100,000 shares of which are
designated as Series A Preferred Stock, none of which are issued and
outstanding, 600,000 shares of which are designated as Series B Preferred Stock,
none of which are issued and outstanding, and 160,000 shares of Series C
Preferred Stock, $.01 par value, of which as of the date hereof, at least
150,000 shares of which were issued and outstanding.
5. AFFIRMATIVE COVENANTS
Borrower covenants to the Agent and the Lenders that from and after the
Effective Date, and until the Termination Date and the payment and satisfaction
in full of the Obligations, unless the Majority Lenders otherwise consent in
writing:
5.1 RECORDS RESPECTING COLLATERAL; LOCKBOX OR BLOCKED ACCOUNT
ARRANGEMENT. Borrower shall, and shall cause each of its Subsidiaries to, keep
all records with respect to the Collateral at the office set forth in Section
5.15 hereof and not remove such records from such address and, upon request of
the Majority Lenders following the occurrence of an Event of Default, enter into
such lockbox or blocked account arrangement with respect to collection of the
Accounts and execute and deliver such documents in connection therewith as the
Majority Lenders may reasonably require.
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5.2 REPORTING REQUIREMENTS. Borrower shall, and shall cause each of
its Subsidiaries to:
(a) Furnish or cause to be furnished to the Agent and each Lender:
(i) (A) As soon as practicable, and in any event within forty-
five (45) days after the end of each fiscal quarter, a consolidated interim
unaudited financial statement of Borrower and its Subsidiaries, including a
balance sheet, income statement and statement of cash flow, for the quarter
and year-to-date period then ended, prepared in accordance with GAAP,
subject to normal year-end adjustments, consistent with the past practice
of Borrower and its Subsidiaries, and certified as to truth and accuracy
thereof by the chief financial officer of Borrower;
(B) As soon as practicable, and in any event within forty-five
(45) days after the end of each month, a consolidated interim unaudited
financial statement of Borrower and its Subsidiaries, including a balance
sheet, income statement and statement of cash flow, for the month then
ended, prepared in accordance with GAAP, subject to normal year-end
adjustments, consistent with the past practice of Borrower and its
Subsidiaries, and certified as to truth and accuracy thereof by the chief
financial officer of Borrower;
(ii) As soon as available, and in any event within ninety (90)
days after the end of each fiscal year, a consolidated audited annual
financial statement of Borrower, including a balance sheet, income
statement and statement of cash flow for the fiscal year then ended,
prepared in accordance with GAAP, in comparative form and accompanied by
the unqualified opinion of a nationally recognized firm of independent
certified public accountants regularly retained by Borrower and its
Subsidiaries and acceptable to the Majority Lenders;
(iii) So long as PTCC is a Subsidiary of Borrower, as soon as
practicable, and in any event within forty-five (45) days after the end of
each fiscal quarter, a consolidated interim unaudited financial statement
of PTCC and it Subsidiaries, including a balance sheet, income statement
and statement of cash flow, for the quarter and year-to-date period then
ended, prepared in accordance with GAAP, subject to normal year-end
adjustments, consistent with the past practice of PTCC and its
Subsidiaries, and certified as to truth and accuracy thereof by the chief
financial officer of PTCC;
(iv) Together with the annual financial statements referred to
in clause (ii) above, a statement from such independent certified public
accountants that, in making their examination of such financial statements,
they obtained no knowledge of any Default or Event of Default or, in lieu
thereof, a statement specifying the nature and period of existence of any
such Default or Event of Default disclosed by their examination;
(v) Together with the annual or interim financial statements
referred to in clauses (i) and (ii) above, a compliance certificate of the
chief executive officer or chief
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financial officer of Borrower in substantially the form of EXHIBIT C hereto
(a "Compliance Certificate") certifying that, to the best of his or her
knowledge, no Default or Event of Default has occurred and is continuing
or, if a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof and the action which is proposed to be
taken with respect thereto, and that the calculations setting forth
Borrower's compliance with the financial covenants set forth in Article 8
hereof are true and accurate;
(vi) Promptly after the sending or filing thereof, as the case
may be, copies of any definitive proxy statements, financial statements or
reports which Borrower or its Subsidiaries send to their shareholders and
copies of any regular periodic and special reports or registration
statements which Borrower or its Subsidiaries file with the Securities and
Exchange Commission (or any Governmental Authority substituted therefor),
including, but not limited to, all Form 10-K and Form 10-Q reports, or any
report or registration statement which Borrower or its Subsidiaries file
with any national securities exchange;
(vii) At least fifteen (15) Business Days prior to the time any
consent by the Majority Lenders will be necessary, Borrower and its
Subsidiaries shall furnish to the Agent and the Lenders all pertinent
information regarding any proposed Acquisition by Borrower or its
Subsidiaries to which the consent of the Majority Lenders is required
hereunder which is reasonably necessary or appropriate to permit the
Lenders to evaluate such Acquisitions in a manner consistent with prudent
banking standards; and
(viii) Such other information respecting the condition or
operations, financial or otherwise, of Borrower and Borrower's Affiliates
and Subsidiaries as the Agent or the Lenders may from time to time
reasonably request.
(b) Furnish or cause to be furnished to the Agent and to any Lender
upon such Lender's request therefor:
(i) As soon as available, and in any event within thirty (30)
days after the end of each month, (A) a borrowing base certificate in
substantially the form of Exhibit D hereto (a "Borrowing Base
Certificate"), updating the Eligible Accounts and the Eligible Pay
Telephones as of the end of the immediately preceding month and signed by
an officer of Borrower reasonably satisfactory to the Agent; provided,
however, that Borrower may, at its option, in connection with an
Acquisition permitted by Section 7.5 hereof, deliver to Agent a Borrowing
Base Certificate, prepared on a pro forma basis, giving effect to such
Acquisition; and (B) an accounts receivable aging, showing the aggregate
dollar value of the Accounts, the age of each individual Account as of the
last day of the preceding month (segregating such items in such manner and
to such degree as the Majority Lenders may request), including the type and
dollar value of the Accounts and the location of the Account Debtor thereon
as of the end of the preceding month;
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(ii) At the time of the delivery of the annual or interim
financial statements referred to in clauses (a)(i) and (a)(ii) above, (A) a
true and complete listing of the locations at which Pay Telephones are
installed, and (B) a list of all Collateral locations (other than locations
representing only installed telephones) at which Collateral having a value
of less than Fifty Thousand Dollars ($50,000) is maintained; and
(iii) Such other information respecting the condition or
operations, financial or otherwise, of Borrower and Borrower's Affiliates
and Subsidiaries as the Agent or the Lenders may from time to time
reasonably request.
All statements of operations shall show separate results of both continuing
operations and discontinued operations.
5.3 TAX RETURNS. Borrower shall, and shall cause each of its
Subsidiaries to, file all federal, state and local tax returns and other reports
that Borrower and its Subsidiaries are required by law to file, maintain
adequate reserves for the payment of all taxes, assessments, governmental
charges and levies imposed upon them, their respective incomes, or their
respective profits, or upon any property belonging to them, and pay and
discharge all such taxes, assessments, governmental charges and levies prior to
the date on which penalties attach thereto, except where the same may be
contested in good faith by appropriate proceedings and for which adequate
reserves have been established.
5.4 COMPLIANCE WITH LAWS. Borrower shall, and shall cause each of
its Subsidiaries to, comply with all laws, statutes, rules, regulations and
ordinances of any Governmental Authority applicable to Borrower or its
Subsidiaries, a violation of which, in any respect, may have a Material Adverse
Effect, including, without limitation, any such laws, statutes, rules,
regulations or ordinances regarding the collection, payment, and deposit of
employees' income, unemployment, and Social Security taxes and with respect to
pension liabilities.
5.5 ENVIRONMENTAL LAWS. Borrower shall, and shall cause each of its
Subsidiaries to, comply with all Environmental Laws and, in the event of any
"release" or "threatened release" of any Hazardous Substance onto, at or under
the property of Borrower or any of its Subsidiaries which requires or may
require notification, response, assessment, investigation or remedial action
pursuant to any Environmental Law, after notifying the Agent and the Lenders and
all appropriate Governmental Authorities thereof, proceed with due diligence and
at Borrower's or its Subsidiary's cost and expense to respond appropriately, in
accordance with all requirements of the Environmental Laws.
5.6 ERISA. Borrower shall, and shall cause each of its Subsidiaries
to:
(a) At all times make prompt payment of contributions required to
meet the minimum funding standards set forth in Section 302 and 305 of ERISA
with respect to each Plan and
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otherwise comply with ERISA and all rules and regulations promulgated thereunder
in all material respects;
(b) Promptly after the occurrence thereof with respect to any Plan,
or any trust established thereunder, notify the Agent and the Lenders of (i) a
"reportable event" described in Section 4043 of ERISA and the regulations issued
from time to time thereunder (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under such regulations), or (ii) any
other event which could subject the Borrower or any ERISA Affiliate to any tax,
penalty or liability under Title I or Title IV of ERISA or Chapter 43 of the
Code which, in the aggregate, could have a Material Adverse Effect;
(c) At the same time and in the same manner as such notice must be
provided to the PBGC, or to a Plan participant, beneficiary or alternative
payee, give the Agent and the Lenders any notice required under Section 101(d),
302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) or ERISA or under Section
401(a)(29) or 412 of the Code with respect to any Plan;
(d) Furnish to the Agent or any Lender, promptly upon the request of
the Agent or such Lender, (i) true and complete copies of any and all documents,
government reports and determination or opinion letters for any Plan; and (ii) a
current statement of withdrawal liability, if any, for each Multiemployer Plan;
and
(e) Furnish to the Agent or any Lender, promptly upon the request of
the Agent or such Lender therefor, such additional information concerning any
Plan that relates to the ability of Borrower to make any payments hereunder, as
may be reasonably requested.
5.7 BOOKS AND RECORDS. Borrower shall, and shall cause each of its
Subsidiaries to, keep adequate records and books of account with respect to its
business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions.
5.8 NOTIFICATIONS TO THE AGENT AND THE LENDERS. Borrower shall
notify the Agent and the Lenders in writing within ten (10) Business Days: (a)
upon Borrower's learning thereof, of any litigation affecting Borrower or any of
its Subsidiaries claiming damages of One Million Dollars ($1,000,000) or more,
individually or when aggregated with other litigation pending against Borrower
or any of its Subsidiaries, whether or not covered by insurance, and of the
threat or institution of any suit or administrative proceeding against Borrower
or any of its Subsidiaries or Affiliates which may have a Material Adverse
Effect and establish such reasonable reserves with respect thereto as the
Majority Lenders may request; (b) upon learning thereof, of any Default or Event
of Default hereunder; (c) upon occurrence thereof, of any event or condition
which would have a Material Adverse Effect; (d) upon the occurrence thereof, of
any default by Borrower or any of its Subsidiaries under (i) any note,
indenture, loan agreement, mortgage, lease, deed or other similar agreement
relating to any Indebtedness of Borrower or its Subsidiaries having a principal
balance of $1,000,000 or more or (ii) any other instrument, document or
agreement to which Borrower or any of its Subsidiaries is a party or by which
Borrower or any of its Subsidiaries or any of their respective
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property is bound, the default of which might have a Material Adverse Effect;
and (e) when the aggregate number of telephones installed in a particular state,
or within a county in a particular state, first equals or exceeds twenty (20).
5.9 INSURANCE. Borrower shall, and shall cause each of its
Subsidiaries to:
(a) Keep all of its property (other than Pay Telephones), whether
now owned or hereafter acquired, insured by insurance companies (i) reasonably
acceptable to the Majority Lenders or having an A or better rating according to
Best's Insurance Reports; Property-Casualty and (ii) licensed to do business in
the State of Florida and in all jurisdictions in which the Collateral is located
against loss or damage by fire or other risk usually insured against under
extended coverage endorsement and theft, burglary, and pilferage, together with
such other hazards as the Majority Lenders may from time to time reasonably
request, in amounts reasonably satisfactory to the Majority Lenders and naming
Agent as loss payee thereon pursuant to a lender's loss payee clause
satisfactory to the Majority Lenders;
(b) Maintain at all times liability insurance coverage against such
risks and in such amounts as are customarily maintained by others in similar
businesses, such insurance to be carried by insurance companies (i) reasonably
acceptable to the Majority Lenders or having an A or better rating according to
Best's Insurance Reports; Property-Casualty and (ii) licensed to do business in
the State of Florida and in all jurisdictions in which Borrower does business;
and
(c) Deliver certificates of insurance for such policy or policies to
Agent, containing endorsements, in form satisfactory to the Majority Lenders ,
providing that the insurance shall not be cancelable, except upon thirty (30)
days' prior written notice to Agent.
5.10 MAINTENANCE OF PROPERTY. Borrower shall, and shall cause each
of its Subsidiaries to, keep all General Intangibles in full force and effect
except for immaterial General Intangibles allowed to lapse by Borrower or any of
its Subsidiaries in the ordinary course of Borrower's or such Subsidiary's
business and any other General Intangible for which Borrower or any of its
Subsidiaries has obtained a substantially similar substitution and the lapse of
which, because of such substitution, does not have a Material Adverse Effect and
maintain all of its other property necessary or useful in the proper conduct of
its respective businesses in good working condition, ordinary wear and tear
excepted.
5.11 PRESERVATION OF CORPORATE EXISTENCE. Borrower shall, and shall
cause each of its Subsidiaries to, except as permitted by Section 7.6 hereof,
preserve and maintain its corporate existence, rights, franchises and privileges
in the jurisdiction of incorporation, and qualify and remain qualified as a
foreign corporation in each jurisdiction in which such qualification is
necessary or desirable in view of its business and operations or the ownership
of its properties.
5.12 EQUIPMENT. Borrower shall keep and maintain the Equipment in
good operating condition, reasonable wear and tear excepted, shall repair and
make all necessary
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replacements thereof so that the operating efficiency thereof shall at all times
be maintained and preserved and, shall not permit any item of Equipment to
become a fixture to real estate or accession to other personal property unless
Agent has a first priority lien on or security interest in such real estate or
other personal property. Borrower shall, immediately on demand therefor by
Agent, deliver to Agent any and all evidence of ownership of any of the
Equipment (including, without limitation, certificates of title and applications
for title, together with any necessary applications to have Agent's Lien noted
thereon, in the case of vehicles).
6. NEGATIVE COVENANTS
Borrower covenants with the Agent and the Lenders that from and after the
Effective Date and until the termination of this Agreement and the payment and
satisfaction in full of the Obligations, without the prior written consent of
the Majority Lenders:
6.1 LIENS. Borrower shall not, and shall not permit any of its
Subsidiaries to, create, assume, or suffer to exist any Lien of any kind in any
of the Collateral or its other assets except for Permitted Liens.
6.2 INDEBTEDNESS. Borrower shall not, and shall not permit any of
its Subsidiaries to, incur, assume, or suffer to exist any Indebtedness other
than (a) the Obligations; (b) Subordinated Debt; (c) Indebtedness of Borrower
evidenced by the Senior Notes; (d) Indebtedness of PTCC in a principal amount
not in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) at any
one time outstanding; (d) Indebtedness in a principal amount of not more than
$3,000,000 secured by a first mortgage on the real estate owned by Borrower
located at 2300 N.W. 89th Place, Miami, Dade County, Florida; (e) Capital Lease
Obligations of PTCC not to exceed Five Million Dollars ($5,000,000); and (e)
other Indebtedness of Borrower in a principal amount not in excess of Ten
Million Dollars ($10,000,000) at any one time outstanding provided that not more
than Five Million Dollars ($5,000,000) of Indebtedness permitted by this clause
(e) may be secured by any assets of Borrower or its Subsidiaries.
6.3 ASSET SALES. Borrower shall not, and shall not permit any of
its Subsidiaries to, sell, lease or otherwise dispose of any of the Collateral
or any interest therein or any of its other assets except for (a) the sale of
Inventory in the ordinary course of business; (b) the sale of assets no longer
used or useful in the business of Borrower or its Subsidiaries and having an
aggregate value of not more than Five Million Dollars ($5,000,000) during any
fiscal year.
6.4 GUARANTIES. Borrower shall not, and shall not permit any of its
Subsidiaries to, Guarantee the obligations of any other Person except by
endorsement of negotiable instruments for deposit or collection and similar
transactions in the ordinary course of business.
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6.5 INVESTMENTS. Borrower shall not, and shall not permit any of
its Subsidiaries to:
(a) Make any Investment in any Person except for (i) Acquisition of
any Person engaged in the Pay Telephone business for which the aggregate
purchase price payable other than in shares of Common Stock (whether payable in
cash, notes, property, assumption of liabilities or otherwise, with property
being valued at the fair market value thereof and notes and assumed liabilities
being valued at the face amount thereof) is not in excess of Three Million
Dollars ($3,000,000.00) for any single Acquisition or related series of
Acquisitions; provided, however, that at the time of such Acquisition, and
giving effect thereto, there does not exist a Default or Event of Default
hereunder; (ii) investments in PTCC not in excess of Five Million Dollars
($5,000,000); and (iii) investments in (A) certificates of deposit issued by
commercial banks located in the United States (including foreign banks with a
United States Federal Branch) having combined capital and surplus in excess of
Five Hundred Million Dollars ($500,000,000), and having a maturity date within
one year after the date such investment is made; (B) readily marketable
commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Moody's Investors Service, Inc.; and (C) direct
obligations of the United States of America or agencies thereof or obligations
fully guaranteed by the United States of America.
(b) Make any Investment outside the United States of America.
6.6 PROHIBITION OF FUNDAMENTAL CHANGES. Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction of
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution) or make any substantial change
in the basic type of business conducted by Borrower or any Subsidiary of
Borrower as of the date hereof except that:
(a) any Subsidiary of Borrower may be merged or consolidated with or
into: (i) Borrower if Borrower shall be the continuing or surviving
corporation or (ii) any other such Subsidiary; provided that if any such
transaction shall be between a Subsidiary and a wholly-owned Subsidiary,
the wholly-owned Subsidiary shall be the continuing or surviving
corporation;
(b) any Subsidiary of Borrower may be merged or consolidated with or
into another Person to consummate an Acquisition of such other Person
permitted by Section 7.5 hereof, provided that the surviving Person shall
be a Subsidiary of Borrower organized and existing under the laws of the
United States or any State thereof or the District of Columbia; and
(c) any wholly-owned Subsidiary of Borrower may be dissolved into
its parent corporation.
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6.7 ISSUANCE OF STOCK. Borrower shall not, and shall not permit any
of its Subsidiaries to, issue any shares of Capital Stock or other ownership
interests, except that (a) Borrower may issue Common Stock and warrants, options
or other rights to acquire Common Stock; (b) Borrower may issue Preferred Stock
pursuant to the Securities Purchase Agreement as in effect on the date hereof
and pursuant to the letter agreement dated as of July 3, 1995 between Borrower
and Appian Capital Partners, L.L.C., as in effect on the date hereof; (c) any
Subsidiary of Borrower may issue shares of Capital Stock to Borrower or any
other wholly-owned Subsidiary of Borrower; and (d) PTCC may issue shares of
common stock.
6.8 FISCAL YEAR. Borrower shall not, and shall not permit any of
its Subsidiaries to, change its fiscal year.
6.9 ERISA. Borrower shall not, and shall not permit any of its
ERISA Affiliates to, take, or fail to take any action with respect to a Plan
including, but not limited to, (a) establishing any Plan, (b) amending any Plan,
(c) terminating or withdrawing from any Plan, or (d) incurring an amount of
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA, where
such action or failure could have a Material Adverse Effect, result in a Lien on
the property of Borrower or any Subsidiary of Borrower, or require the Borrower
or any such Subsidiary to provide any security.
6.10 RELOCATIONS; USE OF NAME. Borrower shall not, and shall not
permit any of its Subsidiaries to, relocate its executive offices; open new
places of business or relocate existing places of business; maintain any
Collateral in excess of Fifty Thousand Dollars ($50,000), as to any individual
location, or in excess of Two Hundred Fifty Thousand Dollars ($250,000), as to
all such locations, or records with respect to Collateral at any locations other
than locations consisting solely of installed Pay Telephones and other than
those locations presently kept or maintained, as set forth on SCHEDULE 5.15
hereto; maintain any Inventory at any location other than those locations set
forth on SCHEDULE 5.15; or use any corporate name (other than its own) or any
fictitious name; in each case except upon thirty (30) days prior written notice
to Agent and after the delivery to Agent of financing statements, if required by
Agent, in form satisfactory to Agent.
6.11 AFFILIATE TRANSACTIONS. Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or the rendering
of any service or the payment of management or other service fees, with any
Affiliate except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less
favorable to Borrower than those which would prevail in a comparable arm's-
length transaction with a Person not an Affiliate.
6.12 DIVIDENDS. Borrower shall not, and shall not permit any of its
Subsidiaries to, declare or pay any dividends on, or make any distribution with
respect to, the shares of any class of its Capital Stock, redeem or retire any
of its Capital Stock, or take any action having an effect equivalent to the
foregoing in any fiscal year, except that (a) Subsidiaries may declare and pay
cash dividends to Borrower or to another Subsidiary of Borrower; (b) subsequent
to the third anniversary
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of the issuance of the Preferred Stock, so long as the Consolidated Fixed
Charge Coverage Ratio of the Borrower is at least 3.0:1.0, the payment of
scheduled cash dividend payments on the Preferred Stock in accordance with the
terms of the Preferred Stock as in effect on the date hereof; and (c) Borrower
may declare and pay other cash dividends on its Capital Stock provided that the
aggregate amount of such dividends, together with dividends paid pursuant to
clause (b) above, do not exceed, during any fiscal year, twenty-five percent
(25%) of the net income of Borrower, on a consolidated basis, as set forth in
the audited financial statements for the fiscal year of Borrower immediately
preceding the year during which such declaration and payment of dividends is
made; provided, however, that at the time of any dividend described in this
clause (b) or (c) there does not exist any Default or Event of Default or any
event or condition which, with the payment of such dividend, would constitute a
Default or Event of Default. For purposes of this Section 7.12, "Consolidated
Fixed Charge Coverage Ratio" shall have the meaning ascribed to such term in the
Senior Notes Indenture as in effect on the date hereof.
6.13 PREPAYMENT AND REDEMPTION. Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, purchase, redeem, retire or
otherwise acquire for value, set apart any money for a sinking, defeasance or
other analogous fund for, the purchase, redemption, retirement or other
acquisition of, or make any voluntary payment or prepayment of the principal of
or interest on, or any other amount owing in respect of the Senior Notes or the
Preferred Stock except for (a) regularly scheduled payments of interest on the
Senior Notes and mandatory purchases and redemptions of the Senior Notes; (b)
cash dividends on the Preferred Stock to the extent permitted by Section 7.12
hereof; (c) the redemption, retirement, cancellation or conversion of the
Preferred Stock to the extent the consideration therefor consists solely of the
issuance of shares of Common Stock; and (d) the redemption of Preferred Stock
and/or the repurchase of the Senior Notes upon a Change of Control, as such term
is defined in the Senior Notes Indenture as in effect on the date hereof;
provided, that all Obligations then due and owing have been fully paid and there
exists no Event of Default which has not been waived by the Lenders.
6.14 AMENDMENT OF CERTAIN DOCUMENTS. Borrower shall not, and shall
not permit any Subsidiary to, agree to any modification of any loan agreement,
indenture or other instruments, documents or agreements relating to the
Preferred Stock and to Funded Debt having an outstanding principal balance of
$1,000,000 or more.
7. FINANCIAL COVENANTS
Borrower covenants with the Agent and the Lenders that from and after the
Effective Date and until the termination of this Agreement and the payment and
satisfaction in full of the Obligations, unless the Majority Lenders otherwise
consent in writing:
7.1 NET WORTH. Borrower shall maintain at all times during the
applicable periods set forth below a Net Worth of not less than the sum of the
amount set forth opposite each such applicable period:
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Applicable Period Amount
Closing - 12/31/96 $47,000,000
01/01/97 - 12/31/97 $52,000,000
01/01/98 - 12/31/98 $57,000,000
At all times thereafter $67,000,000
Notwithstanding the foregoing, in the event that Borrower completes an offering
of its equity securities, the amount set forth above for each applicable period,
commencing with the applicable period in which such issuance occurs, shall be
increased by an amount equal to seventy-five percent (75%) of the amount by
which Borrower's shareholders' equity is increased as a result of the issuance
of equity securities as a part of such offering.
7.2 LEVERAGE RATIO. Borrower shall maintain at all times during the
applicable periods set forth below a Leverage Ratio of not greater than the
ratio set forth opposite each such applicable period:
Applicable Period Ratio
Closing - 06/30/97 3.25:1.00
At all times thereafter 3.00:1.00
7.3 LOANS/OPERATING CASH FLOW RATIO. Borrower shall maintain at
all times a Loans/Operating Cash Flow Ratio of not greater than 2.00:1.00.
7.4 OPERATING CASH FLOW. Borrower shall maintain an Operating Cash
Flow of not less than (a) $5,000,000 for the fiscal quarter ending June 30,
1995; (b) $10,000,000 for the two fiscal quarter period ending September 30,
1995; (c) $15,000,000 for the three fiscal quarter period ending December 31,
1995; and (d) for each four fiscal quarter period ending on the last date of
each fiscal quarter during the applicable period set forth below, the amount set
forth opposite each such applicable period:
Applicable Period Amount
01/01/96 - 12/31/96 $ 19,000,000
01/01/96 - 12/31/97 $ 23,000,000
At all times thereafter $ 26,000,000
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7.5 INTEREST COVERAGE RATIO. Borrower shall maintain as of the end
of each fiscal quarter of Borrower during the applicable periods set forth below
an Interest Coverage Ratio of not less than the ratio set forth opposite each
such applicable period:
Applicable Period Ratio
Closing - 06/30/96 1.50:1.00
07/01/96 - 12/31/96 1.75:1.00
01/01/97 - 06/30/97 2.25:1.00
Each Fiscal Quarter thereafter 2.50:1.00
8. EVENTS OF DEFAULT
The occurrence of any of the following events or conditions shall
constitute an Event of Default hereunder:
8.1 OBLIGATIONS. Borrower shall fail to make any payment of
principal of the Obligations when due or shall fail to make any payment of
interest on the Loans or of any other Obligations (other than payments of
principal) within two (2) Business Days of when due.
8.2 MISREPRESENTATIONS. Borrower or any Subsidiary of Borrower
shall make any representations or warranties in any of the Loan Documents or in
any certificate or statement furnished at any time hereunder or in connection
with any of the Loan Documents which proves to have been untrue or misleading in
any material respect when made or furnished and which continues to be untrue or
misleading in any material respect.
8.3 NEGATIVE AND FINANCIAL COVENANTS. Borrower shall default in the
observance or performance of any covenant or agreement contained in Section 6.8
or Articles 7 or 8 of this Agreement.
8.4 OTHER COVENANTS. Borrower or any of its Subsidiaries shall
default in the observance or performance of any other covenant or agreement
contained in this Agreement or under any of the other Loan Documents to which
Borrower or such Subsidiary is a party and such default continues for more than
thirty (30) days after notice thereof to Borrower by the Agent.
8.5 OTHER DEBTS. (a) Borrower or any of its Subsidiaries (other
than PTCC) shall fail to pay any principal of or premium or interest on any of
its Indebtedness, which is outstanding in a principal amount of at least
$1,000,000 in the aggregate, when the
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same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace or cure period, if any, specified in the agreement,
mortgage, indenture or instrument relating to such Indebtedness; or (b) any
other event shall occur or condition shall exist under any agreement, mortgage,
indenture or instrument relating to any such Indebtedness and shall continue
after the applicable grace or cure period, if any, specified in such agreement,
mortgage, indenture or instrument, if the effect of such event or condition is
to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness; or (c) any such Indebtedness shall be accelerated or otherwise
declared to be due and payable prior to the stated maturity thereof, or (d) any
such Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment), redeemed, purchased or defeased, or an offer to
repay, redeem, purchase or defease such Indebtedness shall be required to be
made, in each case prior to the stated maturity thereof.
8.6 CERTIFICATE OF AMENDMENT. The occurrence of any Event of
Noncompliance under the Certificate of Amendment of the Certificate of
Incorporation of the Borrower filed on July 18, 1995 with the New York
Department of State (the "Certificate of Amendment"); provided, however, an
Event of Noncompliance under Sections L.1(a) and (c) of the Certificate of
Amendment shall not constitute an Event of Default hereunder unless the holders
of the Preferred Stock seek remedies against Borrower other than the remedy set
forth in Section L.2(a) of the Certificate of Amendment, as in effect on the
Effective Date.
8.7 TAX LIEN. A notice of Lien is filed of record with respect to
all or any of Borrower's or any Subsidiary's assets by any Governmental
Authority, including, without limitation, the PBGC, which in the opinion of the
Agent, adversely affects the priority of the Liens granted to Agent hereunder or
under the other Loan Documents.
8.8 ERISA. The occurrence of any of the following events: (i) the
happening of a Reportable Event with respect to any Plan which Reportable Event
could result in a material liability for the Borrower or an ERISA Affiliate or
which otherwise could have a Material Adverse Effect; (ii) the disqualification
or involuntary termination of a Plan for any reason which could result in a
material liability for Borrower or an ERISA Affiliate or which otherwise could
have a Material Adverse Effect; (iii) the voluntary termination of any Plan
while such Plan has a funding deficiency (as determined under Section 412 of the
Code) which could result in a material liability for Borrower or an ERISA
Affiliate or which otherwise could have a Material Adverse Effect; (iv) the
appointment of a trustee by an appropriate United States district court to
administer any such Plan; (v) the institution of any proceedings by the PBGC to
terminate any such Plan or to appoint a trustee to administer any such Plan;
(vi) the failure of Borrower to notify the Agent and the Lenders promptly upon
receipt by Borrower or any of its Subsidiaries of any notice of the institution
of any proceeding or other actions which may result in the termination of any
such Plan.
8.9 VOLUNTARY BANKRUPTCY. The Borrower or any of its Subsidiaries
shall (a) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its Property, (b) make a general
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assignment for the benefit of its creditors, (c) commence a voluntary case under
the Bankruptcy Code (as now or hereafter in effect), (d) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts, (e) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code, or
(f) take any corporate action for the purpose of effecting any of the foregoing.
8.10 INVOLUNTARY BANKRUPTCY. A proceeding or case shall be
commenced, without the application or consent of the Borrower or any of its
Subsidiaries, in any court of competent jurisdiction, seeking (a) its
liquidation, reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (b) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower or such Subsidiary or of all
or any substantial part of its assets, or (c) similar relief in respect of the
Borrower or such Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for relief
against the Borrower or such Subsidiary shall be entered in an involuntary case
under the Bankruptcy Code.
8.11 SUSPENSION OF BUSINESS. The suspension of the transaction of
the usual business of Borrower or of the usual business of any of its
Subsidiaries having assets in excess of Five Hundred Thousand Dollars ($500,000)
(except as a result of a merger permitted by Section 7.6 hereof if such business
is continued by the surviving corporation) or the involuntary dissolution of
Borrower or the involuntary dissolution of any of its Subsidiaries having assets
in excess of Five Hundred Thousand Dollars ($500,000).
8.12 JUDGMENTS. Any judgment, decree or order for the payment of
money which, when aggregated with all other judgments, decrees or orders for the
payment of money pending against Borrower or any of its Subsidiaries (other than
PTCC), exceeds the sum of Five Hundred Thousand Dollars ($500,000), shall be
rendered against Borrower or any of its Subsidiaries (other than PTCC) and
remain unsatisfied and in effect for a period of sixty (60) consecutive days
without being vacated, discharged, satisfied or stayed or bonded pending appeal.
8.13 CHANGE OF CONTROL. There occurs a Change of Control.
8.14 RICO. Borrower, any of its Subsidiaries or any of their
respective directors, shareholders or executive officers shall be indicted under
the Racketeer Influenced and Corrupt Organizations Act of 1970 (18 U.S.C.
section 1961 et seq.) or the Majority Lenders otherwise believe in good faith
that all or any portion of the assets of Borrower or any of its Subsidiaries are
subject to forfeiture pursuant to 18 U.S.C. section 1963.
8.15 GUARANTY. At any time, for any reason other than the consent of
the Lenders given in accordance with Section 13.8, any guaranty of the
Obligations ceases to be in full
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force and effect in any material respect or guarantor thereunder seeks to
repudiate its obligations thereunder and the Liens intended to be created
thereby or in connection therewith are, or such guarantor seeks to render such
Liens, invalid and unperfected.
8.16 FAILURE OF SECURITY. At any time, for any reason other than the
consent of the Lenders given in accordance with Section 13.8, Liens in favor of
the Agent contemplated by the Loan Documents shall, at any time, for any reason,
be invalidated or otherwise cease to be in full force and effect, or such Liens
shall be subordinated or shall not have the priority contemplated by this
Agreement or the other Loan Documents.
9. REMEDIES
Upon the occurrence or existence of any Event of Default, and during the
continuation thereof, without prejudice to the rights of the Agent and the
Lenders to enforce their claims against Borrower for damages for failure by
Borrower to fulfill any of its obligations hereunder, the Agent and the Lenders
shall have the following rights and remedies, in addition to any other rights
and remedies available to the Agent and the Lenders at law, in equity or
otherwise:
9.1 DEFAULT RATE. At the election of the Agent, evidenced by
written notice to the Borrower, the outstanding principal balance of the
Obligations shall bear interest at the Default Rate until paid in full.
9.2 TERMINATION; ACCELERATION OF THE OBLIGATIONS. In the event of
the occurrence of (a) an Event of Default set forth in Sections 9.9 or 9.10
hereof, the Commitment shall automatically and immediately terminate and the
Obligations shall automatically and immediately become due and payable,
provided, however, that in the event of the occurrence of an Event of Default
under Section 9.10 hereof, if the proceeding giving rise to such Event of
Default is dismissed within sixty (60) days of the date it was commenced, then
the termination of the Commitment and the acceleration of the Obligations shall
be rescinded, retroactive to the date of the occurrence of such Event of
Default; and (b) any other Event of Default, the Majority Lenders, at their
option, may terminate the Commitment and declare all of the Obligations to be
immediately due and payable, whereupon all of the Obligations shall become
immediately due and payable, in either case without presentment, demand,
protest, notice of non-payment or any other notice required by law relative
thereto, all of which are hereby expressly waived by Borrower, anything
contained herein to the contrary notwithstanding.
9.3 SET-OFF. The right of each Lender to set-off, without notice to
Borrower, any and all deposits at any time credited by or due from such Lender
to Borrower, whether in a general or special, time or demand, final or
provisional account or any other account or represented by a certificate of
deposit and whether or not unmatured or contingent.
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9.4 RIGHTS AND REMEDIES OF A SECURED PARTY. All of the rights and
remedies of a secured party under the UCC or under other Applicable Law, all of
which rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other rights and
remedies contained in this Agreement, and in any of the other Loan Documents.
9.5 TAKE POSSESSION OF COLLATERAL. The right of the Agent to (a)
enter upon the premises of Borrower, or any other place or places where the
Collateral is located and kept, through self-help and without judicial process,
without first obtaining a final judgment or giving Borrower notice and
opportunity for a hearing on the validity of the Agent's or the Lenders' claim
and without any obligation to pay rent to Borrower, and remove the Collateral
therefrom to the premises of Agent or any agent of Agent, for such time as Agent
may desire, in order to effectively collect or liquidate the Collateral, and/or
(b) require Borrower to assemble the Collateral and make it available to Agent
at a place to be designated by Agent which is reasonably convenient to both
Borrower and Agent.
9.6 SALE OF COLLATERAL. The right of the Agent to sell or to
otherwise dispose of all or any of the Collateral, at public or private sale or
sales, with such notice as may be required by law, in lots or in bulk, for cash
or on credit, all as Agent, in its sole discretion, may deem advisable; such
sales may be adjourned from time to time with or without notice. Agent shall
have the right to conduct such sales on Borrower's premises or elsewhere and
shall have the right to use Borrower's premises without charge for such sales
for such time or times as Agent may see fit. Agent is hereby granted a license
or other right to use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any property of a similar nature, whether owned by
Borrower or with respect to which Borrower has rights under license, sublicense
or other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to the benefit of the Agent
and the Lenders. Agent shall have the right to sell, lease or otherwise dispose
of the Collateral, or any part thereof, for cash, credit or any combination
thereof, and the Agent may purchase all or any part of the Collateral at public
or, if permitted by law, private sale and, in lieu of actual payment of such
purchase price, may set off the amount of such price against the Obligations.
The proceeds realized from the sale of any Collateral shall be applied first to
the costs, expenses and reasonable attorneys' fees and expenses incurred by
Agent for collection and for acquisition, completion, protection, removal,
storage, sale and delivery of the Collateral; second to interest due upon any of
the Obligations; and third to the principal of the Obligations. If any
deficiency shall arise, Borrower shall remain liable to the Lenders therefor.
9.7 NOTICE. Any notice required to be given by Agent of a sale,
lease, other disposition of the Collateral or any other intended action by
Agent, given to Borrower in the manner set forth in Section 13.7 below, ten (10)
days prior to such proposed action, shall constitute commercially reasonable and
fair notice thereof to Borrower.
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9.8 APPOINTMENT OF AGENT AS BORROWER'S LAWFUL ATTORNEY. Borrower
irrevocably designates, makes, constitutes and appoints Agent (and all persons
designated by Agent) as Borrower's true and lawful attorney, and Agent or
Agent's agent, may, without notice to Borrower, and at such time or times
thereafter as Agent or said agent, in its sole discretion, may determine, in
Borrower's or Agent's name: (a) demand payment of the Accounts; (b) enforce
payment of the Accounts, by legal proceedings or otherwise; (c) exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(d) settle, adjust, compromise, extend or renew the Accounts; (e) settle, adjust
or compromise any legal proceedings brought to collect the Accounts; (f) notify
the postal authorities to change the address and delivery of mail addressed to
Borrower to such address as the Agent may designate provided that Agent agrees
to forward to Borrower all such mail not relating to the Collateral; (g) if
permitted by Applicable Law, sell or assign the Accounts upon such terms, for
such amounts and at such time or times as Agent deems advisable; (h) discharge
and release the Accounts; (i) take control, in any manner, of any item of
payment or proceeds on the Accounts; (j) prepare, file and sign Borrower's name
on a Proof of Claim in Bankruptcy or similar document against any Account
Debtor; (k) prepare, file and sign Borrower's name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Accounts; (l) do all acts and things necessary, in Agent's sole discretion, to
fulfill Borrower's obligations under this Agreement; (m) endorse the name of
Borrower upon any of the items of payment or proceeds on any Account, and
deposit the same to the account of the Lenders on account of the Obligations;
(n) endorse the name of Borrower upon any chattel paper, document, instrument,
invoice, freight bill, bill of lading or similar document or agreement relating
to the Accounts or Inventory; (o) use Borrower's stationery and sign the name of
Borrower to verifications of the Accounts and notices thereof to Account
Debtors; and (p) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the Accounts
and Inventory to which Borrower has access.
10. CONDITIONS PRECEDENT
10.1 CONDITIONS PRECEDENT TO INITIAL LOAN. Notwithstanding any other
provision of this Agreement, it is understood and agreed that this Agreement
shall not become effective and the Lenders shall have no obligation to make the
Initial Loan unless and until the following conditions have been met, to the
sole and complete satisfaction of the Lenders, the Agent and their respective
counsel:
(a) the Borrowing Base shall, in the case of the initial Loan, be
adequate, in the judgment of the Majority Lenders, to provide sufficient funds
for the purposes referred to in Section 2.4 hereof.
(b) Borrower shall have issued the Senior Notes, on terms and
conditions satisfactory to the Agent and the Majority Lenders, in the aggregate
principal amount of not less than $ 100,000,000 for aggregate proceeds (before
reasonable commissions and expenses) of not less than $ 100,000,000.
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(c) Borrower shall have prepaid the Loans (as such term is defined
in the Third Restated Agreement) such that the aggregate principal amount of the
Loans outstanding hereunder shall not be more than the lesser of (i) the
Commitment hereunder or (ii) the Borrowing Base hereunder.
(d) the Agent and the Lenders shall have received the following
documents, each duly executed and delivered to the Agent and the Lenders, and
each to be satisfactory in form and substance to Agent and its counsel:
(i) the Note;
(ii) a stock pledge agreement, in form and substance
satisfactory to the Agent, duly executed and delivered by Borrower,
pledging to the Agent for the benefit of the Lenders all of the issued and
outstanding shares of Capital Stock of each Subsidiary owned by Borrower,
subject to no other liens, security interests or encumbrances whatsoever,
together with the certificates evidencing such Capital Stock, blank stock
powers duly executed in blank by Borrower, and such other instruments,
documents or agreements with respect thereto as the Agent may require;
(iii) a certificate signed by the President and the Chief
Financial Officer of Borrower dated as of the Effective Date, stating that
the representations and warranties set forth in Article 5 hereof are true
and correct in all material respects on and as of such date with the same
effect as though made on and as of such date, stating that Borrower is on
such date in compliance with all the terms and conditions set forth in this
Agreement on its part to be observed and performed, and stating that on
such date, and after giving effect to the making of any initial Loan no
Default or Event of Default has occurred or is continuing;
(iv) a certificate executed by the Chief Financial Officer of
Borrower dated as of the Effective Date with respect to the Equipment
(including all Pay Telephones) owned by Borrower and the locations at which
such Equipment (including all Pay Telephones) is maintained;
(v) a certificate of the Secretary of Borrower dated as of
the Effective Date certifying (A) that attached thereto is a true and
correct copy of the By-laws of Borrower, as in effect on the date of such
certification, (B) that attached thereto is a true and complete copy of
Resolutions adopted by the Board of Directors of Borrower, authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents; and (C) as to the incumbency and genuineness of the signatures
of the officers of Borrower executing this Agreement or any of the other
Loan Documents;
(vi) a copy of the Articles of Incorporation of Borrower, and
all amendments thereto, including the Certificate of Amendment authorizing
the issuance of the
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Preferred Stock, certified by the Secretary of State of the State of New
York dated as of a date close to the Effective Date;
(vii) Good Standing Certificates, in each case dated as of a
date close to the Effective Date, issued in respect of Borrower by the
Secretaries of State of each state listed on SCHEDULE 11.1A hereto;
(viii) a Borrowing Base Certificate, duly completed and signed
by an officer of Borrower reasonably satisfactory to the Agent;
(ix) copies of all filing receipts or acknowledgements issued
by any Governmental Authority to evidence any filing or recordation
necessary to perfect the security interests of Agent in the Collateral and
evidence in a form acceptable to the Majority Lenders that such security
interests constitute valid and perfected first priority security interests;
(x) certified copies of Borrower's casualty and liability
insurance policies, together, in the case of such casualty policies, with
loss payable and mortgagee endorsements on Agent's standard form naming
Agent as loss payee;
(xi) the written opinion of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A., counsel to the Borrower, dated as of the
Effective Date, in the form attached hereto as EXHIBIT E hereto, as to the
transactions contemplated by this Agreement;
(xii) all landlord consents and such other similar waivers
necessary to assure Agent of a first priority position in the Borrower's
assets;
(xiii) a certificate of the President and the Chief Financial
Officer of Borrower to which are attached true and complete copies of the
Senior Notes Indenture, the Offering Memorandum relating to the Senior
Notes, and the Registration Rights Agreement, as defined in the Senior
Notes Indenture, and certifying that such documents are in full force and
effect in the forms attached and have not been amended, supplemented or
otherwise modified;
(xiv) a certificate of the President and the Chief Financial
Officer of Borrower to which are attached true and complete copies of the
Securities Purchase Agreement, the Registration Rights Agreement (as
defined in the Securities Purchase Agreement) and the form of Warrants, and
certifying that such documents are in full force and effect in the forms
attached and have not been amended, supplemented or otherwise modified; and
(xv) such other documents, instruments and agreements with
respect to the transactions contemplated by this Agreement, in each case in
such form and containing such additional terms and conditions as may be
reasonably satisfactory to the
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Majority Lenders, and containing, without limitation, representations and
warranties which are customary and usual in such documents.
10.2 ALL LOANS. The obligation of each Lender to make any Loan
hereunder (including the initial Loan) shall be subject to fulfillment of the
following conditions:
(a) No Injunction. No action, proceeding, investigation, regulation
or legislation shall have been instituted, threatened or proposed before any
Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of, or which is related to or arises out of this
Agreement or such Loan or which in the judgement of the Agent or the Majority
Lenders, would make it inadvisable to make such Loan;
(b) No Material Adverse Change. Other than events occurring prior
to the Effective Date which were disclosed to Lender in writing prior to the
Effective Date, there shall not have occurred any material adverse change in the
assets, liabilities, business, operations or condition (financial or otherwise)
of the Borrower, or any event, condition, or state of facts which would be
expected to have a Material Adverse Effect subsequent to the making of such Loan
to Borrower, including, without limitation, any material adverse change in the
financial condition of the Borrower from that reflected in the restated
consolidated audited financial statements of Borrower dated December 31, 1994,
previously furnished to the Lenders, as determined by the Lenders in their sole
discretion;
(c) Solvency. The Lenders shall be satisfied that, giving effect
to the making of such Loan, Borrower will be Solvent;
(d) No Default or Event of Default. There shall exist no Default or
Event of Default or any event or condition which, with the making of such Loan,
would constitute a Default or Event of Default;
(e) Representations and Warranties. All of the representations and
warranties made by Borrower hereunder shall be true and correct in all material
respects as of the date of such Loan with the same force and effect as if made
on and as of such date except for such changes in such representations and
warranties which do not constitute a Default or Event of Default hereunder,
which do not, individually or in the aggregate, have a Material Adverse Effect
and which have, to the extent required, been disclosed to the Agent and the
Lenders pursuant to Section 6.2 hereof or otherwise;
10.3 DELAY IN SATISFACTION OF CONDITIONS PRECEDENT. If the Lenders
make a Loan prior to the fulfillment of any condition precedent set forth in
this Article 11, the making of such Loan shall constitute only an extension of
time for the fulfillment of such condition and not a waiver thereof. The
failure of Borrower, for any reason, to satisfy or cause to be satisfied any
such condition precedent within thirty (30) days after the date thereof shall
constitute an Event of Default for all
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purposes under this Agreement and the Loan Documents, unless such failure is
waived in writing by the Majority Lenders.
11. THE AGENT
11.1 APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder with
such powers as are specifically delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 12.5 hereof and
the first sentence of Section 12.6 hereof shall include reference to its
Affiliates and its own and its Affiliates' officers, directors, employees and
agents): (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement, and shall not by reason of this Agreement be a
trustee for any Lender; (b) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement
or any of the other Loan Documents, or in any certificate or other instrument,
document or agreement referred to or provided for in, or received by any of them
under, this Agreement or any of the other Loan Documents, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Note or any of the other Loan Documents or for any failure by
Borrower or any other Person to perform any of its obligations hereunder or
thereunder; (c) subject to Section 12.3 hereof, shall not be required to
initiate or conduct any litigation or collection proceedings hereunder; and (d)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other agreement, document or instrument referred to or
provided for herein or in connection herewith, except for its own gross
negligence or willful misconduct. The Agent may employ agents and attorneys-in-
fact and shall not be responsible for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith. The Agent may deem
and treat the payee of any Note as the holder thereof for all purposes hereof
unless and until a written notice of the assignment or transfer complying with
the terms and conditions of Section 13.3 hereof.
11.2 RELIANCE BY AGENT. The Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telex, facsimile, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. As to any matters not
expressly provided for by this Agreement, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Majority Lenders (unless the instructions of or
consent of all of the Lenders is required hereunder), and such instructions and
any action taken or failure to act pursuant thereto shall be binding on all of
the Lenders; provided, however, the Agent shall not be required to take any
action which (a) the Agent reasonably believes will expose it to personal
liability unless the Agent receives an indemnification satisfactory to it from
the Lenders with respect to such action or (b) is contrary to this Agreement,
the Notes, the other Loan Documents or Applicable Law.
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11.3 DEFAULTS. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default (other than the non-
payment of principal of or interest on Loans or of Commitment Fees) unless the
Agent has received notice from a Lender or the Borrower specifying such Default
or Event of Default and stating that such notice is a "Notice of Default." In
the event that the Agent receives such a notice of the occurrence of a Default
or Event of Default, the Agent shall give prompt notice thereof to the Lenders
(and shall give each Lender prompt notice of each such non-payment). The Agent
shall (subject to Section 12.7 hereof) take such action with respect to such
Default or Event of Default as shall be directed by the Majority Lenders (unless
the directions of or consent of all of the Lenders is required hereunder),
provided that, unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interest of the Lenders.
11.4 RIGHTS AS A LENDER. With respect to its Commitment and the
Loans made by it, Creditanstalt (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not acting as
the Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. Creditanstalt
(and any successor acting as Agent) and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with Borrower
(and any of its Affiliates) as if it were not acting as the Agent, and
Creditanstalt and its Affiliates may accept fees and other consideration from
Borrower for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
11.5 INDEMNIFICATION. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Sections 13.5 or 13.13 hereof, but without
limiting the obligations of Borrower under said Sections 13.5 and 13.13), for
their Commitment Percentage of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other instruments, documents or agreements contemplated by or
referred to herein or the transactions contemplated hereby (including, without
limitation, the costs and expenses which Borrower are obligated to pay under
Section 13.5 hereof but excluding, unless an Event of Default has occurred and
is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or of any such other instruments, documents or agreements, provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the party to be indemnified.
The obligations of the Lenders under this Section 12.5 shall survive the
termination of this Agreement.
11.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its own decision
to enter into this Agreement and that it will, independently and
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without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement or any other instrument, document
or agreement referred to or provided for herein or to inspect the properties or
books of the Borrower. Except for notice, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition or business of the Borrower (or any of its Affiliates) which may come
into the possession of the Agent or any of its Affiliates.
11.7 FAILURE TO ACT. Except for action expressly required of the
Agent hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall receive further assurances to its
satisfaction from the Lenders of their indemnification obligations under Section
12.5 hereof against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
11.8 RESIGNATION OR REMOVAL OF AGENT; CO-AGENT.
(a) Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower, and the Agent may be removed at any time with cause by
the Majority Lenders. Upon any such resignation or removal, the Majority
Lenders shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment with thirty (30) days after the retiring Agent's
giving of notice of resignation or the Majority Lender's removal of the retiring
Agent, the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank which has a combined capital and surplus of at
least Three Hundred Million Dollars ($300,000,000). Upon the acceptance of any
appointment as Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 12 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent.
(b) In the event that Applicable Law imposes any restrictions on the
identity of an agent such as the Agent or requires the appointment of any co-
agent in connection therewith, the Agent may, in its discretion, for the purpose
of complying with such restrictions, appoint one or more co-agents hereunder.
Any such Co-Agent(s) shall have the same rights, powers, privileges and
obligations as the Agent and shall be subject to and entitled to the benefits of
all provisions of this Agreement and the Loan Documents relative to the Agent.
In addition to any rights of the Majority Lenders set forth in subsection (a)
above, any such Co-Agent may be removed at any time by the Agent.
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11.9 COLLATERAL MATTERS.
(a) Authority. Each Lender authorizes and directs the Agent to
enter into the Loan Documents relating to the Collateral for the benefit of the
Lenders. Each Lender agrees that any action taken by the Agent or the Majority
Lenders (or, where required by the express terms of this Agreement, a greater
proportion of the Lenders) in accordance with the provisions of this Agreement
or the other Loan Documents, and the exercise by the Agent or the Majority
Lenders (or, where so required, such greater proportion) of the powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders. Without limiting the generality of the foregoing, the Agent shall have
the sole and exclusive right and authority to (i) act as the disbursing and
collecting agent for the Lenders with respect to all payments and collections
arising in connection with this Agreement and the Loan Documents relating to the
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Borrower
or any of its Subsidiaries; (iii) act as collateral agent for the Lenders for
purposes of the perfection of all security interests and Liens created by such
agreements and all other purposes stated therein, provided, however, the Agent
hereby appoints, authorizes and directs the Lenders to act as collateral sub-
agents for the Agent and the Lenders for purposes of the perfection of all
security interests and Liens with respect to the Borrower's and its
Subsidiaries' respective deposit accounts maintained with, and cash and other
property held by, such Lender; (iv) manage, supervise and otherwise deal with
the Collateral; (v) take such action as is necessary or desirable to maintain
the perfection and priority of the security interest and Liens created or
purported to be created by the Loan Documents, and (vi) except as may be
otherwise specifically restricted by the terms of this Agreement or any other
Loan Document, exercise all remedies given to the Agent or the Lenders with
respect to the Collateral under the Loan Documents, Applicable Law or otherwise.
(b) Each Lender hereby directs, in accordance with the terms of this
Agreement, the Agent to release or to subordinate any Lien held by the Agent for
the benefit of the Lenders:
(i) against all of the Collateral, upon final and
indefeasible payment in full of the Obligations and termination of this
Agreement;
(ii) against any part of the Collateral sold or disposed of
by the Borrower or any of its Subsidiaries, if such sale or disposition is
permitted by Section 7.3 hereof or is otherwise consented to by the
Majority Lenders, as certified to the Agent by the Borrower in an Officer's
Certificate;
(iii) against any part of the Collateral constituting property
in which the Borrower owned no interest at the time the Lien was granted or
at any time thereafter; or
(iv) if approved, authorized or ratified in writing by the
Agent at the direction of Majority Lenders.
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Each Lender hereby directs the Agent to execute and deliver or file such
termination and partial release statements and do such other things as are
necessary to release Liens to be released pursuant to Section 12.9(b) hereof
promptly upon the effectiveness of any such release.
(c) Without in any manner limiting the Agent's authority to act
without any specific or further authorization or consent by Majority Lenders (as
set for in Section 12.9(b) hereof), each Lender agrees to confirm in writing,
upon request by the Borrower, the authority to release Collateral conferred upon
the Agent under clauses (i) through (iv) of Section 12.9(b) hereof. So long as
no Default or Event of Default is then continuing, upon receipt by the Agent of
any such written confirmation from the Majority Lenders of its authority to
release any particular items or types of Collateral, and in any event upon any
sale and transfer of Collateral which is expressly permitted pursuant to the
terms of this Agreement, and upon at lease five (5) Business Days prior written
request by the Borrower, the Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of Lenders herein or
pursuant hereto upon such Collateral; provided, that (i) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other that the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens upon (or obligations of the Borrower in respect of) all
interests retained by the Borrower, including without limitation the proceeds of
any sale, all of which shall continue to constitute part of the Collateral.
(d) The Agent shall have no obligation whatsoever to the Lenders or
to any other Person to assure that the Collateral exists or is owned by the
Borrower or is cared for, protected or insured or has been encumbered or that
the Liens granted to the Agent pursuant to this Agreement or any of the Loan
Documents have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Agent in this Section 12.9 or in any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
in any act, omission or event related thereto, the Agent may act in any manner
it may deem appropriate, in its sole discretion, given its own interest in the
Collateral as one of the Lenders and that the Agent shall have no duty or
liability whatsoever to any Lender.
11.10 BORROWER NOT A BENEFICIARY. The provisions of this Article 12
are solely for the benefit of the Agent and the Lenders and neither the Borrower
nor any Subsidiary of the Borrower shall have any right to rely on or enforce
any of the provisions hereof. In performing its functions and duties under this
Agreement, the Agent shall act solely as the agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligations or relationship
of agency, trustee or fiduciary with or for the Borrower or any Subsidiary of
the Borrower.
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12. MISCELLANEOUS
12.1 WAIVER. Each and every right and remedy granted to the Agent
and the Lenders under this Agreement or any Loan Document delivered hereunder or
in connection herewith or allowed it by law or in equity, shall be cumulative
and may be exercised from time to time. No failure on the part of the Agent or
any Lender to exercise, and no delay in exercising, any right or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise by the
Agent or any Lender of any right or remedy preclude any other or future exercise
thereof or the exercise of any other right or remedy. No waiver by the Agent or
the Lenders of any Default or Event of Default shall constitute a waiver of any
subsequent Default or Event of Default.
12.2 SURVIVAL. All representations, warranties and covenants made
herein shall survive the execution and delivery of all of the Loan Documents.
The terms and provisions of this Agreement shall continue in full force and
effect until the termination of this Agreement in accordance with Section 2.6
hereof; provided, further, that Borrower's obligations under Sections 2.8(b),
3.7, 3.8, 13.5 and 13.13 hereof shall survive the repayment of the Obligations
and the termination of this Agreement.
12.3 ASSIGNMENTS; SUCCESSORS AND ASSIGNS.
(a) This Agreement is a continuing obligation and binds, and the
benefits hereof shall inure to, Borrower, Agent and each Lender and their
respective successors and assigns; provided, that Borrower may not transfer or
assign any or all of its rights or obligations hereunder without the prior
written consent of all of the Lenders.
(b) Any Lender may, in accordance with Applicable Law, at any time
sell to one or more banks or other financial institutions ("Participants")
participating interests in any Loans owing to such Lender, any of the Notes held
by such Lender, any Commitment held by such Lender hereunder or any other
interests of such Lender hereunder. Borrower agrees that each Participant shall
be entitled to the benefits of Sections 2.8(b), 3.7, 3.8 and 13.13 hereof with
respect to its participation; provided that no Participant shall be entitled to
receive any greater amount pursuant to such Section than such Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such Lender to such Participant had no such transfer occurred.
(c) Each Lender may, with the Agent's consent and in accordance with
Applicable Law, at any time assign, pursuant to an assignment substantially in
the form of EXHIBIT F attached hereto and incorporated herein by reference,
without the Borrower's consent to one or more banks having unimpaired capital
and surplus of Two Hundred Fifty Million Dollars ($250,000,000) or more or may
assign with the Borrower's consent (which shall not be unreasonably withheld) to
any other financial institution (in either case, "Eligible Assignees") all or
any part of any Loans owing to such Lender, any of the Notes held by such
Lender, the portion of the Commitment held by such Lender or any other interest
of such Lender hereunder; provided, however, that (i)
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unless Borrower and the Agent consent otherwise, and except in the case of an
assignment to another Lender, any such partial assignment shall be in a minimum
principal amount of Five Million Dollars ($5,000,000) and (ii) each such
assignment by a Lender of its Loans, Note or Commitment shall be made in such
manner so that the same portion of its Loans, Note and Commitment is assigned to
the respective assignee. Borrower and the Lenders agree that to the extent of
any assignment the Assignee shall be deemed to have the same rights and benefits
with respect to Borrower under this Agreement and any of the Notes as it would
have had if it were a Lender hereunder on the Effective Date and the assigning
Lender shall be released from its Commitment hereunder, to the extent of such
assignment. Upon the making of an assignment, the assigning Lender shall pay to
the Agent an assignment fee of $2,500.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 13.3, any Lender may assign and pledge
all or any portion of its Loans and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(e) Borrower authorizes each Lender to disclose to any Participant
or Eligible Assignee ("Transferee") and any prospective Transferee any and all
financial information in such Lender's possession concerning Borrower which has
been delivered to such Lender by Borrower or the Agent pursuant to this
Agreement or which has been delivered to such Lender by Borrower in connection
with such Lender's credit evaluation of Borrower prior to entering into this
Agreement.
(f) Any Lender shall be entitled to have the Note held by it
subdivided in connection with a permitted assignment of all or any portion of
such Note and the respective Loans evidenced thereby pursuant to Section 13.3(c)
above. In the case of any such subdivision, the new Note (the "New Note")
issued in exchange for a Note (the "Old Note") previously issued hereunder (iii)
shall be substantially in the form of EXHIBIT A hereto, as appropriate, (iv)
shall be dated the date of such assignment, (v) shall be otherwise duly
completed and (vi) shall bear a legend, to the effect that such New Note is
issued in exchange for such Old Note and that the indebtedness represented by
such Old Note shall not have been extinguished by reason of such exchange.
Without limiting the obligations of Borrower under Section 13.5 hereof, the
Lenders shall use reasonable best efforts to ensure that any such assignment
does not result in the imposition of any intangibles, documentary stamp and
other taxes, if any, which may be payable in connection with the execution and
delivery of any such New Note.
(g) If, pursuant to this subsection, any interest in this Agreement
or any of the Notes is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any State thereof,
the Lender making such transfer shall cause such Transferee, concurrently with
the effectiveness of such transfer, (i) to represent to such Lender (for the
benefit of such Lender and Borrower) that under Applicable Law and treaties no
taxes will be required to be withheld by such Lender or Borrower with respect to
any payments to be made to such Transferee hereunder or in respect of the Loans,
(ii) to furnish to such Lender and Borrower either U.S. Internal
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Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such Transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all payments hereunder) and (iii) to agree (for the benefit
of such Lender and Borrower) to provide such Lender and Borrower a new Form 4224
or Form 1001 upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and regulations
and amendments duly executed and completed by such Transferee, and to comply
from time to time with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
(h) Anything in this Section 13.3 to the contrary notwithstanding, no
Lender may assign or participate any interest in any Loan held by it hereunder
to Borrower or any of its Affiliates or Subsidiaries without the prior written
consent of each Lender.
12.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement. Any signature page to this Agreement may be witnessed by a telecopy
or other facsimile of any original signature page and any signature page of any
counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.
12.5 EXPENSE REIMBURSEMENT. Borrower agrees to reimburse the Agent
for all of the Agent's costs and expenses incurred in connection with the
development, preparation, execution, delivery, modification or amendment of this
Agreement, the Notes and the other Loan Documents, including audit costs,
appraisal costs, the cost of searches, filings and filing fees, taxes and the
fees and disbursements of Agent's attorneys, Messrs. Troutman Sanders and any
counsel retained by them. Borrower further agrees to reimburse the Agent and
each Lender for all costs and expenses incurred by the Agent or such Lender
(including attorneys' fees and disbursements) to: (a) restructure, refinance or
"workout" the transactions contemplated by this Agreement; (b) commence, defend
or intervene in any court proceeding; (c) file a petition, complaint, answer,
motion or other pleading, or to take any other action in or with respect to any
suit or proceeding (bankruptcy or otherwise) relating to the Collateral or this
Agreement, the Notes or any of the other Loan Documents; (d) protect, collect,
lease, sell, take possession of, or liquidate any of the Collateral; (e) attempt
to enforce any security interest in any of the Collateral or to seek any advice
with respect to such enforcement; and (f) enforce any of the Agent's and the
Lenders' rights to collect any of the Obligations. Borrower also agrees to pay,
and to save harmless the Agent and the Lenders from any delay in paying, any
intangibles, documentary stamp and other taxes, if any, which may be payable in
connection with the execution and delivery of this Agreement, the Notes or any
of the other Loan Documents, or the recording of any thereof, or in any
modification hereof or thereof. Additionally, Borrower shall pay to the Agent
and each Lender on demand any and all fees, costs and expenses which the Agent
or such Lender pays to a bank or other similar institution arising out of or in
connection with (x) the forwarding to Borrower or any other Person on Borrower's
behalf, by the Agent or such Lender of proceeds of any Loan and (y) the
depositing for collection by of any check or item of payment received by or
delivered to the Agent or such Lender on account of the Obligations. All fees,
costs and expenses provided for in this Section 13.5 may, at the option of the
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Majority Lenders, be charged as Loans to Borrower's revolving loan account with
the Lenders provided for in Section 2.3 hereof. Borrower's obligations under
this Section shall survive the termination of this Agreement and the repayment
of the Obligations.
12.6 SEVERABILITY. If any provision of this Agreement or any of the
Loan Documents or the application thereof to any party thereto or circumstances
shall be invalid or unenforceable to any extent, the remainder of this Agreement
or such Loan Documents and the application of such provisions to any other party
thereto or circumstance shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
12.7 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been given or made when (a) delivered by hand (including, but not limited
to, by means of overnight courier service), (b) sent by telex or facsimile
transmitter (with receipt confirmed), provided that a copy is mailed by
certified mail, return receipt requested, or (c) except as otherwise provided
herein, deposited in the mail, registered or certified mail, postage prepaid,
addressed to such party at the "Address for Notices" specified below its name on
the signature pages hereto or to such other address as may be designated
hereafter in writing by the respective parties hereto.
12.8 ENTIRE AGREEMENT - AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior negotiations,
understandings and agreements between such parties in respect of such subject
matter. Neither this Agreement nor any provision hereof may be changed, waived,
discharged, modified or terminated except pursuant to a written instrument
signed by Borrower, the Agent and the Majority Lenders or by Borrower and the
Agent acting with the consent of the Majority Lenders; provided, however, that
no such amendment, waiver, discharge, modification or termination shall, except
pursuant to an instrument signed by Borrower, the Agent and all of the Lenders
or by Borrower and the Agent acting with the consent of all of the Lenders, (a)
increase the amount of, extend the term of, or extend the time or waive any
requirement for the termination of, the Commitment; (b) extend the date fixed
for the scheduled payment of principal of, or interest on, any Loan; (c) reduce
the amount of any scheduled payment of principal of, or the rate of interest on,
any Loan; (d) reduce any fee payable hereunder; (e) alter the terms of this
Section 13.8; (f) release any guarantor of the Obligations; (g) reduce the
Commitment of any Lender in any manner which would change such Lender's
Commitment Percentage; or (h) amend the definitions of the term "Majority
Lenders" or "Borrowing Base" set forth in Section 1.1 hereof; provided, further,
that any amendment, waiver, discharge modification or termination of any
provision of Section 12 hereof, or which increases the obligations of the Agent
hereunder and under the Loan Documents, shall require the written consent of the
Agent.
Anything in this Agreement to the contrary notwithstanding, if any
Lender shall fail to fulfill its obligations to make any Loan hereunder then,
for so long as such failure shall continue, such Lender shall (unless the
Majority Lenders, determined as if such Lender were not a "Lender" hereunder,
shall otherwise consent in writing) be deemed for all purposes relating to
amendments,
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modifications, waivers or consents under this Agreement or the Notes (including,
without limitation, under this Section 13.8) to have no Loans or Commitment,
shall not be treated as a "Lender" hereunder when performing the computation of
Majority Lenders, and shall have no rights under the preceding paragraph of this
Section 13.8; provided that any action taken by the other Lenders with respect
to the matters referred to in clauses (a) through (h) of the preceding paragraph
shall not be effective as against such Lender.
12.9 TIME OF THE ESSENCE. Time is of the essence in this Agreement
and the other Loan Documents.
12.10 INTERPRETATION. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other Governmental Authority by reason of such party having or being
deemed to have structured or dictated such provision.
12.11 LENDERS NOT A JOINT VENTURER. Neither this Agreement nor any
agreements, instruments, documents or transactions contemplated hereby
(including the Loan Documents) shall in any respect be interpreted, deemed or
construed as making the Agent or any Lender a partner or joint venturer with
Borrower or as creating any similar relationship or entity, and Borrower agrees
that it will not make any assertion, contention, claim or counterclaim to the
contrary in any action, suit or other legal proceeding involving the Agent or
the Lenders and Borrower.
12.12 CURE OF DEFAULTS BY LENDERS. If, hereafter, Borrower defaults
in the performance of any duty or obligation to the Agent and the Lenders
hereunder, any Lender may, at its option, but without obligation, cure such
default and any costs, fees and expenses incurred by such Lender in connection
therewith including, without limitation, for the purchase of insurance, the
payment of taxes and the removal or settlement of liens and claims, shall be
included in the Obligations and be secured by the Collateral.
12.13 INDEMNITY. In addition to any other indemnity provided for
herein, Borrower hereby indemnifies the Agent and each Lender from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever (including, without limitation, fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against the Agent or such
Lender in any litigation, proceeding or investigation instituted or conducted by
any Governmental Authority or any other Person (other than Borrower) with
respect to any aspect of, or any transaction contemplated by, or referred to in,
or any matter related to, this Agreement or the other Loan Documents (including,
but not limited to the issuance of the Preferred Stock and the Senior Notes),
whether or not Agent or such Lender is a party thereto, except to the extent
that any of the foregoing arises out of gross negligence or willful misconduct
of Agent or such Lender, as the case may be. Additionally, Borrower hereby
indemnifies and holds the Agent and each Lender harmless from all loss, cost
(including, without limitation, fees and disbursements of counsel), liability
and damage whatsoever incurred by Agent or such Lender by reason of any
violation of any applicable Environmental Laws for which Borrower or any of its
Subsidiaries have any liability or which occurs upon any real estate
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owned by or under the control of Borrower or any of its Subsidiaries, or by
reason of the imposition of any governmental lien for the recovery of
environmental cleanup costs expended by reason of such violation. Borrower's
obligations under this Section shall survive the termination of this Agreement
and the repayment of the Obligations.
12.14 ATTORNEY-IN-FACT. Borrower hereby designates, appoints and
empowers Agent irrevocably as its attorney-in-fact, at Borrower's cost and
expense, to do in the name of Borrower any and all actions which Agent may deem
necessary or advisable to carry out the terms hereof upon the failure, refusal
or inability of Borrower to do so, and Borrower hereby agrees to indemnify and
hold Agent harmless from any costs, damages, expenses or liabilities arising
against or incurred by the Agent in connection therewith except to the extent
that any of such costs, damages, expenses or liabilities arise out of Agent's
gross negligence or willful misconduct.
12.15 SOLE BENEFIT. The rights and benefits set forth in this
Agreement and in the other Loan Documents are for the sole and exclusive benefit
of the parties thereto and may be relied upon only by such parties.
12.16 FINANCING STATEMENTS.
(a) Borrower hereby agrees that all financing statements filed under
the Uniform Commercial Code in connection with the Original Loan Agreement, the
First Restated Agreement, the Second Restated Agreement, or the Third Restated
Agreement showing Borrower as the debtor and Creditanstalt, as agent, as the
secured party, shall be sufficient to perfect the Liens granted to the Agent
pursuant to this Agreement and the Loan Documents, to the extent such Liens may
be perfected by the filing of financing statements and Borrower hereby agrees
that it shall not make any assertion, contention, claim or counterclaim to the
contrary in any action, suit or other legal proceeding involving the Agent or
the Lenders and Borrower.
(b) Borrower acknowledges and agrees that it is Borrower's intent
that all financing statements filed hereunder shall remain in full force and
effect until this Agreement shall have been terminated in accordance with the
provisions hereof, even if, at any time or times prior to such termination, no
loans or Loans shall be outstanding hereunder. Accordingly, Borrower waives any
right which it may have under Section 9-404(1) of the UCC to demand the filing
of termination statements with respect to the Collateral, and agree that the
Agent shall not be required to send such termination statements to Borrower, or
to file them with any filing office, unless and until this Agreement shall have
been terminated in accordance with its terms and all Obligations paid in full in
immediately available funds. Upon such termination and payment in full, Agent
shall execute appropriate termination statements and deliver the same to
Borrower.
12.17 GOVERNING LAW; JURISDICTION. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK
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(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW). BORROWER HEREBY (A) SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS; (B) AGREES THAT SECTIONS 5-1401
AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL APPLY
TO THIS AGREEMENT; AND (C) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE AGENT OR THE LENDERS TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
12.18 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH LENDER EACH
HEREBY KNOWINGLY, INTELLIGENTLY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING BASED ON OR
ARISING OUT OF, UNDER, IN CONNECTION WITH, OR RELATING TO THIS AGREEMENT, ANY
OF THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED
HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF BORROWER, AGENT OR ANY LENDER. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDERS MAKING THE LOANS TO BORROWER.
_________________
Initials
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IN WITNESS WHEREOF, Borrower, the Agent and the Lenders has set its hand and
seal as of the day and year first above written.
"BORROWER"
PEOPLES TELEPHONE COMPANY, INC.
By: __________________________
Robert D. Rubin
President
Attest:_______________________
Francis J. Harkins
Secretary
[CORPORATE SEAL]
Address for Notices:
Peoples Telephone Company, Inc.
2300 N.W. 89th Place
Miami, Florida 33172
Attn: Jeffrey Hanft
Robert D. Rubin
Telecopy Number: (305) 593-0479
WITH A COPY TO:
Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Dale Greenberg, Esq.
Telecopy No.: (305) 579-0717
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(Signatures continued from previous page)
"AGENT"
CREDITANSTALT-BANKVEREIN
By:___________________________
Robert M. Biringer
Senior Vice President
By:___________________________
Joseph P. Longosz
Vice President
Address for Notices:
Creditanstalt-Bankverein
245 Park Avenue
New York, New York 10167
Attn: Dennis O'Dowd
Telecopy Number: (212) 851-1234
WITH COPIES TO:
Creditanstalt-Bankverein
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Joseph P. Longosz
Telecopy Number: (404) 390-1851
and
Troutman Sanders
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Telecopy Number: (404) 885-3900
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(Signatures continued on next page)
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(Signatures continued from previous page)
"LENDERS"
COMMITMENT
$40,000,000 CREDITANSTALT-BANKVEREIN
By:___________________________
Robert M. Biringer
Senior Vice President
By:___________________________
Joseph P. Longosz
Vice President
Address for Notices:
Creditanstalt-Bankverein
245 Park Avenue
New York, New York 10167
Attn: Dennis O'Dowd
Telecopy Number: (212) 851-1234
WITH COPIES TO:
Creditanstalt-Bankverein
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Telecopy Number: (404) 390-1851
and
Troutman Sanders
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Telecopy Number: (404) 885-3900
73
July 3, 1995
Creditanstalt American Corporation
Two Greenwich Plaza
Second Floor
Greenwich, Connecticut 06830
Re: Second Amended and Restated Warrant Agreement dated as of February
17, 1994 (the "Warrant Agreement") between Peoples Telephone
Company, Inc. (the "Company") and Creditanstalt American Corporation
("Creditanstalt")
Gentlemen:
Please refer to the above-referenced Warrant Agreement and to that certain
letter agreement dated May 11, 1995 (the "Letter Agreement") between the Company
and Creditanstalt relating to the repricing of certain of the Warrants.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to such terms in the Warrant Agreement.
Pursuant to the Letter Agreement, the Company agree to amend the Warrant
Agreement not later than June 30, 1995 to reduce the Exercise Price for the
Series D Warrants from $9.00 per Series D Warrant to $5.25 per Series D Warrant
in exchange for Creditanstalt agreeing to reduce the number of demand
registrations under Section 15(a) of the Warrant Agreement for which the Company
is obligated to bear all expenses (other than underwriting discounts and
commissions) from three to two. Under the terms of the Letter Agreement,
Creditanstalt agreed that, if the Company issued, on or before June 30, 1995,
new shares of its Common Stock in exchange for net cash proceeds of not less
than $20 million, the reduction of the Exercise Price would apply to only to
Series D Warrants exercisable for 150,000 warrants.
The Company has entered into a Securities Purchase Agreement, dated as of
the date hereof (the "Securities Purchase Agreement"), among the Company, UBS
Capital Corporation ("UBS") and Appian Capital Partners, L.L.C. ("Appian"),
pursuant to which the Company will issue shares of its Cumulative Convertible
Series C Preferred Stock for an aggregate purchase price of $15,000,000 (the
"UBS Investment"). This letter agreement is to evidence our mutual
understanding and agreement that, as a result of the UBS Investment, that (a)
Creditanstalt agrees that the reduction of the Exercise Price for the Series D
Warrants need only be applicable to that portion of the Series D Warrants
<PAGE>
entitling the holders thereof to purchase from the Company an aggregate of
200,000 shares of Common Stock or Preferred Stock (subject to adjustment as
provided in Section 12 of the Warrant Agreement); and (b) Creditanstalt and the
Company agree to enter into an amendment reflecting the revisions described in
the Letter Agreement, as modified hereby, not later than September 30, 1995.
If the foregoing accurately sets forth the terms of our agreement, please
so indicate by executing a copy of this letter in the space provided below.
Very truly yours,
PEOPLES TELEPHONE COMPANY, INC.
By: ____________________________
Robert D. Rubin
President
Accepted and agreed:
CREDITANSTALT AMERICAN CORPORATION
By: _______________________________
Robert M. Biringer
Senior Vice President
By: _______________________________
Joseph P. Longosz
Vice President
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated as of May 3, 1995 (as amended, supplemented or
modified from time to time, the "Exchange Agreement"), by and between PEOPLES
TELEPHONE COMPANY, INC., a New York Corporation ("Peoples"), and CREDITANSTALT
CORPORATE FINANCE, INC., a Delaware corporation ("Creditanstalt").
W I T N E S S E T H
WHEREAS, contemporaneously with the execution and delivery of this Exchange
Agreement, PTC Cellular, Inc., a Delaware corporation and a majority-owned
subsidiary of Peoples ("Cellular"), has executed and delivered its Promissory
Note dated the date hereof and in an aggregate principal amount of up to
$2,500,000 (the "Note") and that certain Security Agreement, dated as of the
date hereof, by Cellular in favor of Creditanstalt (the "Security Agreement");
and
WHEREAS, in order to induce Creditanstalt to structure and provide such
loan to Cellular, Peoples has agreed to execute and deliver this Exchange
Agreement.
NOW, THEREFORE, in consideration of the premises the parties hereto agree
as follows:
Section 1. Definitions. As used in this Exchange Agreement, unless
otherwise defined herein, terms defined in the Security Agreement (as in effect
on the date hereof, whether or not the Security Agreement is thereafter
terminated or expires according to its terms) shall have such defined meanings
when used herein except that the following terms shall have the following
meanings, unless the context otherwise requires:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, a Person shall be deemed to
control another Person if such first Person possesses directly or indirectly the
power to (i) vote 10% or more of the securities having ordinary voting power for
the selection of directors of such Person or (ii) direct, or cause the direction
of, the management and policies of the second Person, whether through the
ownership of voting securities, by contract or otherwise. In addition, as to
Creditanstalt, "Affiliate" shall include any partnership a majority of the
partners of which are officers, directors, employees or Affiliates of
Creditanstalt, and as to the Peoples, Affiliate shall not include Creditanstalt.
"Commission" shall mean the Securities and Exchange Commission or any
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
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"Common Stock" shall mean the Common Stock, par value $.01 per share, of
Peoples, and shall include any stock into which such Common Stock shall have
been changed or any stock resulting from any reclassification of such Common
Stock.
"Current Market Price Per Share" shall mean, with respect to any shares of
the Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite
Transactions Tape, the closing price for the trading day immediately prior
to such date as reported on the Composite Transactions Tape; or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a national
securities exchange, the last sale price regular way of the Common Stock,
for the trading day immediately prior to such date, on the principal
national securities exchange on which the Common Stock is traded or, in
case no such sale takes place on any such day, the average of the closing
bid and asked prices regular way, in either case on such national
securities exchange; or
(iii) if the Common Stock is not then reported on the Composite
Transaction Tape or listed or admitted to trading on a national securities
exchange, but is then traded in the over-the-counter market, the closing
sales price, or, if there is no closing sales price, the average of the
closing bid and asked prices, in the over-the-counter market, for the
trading day immediately prior to such date, as reported by the National
Association of Securities Dealers' Automated Quotation System, or, if not
so reported, as reported by the National Quotation Bureau, Incorporated or
any successor thereof, or, if not so reported the average of the closing
bid and asked prices as furnished by any member of the National Association
of Securities Dealers, Inc. selected from time to time by the Board of
Directors of Peoples for that purpose; or
(iv) if no such prices are then furnished, the fair market value of
a share of Common Stock as determined by agreement between Creditanstalt
and Peoples or, in the absence of such an agreement, by an independent
investment banking firm or an independent appraiser engaged by Peoples (in
either case the cost of which engagement will be borne by Peoples) and
reasonably acceptable to Creditanstalt.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute.
"Exchange Notice" shall have the meaning set forth in subsection 2(b).
"Exchange Period" shall mean the period beginning on December 1, 1995 and
continuing for so long as any principal or interest on the Note remains
outstanding and unexchanged.
"Exchange Price Per Share" shall have the meaning set forth in subsection
2(b).
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"Exchange Right" shall have the meaning set forth in subsection 2(a).
"Exchange Shares" shall mean the shares of Common Stock issued or issuable
by Peoples to or at the direction of Creditanstalt or its Affiliate pursuant to
this Exchange Agreement. Without limiting the generality of the foregoing, the
term "Exchange Shares" shall be deemed to include any Makewhole Shares.
"Indebtedness" shall mean any and all obligations of Cellular arising
under the Note and the Security Agreement.
"Makewhole Amount" shall have the meaning set forth in subsection 2(c).
"Makewhole Shares" shall mean any shares of Common Stock issued or issuable
by Peoples to or at the direction of Creditanstalt or its Affiliate pursuant to
Section 2(c) of this Exchange Agreement.
"Registration Period" shall mean the period commencing on December 1, 1995
and continuing until the later of (i) the date on which all outstanding
Indebtedness shall have been repaid or exchanged for Common Stock hereunder and
(ii) the date which is five (5) business days after the disposition of all
Exchange Shares issued hereunder by the Person(s) to whom such shares shall have
been issued by Peoples, provided that if any Makewhole Shares shall be issued by
Peoples such period shall be extended until the date which is five (5) business
days after the disposition of all such Makewhole Shares.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute.
"Shelf Registration" shall have the meaning set forth in subsection 7(a).
"Subsidiary" shall mean, as to any Person, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Exchange Agreement
shall refer to a Subsidiary or Subsidiaries of Peoples.
Section 2. Exchange Right.
(a) Grant of Right. Peoples hereby grants to Creditanstalt the right (the
"Exchange Right"), exercisable by notice given to Peoples at any time and from
time to time during the Exchange Period, to exchange all or any portion of the
then-outstanding Indebtedness for shares of Common Stock as further set forth
herein.
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(b) Procedures for Exchange, Etc.. In order to exercise the Exchange
Right Creditanstalt shall deliver a written notice to Peoples (the "Exchange
Notice") setting forth the aggregate amount of outstanding Indebtedness which it
desires to exchange for shares of Common Stock, the date on which it desires to
receive delivery of such shares (which shall be no earlier than the tenth
business day after the date of the Exchange Notice), and the name(s) of the
Person(s) (who may be a broker or other nominee) in whose name such shares shall
be registered. Peoples shall thereupon issue and cause to be delivered to or
upon the written order of Creditanstalt and in such name or names as
Creditanstalt shall have designated, on the date set forth in the Exchange
Notice or as promptly as practicable thereafter, a certificate or certificates
for the Exchange Shares required to be issued hereunder upon such exchange. The
number of Exchange Shares required to be so issued shall be the number which is
obtained (rounded up to the next whole number) when the amount of Indebtedness
specified in the Exchange Notice is divided by the Exchange Price Per Share (as
herein defined) of the Common Stock on the date on which the Exchange Notice is
given. The "Exchange Price Per Share" on any date shall be the Current Market
Price Per Share on such date less a discount of 2%, or such other discount as
Creditanstalt shall determine to be appropriate (in its sole discretion) in
order to reflect any estimated commissions, fees or other expenses that may be
incurred in connection with the subsequent disposition of the related Exchange
Shares. Unless Creditanstalt shall specify otherwise in its Exchange Notice,
the Indebtedness so exchanged shall be deemed to constitute Indebtedness
representing any accrued but unpaid interest first, followed by any outstanding
principal. Subject to any restriction on transfer of the Exchange Shares under
Section 8 of this Agreement, each Person to whom Exchange Shares are issued
shall sell such shares in such transactions as shall be determined by such
holder within five (5) trading days of receipt thereof unless, in the sole
discretion of such holder, a delay beyond the expiration of such five (5)
trading day period is appropriate in light of market conditions, in which event
such period shall be extended for so long as such holder shall deem to be
appropriate.
(c) Makewhole Agreement. If any initial holder of any Exchange Shares
shall sell any Exchange Shares for a sales price per share (net of applicable
commissions or similar fees and any expenses of the broker or selling agent that
such holder is required to pay or reimburse and any other reasonable
out-of-pocket fees or expenses of such holder incurred in connection with such
sale) that exceeds the Exchange Price Per Share of such Exchange Shares, then
such initial holder shall, as promptly as practicable but in any event within
two (2) business days of its receipt of such amount, apply the amount by which
such aggregate sales price exceeds the aggregate Exchange Price Per Share for
all such Exchange Shares to the repayment of Indebtedness under any portion of
the Note still held by such holder, and, if none, pay such amount to Peoples,
which payment shall be made in cash in immediately available funds. If any
initial holder of any Exchange Shares shall sell any Exchange Shares for a
sales price per share (determined as set forth in the immediately preceding
sentence) that is less than the Exchange Price Per Share of such Exchange
Shares (the aggregate amount of such difference being referred to herein as
the "Makewhole Amount"), then Peoples shall, as promptly as practicable but
in any event within two (2) business days of any request therefor, issue to or
at the direction of such initial holder such number of whole shares of Common
Stock as shall have an aggregate value, based on the Exchange Price Per Share
of the Common Stock on the date of issuance, equal to or greater than the
Makewhole Amount (the "Makewhole Shares"). Subject to any restriction on
transfer of the
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Makewhole Shares under Section 8 of this Agreement, each Person to whom
Makewhole Shares are issued shall sell such shares in such transactions as
shall be determined by such holder within five (5) trading days of receipt
thereof unless, in the sole discretion of such holder, a delay beyond the
expiration of such five (5) trading day period is appropriate in light of
market conditions, in which event such period shall be extended for so long as
such holder shall deem to be appropriate. Following the sale of any Makewhole
Shares, (i) the holder of such shares shall pay to Peoples in cash, as promptly
as practicable but in any event within two (2) business days of its receipt of
such amount, any amount by which the net sales proceeds received by such holder
upon such sale (net of applicable commissions or similar fees and any expenses
of the broker or selling agent that such holder is required to pay or
reimburse and any other reasonable out-of-pocket fees or expenses of such
holder incurred in connection with such sale) exceeds the Makewhole Amount, and
(ii) in the event any Makewhole Amount shall exceed the net sales proceeds
received by such holder upon such sale (determined as set forth in clause (i)
of this sentence), then Peoples shall, as promptly as practicable but in any
event within two (2) business days of any request therefor, issue to or at the
direction of such holder such number of whole shares of Common Stock as shall
have an aggregate value, based on the Exchange Price Per Share of the Common
Stock on the date of issuance, equal to or greater than the difference between
such Makewhole Amount and such net sales proceeds. Any shares of Common Stock
issued pursuant to the immediately preceding sentence shall thereafter be deemed
to be Makewhole Shares for all purposes under this Exchange Agreement, and the
aggregate value of such shares (based on the Exchange Price Per Share on the
date of issuance) shall be deemed to be the related Makewhole Amount for
purposes of further application of the provisions of the immediately preceding
sentence, which provisions shall apply to all Makewhole Shares issued or
issuable under this Exchange Agreement. The foregoing provisions of this
paragraph (c) are intended to obligate Peoples to continue to issue Makewhole
Shares until the aggregate net proceeds of the sale of all Exchange Shares and
Makewhole Shares issued pursuant to an Exchange Notice equals or exceeds the
amount of Indebtedness specified in such Exchange Notice.
(d) Reduction in Principal of Exchanged Note. Upon receipt of each
Exchange Notice, Peoples shall notify Cellular that it is cancelling the amount
of Indebtedness specified in the Exchange Notice as a contribution to capital of
Cellular by Peoples. Upon receipt of the Exchange Shares issuable to
Creditanstalt pursuant to an Exchange Notice, Creditanstalt shall make an
appropriate notation on the original Note to reflect the reduction in
Indebtedness evidenced thereby.
(e) Limitation on Number of Shares of Common Stock Exchanged.
Notwithstanding the foregoing provisions of this Section 2, Creditanstalt will
not be entitled to exchange Indebtedness for shares of Common Stock or receive
any Makewhole Shares if and to the extent such Common Stock, together with all
other shares of Common Stock then owned by Creditanstalt and its Affiliates and
any such shares which shall be attributable to them under the federal Bank
Holding Company Act of 1956, as amended, will exceed 4.99% of the then
outstanding Common Stock.
Section 3. Representations and Warranties. Peoples hereby represents
and warrants as follows:
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(a) Peoples is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of New York, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Exchange Agreement, to issue the shares of Common Stock required to be issued
hereunder and to perform its obligations under this Exchange Agreement, has the
corporate power and authority and legal right to own and lease its properties
and is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which it owns or leases real property or in which the conduct of
its business requires such qualification, except where failure to be so
qualified could not be reasonably expected to have a material adverse effect on
the business, properties, financial condition or results of operations of
Peoples and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by Peoples of this Exchange
Agreement and the issuance of the shares of Common Stock required to be issued
hereby have been duly authorized by all necessary corporate action and do not
and will not violate, or result in a breach of, or constitute a default under,
or require any consent under, or result in the creation of any lien, charge or
encumbrance upon the assets of Peoples pursuant to, any law, statute, ordinance,
rule, regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over Peoples or its
Subsidiaries or any contract, mortgage, loan agreement, note, lease or other
instrument binding upon Peoples or its Subsidiaries or by which their properties
are bound.
(c) This Exchange Agreement has been duly executed and delivered by
Peoples and constitutes a legal, valid, binding and enforceable obligation of
Peoples, except as enforceabiity may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the rights and remedies of
creditors and (ii) general principles of equity (whether applied at law or in
equity). When issued as contemplated hereby, the Exchange Shares will be duly
authorized, validly issued, fully paid and nonassessable shares of the Common
Stock, with no personal liability attaching to the ownership thereof.
(d) Peoples has authorized capital stock consisting of 25,000,000 shares
of Common Stock, par value $.01 per share, of which as of March 24, 1995
16,035,875 shares were issued and outstanding, and 5,000,000 shares of Preferred
Stock, $.01 par value, 100,000 shares of which are designated as Series A
Preferred Stock, none of which are issued and outstanding, and 600,000 shares of
which are designated as Series B Preferred Stock, none of which are issued and
outstanding.
Section 4. Payment of Taxes. Peoples will pay all taxes attributable
to the initial issuance of Exchange Shares upon exercise of the Exchange Right.
Subject to the next sentence of this Section 4, Peoples shall not be required to
pay any tax which may be payable in respect of any subsequent transfer of any
Exchange Shares, and Peoples shall not be required to issue or deliver such
certificate unless or until the person or persons requesting the issuance
thereof shall have paid to Peoples the amount of such tax or shall have
established to the satisfaction of Peoples that such tax has been paid. Peoples
will indemnify and hold harmless each seller of Exchange Shares from and against
any and all taxes which shall be paid or payable by such seller
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in respect of any income which arises out of (or is determined to arise out of)
the issuance or sale of any Exchange Shares.
Section 5. Reservation and Issuance of Exchange Shares.
(a) Peoples will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Common Stock hereunder, that number of shares of
Common Stock which is equal to 200% of the maximum number of shares of Common
Stock for which the amount of the Indebtedness then outstanding may be exchanged
at the then Current Market Price Per Share.
(b) Peoples will take any corporate action which may be necessary in order
that Peoples may validly and legally issue fully paid and nonassessable Exchange
Shares pursuant to the exercise of the Exchange Right.
(c) Peoples covenants that all Exchange Shares will, upon issuance in
accordance with the terms of this Exchange Agreement, be fully paid and
nonassessable and free from all taxes with respect to the issuance thereof and
from all liens, charges and security interests (other than any created by or on
behalf of any the Person(s) to whom they are issued hereunder).
Section 6. Obtaining of Governmental Approvals and Stock Exchange
Listings. Subject, in the case of any registration under the Securities Act, to
the limitations set forth in Section 7, Peoples will, at its own expense, from
time to time take all action which may be necessary to obtain and keep effective
any and all permits, consents and approvals of governmental agencies and
authorities which are or become requisite in connection with the exercise of the
Exchange Right and the issuance, sale, transfer and delivery of the Exchange
Shares and all action which may be necessary so that such Exchange Shares,
immediately upon their issuance upon the exercise of the Exchange Right, will be
listed on each securities exchange, if any, on which the Common Stock is then
listed.
Section 7. Registration.
(a) Peoples hereby undertakes and agrees that it will register, in
accordance with applicable law and this Section 7 and without any Demand, a
sufficient number of shares of Common Stock as to constitute all Exchange Shares
which may be issued hereunder (and not less than two times the number of shares
equal to $2,500,000 divided by the Current Market Price Per Share on the date
such registration statement is filed), which shares shall be registered for
resale by the holder(s) thereof from time to time in transactions on a national
securities exchange, in the over-the-counter market, in negotiated transactions
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices, by selling the shares to or
through broker-dealers, which broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the seller(s) or the
purchasers of the Exchange Shares for whom such broker-dealers may act as agents
or to whom they may sell as principals, or both (which registration shall be
referred to herein as the "Shelf Registration"). Peoples will comply
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with Rule 415 under the Securities Act to permit the continuous or delayed
offering of such Exchange Shares. Peoples undertakes and agrees to prepare
and file the registration statement relating to the Shelf Registration with the
Commission no later than September 1, 1995 and to cause such Shelf Registration
to become effective no later than December 1, 1995.
(b) If, at any time and from time to time during the Registration Period,
the Shelf Registration shall not then be in effect, then:
(i) Upon the written request of Creditanstalt or any Person to whom
Exchange Shares are issued pursuant to this Exchange Agreement requesting
that Peoples effect the registration under the Securities Act of any
Exchange Shares issued or issuable hereunder and specifying the intended
method or methods of disposition thereof (a "Demand"), Peoples will
thereupon use its reasonable best efforts promptly to effect the
registration under the Securities Act of such Exchange Shares for
disposition in accordance with the intended method or methods of
disposition stated in such request, provided that Peoples shall not be
obligated to effect any such registration prior to December 1, 1995. If
any registration requested pursuant to this subsection 7(b)(i) shall be an
underwritten public offering, only Exchange Shares which are to be included
in the underwriting may be included in such registration, and the sellers
thereof shall, after reasonable consultation with Peoples, have the right
to designate the managing underwriter(s) in any such underwritten public
offering with the consent of Peoples (which consent shall not be
unreasonably withheld). Peoples shall be obligated to effect as many
registrations as shall be requested pursuant to this subsection 7(b)(i)
(subject to the limitations set forth herein).
(ii) If Peoples proposes to register any of its securities under the
Securities Act (except pursuant to a registration statement filed on Form
S-8 or Form S-4 or such other form as shall be prescribed under the Act for
the same purposes), Peoples will at each such time give written notice
(which notice shall state the intended method of disposition thereof by the
prospective sellers) to all holders of any outstanding Exchange Shares of
its intention to do so and the proposed minimum offering price per share of
Common Stock. Upon the written request of any holder thereof given within
10 days after Peoples' giving of such notice, Peoples will use its
reasonable best efforts to effect the registration of any Exchange Shares
which it shall have been so requested to register by including the same in
such registration statement, all to the extent required to permit the sale
or other disposition thereof in accordance with the intended method of sale
or other disposition set forth in each such request. If the registration
of which Peoples gives notice pursuant to this subsection 7(b)(ii) is for
an underwritten public offering, only Exchange Shares which are to be
included in the underwriting may be included in such registration, and
Peoples shall have the right to designate the managing underwriter(s) in
any such underwritten public offering; provided that (i) Peoples shall use
its best efforts to cause the managing underwriter(s) to include the
Exchange Shares requested to be included in the registration in the
underwriting, and (ii) if the managing underwriter(s) advises the holders
of the Exchange Shares and all other Persons seeking to include securities
of Peoples held by them in such registration statement ("Other Security
Holders") in writing that the total
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amount of securities which they and Peoples and any such Other Security
Holders intend to include in such offering is sufficiently large to
materially and adversely affect the success of such offering, the amount of
securities to be offered for the accounts of the holders of the Exchange
Shares requesting to be so included and all Other Security Holders, other
than Peoples, shall be reduced pro rata (based upon the amount of
securities each such Person sought to include in the offering) to the
extent necessary to reduce the total amount of securities to be included in
the offering to the amount recommended by such managing underwriter(s).
Any registration statement filed pursuant to this subsection 7(b)(ii) may
be withdrawn at any time at the discretion of Peoples.
(iii) If a registration under this subsection 7(b) which includes
any Exchange Shares shall be in connection with an underwritten public
offering, Peoples hereby agrees not to effect any sale or distribution of
any Common Stock or of any other equity security of Peoples or of any
security convertible into or exchangeable or exercisable for any equity
security of Peoples (other than as part of such underwritten public
offering) within seven days before or 90 days after the effective date of
such registration statement and Peoples hereby also agrees to cause each
holder of any equity security, or of any security convertible into or
exchangeable or exercisable for any equity security, of Peoples purchased
from Peoples at any time other than in a public offering, so to agree.
(c) No Person shall have the right to have any securities other than
Exchange Shares included in any registration under subsection 7(a) or subsection
7(b), and Peoples hereby represents and warrants that no Person has any such
rights (other than such rights as shall have been waived by the holders(s)
thereof).
(d) As a condition to the inclusion of a holder's Exchange Shares in any
registration statements, each such holder of Exchange Shares requesting
registration thereof will furnish to Peoples such information with respect to
such holder as is required to be disclosed in the registration statement (and
the prospectus included therein) by the applicable rules, regulations and
guidelines of the Commission. Failure of a holder to furnish such information
or agreement shall not affect the obligation of Peoples under this Section 7 to
the remaining holders who furnish such information.
(e) In each instance in which Peoples is required under this Section 7 to
effect, or to use its reasonable best efforts to effect, the registration of any
Exchange Shares under the Securities Act, Peoples shall:
(i) as expeditiously as possible (or, in the case of the Shelf
Registration, as set forth in subsection 7(a)) and subject to any
applicable limitations set forth in subsection 7(b)(ii), prepare and file
with the Commission a registration statement on the appropriate form with
respect to such Exchange Shares and (A) in the case of the Shelf
Registration, cause such registration statement to become effective as set
forth in subsection 7(a) and (B) use its best efforts to cause any such
other registration statement to become effective as soon as practicable
after such filing;
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(ii) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements (including post-effective
amendments and supplements) to the registration statement covering such
Exchange Shares and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and usable for
resale for a period necessary to complete the distribution of such
securities and any Makewhole Shares which shall be issued or issuable under
this Exchange Agreement, and to comply with the provisions of the
Securities Act with respect to the disposition of all Exchange Shares
covered by such registration statement during such period in accordance
with the intended method of disposition of the sellers set forth therein;
(iii) as expeditiously as possible, furnish to each seller of such
Exchange Shares registered, or to be registered under the Securities Act,
and to each underwriter, if any, of such Exchange Shares such number of
copies of a prospectus and preliminary prospectus in conformity with the
requirements of the Securities Act, and such other documents as such seller
or underwriter may reasonably request in order to facilitate the public
sale or other disposition of such Exchange Shares;
(iv) as expeditiously as possible, notify each seller of such
Exchange Shares if, at any time when a prospectus relating to such Exchange
Shares, is required to be delivered under the Securities Act, any event
shall have occurred as a result of which the prospectus then in use with
respect to such Exchange Shares would include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or for
any other reason it shall be necessary to amend or supplement such
prospectus in order to comply with the Securities Act and prepare and
furnish to all sellers as promptly as possible, and in any event within
ninety (90) days of such notice, a reasonable number of copies of a
supplement to or an amendment of such prospectus which will correct such
statement or omission or effect such compliance;
(v) as expeditiously as possible (or, in the case of the Shelf
Registration, no later than December 1, 1995), use its reasonable best
efforts to register or qualify such Exchange Shares under such other
securities or blue sky laws of New York and such other jurisdictions as
such seller shall reasonably request and do any and all other acts and
things which may be reasonably necessary to enable such seller to
consummate the public sale or other disposition in each such jurisdiction
of the Exchange Shares owned by such seller and included in such
registration statement, provided that Peoples shall not be required to
consent to the general service of process or to qualify to do business in
any jurisdiction where it is not then qualified;
(vi) use its reasonable best efforts to keep the holders of such
Exchange Shares informed of Peoples's best estimate of the earliest date on
which such registration statement or any post-effective amendment or
supplement thereto will become effective and will promptly notify such
holders and the managing underwriters, if any, participating in the
distribution pursuant to such registration statement of the following: (A)
when such
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registration statement or any post-effective amendment or supplement
thereto becomes effective or is approved; (B) of the issuance by any
competent authority of any stop order suspending the effectiveness or
qualification of such registration statement or the prospectus then in use
or the initiation or threat of any proceeding for that purpose; and (C) of
the suspension of the qualification of any Exchange Shares included in such
registration statement for sale in any jurisdiction;
(vii) make available to its security holders, as soon as practicable,
an earnings statement covering a period of at least twelve months which
satisfies the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;
(viii) cooperate with the sellers of such Exchange Shares and the
underwriters, if any, of such Exchange Shares; give each seller of such
Exchange Shares, and the underwriters, if any, of such Exchange Shares and
their respective counsel and accountants, such access to its books and
records and such opportunities to discuss the business of Peoples with its
officers and independent public accountants as shall be necessary to enable
them to conduct a reasonable investigation within the meaning of the
Securities Act and, in the event that Exchange Shares are to be sold in an
underwritten offering, enter into an underwriting agreement containing
customary representations and warranties, covenants, conditions and
indemnification provisions, including without limitation the furnishing to
the underwriters of a customary opinion of independent counsel to Peoples
and a customary "comfort" letter from Peoples's independent public
accountants;
(ix) provide a CUSIP number for all Exchange Shares not later than
the effective date of the registration statement;
(x) as to all registrations under this Section 7, pay all costs and
expenses incident to the performance and compliance by Peoples of this
Section 7, including without limitation (A) all registration, filing and
qualification fees; (B) all printing expenses; (C) all fees and
disbursements of counsel and independent public accountants for Peoples;
(D) all blue sky fees and expenses (including fees and expenses of counsel
in connection with blue sky surveys); (E) all transfer taxes; (F) the
entire expense of any special audits required by the rules and regulations
of the Commission; and (G) the cost of distributing prospectuses in
preliminary and final form as well as any supplements thereto, and Peoples
shall pay the fees and expenses of one counsel for the holders of the
Exchange Shares being registered; and
(xi) as to the first registration under subsection 7(b)(i) which is
in respect of an underwritten offering, as expeditiously as possible, take
such actions as the underwriters reasonably request in order to expedite or
facilitate the disposition of the Exchange Shares to be included in such
offering (including, without limitation, effecting a stock split, stock
dividend or a combination of shares of Common Stock).
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(f) (i) Peoples will indemnify and hold harmless each seller of Exchange
Shares, each director, officer, employee and agent of each seller, and each
other person, if any, who controls such seller within the meaning of the
Securities Act or the Exchange Act from and against any and all losses,
claims, damages, liabilities and legal and other expenses (including costs
of investigation) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement
under which such Exchange Shares were registered under the Securities Act,
any prospectus or preliminary prospectus contained therein or any amendment
or supplement thereto, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to such seller and furnished to Peoples in writing by
such seller expressly for use therein, and provided that Peoples will not
be liable to any Person who participates as an underwriter in the offering
or sale of Exchange Shares or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act under the indemnity
agreement in this subsection 7(f) with respect to any preliminary
prospectus or the final prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, claim,
damage or liability of such underwriter or controlling Person results from
the sale by such underwriter of Exchange Shares to a Person to whom there
was not sent or given, at or prior to the written confirmation of such
sale, a copy of the final prospectus or of the final prospectus as then
amended or supplemented, whichever is most recent, if Peoples has
previously furnished copies thereof to such underwriter, or from a sale to
a Person in a state where the offering has not been registered or
qualified, if Peoples has notified the seller and any underwriter involved
in such sale of the states where the offering has been registered or
qualified.
(ii) It shall be a condition to the obligation of Peoples to effect a
registration of Exchange Shares under the Securities Act pursuant hereto
that (A) each seller, severally and not jointly, indemnify and hold
harmless Peoples and each person, if any, who controls Peoples within the
meaning of the Securities Act or the Exchange Act to the same extent as the
indemnity from Peoples in the foregoing paragraph, but only with reference
to any breach by such seller of any agreement between such seller, and
Peoples with respect to the offering and with reference to information
relating to such seller furnished to Peoples in writing by such seller
expressly for use in the registration statement, any prospectus or
preliminary prospectus contained therein or any amendment or supplement
thereto and (B) each seller, in the event that Exchange Shares are to be
sold in an underwritten offering, enters into an underwriting agreement
containing customary representations and warranties, covenants,
conditions and indemnification provisions.
(iii) In case any claim shall be made or any proceeding (including
any governmental investigation) shall be instituted involving any
indemnified party in respect of which indemnity may be sought pursuant to
this subsection 7(f), such indemnified party shall promptly notify the
indemnifying party in writing of the same, provided that failure to notify
the indemnifying party shall not relieve it from any liability it may have
to an
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indemnified party otherwise than under this subsection 7(f). The
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party in such proceeding and shall pay the fees and
disbursements of such counsel. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (A) the indemnifying party shall have failed to retain
counsel for the indemnified party as aforesaid, (B) the indemnifying party
and such indemnified party shall have mutually agreed to the retention
of such counsel or (C) representation of such indemnified party by the
counsel retained by the indemnifying party would, in the reasonable
opinion of the indemnified party, be inappropriate due to actual or
potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding, provided that Peoples
shall not be liable for the fees and disbursements of more than one
additional counsel for all indemnified parties. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(g) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection 7(f)
is due in accordance with its terms but is for any reason held by a court
to be unavailable on grounds of policy or otherwise, Peoples or the
applicable sellers, as the case may be, shall contribute to the aggregate
losses, claims, damages and liabilities incurred (including legal or other
expenses reasonably incurred in connection with the investigating or
defending of same) by the other and for which such indemnification was
sought. In determining the amount of contribution to which the respective
parties are entitled, there shall be considered the relative benefits
received by each party from the offering of the securities included in the
registration statement (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission,
and any other equitable considerations appropriate in the circumstances;
provided, however, that (i) in no case shall any seller of Exchange Shares
be required to contribute any amount in excess of the net sales proceeds of
the Exchange Shares sold by him and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this subsection
7(g), each person who controls any seller of Exchange Shares or Peoples
shall have the same rights to contribution as such seller or Peoples. Any
party entitled to contribution shall, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against Peoples or
the seller of Exchange Shares under this subsection 7(g), notify Peoples
or such seller, as the case may be, but the omission to so notify Peoples
or such seller, as the case may be, shall not relieve it from any other
obligation it may have hereunder or otherwise.
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(h) Peoples shall not, without the written consent of Creditanstalt (if
any Indebtedness is then outstanding) and the holders of not less than 50% of
the aggregate outstanding Exchange Shares, if any, grant to any person for so
long as any Indebtedness or any Exchange Shares are outstanding, any demand or
piggyback registration rights.
Section 8. Restrictions on Transfer.
(a) Creditanstalt acknowledges that if the issuance of any Exchange Shares
to the initial holder(s) thereof is not effected pursuant to an effective
registration statement under the Securities Act, such Exchange Shares will be
subject to certain restrictions on transfer as further set forth herein. Each
such initial holder, by accepting such Exchange Shares, agrees that it will not
sell or otherwise transfer any of such Exchange Shares except upon the terms and
conditions specified herein and that it will cause any transferee thereof
(except pursuant to a registered offering) to agree to take and hold the same
subject to the terms and conditions specified herein, provided that any such
initial holder may sell any such Exchange Shares pursuant to an effective
registration statement or in one or more private transactions not requiring
registration under the Securities Act. Without limiting the means by which any
holder of Exchange Shares may sell such shares, Peoples hereby acknowledges that
any such holder may sell such Exchange Shares, in such holder's discretion, in
market transactions through one or more broker-dealers, one or more of which may
be an Affiliate of Creditanstalt.
(b) Except as provided in subsection 8(d) hereof, each certificate for the
Exchange Shares issued to an initial holder thereof or to a subsequent
transferee thereof pursuant to subsection 8(c) shall include a legend in
substantially the following form provided that such legend shall not be required
if such transfer is being made in connection with a sale pursuant to an offering
registered under the Securities Act or which is exempt from registration under
the Securities Act or if the opinion of counsel referred to in subsection 8(c)
is to the further effect that neither such legend nor the restrictions on
transfer in this Section 8 are required in order to ensure compliance with the
Securities Act:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS. THE SHARES
MAY BE TRANSFERRED ONLY IN A TRANSACTION WHICH IS REGISTERED UNDER THE
SECURITIES ACT OR OTHERWISE IN COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN THE EXCHANGE AGREEMENT DATED AS OF MAY 3, 1995 BETWEEN PEOPLES TELEPHONE
COMPANY, INC. AND CREDITANSTALT CORPORATE FINANCE, INC., A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE
OF PEOPLES AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
14
<PAGE>
(c) Prior to any proposed assignment, transfer or sale of any Exchange
Shares (other than a transfer among Creditanstalt and/or its Affiliates), the
holder thereof shall give written notice to Peoples of such holder's intention
to effect such assignment, transfer or sale, which notice shall set forth the
date of such proposed assignment, transfer or sale. Each holder wishing to
effect such a transfer of any Exchange Shares shall also furnish to Peoples an
agreement by the transferee thereof that it is taking and holding the same
subject to the terms and conditions specified herein and, unless the transferee
is an Affiliate of such holder, a written opinion of such holder's counsel, in
form reasonably satisfactory to Peoples, to the effect that the proposed
transfer may be effected without registration under the Securities Act and any
applicable state securities laws.
(d) The restrictions set forth in this Section 8 shall terminate and cease
to be effective with respect to any Exchange Shares registered for sale under
the Securities Act or upon receipt by Peoples of an opinion of counsel, in form
reasonably satisfactory to Peoples, to the effect that compliance with such
restrictions is not necessary in order to comply with the Securities Act with
respect to the issuance of the Exchange Shares. Whenever such restrictions
shall so terminate the holder of such Exchange Shares shall be entitled to
receive from Peoples, without expense (other than transfer taxes, if any),
certificates for such Exchange Shares not bearing the legend set forth in
subsection 8(b) at which time Peoples will rescind any transfer restrictions
relating thereto.
(e) With a view to making available to Creditanstalt and its Affiliates
and subsequent holders of the Exchange Shares the benefits of certain rules and
regulations of the Commission (including, without limitation, Rules 144 and 144A
under the Securities Act) which may permit the sale of Exchange Shares to the
public without registration, Peoples agrees to take any and all such actions as
may be required of it to make available to Creditanstalt and its Affiliates and
such subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act or any
successor provision thereto;
(ii) file with the Commission in a timely manner all reports and
other documents required of Peoples under the Securities Act and the
Exchange Act; and
(iii) so long as Creditanstalt or an Affiliate thereof owns any
Exchange Shares, furnish to Creditanstalt forthwith upon request a written
statement by Peoples as to its compliance with the reporting requirements
of Rule 144 or any successor provision thereto, and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly report
of Peoples filed with the Commission, and such other reports and documents
of Peoples and other information in the possession of or reasonably
obtainable by Peoples as Creditanstalt and its Affiliates and subsequent
holders of the Exchange Shares may reasonably request in availing itself
of any rule or regulation of the Commission allowing Creditanstalt and its
Affiliates and subsequent holders of the Exchange Shares to sell any such
securities without registration.
15
<PAGE>
Section 9. Amendments and Waivers. Any provision of this Exchange
Agreement may be amended, supplemented, waived, discharged or terminated only by
a written instrument signed by Peoples and Creditanstalt.
Section 10. Specific Performance. Creditanstalt and the holders of any
Exchange Shares shall have the right to specific performance by Peoples of the
provisions of this Exchange Agreement. Peoples hereby irrevocably waives, to
the extent that it may do so under applicable law, any defense based on the
adequacy of a remedy at law which may be asserted as a bar to the remedy of
specific performance in any action brought against Peoples for specific
performance of this Exchange Agreement by Creditanstalt or the holders of any
Exchange Shares.
Section 11. Notices.
(a) Any notice or demand to be given or made by Creditanstalt or any
holder of any Exchange Shares to or on Peoples pursuant to this Exchange
Agreement shall be sufficiently given or made if sent by registered mail, return
receipt requested, postage prepaid, addressed to Peoples at the following
address:
Peoples Telephone Company, Inc.
2300 N.W. 89th Place
Miami, Florida 33172
Attn: F. J. Pollak
Facsimile Number: (305) 477-9890
(b) Any notice to be given by Peoples to or on any holder of any Exchange
Shares pursuant to this Exchange Agreement shall be sufficiently given or made
if sent by registered mail, return receipt requested, postage prepaid, addressed
to such holder as such holder's name and address shall appear on the Common
Stock registry of Peoples and to Creditanstalt at the address set forth below,
and any notice to be given by Peoples to or on Creditanstalt pursuant to this
Exchange Agreement shall be sufficiently given or made if sent by registered
mail, return receipt requested, postage prepaid, addressed to Creditanstalt at
the following address:
Creditanstalt Corporate Finance, Inc.
Two Greenwich Plaza
Greenwich, Connecticut 06830
Attn: Dennis O'Dowd
Facsimile Number: (208) 861-6594
16
<PAGE>
with copies to:
Creditanstalt Corporate Finance, Inc.
Two Ravinia Drive
Suite 1680
Atlanta, Georgia 30346
Attn: Robert M. Biringer
Facsimile Number: (404) 390-1851
and
Troutman Sanders
Suite 5200
600 Peachtree Street
Atlanta, Georgia 30308-2216
Attn: Hazen H. Dempster, Esq.
Facsimile Number: (404) 885-3900
Section 12. Binding Effect. This Exchange Agreement shall be binding
upon and inure to the sole and exclusive benefit of Peoples, its successors and
assigns, Creditanstalt, Affiliates of Creditanstalt and the registered holders
from time to time of the Exchange Shares.
Section 13. Counterparts. This Exchange Agreement may be executed in
one or more separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
Section 14. NEW YORK LAW. THIS EXCHANGE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 15. Benefits of This Agreement; Assignment. Nothing in this
Exchange Agreement shall be construed to give to any Person other than Peoples,
Creditanstalt and the registered holders of the Exchange Shares any legal or
equitable right, remedy or claim under this Exchange Agreement; provided,
however, that Creditanstalt shall be permitted to assign its rights and
obligations under this Exchange Agreement, in whole or in part, to any Person to
whom the Note is assigned.
Section 16. Entire Agreement. This Exchange Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations, understandings and agreements
between such parties in respect of such subject matter.
[Remainder of page intentionally left blank]
17
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Exchange Agreement
to be duly executed and delivered by their proper and duly authorized officers,
as of the date and year first above written.
PEOPLES TELEPHONE COMPANY, INC.
By:__________________________________
Robert D. Rubin
President
Attest:______________________________
Secretary
[CORPORATE SEAL]
CREDITANSTALT CORPORATE FINANCE, INC.
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title:
The undersigned acknowledges and consents to the terms of this Agreement,
this ___ day of May, 1995.
PTC CELLULAR, INC.
By:__________________________________
Name:
Title:
Attest:______________________________
Name:
Title:
18
- - - ---------------------------------------------------------------
- - - ---------------------------------------------------------------
PEOPLES TELEPHONE COMPANY, INC., as Issuer
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as Trustee
--------------------
INDENTURE
Dated as of July 15, 1995
--------------------
$100,000,000
12-1/4% Senior Notes due 2002
12-1/4% Senior Notes due 2002, Series B
- - - ---------------------------------------------------------------
- - - ---------------------------------------------------------------
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of July 15, 1995
Trust Indenture Indenture
Act Section Section
Section 310(a)(1) ...................................... 6.09
(a)(2) ...................................... 6.09
(a)(3) ...................................... Not Applicable
(a)(4) ...................................... Not Applicable
(a)(5) ...................................... 6.09
(b) ...................................... 6.08, 6.10
(c) ...................................... Not Applicable
Section 311(a) ...................................... 6.13
(b) ...................................... 6.13
(c) ...................................... Not Applicable
Section 312(a) ...................................... 7.01
(b) ...................................... 7.02
(c) ...................................... 7.02
Section 313(a) ...................................... 7.03
(b) ...................................... 7.03
(c) ...................................... 7.03
(d) ...................................... 7.03
Section 314(a) ...................................... 7.04
(a)(4) ...................................... 10.08
(b) ...................................... Not Applicable
(c)(1) ...................................... 1.04, 4.04
12.01(c)
(c)(2) ...................................... 1.04, 4.04
12.01(c)
(c)(3) ...................................... Not Applicable
(d) ...................................... Not Applicable
(e) ...................................... 1.04
Section 315(a) ...................................... 6.01(a)
(b) ...................................... 6.02
(c) ...................................... 6.01(b)
(d) ...................................... 6.01(c)
(e) ...................................... 5.14
Section 316(a) (last
sentence) ...................................... 1.01
("Outstanding")
(a)(1)(A) ...................................... 5.12, 5.13
(a)(1)(B) ...................................... 5.13
(a)(2) ...................................... Not Applicable
(b) ...................................... 5.08
(c) ...................................... 9.04
Section 317(a)(1) ...................................... 5.03
(a)(2) ...................................... 5.04
(b) ...................................... 10.03
Section 318(a) ...................................... 1.08
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
PARTIES ............................................................ 1
RECITALS ........................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions ..................................... 1
Section 1.02. Other Definitions ............................... 25
Section 1.03. Rules of Construction ........................... 26
Section 1.04. Form of Documents Delivered to
Trustee ....................................... 26
Section 1.05. Acts of Holders ................................. 28
Section 1.06. Notices, etc., to the Trustee and the
Company ....................................... 29
Section 1.07. Notice to Holders; Waiver ....................... 29
Section 1.08. Conflict with Trust Indenture Act ............... 30
Section 1.09. Effect of Headings and Table of
Contents ...................................... 30
Section 1.10. Successors and Assigns .......................... 30
Section 1.11. Separability Clause ............................. 30
Section 1.12. Benefits of Indenture ........................... 31
Section 1.13. GOVERNING LAW ................................... 31
Section 1.14. No Recourse Against Others ...................... 31
Section 1.15. Independence of Covenants ....................... 31
Section 1.16. Exhibits ........................................ 31
Section 1.17. Counterparts .................................... 32
Section 1.18. Duplicate Originals ............................. 32
ARTICLE TWO
SECURITY FORMS
Section 2.01. Forms Generally ................................. 32
Section 2.02. Form of Face of Securities ...................... 32
Section 2.03. Form of Reverse of Security ..................... 38
- - - -------------------
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this indenture.
-i-
<PAGE>
Page
Section 2.04. Form of Trustee's Certificate of
Authentication ................................ 52
Section 2.05. Form of Legend on Restricted
Securities .................................... 53
Section 2.06. Form of Legend for Global Securities ............ 53
ARTICLE THREE
THE SECURITIES
Section 3.01. Title and Terms ................................. 54
Section 3.02. Denominations ................................... 56
Section 3.03. Execution, Authentication, Delivery
and Dating .................................... 56
Section 3.04. Temporary Securities ............................ 58
Section 3.05. Registration, Registration of
Transfer and Exchange ......................... 59
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Securities .................................... 62
Section 3.07. Payment of Interest; Interest Rights
Preserved ..................................... 63
Section 3.08. Persons Deemed Owners ........................... 64
Section 3.09. Cancellation .................................... 64
Section 3.10. Computation of Interest ......................... 65
Section 3.11. Legal Holidays .................................. 65
Section 3.12. CUSIP Number .................................... 65
Section 3.13. Book-Entry Provisions for U.S. Global
Security ...................................... 66
Section 3.14. Special Transfer Provisions ..................... 67
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance
or Covenant Defeasance ........................ 72
Section 4.02. Defeasance and Discharge ........................ 73
Section 4.03. Covenant Defeasance ............................. 73
Section 4.04. Conditions to Defeasance or Covenant
Defeasance .................................... 74
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust;
Other Miscellaneous Provisions ................ 76
Section 4.06. Reinstatement ................................... 77
-ii-
<PAGE>
Page
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default ............................... 77
Section 5.02. Acceleration of Maturity; Rescission
and Annulment ................................. 80
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee .................... 81
Section 5.04. Trustee May File Proofs of Claims ............... 82
Section 5.05. Trustee May Enforce Claims Without
Possession of Securities ...................... 83
Section 5.06. Application of Money Collected .................. 84
Section 5.07. Limitation on Suits ............................. 84
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and
Interest ...................................... 85
Section 5.09. Restoration of Rights and Remedies .............. 85
Section 5.10. Rights and Remedies Cumulative .................. 86
Section 5.11. Delay or Omission Not Waiver .................... 86
Section 5.12. Control by Majority ............................. 86
Section 5.13. Waiver of Past Defaults ......................... 87
Section 5.14. Undertaking for Costs ........................... 87
Section 5.15. Waiver of Stay, Extension or Usury
Laws .......................................... 88
Section 5.16. Unconditional Right of Holders To
Institute Certain Suits ....................... 88
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities ............. 88
Section 6.02. Notice of Defaults .............................. 89
Section 6.03. Certain Rights of Trustee ....................... 90
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Securities or
Application of Proceeds Thereof ............... 91
Section 6.05. Trustee and Agents May Hold
Securities; Collections; Etc. ................. 92
Section 6.06. Money Held in Trust ............................. 92
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim ................... 92
Section 6.08. Conflicting Interests ........................... 93
Section 6.09. Corporate Trustee Required;
Eligibility ................................... 93
-iii-
<PAGE>
Page
Section 6.10. Resignation and Removal; Appointment
of Successor Trustee .......................... 94
Section 6.11. Acceptance of Appointment by
Successor ..................................... 95
Section 6.12. Successor Trustee by Merger, etc. ............... 96
Section 6.13. Preferential Collection of Claims
Against Company ............................... 97
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and
Addresses of Holders .......................... 97
Section 7.02. Communications of Holders ....................... 98
Section 7.03. Reports by Trustee .............................. 98
Section 7.04. Reports by Company .............................. 98
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc. .................... 99
Section 8.02. Successor Substituted ........................... 100
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders ...................... 101
Section 9.02. With Consent of Holders.......................... 101
Section 9.03. Compliance with Trust Indenture Act ............. 103
Section 9.04. Revocation and Effect of Consents ............... 103
Section 9.05. Notation on or Exchange of
Securities .................................... 104
Section 9.06. Trustee May Sign Amendments, etc. ............... 104
-iv-
<PAGE>
Page
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest ...................................... 105
Section 10.02. Maintenance of Office or Agency ................. 105
Section 10.03. Money for Security Payments To Be
Held in Trust ................................. 106
Section 10.04. Corporate Existence ............................. 107
Section 10.05. Payment of Taxes and Other Claims ............... 108
Section 10.06. Maintenance of Properties ....................... 108
Section 10.07. Insurance ....................................... 108
Section 10.08. Compliance Certificate .......................... 109
Section 10.09. SEC Reports and Other Information ............... 110
Section 10.10 Designation of Unrestricted
Subsidiaries .................................. 111
Section 10.11. Limitation on Indebtedness ...................... 112
Section 10.12. Limitation on Restricted Payments ............... 115
Section 10.13. Limitation on Transactions with
Interested Persons ............................ 118
Section 10.14. Disposition of Proceeds of Asset
Sales ......................................... 119
Section 10.15. Change of Control ............................... 123
Section 10.16. Limitation on Liens ............................. 126
Section 10.17. Limitation on Issuances and Sales of
Preferred Stock by Restricted
Subsidiaries .................................. 127
Section 10.18. Limitation on Dividends and Other
Payment Restrictions Affecting
Restricted Subsidiaries ....................... 127
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.01. Right of Redemption ............................. 128
Section 11.02. Applicability of Article ........................ 128
Section 11.03. Election To Redeem; Notice to
Trustee ....................................... 128
Section 11.04. Selection by Trustee of Securities To
Be Redeemed ................................... 128
Section 11.05. Notice of Redemption ............................ 129
Section 11.06. Deposit of Redemption Price ..................... 130
Section 11.07. Securities Payable on Redemption
Date .......................................... 130
-v-
<PAGE>
Page
Section 11.08. Securities Redeemed or Purchased in
Part .......................................... 131
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture ..................................... 131
Section 12.02. Application of Trust Money ...................... 133
TESTIMONIUM ........................................................ 134
SIGNATURES ......................................................... 134
EXHIBIT A FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS TO NON-QIB
INSTITUTIONAL ACCREDITED INVESTORS
EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED UPON
TERMINATION OF RESTRICTED PERIOD
EXHIBIT C FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
-vi-
<PAGE>
INDENTURE, dated as of July 15, 1995, between PEOPLES
TELEPHONE COMPANY, INC., a New York corporation (the
"Company"), and FIRST UNION NATIONAL BANK OF NORTH CAROLINA, a
national banking association, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an
issue of 12-1/4% Senior Notes due 2002 (the "Series A
Securities"), and an issue of 12-1/4% Senior Notes due 2002,
Series B (the "Series B Securities," and together with the
Series A Securities, the "Securities"), of substantially the
tenor and amount hereinafter set forth, and to provide therefor
the Company has duly authorized the execution and delivery of
this Indenture. (Each of the Series A Securities and the
Series B Securities shall sometimes be referred to hereinafter
as a "series.")
All things necessary have been done to make the
Securities, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid
obligations of the Company and to make this Indenture a valid
agreement of the Company, in accordance with the terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a
person (a) assumed in connection with an Asset Acquisition from
such person or (b) existing at the time such person becomes a
Restricted Subsidiary, which, in either case, was not created
or entered into in anticipation or contemplation of an Asset
Acquisition or such person becoming a Restricted Subsidiary.
"Affiliate" means, with respect to any specified
person, any other person directly or indirectly controlling or
<PAGE>
controlled by or under direct or indirect common control with
such specified person.
"Agent Members" shall have the meaning specified in
Section 3.13 hereof.
"Asset Acquisition" means (a) an Investment by the
Company or any Restricted Subsidiary in any other person
pursuant to which such person shall become a Restricted
Subsidiary or shall be merged with or into the Company or any
Restricted Subsidiary, (b) the acquisition by the Company or
any Restricted Subsidiary of the assets of any person which
constitute all or substantially all of the assets of such
person or any division or line (whether based on product or
geography) of business of such person or (c) the acquisition by
the Company or any Restricted Subsidiary of any public pay
telephones, inmate telephones, cellular telephones and/or
telephone operating facility from any person other than the
manufacturer (or an Affiliate thereof or special purpose
finance entity related thereto) of such telephones in a
transaction involving consideration having a Fair Market Value
equal to or greater than $500,000.
"Asset Sale" means any sale, issuance, conveyance,
transfer, lease or other disposition to any person other than
the Company or a Wholly-Owned Restricted Subsidiary, in one or
a series of related transactions, of (a) any Capital Stock of
any Restricted Subsidiary; (b) all or substantially all of the
properties and assets of any division or line (whether based on
product or geography) of business of the Company or any
Restricted Subsidiary; (c) any other properties or assets of
the Company or any Restricted Subsidiary other than in the
ordinary course of business; or (d) any public pay telephones,
inmate telephones, cellular telephones and/or telephone
operating facility by the Company or any Restricted Subsidiary
or for purposes of Section 10.14, PTC Cellular, Inc. involving
consideration having a Fair Market Value equal to or greater
than $500,000. For the purposes of this definition, the term
"Asset Sale" shall not include (i) any sale, issuance,
conveyance, transfer, lease or other disposition of properties
or assets that is governed by Article Eight, (ii) sales of
obsolete equipment and (iii) any sale, issuance, conveyance,
transfer, lease or other disposition of properties or assets,
whether in one transaction or a series of related transactions,
involving assets with a Fair Market Value not in excess of
$50,000.
2
<PAGE>
"Average Life to Stated Maturity" means, with respect
to any Indebtedness, as at any date of determination, the
quotient obtained by dividing (a) the sum of the products of
(i) the number of years from such date to the date or dates of
each successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness
multiplied by (ii) the amount of each such principal payment by
(b) the sum of all such principal payments.
"Bankruptcy Law" means Title 11 of the United States
Code or any similar United States federal or state law relating
to, bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors or the law of
any other jurisdiction relating to bankruptcy, insolvency,
receivership, winding-up, liquidation, reorganization or relief
of debtors or any amendment to, succession to or change in any
such law.
"Bankruptcy Order" means any court order made in a
proceeding pursuant to or within the meaning of any Bankruptcy
Law, containing an adjudication of bankruptcy or insolvency, or
providing for liquidation, receivership, winding-up,
dissolution or reorganization, or appointing a Custodian of a
debtor or of all or any substantial part of a debtor's
property, or providing for the staying, arrangement, adjustment
or composition of indebtedness or other relief of a debtor.
"Board" means the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company, to have been duly adopted by the Board 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 of New York, State of New York or the
City of Charlotte, State of North Carolina are authorized or
obligated by law, regulation or executive order to close.
"Capital Stock" means, with respect to any person,
any and all shares, interests, participations, rights in, or
other equivalents (however designated) of such person's capital
stock, and any rights (other than debt securities convertible
into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
3
<PAGE>
"Capitalized Lease Obligation" means any obligation
under a lease of (or other agreement conveying the right to
use) any property (whether real, personal or mixed) that is
required to be classified and accounted for as a capital lease
obligation under GAAP, and, for the purpose of this Indenture,
the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in
accordance with GAAP.
"Cash Equivalents" means, at any time, (i) any
evidence of Indebtedness with a maturity of 365 days (or for
the purposes of Section 10.14, 270 days) or less issued or
directly and fully guaranteed or insured by the United States
of America or any agency or instrumentality thereof (provided
that the full faith and credit of the United States of America
is pledged in support thereof); (ii) certificates of deposit or
acceptances with a maturity of 365 days (or for the purposes of
Section 10.14, 270 days) or less of any financial institution
that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than
$250,000,000; (iii) commercial paper with a maturity of 365
days (or for the purposes of Section 10.14, 270 days) or less
issued by a corporation that is not an Affiliate of the Company
organized under the laws of any State of the United States or
the District of Columbia and rated at least A-1 by Standard &
Poor's Corporation or at least P-1 by Moody's Investors
Service, Inc. or at least an equivalent rating category of
another nationally recognized securities rating agency;
(iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United
States of America or issued by any agency thereof and backed by
the full faith and credit of the United States of America, in
each case maturing within one year from the date of
acquisition; and (v) money market accounts with a financial
institution of the type described in clause (ii) above which
invest substantially in instruments of the types described in
clauses (i) through (iv) above.
"Change of Control" means the occurrence of any of
the following events: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than a Permitted Holder, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has a
right to acquire, whether such right is exercisable immediately
4
<PAGE>
or only after the passage of time), directly or indirectly, of
more than 50% of the total Voting Stock of the Company; or
(b) the Company consolidates with, or merges with or into
another person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to
any person, or any person consolidates with, or merges with or
into the Company, in any such event pursuant to a transaction
in which the outstanding Voting Stock of the Company, is
converted into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding Voting Stock of the Company is converted into or
exchanged for (1) Voting Stock (other than Redeemable Capital
Stock) of the surviving or transferee corporation or (2) cash,
securities and other property in an amount which could be paid
by the Company as a Restricted Payment pursuant to Section
10.12 and (ii) immediately after such transaction no "person"
or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act), other than a Permitted Holder, is the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total Voting Stock of the
surviving or transferee corporation.
"Commission" or "SEC" means the Securities and
Exchange Commission, as from time to time constituted, or if at
any time after the execution of this Indenture such Commission
is not existing and performing the applicable duties now
assigned to it, then the body or bodies performing such duties
at such time.
"Common Stock" means, with respect to any person, any
and all shares, interests or other participations in, and other
equivalents (however designated and whether voting or
nonvoting) of, such person's common stock, whether outstanding
at the Issue Date or issued after the Issue Date, and includes,
without limitation, all series and classes of such common
stock.
"Company" means the person named as the "Company" in
the first paragraph of this Indenture, until a successor person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor person.
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"Company Request" or "Company Order" means a written
request or order signed in the name of the Company by any one
of its Chairman of the Board, its Chief Financial Officer, its
Chief Executive Officer, its President or a Vice President, and
by any one of its Secretary or an Assistant Secretary, and
delivered to the Trustee.
"Consolidated Cash Flow Available for Fixed Charges"
means, with respect to the Company and the Restricted
Subsidiaries for any period, (i) the sum of, without
duplication, the amounts for such period, taken as a single
accounting period, of (a) Consolidated Net Income,
(b) Consolidated Non-cash Charges, (c) Consolidated Interest
Expense to the extent reducing Consolidated Net Income,
(d) Consolidated Income Tax Expense to the extent reducing
Consolidated Net Income and (e) to the extent incurred in such
period and not otherwise included in clause (b) above, the 1994
Charges to the extent reducing Consolidated Net Income less
(ii) non-cash items increasing Consolidated Net Income.
"Consolidated Fixed Charge Coverage Ratio" means,
with respect to the Company, the ratio of the aggregate amount
of Consolidated Cash Flow Available for Fixed Charges of the
Company and the Restricted Subsidiaries for the four full
fiscal quarters for which financial information in respect
thereof is available immediately preceding the date of the
transaction (the "Transaction Date") giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio (such
four full fiscal quarter period being referred to herein as the
"Four Quarter Period") to the aggregate amount of Consolidated
Fixed Charges of the Company for the Four Quarter Period. In
addition to and without limitation of the foregoing, for
purposes of this definition, "Consolidated Cash Flow Available
for Fixed Charges" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the
period of such calculation to, without duplication, (a) the
incurrence of any Indebtedness of the Company or any Restricted
Subsidiary during the period commencing on the first day of the
Four Quarter Period to and including the Transaction Date (the
"Reference Period"), including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make
such calculation, as if such incurrence occurred on the first
day of the Reference Period, (b) an adjustment to eliminate or
include, as the case may be, the Consolidated Cash Flow
Available for Fixed Charges and the Consolidated Fixed Charges
of such person directly attributable to assets which are the
subject of any Asset Sales or Asset Acquisitions occurring
during the
6
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Reference Period, as if such Asset Sale (after giving effect to any
Designation of Unrestricted Subsidiaries) or Asset Acquisition
occurred on the first day of the Reference Period and (c) the
retirement of Indebtedness which cannot be reborrowed during the
Reference Period as if retired on the first day of the Reference
Period. Furthermore, in calculating "Consolidated Fixed Charges"
for purposes of determining the denominator (but not the numerator)
of this "Consolidated Fixed Charge Coverage Ratio," (i) interest
on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date, (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a
factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect
on the Transaction Date will be deemed to have been in effect
during the Reference Period; and (iii) notwithstanding clauses
(i) and (ii) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Rate Protection Obligations,
shall be deemed to have accrued at the rate per annum resulting
after giving effect to the operation of such agreements to the
extent then applicable.
"Consolidated Fixed Charges" means, with respect to
the Company for any period, the sum of, without duplication,
the amounts for such period of (i) Consolidated Interest
Expense and (ii) the aggregate amount of dividends and other
distributions paid or accrued during such period in respect of
Redeemable Capital Stock (other than the UBS Capital Preferred
Stock) of the Company and the Restricted Subsidiaries on a
consolidated basis.
"Consolidated Income Tax Expense" means, with respect
to the Company for any period, the provision for federal,
state, local and foreign income taxes of the Company and the
Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect
to the Company for any period, without duplication, the sum of
(i) the interest expense of the Company and the Restricted
Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation,
(a) any amortization of debt discount, (b) the net cost under
Interest
7
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Rate Protection Obligations (including any amortization of discounts),
(c) the interest portion of any deferred payment obligation,
(d) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and
(e) all accrued interest and (ii) the interest component of Capitalized
Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Company and the Restricted Subsidiaries during
such period as determined on a consolidated basis in accordance
with GAAP. Notwithstanding anything herein to the contrary,
Consolidated Interest Expense shall include amounts which would
constitute Consolidated Interest Expense but for the treatment
of the Discontinued Operations under GAAP.
"Consolidated Net Income" means, with respect to the
Company and the Restricted Subsidiaries for any period, the
consolidated net income (or loss) from continued operations of
the Company and the Restricted Subsidiaries for such period as
determined in accordance with GAAP, adjusted, to the extent
included in calculating such net income (or loss), by
excluding, without duplication, (i) all extraordinary gains and
losses (net of fees and expenses relating to the transaction
giving rise thereto), (ii) the portion of net income (or loss)
of the Company and the Restricted Subsidiaries allocable to
minority interests in unconsolidated persons except to the
extent that cash dividends or distributions have actually been
received by the Company or a Restricted Subsidiary, (iii) net
income (or loss) of any person combined with such person or one
of its Restricted Subsidiaries on a "pooling of interests"
basis attributable to any period prior to the date of
combination, (iv) any gain realized upon the termination of any
employee pension benefit plan, on an after-tax basis, (v) gains
in respect of any Asset Sales by the Company or a Restricted
Subsidiary (net of fees and expenses relating to the
transaction giving rise thereto) on an after-tax basis,
(vi) the net income of any Unrestricted Subsidiary except to
the extent that cash dividends or distributions have been
actually received by the Company or one of the Restricted
Subsidiaries, (vii) the cumulative non-cash effect of any
change in accounting principle and (viii) the net income of any
Restricted Subsidiary to the extent that the declaration of
dividends or similar distributions by the Restricted Subsidiary
of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule
or governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
8
<PAGE>
"Consolidated Non-cash Charges" means, with respect
to the Company for any period, the aggregate depreciation,
amortization and other non-cash expenses of the Company and the
Restricted Subsidiaries reducing Consolidated Net Income of
such person and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"consolidation" means, with respect to the Company,
the consolidation of the accounts of the Restricted
Subsidiaries with those of the Company, all in accordance with
GAAP; provided that "consolidation" will not include
consolidation of the accounts of any Unrestricted Subsidiary
with the accounts of the Company. The term "consolidated" has
a correlative meaning to the foregoing.
"control" means, with respect to any specified
person, the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership
of Voting Stock, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the
date of execution of this Indenture is located at 230 South
Tryon Street, 8th Floor, Charlotte, North Carolina 28288-1179,
Attention: Daniel J. Ober.
"Credit Agreement" means the Fourth Amended and
Restated Loan and Security Agreement dated as of July 19, 1995,
by and among the Company, as Borrower, Creditanstalt-
Bankverein, as lender, and any other lenders which become
parties from time to time thereto, together with the related
documents thereto (including, without limitation, any security
documents), in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing or otherwise
restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement in compliance with this
Indenture.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement or other similar agreement or
arrangement designed to protect the Company or any of the
9
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Restricted Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, interim receiver,
receiver and manager, receiver-manager, trustee, assignee,
liquidator, sequestrator or similar official under any
Bankruptcy Law or any other person with like powers whether
appointed judicially or out of court and whether pursuant to an
interim or final appointment.
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Depository" means, with respect to the Securities
issued in the form of one or more Global Securities, The
Depository Trust Company or another person designated as
Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designation" shall have the meaning specified in
Section 10.10 hereof.
"Designation Amount" shall have the meaning specified
in Section 10.10 hereof.
"Discontinued Operations" means those business
segments of the Company segregated and accounted for as
discontinued operations for financial accounting purposes as of
the Issue Date for so long as such operations constitute
discontinued operations.
"Equity Offering" means an offering, whether public
or private, of Capital Stock (other than Redeemable Capital
Stock or Capital Stock requiring the payment of dividends in
cash or Redeemable Capital Stock at any time on or prior to any
Stated Maturity of the Securities) of the Company issued and
sold directly by the Company.
"Event of Default" shall have the meaning specified
in Section 5.01 hereof.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exchange Offer" means any exchange pursuant to the
Registration Rights Agreement of Series A Securities for a like
principal amount of Series B Securities.
10
<PAGE>
"Fair Market Value" means, with respect to any asset,
the price (after taking into account any liabilities relating
to such assets) which could be negotiated in an arm's length
free market transaction, for cash, between a willing seller and
a willing buyer, neither of which is under pressure or
compulsion to complete the transaction; provided that, except
with respect to any Asset Sale which involves an asset or
assets the value of which could reasonably be expected to
exceed $500,000, the Fair Market Value of any such asset or
assets shall be determined by the Board, acting in good faith
and shall be evidenced by a Board Resolution delivered to the
Trustee.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the
accounting profession of the United States of America, which
are applicable as of the date of determination and are
consistently applied.
"Global Security" means a Security evidencing all or
a part of the Securities to be issued as book-entry securities,
issued to the Depository in accordance with Section 3.03 and
bearing the legend prescribed in Section 2.06.
"guarantee" means, as applied to any obligation,
(i) a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business),
direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to
assure in any way the payment or performance (or payment of
damages in the event of non-performance) of all or any part of
such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit. A
guarantee shall include, without limitation, any agreement to
maintain or preserve any other person's financial condition or
to cause any other person to achieve certain levels of
operating results.
"Holder" or "Securityholder" means a person in whose
name a Security is registered in the Security Register.
"Indebtedness" means, with respect to any person,
without duplication, (a) all liabilities of such person for
borrowed money or for the deferred purchase price of property
11
<PAGE>
or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of
business, but including, without limitation, all obligations,
contingent or otherwise, of such person in connection with any
letters of credit, banker's acceptance or other similar credit
transaction, (b) all obligations of such person evidenced by
bonds, notes, debentures or other similar instruments, (c) all
Indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property
acquired by such person (even if the rights and remedies of the
seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), but
excluding trade accounts payable arising in the ordinary course
of business, (d) all Capitalized Lease Obligations of such
person, (e) all Indebtedness referred to in the preceding
clauses of other persons and all dividends of other persons,
the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon property (including,
without limitation, accounts and contract rights) owned by such
person, even though such person has not assumed or become
liable for the payment of such Indebtedness (the amount of such
obligation being deemed to be the lesser of the value of such
property or asset or the amount of the obligation so secured),
(f) all guarantees of Indebtedness referred to in this
definition by such person, (g) all Redeemable Capital Stock
valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued dividends, (h) all
obligations under or in respect of foreign exchange contracts,
currency swap agreements or other similar agreements and
Interest Rate Protection Obligations of such person and (i) any
amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred
to in clauses (a) through (h) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Redeemable
Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value shall be
determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock. When any person
becomes a Restricted Subsidiary, there shall be deemed to have
been an incurrence by such Restricted Subsidiary of all
Indebtedness for which it is liable at the time it becomes a
Restricted Subsidiary. If the Company or any
12
<PAGE>
of the Restricted Subsidiaries, directly or indirectly,
guarantees Indebtedness of a third person, there shall be
deemed to be an incurrence of such guaranteed Indebtedness
as if the Company or such Restricted Subsidiary had directly
incurred or otherwise assumed such guaranteed Indebtedness.
"Indenture" means this instrument as originally
executed (including all exhibits and schedules hereto) and 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.
"Independent Director" means, with respect to any
transaction or series of transactions, a member of the Board
who is not employed by the Company (other than as a consultant)
and who does not have, or was not appointed to the Board of a
shareholder which has, any material direct or indirect
financial interest in or with respect to such transaction or
series of transactions.
"Independent Financial Advisor" means a firm
(i) which does not, and whose directors, officers and employees
or Affiliates do not, have a direct or indirect financial
interest in the Company and (ii) which, in the judgment of the
Board, is otherwise independent and qualified to perform the
task for which it is to be engaged.
"Institutional Accredited Investor" means an
institution that is an "accredited investor" as that term is
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"interest," when used with respect to any Security,
means the amount of all interest accruing on such Security,
including all additional interest payable on the Securities
pursuant to the Registration Rights Agreement and all interest
accruing subsequent to the occurrence of any events specified
in Sections 5.01(h), (i) and (j) or which would have accrued
but for any such event, whether or not such claims are
allowable under applicable law.
"Interest Payment Date" means, when used with respect
to any Security, the Stated Maturity of an installment of
interest on such Security, as set forth in such Security.
"Interest Rate Protection Obligations" means the
obligations of any person pursuant to any arrangement with any
other person whereby, directly or indirectly, such person is
13
<PAGE>
entitled to receive from time to time periodic payments
calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or
a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps,
floors, collars and similar agreements.
"Interested Person" shall have the meaning specified
in Section 10.13.
"Investment" means, with respect to any person, any
direct or indirect loan or other extension of credit (including
by way of a guarantee) or capital contribution to (by means of
any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or
any purchase or acquisition by such person of any Capital
Stock, bonds, notes, debentures or other securities or
evidences of Indebtedness issued by, any other person.
"Investments" shall exclude extensions of trade credit on
commercially reasonable terms in accordance with normal trade
practices. In addition to the foregoing, any foreign exchange
contract, currency swap agreement or other similar agreement
shall constitute an Investment hereunder.
"Issue Date" means July 19, 1995.
"Lien" means any mortgage, charge, pledge, lien
(statutory or other), security interest, hypothecation,
assignment for security, claim, or preference or priority or
other encumbrance upon or with respect to any property of any
kind. A person shall be deemed to own subject to a Lien any
property which such person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Maturity" means, with respect to any Security, the
date on which any principal of such Security becomes due and
payable as therein or herein provided, whether at the Stated
Maturity with respect to such principal or by declaration of
acceleration, call for redemption or purchase or otherwise.
"Net Cash Proceeds" means, with respect to any Asset
Sale, the sum of (a) the proceeds thereof in the form of cash
or Cash Equivalents (including payments in respect of deferred
payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are
14
<PAGE>
financed or sold with recourse to the Company or any Restricted
Subsidiary)) and (b) the aggregate principal amount (or, in the
case of Indebtedness issued with original issue discount,
accreted value) of any Indebtedness of the Company or any
Restricted Subsidiary assumed by the purchaser of the assets or
shares subject to such Asset Sale and as to which the Company
or any Restricted Subsidiary has been unconditionally released,
net of (i) brokerage commissions and other fees and expenses
(including, without limitation, fees and expenses of legal
counsel and investment bankers) related to such Asset Sale,
(ii) provisions for all taxes payable as a result of such Asset
Sale, (iii) amounts required to be paid to any person (other
than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale
(which, in the case of a Lien permitted under this Indenture,
is being pledged or used to permanently reduce Indebtedness
secured by such Lien) and (iv) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the
case may be, as a reserve required in accordance with GAAP
consistently applied against any liabilities associated with
such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected
in an officers' certificate delivered to the Trustee; provided
that any amounts remaining after such adjustments, revaluations
or liquidations of such reserves shall also constitute Net Cash
Proceeds.
"Non-U.S. person" means a person who is not a U.S.
person, as defined in Regulation S.
"1994 Charges" means the one time charges taken by
the Company in the fiscal year ended December 31, 1994 and
reflected in the financial statements included in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum
dated July 12, 1995 pursuant to which the Securities were
offered.
"Officers' Certificate" means a certificate signed by
the Chairman of the Board, Vice Chairman, a Co-Chief Executive
Officer, the Chief Financial Officer, the President or a Vice
President, and by the Secretary or an Assistant Secretary, of
the Company and delivered to the Trustee.
15
<PAGE>
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel for the Company or the Trustee, and
who shall be acceptable to the Trustee.
"Other Senior Debt" means Indebtedness of the Company
ranking pari passu in right of payment with the Securities, the
terms of which require that Net Cash Proceeds be used to
permanently reduce (and thereby also reduce commitments
relating to) such Indebtedness.
"Other Senior Debt Pro Rata Share" means a fraction,
(i) the numerator of which is the aggregate principal amount of
Other Senior Debt outstanding on the date Net Cash Proceeds are
received and (ii) the denominator of which is the sum of
(x) the aggregate principal amount of Securities Outstanding on
such date and (y) the aggregate principal amount of any Other
Senior Debt outstanding on such date.
"Outstanding" 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, or portions thereof, for whose
payment or redemption money in the necessary amount has
been theretofore deposited with the Trustee or any Paying
Agent (other than the Company or any Affiliate thereof) in
trust for the Holders of such Securities; provided,
however, that if such Securities are to be redeemed,
notice of such redemption has been duly and irrevocably
given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Securities with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Four, to the extent provided in Sections 4.02 and
4.03; and
(iv) Securities 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
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the
Securities are valid obligations of the Company;
16
<PAGE>
provided, however, that in determining whether the Holders of
the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Securities owned by the Company or
any other obligor under the Securities or any Affiliate of the
Company or 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 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 under the
Securities or any Affiliate of the Company or such other
obligor.
"Paying Agent" means any person authorized by the
Company to pay the principal, premium, if any, or interest on
any Securities on behalf of the Company.
"Permitted Holders" mean any of the following
individually or collectively: (i) UBS Capital Corporation or
its Affiliates; (ii) Jeffrey Hanft; (iii) Robert D. Rubin; and
(iv) their respective controlled Affiliates.
"Permitted Investments" means any of the following
(i) Investments in Cash Equivalents; (ii) Investments in
prepaid expenses, negotiable instruments held for collection
and lease, utility and workers' compensation, performance and
other similar deposits; (iii) Interest Rate Protection
Obligations and Currency Agreements permitted under clause (e)
of Section 10.11; (iv) any issuance of Capital Stock (other
than Redeemable Capital Stock) of the Company in exchange for
Capital Stock, property or assets of another person; and
(v) Investments representing Capital Stock or obligations
issued to the Company or any of the Restricted Subsidiaries in
settlement of claims against any other person by reason of a
composition or readjustment of debt or a reorganization of any
debtor of the Company or such Restricted Subsidiary.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental
charges or claims either (i) not delinquent or (ii)
contested in good faith by appropriate proceedings and as
to which the Company or the Restricted Subsidiaries shall
17
<PAGE>
have set aside on its books such reserves as may be
required pursuant to GAAP;
(b) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(c) Liens incurred or deposits made in the ordinary
course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money);
(d) judgment Liens not giving rise to an Event of
Default so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly
initiated for the review of such judgment shall not have
been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(e) easements, reservations, licenses, rights-of-
way, zoning restrictions and other similar charges or
encumbrances in respect of real property not interfering
in any material respect with the ordinary conduct of the
business of the Company or any of the Restricted
Subsidiaries;
(f) any interest or title of a lessor or sublessor
under any Capitalized Lease Obligation or operating lease;
(g) purchase money Liens incurred in the ordinary
course of business; provided that (i) the related purchase
money Indebtedness shall not be secured by any property or
assets of the Company or any Restricted Subsidiary other
than the property and assets so acquired and (ii) the Lien
securing such Indebtedness shall be created within 90 days
of such acquisition;
(h) Liens securing reimbursement obligations with
respect to commercial letters of credit which encumber
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documents and other property relating to such letters of
credit and products and proceeds thereof;
(i) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory,
contractual, or warranty requirements of the Company or
any of the Restricted Subsidiaries, including rights of
offset and set-off;
(j) Liens securing Interest Rate Protection
Obligations and Currency Agreements, which Interest Rate
Protection Obligations and Currency Agreements relate to
Indebtedness that is secured by Liens otherwise permitted
under this Indenture;
(k) Liens securing Indebtedness of the Company or
any Restricted Subsidiary incurred to purchase public pay
telephones, which Indebtedness is permitted to be incurred
pursuant to Section 10.11, is owed to a vendor or to a
bank or other financial institution and has financed the
purchase of such public pay telephones; provided that
(i) the amount of such Indebtedness does not exceed, at
the time of incurrence, the lesser of the book value or
the Fair Market Value of the public pay telephones so
acquired and (ii) the Indebtedness shall not be secured by
any property or assets of the Company or any Restricted
Subsidiary other than the public pay telephones so
acquired;
(l) Liens securing Indebtedness under Capitalized
Lease Obligations incurred by the Company or a Restricted
Subsidiary after the Issue Date in the ordinary course of
business to the extent relating to property and assets
subject to the applicable lease and which are securing
solely the lease rental of such property, plus reasonable
fees and expenses incurred in connection therewith; and
(m) Liens securing Acquired Indebtedness created
prior to (and not created in connection with or in
contemplation of) the incurrence of such Indebtedness by
the Company or any Restricted Subsidiary; provided that
such Lien does not extend to any property or assets of the
Company or any Restricted Subsidiary other than the
property and assets acquired in the transaction resulting
in such Acquired Indebtedness being incurred by the
Company or any Restricted Subsidiary; provided, further,
that such Acquired Indebtedness is permitted to be
incurred by the
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Company or such Restricted Subsidiary, as the case may
be, pursuant to Section 10.11.
"person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency
or political subdivision thereof.
"Predecessor Security" means, with respect to any
particular Security, 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 hereof
in exchange for a mutilated Security or in lieu of a lost,
destroyed or stolen Security shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any person,
any and all shares, interests, participations or other
equivalents (however designated) of such person's preferred or
preference stock whether now outstanding or issued after the
Issue Date, and including, without limitation, all classes and
series of preferred or preference stock of such person.
"Private Exchange Securities" shall have the meaning
specified in the Registration Rights Agreement.
"Private Placement Legend" means the legend initially
set forth on the Securities in the form set forth in
Section 2.02(a).
"Purchase Agreement" means the Purchase Agreement,
dated as of July 12, 1995, among the Company and Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated.
"Qualified Institutional Buyer" or "QIB" shall have
the meaning specified in Rule 144A under the Securities Act.
"Redeemable Capital Stock" means any class or series
of Capital Stock that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or by
contract or otherwise, is or upon the happening of an event or
passage of time would be, required to be redeemed on or prior
to any Stated Maturity of the Securities or is redeemable at
the option of the holder thereof at any time on or prior to any
Stated Maturity of the Securities, or is convertible into or
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exchangeable for debt securities at any time prior to any
Stated Maturity of the Securities.
"Redemption Date" means, with respect to any Security
to be redeemed, any date fixed for such redemption by or
pursuant to this Indenture and the terms of the Securities.
"Redemption Price" means, with respect to any
Security to be redeemed, the price at which it is to be
redeemed pursuant to this Indenture and the terms of the
Securities.
"Registered Exchange Offer" means the registration by
the Company, under the Securities Act of all Series B
Securities that are not Private Exchange Securities pursuant to
a registration statement under which the Company offers each
Holder of Series A Securities the opportunity to exchange all
Series A Securities held by such Holder for Series B Securities
in an aggregate principal amount equal to the aggregate
principal amount of Series A Securities held by such Holder,
all in accordance with the terms and conditions of the
Registration Rights Agreement.
"Registrable Securities" shall have the meaning
specified in the Registration Rights Agreement.
"Registration Rights Agreement" means the
Registration Rights Agreement, dated July 19, 1995 by and
between the Company and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as the same may be
amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date
specified in the Securities.
"Regulation S" means Regulation S under the
Securities Act.
"Responsible Officer" means, with respect to the
Trustee, the chairman or vice chairman of the board of
directors, the chairman or vice chairman of the executive
committee of the board of directors, 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 and any assistant controller or any other officer of
the Trustee customarily performing functions similar to those
performed by
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any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer of the
Trustee to whom any corporate trust matter is referred because
of his or her knowledge of and familiarity with the particular
subject.
"Restricted Payment" shall have the meaning specified
in Section 10.12 hereof.
"Restricted Payments Availability" means, at any
date, the amount available as of such date for Restricted
Payments as determined by reference to clauses (C)(1), (2), (3)
and (4) of the first paragraph of Section 10.12 at such date,
less the amount of all Restricted Payments previously declared
or made from and after the Issue Date to such date.
"Restricted Subsidiary" means any Subsidiary of the
Company that has not been designated by the Board, by a Board
Resolution delivered to the Trustee, as an Unrestricted
Subsidiary pursuant to and in compliance with Section 10.10
hereof. Any such designation may be revoked by a Board
Resolution delivered to the Trustee, subject to the provisions
of such Section 10.10.
"Revocation" shall have the meaning specified in
Section 10.10 hereof.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" means any of the securities, as defined
in the first paragraph of the recitals hereof, that are
authenticated and delivered under this Indenture. For all
purposes of this Indenture, the term "Securities" shall include
any Series B Securities to be issued and exchanged for any
Series A Securities pursuant to the Registration Rights
Agreement and this Indenture and, for purposes of this
Indenture, all Series A Securities and Series B Securities
shall vote together as one series of Securities under this
Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Security Register" and "Security Registrar" shall
have the respective meanings specified in Section 3.05 hereof.
"Series A Securities" has the meaning stated in the
first recital of this Indenture.
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"Series B Securities" has the meaning stated in the
first recital of this Indenture and refers to any Series B
Securities, containing terms substantially identical to the
Series A Securities (except that such Series B Securities
(other than the Private Exchange Securities) shall be
registered under the Securities Act), that are issued and
exchanged for the Series A Securities pursuant to the
Registration Rights Agreement and this Indenture.
"Significant Subsidiary" means, at any particular
time, any Restricted Subsidiary that, together with the
Restricted Subsidiaries of such Restricted Subsidiary, (a)
accounted for more than 10% of the consolidated revenues of the
Company and the Restricted Subsidiaries for the most recently
completed fiscal year of the Company or (b) was the owner of
more than 10% of the consolidated assets of the Company and the
Restricted Subsidiaries as at the end of such fiscal year, all
as shown on the consolidated financial statements of the
Company and the Restricted Subsidiaries for such fiscal year.
"Special Record Date" means, with respect to the
payment of any Defaulted Interest, a date fixed by the Trustee
pursuant to Section 3.07 hereof.
"Stated Maturity" means, when used with respect to
any Security or any installment of interest thereon, the date
specified in such Security as the fixed date on which any
principal of such Security or such installment of interest is
due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument
governing such Indebtedness as the fixed date on which the
principal of such Indebtedness, or any installment of interest
thereon, is due and payable.
"Subordinated Indebtedness" means Indebtedness of the
Company which is expressly subordinated in right of payment to
the Securities.
"Subsidiary" means, with respect to any person, (i) a
corporation a majority of whose Voting Stock is at the time,
directly or indirectly, owned by such person, by one or more
Subsidiaries of such person or by such person and one or more
Subsidiaries thereof and (ii) any other person (other than a
corporation), including without limitation, a joint venture, in
which such person, one or more Subsidiaries thereof or such
person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, has at least
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majority ownership interest entitled to vote in the election of
directors, managers or trustees thereof (or other person
performing similar functions). For purposes of this
definition, any directors' qualifying shares or investments by
foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Trust Indenture Act" or "TIA" means the Trust
Indenture Act of 1939, as amended.
"Trustee" means the person named as the "Trustee" in
the first paragraph of this Indenture, until a successor
Trustee shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
mean such successor Trustee.
"UBS Capital Preferred Stock" means the Company's
Series C Cumulative Convertible Preferred Stock, par value $.01
per share, issued pursuant to the Securities Purchase Agreement
dated as of July 3, 1995 among the Company, UBS Capital
Corporation and Appian Capital Partners, L.L.C.
"Unrestricted Subsidiary" means (i) PTC Cellular,
Inc. and (ii) any other Subsidiary of the Company designated as
such pursuant to and in compliance with Section 10.10 hereof.
Any such designation pursuant to clause (i) or (ii) may be
revoked by a Board Resolution delivered to the Trustee, subject
to the provisions of Section 10.10; provided that PTC Cellular,
Inc. shall be an Unrestricted Subsidiary for so long as it
constitutes a Discontinued Operation.
"U.S. Government Obligations" means securities that
are (i) direct obligations of the United States of America for
the timely payment of which its full faith and credit is
pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the
United States of America the timely 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 include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository
receipt, provided that (except as required by law) such
custodian is not authorized to make any
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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.
"Voting Stock" means any class or classes of Capital
Stock pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of any
person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting
power by reason of the happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any
Restricted Subsidiary of which 100% of the outstanding Capital
Stock is owned by the Company or another Wholly-Owned
Restricted Subsidiary. For purposes of this definition, any
directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in
determining the ownership of a Restricted Subsidiary.
Section 1.02. Other Definitions.
Defined in
Term Section
"Act" 1.05
"Asset Sale Offer" 10.14
"Asset Sale Offer Price" 10.14
"Asset Sale Purchase Date" 10.14
"Change of Control Date" 10.15
"Change of Control Offer" 10.15
"Change of Control Purchase Date" 10.15
"Change of Control Purchase Price" 10.15
"covenant defeasance" 4.03
"Defaulted Interest" 3.07
"defeasance" 4.02
"Defeased Securities" 4.01
"incur" 10.11
"Notice of Default" 5.01
"Offshore Securities Exchange Date" 3.01
"Permanent Offshore Physical
Securities" 3.01
"Physical Securities" 3.01
"Restricted Security" 2.05
"Surviving Entity" 8.01
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"Temporary Offshore Physical
Securities" 3.01
"U.S. Global Security" 3.01
"U.S. Physical Securities" 3.01
Section 1.03. Rules of Construction.
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 GAAP;
(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;
(e) all references to "$," or, "dollars" shall refer
to the lawful currency of the United States of America;
(f) the words "include," "included" and "including"
as used herein shall be deemed in each case to be followed
by the phrase "without limitation."
Section 1.04. Form of Documents Delivered to
Trustee.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee (a) an Officers' Certificate in
form and substance satisfactory to the Trustee stating that, in
the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with, (b) an Opinion of Counsel in form and
substance satisfactory to the Trustee stating that, in the
opinion of counsel, all such conditions have been complied with
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and (c) where applicable, a certificate of opinion by an
accountant that complies with Section 314(c) of the Trust
Indenture Act.
Each certificate and Opinion of Counsel with respect
to compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that the person making such
certificate or Opinion of Counsel has read such covenant
or condition;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
contained in such certificate or Opinion of Counsel are
based;
(c) a statement that, in the opinion of such person,
he has made such examination or investigation as is
necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion
of such person, such condition or covenant has been
complied with.
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 relates to legal matters,
upon a certificate or opinion of, or representations by,
counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such
certificate or opinion of counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of,
or representations by, an officer or officers of the Company
stating that
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the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated, with proper
identification of each matter covered therein, and form one
instrument.
Section 1.05. 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 (as provided below in subsection (b) of this
Section 1.05) of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01 hereof) 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 in any
reasonable 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 action by the Holder of any
Security shall bind every future Holder of the same Security or
the Holder of every Security issued upon the transfer thereof
or in exchange therefor or in lieu thereof to the same extent
as the original Holder, in respect of anything done, suffered
or omitted to be done by the Trustee, any Paying Agent or the
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Company in reliance thereon, whether or not notation of such
action is made upon such Security.
Section 1.06. Notices, etc., to the Trustee and the
Company.
Any request, demand, authorization, direction,
notice, consent, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with:
(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 230 South Tryon Street, 8th Floor, Charlotte,
North Carolina 28288-1179, Attention: Corporate Trust
Division or at any other address previously furnished in
writing to the Holders and the Company by the Trustee or
at the office of any drop agent specified to the Holders
and the Company from time to time;
(b) the Company by the Trustee or by any Holder
shall be sufficient for every purpose (except as otherwise
expressly provided herein) hereunder if in writing and
mailed, first-class postage prepaid, to the Company
addressed to it at 2300 N.W., 89 Place, Miami, Florida
33172, Attention: Chief Executive Officer, or at any
other address previously furnished in writing to the
Trustee by the Company.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders
of any event, such notice shall be sufficiently given (unless
otherwise expressly provided herein) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at the address of such Holder 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.
Any notice when mailed to a Holder in the aforesaid manner
shall be conclusively deemed to have been received by such
Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice
may be
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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 mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed
to be a sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or
conflicts with any provision of the Trust Indenture Act or
another provision which is required or deemed to be included in
this Indenture by any of the provisions of the Trust Indenture
Act, such provision or requirement of the Trust Indenture Act
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 latter provision shall be deemed
to apply to this Indenture as so modified or excluded, as the
case may be.
Section 1.09. Effect of Headings and Table of
Contents.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company, shall bind their respective successors and assigns,
whether so expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
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validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Securities issued
pursuant hereto, express or implied, shall give to any person
(other than the parties hereto and their successors hereunder,
any Paying Agent and the Holders) any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 1.13. 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 GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF). THE TRUSTEE, THE COMPANY, ANY OTHER
OBLIGOR IN RESPECT OF THE SECURITIES AND THE HOLDERS AGREE TO
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN
THE CITY OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE OR THE SECURITIES.
Section 1.14. No Recourse Against Others.
A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Holder by
accepting any of the Securities waives and releases all such
liability.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall
be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact
that it would be permitted by an exception to, or be otherwise
within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or condition
exists.
Section 1.16. Exhibits.
All exhibits attached hereto are by this reference
made a part hereof with the same effect as if herein set forth
in full.
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Section 1.17. Counterparts.
This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same
instrument.
Section 1.18. Duplicate Originals.
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
ARTICLE TWO
SECURITY FORMS
Section 2.01. Forms Generally.
The Securities and the Trustee's certificate of
authentication with respect thereto shall be in substantially
the forms set forth, or referenced, 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 any applicable law or 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.
The definitive Securities shall be printed,
typewritten, 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 of such Securities.
Section 2.02. Form of Face of Securities.
(a) The form of the face of the Series A Securities
shall be substantially as follows:
[Legend if Security is a Restricted Security]
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THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE OR OTHER SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH
PEOPLES TELEPHONE COMPANY, INC. (THE "COMPANY") OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF THIS SECURITY) (THE "RESALE
RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2),
(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND
IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY
IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
33
<PAGE>
PEOPLES TELEPHONE COMPANY INC.
___________
12-1/4% SENIOR NOTES DUE 2002
CUSIP No.
No. ___________ $____________
PEOPLES TELEPHONE COMPANY INC., a New York
corporation (herein called the "Company", which term includes
any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
_______________ or registered assigns, the principal sum of
_______________ United States Dollars on July 15, 2002, at the
office or agency of the Company referred to below, and to pay
interest thereon on January 15, and July 15, in each year,
commencing on January 15, 1996 (each an "Interest Payment
Date"), accruing from the Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for, at the rate of 12-1/4% per annum, until the
principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year of twelve 30-day
months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, 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
January 1 or July 1 (each a "Regular Record Date"), 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, and interest on such defaulted
interest at the then applicable interest rate borne by the
Securities, to the extent lawful, shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may 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 of which shall be
given to Holders of Securities not less than 10 days prior to
such Special Record Date, or may 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 such Indenture. In addition, the
Company may be obligated to pay additional interest pursuant to
certain provisions of the Registration Rights Agreement.
34
<PAGE>
If this Security is a Global Security, all payments
in respect of this Security will be made to the Depository or
its nominee in immediately available funds in accordance with
customary procedures established from time to time by the
Depository. If this Security is a Global Security and a
Restricted Security, only Qualified Institutional Buyers (as
defined in Rule 144A under the Securities Act) may hold a
beneficial interest herein. If this Security is not a Global
Security, payment of the principal of, premium, if any, and
interest on this Security will be made at the office or agency
of the Company maintained for that purpose in the Borough of
Manhattan in The City of New York, or at such other office or
agency of the Company as may be maintained 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 public and
private debts; provided, however, that payment of interest may
be made at the option of the Company by check mailed to the
address of the person entitled thereto as such address shall
appear on the Security Register.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly 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.
Dated: PEOPLES TELEPHONE COMPANY INC.
By:
---------------------------
Name:
Attest: Title:
__________________________
Authorized Signature
By:
---------------------------
Name:
Title:
35
<PAGE>
(b) The form of the face of the Series B Securities
shall be substantially as follows:
PEOPLES TELEPHONE COMPANY INC.
________________
12-1/4% SENIOR NOTES DUE 2002,
SERIES B
CUSIP No.________
No. _____________ $_____________
PEOPLES TELEPHONE COMPANY INC., a New York
corporation (herein called the "Company", which term includes
any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to
______________________ or registered assigns, the principal sum
of ___________________ Dollars on July 15, 2002, at the office
or agency of the Company referred to below, and to pay interest
thereon on January 15 and July 15 (each an "Interest Payment
Date"), in each year, commencing on January 15, 1996, accruing
from the Issue Date or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, at
the rate of 12-1/4% per annum, until the principal hereof is paid
or duly provided for. Interest shall be computed on the basis
of a 360-day year of twelve 30-day months.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
the Indenture referred to on the reverse hereof, 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
January 1 or July 1 (each a "Regular Record Date"), 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, and interest on such defaulted
interest at the then applicable interest rate borne by the
Securities, to the extent lawful, shall forthwith cease to be
payable to the Holder on such Regular Record Date, and may 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 of which shall be
given to Holders of Securities not less than 10 days prior to
such Special Record Date, or may 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,
36
<PAGE>
and upon such notice as may be required by such exchange, all
as more fully provided in such Indenture.
If this Security is a Global Security, all payments
in respect of this Security will be made to the Depository or
its nominee in immediately available funds in accordance with
customary procedures established from time to time by the
Depository. If this Security is not a Global Security, payment
of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan in The
City of New York, or at such other office or agency of the
Company as may be maintained 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 public and private
debts; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the address of
the person entitled thereto as such address shall appear on the
Security Register.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof.
Unless the certificate of authentication hereon has
been duly 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.
Dated: PEOPLES TELEPHONE COMPANY INC.
By:
---------------------------
Attest: Name:
Title:
_____________________________ By:
Authorized Signature ---------------------------
Name:
Title:
37
<PAGE>
Section 2.03. Form of Reverse of Security.
(a) The form of the reverse of the Series A
Securities shall be substantially as follows:
1. Indenture. This Security is one of a duly
authorized issue of Securities of the Company designated as its
12-1/4% Senior Notes due 2002 (herein called the "Series A
Securities"), limited (except as otherwise provided in the
Indenture referred to below) in aggregate principal amount to
$100,000,000, which may be issued under an indenture (herein
called the "Indenture") dated as of July 15, 1995, between the
Company and First Union National Bank of North Carolina, 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, obligations and immunities thereunder of the
Company, the Trustee, and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be,
authenticated and delivered.
All capitalized terms used in this Series A Security
which are defined in the Indenture and not otherwise defined
herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no
provisions of this Series A Security or of the Indenture shall
alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium,
if any, and interest on this Security at the times, place, and
rate, and in the coin or currency, herein prescribed.
2. Registration Rights. Pursuant to the
Registration Rights Agreement, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of
this Security shall have the right to exchange this Security
for 12-1/4% Senior Notes due 2002, Series B, of the Company
(herein called the "Series B Securities") which have been
registered (or, with respect to certain Series B Securities
thereof, which will be entitled to such registration, as set
forth in the Registration Rights Agreement) under the
Securities Act, in like principal amount and having identical
terms as the Series A Securities hereof, respectively. The
Holders of Series A Securities shall be entitled to receive
certain additional interest payments in the event such exchange
offer is not consummated
38
<PAGE>
and upon certain other conditions, all pursuant to and in accordance
with the terms of the Registration Rights Agreement. The Series A
Securities and the Series B Securities are together referred to herein
as the "Securities."
3. Redemption.
(a) Optional Redemption. The Securities are subject
to redemption, at the option of the Company, as a whole or in
part in principal amounts of $1,000 or any integral multiple of
$1,000, at any time on or after July 15, 2000, upon not less
than 30 nor more than 60 days' prior notice at the Redemption
Prices (expressed as percentages of the principal amount) set
forth below, plus accrued and unpaid interest to the redemption
date, if redeemed during the 12-month period beginning July 15
of the years indicated below:
Redemption
Year Price
2000 103.500%
2001 101.750%
2002 100.000%
In addition, prior to July 15, 1998, in the event of
one or more Equity Offerings consummated after the Issue Date
(other than the sale of the UBS Capital Preferred Stock) for
aggregate gross proceeds to the Company equal to or exceeding
$10,000,000, the Company may redeem in the aggregate up to a
maximum of 20% of the principal amount of the Securities
originally issued with the net proceeds thereof at a redemption
price equal to 111-1/4% of the principal amount thereof, plus
accrued and unpaid interest to the Redemption Date.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Securities.
(c) Interest Payments. In the case of any
redemption of Series A Securities, interest installments whose
Stated Maturity is on or prior to the 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 Date referred to on the face hereof.
Securities (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption
Date.
39
<PAGE>
(d) Partial Redemption. In the event of redemption
of this Series A Security in part only, a new Series A Security
or Securities for the unredeemed portion hereof shall be issued
in the name of the Holder hereof upon the cancellation hereof.
4. Offers to Purchase. Sections 10.14 and 10.15 of
the Indenture provide that following any Asset Sale and upon
the occurrence of a Change of Control, and subject to further
limitations contained therein, the Company shall make an offer
to purchase certain amounts of the Securities in accordance
with the procedures set forth in the Indenture.
5. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the
outstanding Securities, plus all accrued and unpaid interest,
if any, to and including the date the Securities are paid, may
be declared due and payable in the manner and with the effect
provided in the Indenture.
6. Defeasance. The Indenture contains provisions
(which provisions apply to this Series A Security) for
defeasance at any time of (a) the entire indebtedness of the
Company on this Series A Security and (b) certain restrictive
covenants and related Defaults and Events of Default, in each
case upon compliance by the Company with certain conditions set
forth therein.
7. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Securities, amend, waive or
supplement the Indenture or the Securities for certain
specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the
qualification of the Indenture under the Trust Indenture Act of
1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Securities may be made by
the Company and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of
the Outstanding Securities, subject to certain exceptions
requiring the consent of the Holders of the particular
Securities to be affected. Any such consent or waiver by or on
behalf of the Holder of this Series A Security shall be
conclusive and binding upon such Holder and upon all future
Holders of this Series A Security and of any Series A Security
issued upon the registration of transfer hereof or in exchange
herefor or in
40
<PAGE>
lieu hereof whether or not notation of such consent or waiver is
made upon this Series A Security.
8. Denominations, Transfer and Exchange. The Series
A Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple
thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Series A Securities are
exchangeable for a like aggregate principal amount of Series A
Securities of a different authorized denomination, as requested
by the Holder surrendering the same.
If this Series A Security is in certificated form,
then as provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Series A
Security is registrable on the Security Register of the
Company, upon surrender of this Series A Security for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Series A Securities,
of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee
or transferees.
If this Series A Security is a Restricted Security in
certificated form, then as provided in the Indenture and
subject to certain limitations therein set forth, the Holder,
provided it is a Qualified Institutional Buyer, may exchange
this Series A Security for a book-entry security by instructing
the Trustee to arrange for such Series A Security to be
represented by a beneficial interest in a Global Security in
accordance with the customary procedures of the Depository.
If this Series A Security is a Global Security, it is
exchangeable for Series A Securities in certificated form if
(i) the Depository notifies the Company that it is unwilling or
unable to continue as depository and a successor Depository is
not appointed by the Company within 60 days or (ii) there shall
have occurred and be continuing an Event of Default and the
Security Registrar has received a request from the Depository
to issue certificated Securities. In addition, in accordance
with the provisions of the Indenture and subject to certain
limitations therein set forth, a beneficial owner of a
beneficial interest in a Global Security may request a Series A
Security in certificated form, in exchange in whole or in part,
as the case may be, for such beneficial owner's interest in the
Global Security. In any such instance, an owner of a
41
<PAGE>
beneficial interest in a Global Security will be entitled to
physical delivery in certificated form of Series A Securities
in authorized denominations equal in principal amount to such
beneficial interest and to have such Series A Securities
registered in its name.
No service charge shall be made for any registration
of transfer or exchange or redemption of Series A Securities,
but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in
connection therewith.
9. Certain Information Obligations. At any time
when the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, upon the request of a Holder
of a Series A Security, the Company will promptly furnish or
cause to be furnished such information as is specified pursuant
to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto) to such Holder or to a prospective purchaser
of such Series A Security designated by such Holder, as the
case may be, in order to permit compliance by such Holder with
Rule 144A under the Securities Act.
10. Persons Deemed Owners. Prior to and at the time
of due presentment of this Series 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 this
Series A Security is registered as the owner hereof for all
purposes, whether or not this Series A Security shall be
overdue, and neither the Company, the Trustee nor any agent
shall be affected by notice to the contrary.
11. GOVERNING LAW. THE INDENTURE AND THIS SECURITY
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE SECURITIES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THE INDENTURE OR THIS SECURITY.
42
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to
- - - ---------------------------------------------------------------
(Insert assignee's social security or tax ID number) ----------
- - - ---------------------------------------------------------------
- - - ---------------------------------------------------------------
- - - ---------------------------------------------------------------
(Print or type assignee's name, address and zip code) and
irrevocably appoint
- - - ---------------------------------------------------------------
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for such agent.
In connection with any transfer of this Security
occurring prior to the date which is the earlier of (i) the
date of the declaration by the Commission of the effectiveness
of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), covering resales of this
Security (which effectiveness shall not have been suspended or
terminated at the date of the transfer) and (ii) the later of
July 19, 1998, or the date three years after the Company or an
Affiliate of the Company was the owner of this Security (or any
Predecessor Security), the undersigned confirms that it has not
utilized any general solicitation or general advertising in
connection with the transfer and that:
43
<PAGE>
[Check One]
[ ] (a) this Security is being transferred in compliance
with the exemption from registration under the
Securities Act provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in
accordance with (a) above and documents, including a
transferee certificate substantially in the form
attached hereto, are being furnished which comply
with the conditions of transfer set forth in this
Security and the Indenture.
If none of the foregoing boxes is checked and, in the case of
(b) above, if the appropriate document is not attached or
otherwise furnished to the Trustee, the Trustee or Registrar
shall not be obligated to register this Security in the name of
any person other than the Holder hereof unless and until the
conditions to any such transfer of registration set forth
herein and in Section 3.14 of the Indenture shall have been
satisfied.
- - - --------------------------------------------------------------------
Date: Your signature:
-------------- --------------------------------
(Sign exactly as your name
appears on the other side of
this Security)
By:
-----------------------
NOTICE: To be executed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is
purchasing this Security for its own account or an account with
44
<PAGE>
respect to which it exercises sole investment discretion and
that it and any such account is a "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ ____________________________
NOTICE: To be executed by
an executive officer
[The Transferee Certificate (Exhibit A to the
Indenture) will be attached to the Series A Security]
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the
Company pursuant to Section 10.14 or 10.15 of the Indenture,
check the Box: [ ]
If you wish to have a portion of this Security
purchased by the Company pursuant to Section 10.14 or 10.15 of
the Indenture, state the amount:
$______________
Date: _____________ Your Signature: ______________________
(Sign exactly as your name
appears on the other side
of this Security)
By:
------------------------
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
45
<PAGE>
(b) The form of the reverse of the Series B
Securities shall be substantially as follows:
1. Indenture. This Security is one of a duly
authorized issue of Securities of the Company designated as its
12-1/4% Senior Notes due 2002, Series B (herein called the
"Series B Securities"), limited (except as otherwise provided
in the Indenture referred to below) in aggregate principal
amount to $100,000,000, which may be issued under an indenture
(herein called the "Indenture") dated as of July 15, 1995,
between the Company and First Union National Bank of North
Carolina, 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,
limitation of rights, duties, obligations and immunities
thereunder of the Company, the Trustee and the Holders of the
Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
All capitalized terms used in this Series B Security
which are defined in the Indenture and not otherwise defined
herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provision
of this Series B Security or of the Indenture shall alter or
impair the obligation of the Company or, which is absolute and
unconditional, to pay the principal of, premium, if any, and
interest on this Security at the times, place, and rate, and in
the coin or currency, herein prescribed.
The Series B Securities were issued pursuant to an
exchange offer pursuant to which 12-1/4% Senior Notes due 2002 of
the Company (herein called the "Series A Securities"), in like
principal amount and having substantially identical terms as
the Series B Securities, were exchanged for the Series B
Securities. The Series A Securities and the Series B
Securities are together referred to herein as the "Securities."
2. Redemption.
(a) Optional Redemption. The Securities are subject
to redemption, at the option of the Company, as a whole or in
part in principal amounts of $1,000 or any integral multiple of
$1,000, at any time on or after July 15, 2000, upon not less
than 30 nor more than 60 days' prior notice, at the Redemption
46
<PAGE>
Prices (expressed as percentages of the principal amount) set
forth below, plus accrued and unpaid interest to the redemption
date, if redeemed during the 12-month period beginning July 15
of the years indicated below:
Redemption
Year Price
2000 103.500%
2001 101.750%
2002 100.000%
In addition, prior to July 15, 1998, in the event of
one or more Equity Offerings consummated after the Issue Date
(other than the sale of the UBS Capital Preferred Stock) for
aggregate gross proceeds to the Company equal to or exceeding
$10,000,000, the Company may redeem in the aggregate up to a
maximum of 20% of the principal amount of the Securities
originally issued with the net proceeds thereof at a redemption
price equal to 111-1/4% of the principal amount thereof, plus
accrued and unpaid interest to the Redemption Date.
(b) Sinking Fund. The Company will not be required
to make any mandatory sinking fund payments in respect of the
Securities.
(c) Interest Payments. In the case of any
redemption of Series B Securities, interest installments whose
Stated Maturity is on or prior to the 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 Date referred to on the face hereof.
Securities (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption
Date.
(d) Partial Redemption. In the event of redemption
of this Series B Security in part only, a new Series B Security
or Securities for the unredeemed portion hereof shall be issued
in the name of the Holder hereof upon the cancellation hereof.
3. Offers to Purchase. Sections 10.14 and 10.15 of
the Indenture provide that following any Asset Sale and upon
the occurrence of a Change of Control, and subject to further
limitations contained therein, the Company shall make an offer
to purchase certain amounts of the Securities in accordance
with the procedures set forth in the Indenture.
47
<PAGE>
4. Defaults and Remedies. If an Event of Default
shall occur and be continuing, the principal of all of the
outstanding Securities, plus all accrued and unpaid interest,
if any, to and including the date the Securities are paid, may
be declared due and payable in the manner and with the effect
provided in the Indenture.
5. Defeasance. The Indenture contains provisions
(which provisions apply to this Series B Security) for
defeasance at any time of (a) the entire indebtedness of the
Company on this Series B Security and (b) certain restrictive
covenants and related Defaults and Events of Default, in each
case upon compliance by the Company with certain conditions set
forth therein.
6. Amendments and Waivers. The Company and the
Trustee (if a party thereto) may, without the consent of the
Holders of any Outstanding Securities, amend, waive or
supplement the Indenture or the Securities for certain
specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, maintaining the
qualification of the Indenture under the Trust Indenture Act of
1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and
modifications of the Indenture or the Securities may be made by
the Company and the Trustee with the consent of the Holders of
not less than a majority of the aggregate principal amount of
the Outstanding Securities, subject to certain exceptions
requiring the consent of the Holders of the particular
Securities to be affected. Any such consent or waiver by or
on behalf of the Holder of this Series B Security shall be
conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Series B 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 Series B Security.
7. Denominations, Transfer and Exchange. The
Series B Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Series B Securities
are exchangeable for a like aggregate principal amount of
Series B Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
48
<PAGE>
If this Series B Security is in certificated form,
then as provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Series B
Security is registrable on the Security Register of the
Company, upon surrender of this Series B Security for
registration of transfer at the office or agency of the Company
maintained for such purpose in the Borough of Manhattan in The
City of New York or at such other office or agency of the
Company as may be maintained for such purpose, duly endorsed
by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Series B Securities,
of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee
or transferees.
If this Series B Security is a Global Security, it is
exchangeable for Series B Securities in certificated form if
(i) the Depository notifies the Company that it is unwilling or
unable to continue as depository and a successor Depository is
not appointed by the Company within 60 days or (ii) there shall
have occurred and be continuing an Event of Default and the
Security Registrar has received a request from the Depository
to issue certificated Securities. In addition, in accordance
with the provisions of the Indenture and subject to certain
limitations therein set forth, a beneficial owner of a
beneficial interest in a Global Security may request a Series B
Security in certificated form, in exchange in whole or in part,
as the case may be, for such beneficial owner's interest in the
Global Security. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to
physical delivery in certificated form of Series B Securities
in authorized denominations equal in principal amount to such
beneficial interest and to have such Series B Securities
registered in its name.
No service charge shall be made for any registration
of transfer or exchange or redemption of Series B Securities,
but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in
connection therewith.
8. Persons Deemed Owners. Prior to and at the time
of due presentment of this Series B 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
Series B Security is registered as the owner hereof for all
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purposes, whether or not this Series B Security shall be
overdue, and neither the Company, the Trustee nor any agent
shall be affected by notice to the contrary.
9. GOVERNING LAW. THE INDENTURE AND THIS SECURITY
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE
COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE SECURITIES AND THE
HOLDERS AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR STATE COURT LOCATED IN THE CITY OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THE INDENTURE OR SECURITY.
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ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to
- - - --------------------------------------------------------------------
(Insert assignee's social security or tax ID number) ---------------
- - - --------------------------------------------------------------------
- - - --------------------------------------------------------------------
- - - --------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and
irrevocably appoint
- - - --------------------------------------------------------------------
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for such agent.
Date: Your signature:
--------------- ---------------------------------
(Sign exactly as your name
appears on the other side of
this Security)
By:
-------------------------
NOTICE: To be signed
by an executive officer
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the
Company pursuant to Section 10.14 or 10.15 of the Indenture,
check the Box: [ ]
If you wish to have a portion of this Security
purchased by the Company pursuant to Section 10.14 or 10.15 of
the Indenture, state the amount:
$______________
Date: __________________ Your Signature: ______________________
(Sign exactly as your
name appears on the
other side of this
Security)
By:
------------------
NOTICE: To be signed
by an executive
officer.
NOTICE: Signature(s) must be guaranteed by an institution
which is a participant in the Securities Transfer Agent
Medallion Program ("STAMP") or similar program.
Section 2.04. Form of Trustee's Certificate of
Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, as Trustee
By:
----------------------------
Authorized Officer
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Section 2.05. Form of Legend on Restricted
Securities.
During the period beginning on the later of the Issue
Date and the last date on which the Company or any Affiliate of
the Company was the owner of a Series A Security (or any
Predecessor Security) and ending on the date three years from
any such date (or such longer period as may be required under
the Securities Act or applicable state securities laws in the
opinion of counsel for the Company), any Series A Security
issued or owned during the period set forth above, as the case
may be, and any Security issued upon registration of transfer
of, or in exchange for, or in lieu of, such Series A Security,
shall be deemed a "Restricted Security" and shall be subject to
the restrictions on transfer provided in the legend set forth
on the face of the form of Series A Security in Section
2.02(a); provided, however, that the term "Restricted Security"
shall not include (a) any Series A Security which is issued
upon transfer of, or in exchange for, any Security which is not
a Restricted Security or (b) any Series A Security as to which
such restrictions on transfer have been terminated in
accordance with Section 3.05, (c) any Series B Security issued
pursuant to the Registered Exchange Offer or (d) any Series B
Security sold pursuant to a Shelf Registration Statement (as
defined in the Registration Rights Agreement). Any Restricted
Security shall bear the legend set forth on the face of the
Security pursuant to Section 2.02(a).
Section 2.06. Form of Legend for Global Securities.
Any Global Security authenticated and delivered
hereunder shall bear a legend (which would be in addition to
any other legends required in the case of a Restricted
Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR
A NOMINEE OF THE DEPOSITORY OR A SUCCESSOR
DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE,
AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER
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NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND SUCH CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE
THE REGISTERED OWNER HEREOF, CEDE, & CO., HAS AN
INTEREST HEREIN.
ARTICLE THREE
THE SECURITIES
Section 3.01. Title and Terms.
The aggregate principal amount of Securities which
may be authenticated and delivered under this Indenture is
limited to $100,000,000 in aggregate principal amount of Series
A Securities and Series B Securities, except for Securities
authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities pursuant to
Section 3.03, 3.04, 3.05, 3.06, 9.06, 10.14, 10.15, or 11.08.
The Series A Securities shall be known and designated
as the "12-1/4% Senior Notes due 2002" of the Company. The Series
B Securities shall be known and designated as the "12-1/4% Senior
Notes due 2002, Series B" of the Company. The final Stated
Maturity of the Series A Securities and the Series B Securities
shall be July 15, 2002, and the Series A Securities and
Series B Securities shall each bear interest at the rate of
12-1/4% per annum (as adjusted pursuant ot the Registration Rights
Agreement) from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid, as the case may
be, payable on January 15, 1996 and semi-annually thereafter on
January 15 and July 15, in each year, until the principal
thereof is paid or duly provided for. Interest on any overdue
principal, interest (to the extent lawful) or premium, if any,
shall be payable on demand.
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Series B Securities may be issued only in exchange
for a like principal amount of Series A Securities pursuant to
an Exchange Offer.
Series A Securities offered and sold in reliance on
Rule 144A shall be issued initially in the form of one or more
permanent global Securities substantially in the form set forth
in Sections 2.02(a) and 2.03(a) hereof (the "U.S. Global
Security") deposited with the Trustee, as custodian of the
Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal
amount of the U.S. Global Security may from time to time be
increased or decreased by adjustments made on the records of
the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Series A Securities offered and sold in reliance on
Regulation S shall be issued initially in the form of one or
more Global Securities substantially in the form set forth in
Sections 2.02(a) and 2.03(a) hereof (the "Temporary Offshore
Global Securities"). The Temporary Offshore Global Securities
will be registered in the name of, and held by, a temporary
holder designated by Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated until the later of the
completion of the distribution of the Series A Securities and
the termination of the "restricted period" (as defined in
Regulation S) with respect to the offer and sale of the
Series A Securities (the "Offshore Securities Exchange Date").
At any time following the Offshore Securities Exchange Date,
upon receipt by the Trustee and the Company of a certificate
substantially in the form of Exhibit B hereto, the Company
shall execute, and the Trustee shall authenticate and deliver,
one or more permanent certificated Securities in registered
form substantially in the form set forth in Sections 2.02(a)
and 2.03(a) hereof (the "Permanent Offshore Physical
Securities"), in exchange for the surrender of Temporary
Offshore Global Securities of like tenor and amount.
Series A Securities offered and sold other than as
described in the preceding two paragraphs shall be issued in
the form of permanent certificated Securities in registered
form in substantially the form set forth in Sections 2.02(a)
and 2.03(a) hereof (the "U.S. Physical Securities").
The Temporary Offshore Global Securities, Permanent
Offshore Physical Securities and U.S. Physical Securities are
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<PAGE>
sometimes collectively herein referred to as the "Physical
Securities."
The principal of, premium, if any, and interest on
Global Securities shall be payable to the Depository or its
nominee, as the case may be, as the sole registered owner and
the sole holder of the Global Securities represented thereby.
The principal of, premium, if any, and interest on Securities
in certificated form shall be payable at the office or agency
of the Company maintained for such purpose in The City of New
York, or at such other office or agency of the Company as may
be maintained for such purpose; provided, however, that at the
option of the Company interest may be paid by check mailed to
the addresses of the persons entitled thereto as such addresses
shall appear on the Security Register.
The Securities shall be redeemable as provided in
Article Eleven.
At the election of the Company, the entire
Indebtedness on the Securities or certain of the Company's
obligations and covenants and certain Events of Default
thereunder may be defeased as provided in Article Four.
Section 3.02. Denominations.
The Securities shall be issuable only in registered
form without coupons and only in denominations of $1,000 and
any integral multiple thereof.
Section 3.03. Execution, Authentication, Delivery
and Dating.
The Securities shall be executed on behalf of the
Company by any two of its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Financial Officer,
its Treasurer or its Vice Presidents, and by any one of its
Secretary or Assistant Secretary, under its corporate seal
reproduced thereon 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 signature
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
56
<PAGE>
to the authentication and delivery of such Securities or
did not hold such offices on 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 to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee
in accordance with such Company Order shall authenticate and
deliver such Securities as provided in this Indenture and not
otherwise. On Company Order, the Trustee or an authenticating
agent shall authenticate for original issue Series B Securities
in an aggregate principal amount not to exceed $100,000,000;
provided that such Series B Securities shall be issuable only
upon the valid surrender for cancellation of Series A
Securities of a like aggregate principal amount in accordance
with an Exchange Offer pursuant to the Registration Rights
Agreement. In each case, the Trustee shall be entitled to
receive an Officers' Certificate and an Opinion of Counsel of
the Company that it may reasonably request in connection with
such authentication of Securities. Such order shall specify
the amount of Securities to be authenticated and the date on
which the original issue of Series A Securities or Series B
Securities is to be authenticated. The aggregate principal
amount of Securities outstanding at any time may not exceed
$100,000,000 except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in
lieu of, other Securities pursuant to Section 3.01.
Each Security shall be dated the date of its
authentication.
No Security 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 in Section 2.04 hereof
duly executed by the Trustee by manual signature of an
authorized representative, and such certificate upon any
Security shall be conclusive evidence, and the only evidence,
that such Security has been duly authenticated and delivered
hereunder.
In case the Company, pursuant to Article Eight, shall
be consolidated or merged with or into any other person or
shall convey, transfer or lease substantially all of its
properties and assets to any person, and the successor person
resulting from such consolidation or surviving such merger, or
into which the Company shall have been merged, or the person
57
<PAGE>
which shall have received a conveyance, transfer or lease as
aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the
Securities authenticated or delivered prior to such
consolidation, merger, conveyance, transfer or lease may, from
time to time, at the request of the successor person, be
exchanged for other Securities executed in the name of the
successor person with such changes in terminology and form as
may be appropriate, but otherwise in substance of like tenor as
the Securities surrendered for such exchange and of like
principal amount; and the Trustee, upon Company Order of the
successor person, shall authenticate and deliver replacement
Securities as specified in such request for the purpose of such
exchange. If such Securities shall at any time be
authenticated and delivered in any new name of a successor
person pursuant to this Section 3.03 in exchange or
substitution for or upon registration of transfer of any
Securities, such successor person, at the option of the Holders
but without expense to them, shall provide for the exchange of
all Securities at the time Outstanding for Securities
authenticated and delivered in such new name.
The Trustee may appoint an authenticating agent to
authenticate Securities on behalf of the Trustee if directed to
do so by a Company Order. Each reference in this Indenture to
authentication by the Trustee includes authentication by each
such agent. An authenticating agent has the same rights as any
Security Registrar or Paying Agent to deal with the Company and
its Affiliates.
If the Securities are to be issued in the form of one
or more Global Securities, then the Company shall execute and
the Trustee shall authenticate and deliver one or more Global
Securities that (i) shall represent and shall be in minimum
denominations of $1,000, (ii) shall be registered in the name
of the Depository for such Global Security or Securities or the
nominee of such Depository, (iii) shall be delivered by the
Trustee to such Depository or pursuant to such Depository's
instructions and (iv) shall bear the legend set forth in
Section 2.06.
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. Temporary
Securities may be printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized
denomination,
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<PAGE>
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 conclusively
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay but in no event later than the date that the Registered
Exchange Offer is consummated. After the preparation of
definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Company
designated for such purpose 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 referred to as
the "Security Register") in which, subject to such reasonable
regulations as the Security Registrar may prescribe, the
Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby initially
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 the office or agency of the Company designated
pursuant to Section 10.02, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations, of
a like aggregate principal amount.
At the option of the Holder, Securities in
certificated form may be exchanged for other Securities of any
authorized denomination or denominations, of a like aggregate
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<PAGE>
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
the Trustee shall authenticate and deliver, the Securities
which the Holder making the exchange is entitled to receive.
If a Series A Security is a Restricted Security in
certificated form, then as provided in this Indenture and
subject to the limitations herein set forth, the Holder,
provided it is a Qualified Institutional Buyer, may exchange
such Security for a book-entry security by instructing the
Trustee to arrange for such Series A Security to be represented
by a beneficial interest in a Global Security in accordance
with the customary procedures of the Depository.
All Securities issued upon any registration of
transfer or exchange of Securities including, without
limitation, any exchange pursuant to an Exchange Offer shall be
the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration
of transfer or exchange and no such transfer or exchange shall
constitute a repayment of any obligation nor create any new
obligations of the Company.
Every Security presented or surrendered for
registration of transfer, or for exchange or redemption shall
(if so required by the Company or the Security Registrar) be
duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing.
Every Restricted Security shall be subject to the
restrictions on transfer provided in the legend required to be
set forth on the face of each Restricted Security pursuant to
Section 2.05, Section 2.02(a) and the restrictions set forth in
this Section 3.05, and the Holder of each Restricted Security,
by such Holder's acceptance thereof, agrees to be bound by such
restrictions on transfer.
The restrictions imposed by this Section 3.05 and
Section 2.05 upon the transferability of any particular
Restricted Security shall cease and terminate on (a) the later
of July 19, 1998 or three years after the last date on which
the Company or any Affiliate of the Company was the owner of
such Restricted Security (or any predecessor of such Restricted
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Security) or (b) (if earlier) if and when such Restricted
Security has been sold pursuant to an effective registration
statement under the Securities Act or, unless the Holder
thereof is an affiliate of the Company within the meaning of
Rule 144 (or such successor provision), transferred pursuant to
Rule 144 or Rule 904 under the Securities Act (or any successor
provision). Any Restricted Security as to which such
restrictions on transfer shall have expired in accordance with
their terms or shall have terminated may, upon surrender of
such Restricted Security for exchange to the Trustee or any
transfer agent in accordance with the provisions of this
Section 3.05, be exchanged for a new Security, of like series,
tenor and aggregate principal amount, which shall not bear the
restrictive legend required by Section 2.05. The Company shall
inform the Trustee in writing of the effective date of any
registration statement registering any Restricted Securities
under the Securities Act.
No service charge shall be made to a Holder for any
registration of transfer or exchange or redemption 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 3.03, 3.04, 9.06, 10.14, 10.15 or 11.08 not involving
any transfer.
The Company shall not be required (a) to issue,
register the transfer of or exchange any Security during a
period beginning at the opening of business 15 days before the
mailing of a notice of redemption of the Securities selected
for redemption under Section 11.04 and ending at the close of
business on the day of such mailing, or (b) to register the
transfer of or exchange any Security so selected for redemption
in whole or in part, except the unredeemed portion of
Securities being redeemed in part.
Any Holder of the U.S. Global Security shall, by
acceptance of such U.S. Global Security, agree that transfers
of beneficial interests in such Global Security may be effected
only through a book-entry system maintained by the Holder of
such U.S. Global Security (or its agent), and that ownership of
a beneficial interest in the Security shall be required to be
reflected in a book entry.
When Securities are presented to the Security
Registrar with a request to register the transfer or to
exchange them for an equal principal amount of Securities of
other
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authorized denominations, the Security Registrar shall
register the transfer or make the exchange as requested if its
requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Securities at the
Security Registrar's request.
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Securities.
If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the
Trustee, such security or indemnity, in each case, as may be
required by them to save each of them harmless from any loss
which any of them may suffer if a Security is replaced, 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 a Company Order the Trustee
shall authenticate and deliver, in exchange for any such
mutilated Security or in lieu of any such destroyed, lost or
stolen Security, a replacement Security of like tenor and
principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any replacement Securities 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 replacement 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 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.
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Section 3.07. Payment of Interest; Interest Rights
Preserved.
Interest, including any additional interest payable
pursuant to the Registration Rights Agreement relating to
increases in the interest rate on the Securities, 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 and interest on such defaulted interest at the
then applicable interest rate borne by the Securities, to the
extent lawful (such defaulted interest and interest thereon
herein collectively called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the Regular
Record Date; and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in
subsection (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
Subsection (a) provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of
the notice of the proposed payment. The Trustee shall
promptly notify the Company in writing of such Special
Record Date. In the name and at the expense of the
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Company, the Trustee 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 its 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 on such Special Record Date and shall no longer
be payable pursuant to the following subsection (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 written notice given
by the Company to the Trustee of the proposed payment
pursuant to this subsection (b), such 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.
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for
registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in
whose name any Security is registered in the Security Register
as the owner of such Security for the purpose of receiving
payment of principal of, premium, if any, and (subject to
Section 3.07) interest on such Security and for all other
purposes whatsoever, whether or not such Security shall 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 shall be delivered to the
Trustee and, if not already cancelled, shall be promptly
cancelled by it. The Company may at any time deliver to the
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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 cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section 3.09,
except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company
unless by a Company Order the Company shall direct that the
cancelled Securities be returned to it. The Trustee shall
provide the Company a list of all Securities that have been
cancelled from time to time as requested by 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.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date,
Redemption Date, date established for the payment of Defaulted
Interest or Stated Maturity of any Security shall not be a
Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of principal, premium,
if any, or interest need not be made on such date, but may be
made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption
Date, date established for the payment of Defaulted Interest or
at the Stated Maturity, as the case may be, and no interest
shall accrue with respect to such payment for the period from
and after such Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated
Maturity, as the case may be, to the next succeeding Business
Day.
Section 3.12. CUSIP Number.
The Company in issuing the Securities may use a
"CUSIP" number (if then generally in use), and if so, the
Trustee may use the CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; provided, however, that
any such notice may state that no representation is made as to
the correctness or accuracy of the CUSIP number printed in the
notice or on the Securities, and that reliance may be placed
only on the other identification numbers printed on the
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Securities. All Series A Securities shall bear identical CUSIP
numbers. All Series B Securities shall bear identical CUSIP
numbers. The Company shall promptly notify the Trustee in
writing of any change in the CUSIP number of either series of
Securities.
Section 3.13. Book-Entry Provisions for U.S. Global
Security.
(1) The U.S. Global Security initially shall (i) be
registered in the name of the Depository for such global
Security or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear
legends as set forth in Section 2.06.
Members of, or participants in, the Depository
("Agent Members") shall have no rights under this Indenture
with respect to any U.S. Global Security held on their behalf
by the Depository, or the Trustee as its custodian, or under
the U.S. Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such U.S. Global Security for
all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished
by the Depository or shall impair, as between the Depository
and its Agent Members, the operation of customary practices
governing the exercise of the rights of a holder of any
security.
(2) Transfers of the U.S. Global Security shall be
limited to transfers of such U.S. Global Security in whole, but
not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the
U.S. Global Security may be transferred in accordance with the
rules and procedures of the Depository and the provisions of
Section 3.14. Beneficial owners may obtain U.S. Physical
Securities in exchange for their beneficial interests in the
U.S. Global Security upon request in accordance with the
Depository's and the Security Registrar's procedures. In
addition, U.S. Physical Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in
the U.S. Global Security if (i) the Depository notifies the
Company that it is unwilling or unable to continue as
Depository for the U.S. Global Security and a successor
depository is not appointed by the Company within 60 days of
such notice or (ii) an Event of Default has occurred and is
continuing and the Security
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Registrar has received a request from the Depository to issue
Physical Securities.
(3) In connection with any transfer of a portion of
the beneficial interest in the U.S. Global Security to
beneficial owners pursuant to subsection (2) of this Section,
the Security Registrar shall reflect on its books and records
the date and a decrease in the principal amount of the U.S.
Global Security in an amount equal to the principal amount of
the beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the Trustee
shall authenticate and deliver, one or more U.S. Physical
Securities of like tenor and amount.
(4) In connection with the transfer of the entire
U.S. Global Security to beneficial owners pursuant to
subsection (2) of this Section, the U.S. Global Security shall
be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified
by the Depository in exchange for its beneficial interest in
the U.S. Global Security, an equal aggregate principal amount
of U.S. Physical Securities of authorized denominations.
(5) Any U.S. Physical Security delivered in exchange
for an interest in the U.S. Global Security pursuant to
subsection (2) or subsection (3) of this Section shall, except
as otherwise provided by paragraph (f) of Section 3.14, bear
the Private Placement Legend.
(6) The registered holder of the U.S. Global
Security may grant proxies and otherwise authorize any person,
including Agent Members and persons that may hold interests
through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
Section 3.14. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect
to the registration of any proposed transfer of a Restricted
Security to any Institutional Accredited Investor which is not
a QIB (excluding Non-U.S. persons):
(i) The Security Registrar shall register the
transfer of any Series A Security, whether or not such
Security bears the Private Placement Legend, if (x) the
requested
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transfer is subsequent to date which is three years after
the later of the Issue Date and the last date on which the
Company or any of its Affiliates was the owner of such
Security or (y) the proposed transferee has delivered to
the Security Registrar a certificate substantially in the
form of Exhibit A hereto.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security
seeking to transfer a U.S. Physical Security to another
person, upon receipt by the Security Registrar of (x) the
documents, if any, required by paragraph (i) and (y) in-
structions given in accordance with the Depository's and
the Security Registrar's procedures therefor, the Security
Registrar shall reflect on its books and records the date
and a decrease in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more U.S.
Physical Certificates of like tenor and amount.
(b) Transfers to QIBs. The following provisions
shall apply with respect to the registration of any proposed
transfer of a Restricted Security to a QIB (excluding Non-U.S.
persons):
(i) If the Security to be transferred consists of
U.S. Physical Securities or Temporary Offshore Global
Securities, the Security Registrar shall register the
transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the
form of Series A Security stating, or has otherwise
advised the Company and the Security Registrar in writing,
that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Series A
Security stating, or has otherwise advised the Company and
the Security Registrar in writing, that it is purchasing
the Series A Security for its own account or an account
with respect to which it exercises sole investment
discretion and that it and any such account are QIBs
within the meaning of Rule 144A, and that it is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and
that it is
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aware that the transferor is relying upon it foregoing
representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member,
and the Series A Security to be transferred consists of
U.S. Physical Securities, Temporary Offshore Global
Securities or Permanent Offshore Physical Securities, upon
receipt by the Security Registrar of instructions given in
accordance with the Depository's and the Security
Registrar's procedures therefor, the Security Registrar
shall reflect on its books and records the date and an
increase in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the
U.S. Physical Securities or Permanent Offshore Physical
Securities, as the case may be, to be transferred, and the
Trustee shall cancel the Physical Security so transferred.
(c) Transfers by Non-U.S. Persons on or Prior to the
Date 40 Days After the Issue Date. The following provisions
shall apply with respect to registration of any proposed
transfer of a Restricted Security by a Non-U.S. person on or
prior to the date 40 days after the Issue Date:
(i) The Security Registrar shall register the
transfer of any Series A Security (x) if the proposed
transferee is a Non-U.S. person and the proposed
transferor has delivered to the Security Registrar a
certificate substantially in the form of Exhibit C hereto
or (y) if the proposed transferee is a QIB and the
proposed transferor has checked the box provided for on
the form of Series A Security stating, or has otherwise
advised the Company and the Security Registrar in writing,
that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Series A
Security stating, or has otherwise advised the Company and
the Security Registrar in writing, that it is purchasing
the Series A Security for its own account or an account
with respect to which it exercises sole investment
discretion and that it and any such account are QIBs
within the meaning of Rule 144A, and that it is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and
that it is aware that the transferor is relying upon its
foregoing representations in order to
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claim the exemption from registration provided by Rule 144A.
Unless clause (ii) below is applicable, the Company shall
execute, and the Trustee shall authenticate and deliver, one
or more Temporary Offshore Global Securities of like tenor
and amount.
(ii) If the proposed transferee is an Agent Member,
upon receipt by the Security Registrar of instructions
given in accordance with the Depository's and the Security
Registrar's procedures therefor, the Security Registrar
shall reflect on its books and records the date and an
increase in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the
Temporary Offshore Physical Security to be transferred,
and the Trustee shall cancel the Temporary Offshore
Physical Security so transferred.
(d) Transfers by Non-U.S. Persons on or After the
Date 40 Days After the Issue Date. The following provisions
shall apply with respect to any transfer of a Restricted
Security by a Non-U.S. person on or after the date 40 days
after the Issue Date:
(i) (x) If the Restricted Security to be transferred
is a Permanent Offshore Physical Security, the Security
Registrar shall register such transfer, (y) if the Series
A Security to be transferred is a Temporary Offshore
Physical Security, upon receipt of a certificate
substantially in the form of Exhibit B from the proposed
transferor, the Security Registrar shall register such
transfer and (z) in the case of either clause (x) or (y),
unless clause (ii) below is applicable, the Company shall
execute, and the Trustee shall authenticate and deliver,
one or more Permanent Offshore Physical Securities of like
tenor and amount.
(ii) If the proposed transferee is an Agent Member,
upon receipt by the Security Registrar of instructions
given in accordance with the Depository's and the Security
Registrar's procedures therefor, the Registrar shall
reflect on its books and records the date and an increase
in the principal amount of the U.S. Global Security in an
amount equal to the principal amount of the Temporary
Offshore Physical Security or Permanent Offshore Physical
Security to be transferred, and the Trustee shall cancel
the Physical Security so transferred.
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(e) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any transfer
of a Restricted Security to a Non-U.S. person:
(i) Prior to the date 40 days after the Issue Date,
the Security Registrar shall register any proposed
transfer of a Restricted Security to a Non-U.S. person
upon receipt of a certificate substantially in the form of
Exhibit C hereto from the proposed transferor, and the
Company shall execute, and the Trustee shall authenticate
and deliver, one or more Temporary Offshore Global
Securities of like tenor and amount.
(ii) On and after the date 40 days after the Issue
Date, the Security Registrar shall register any proposed
transfer to any Non-U.S. person (w) if the Series A
Security to be transferred is a Permanent Offshore
Physical Security, (x) if the Series A Security to be
transferred is a Temporary Offshore Physical Security,
upon receipt of a certificate substantially in the form of
Exhibit B from the proposed transferor, (y) if the Series
A Security to be transferred is a U.S. Physical Security
or an interest in the U.S. Global Security, upon receipt
of a certificate substantially in the form of Exhibit A
from the proposed transferor and (z) in the case of either
clause (w), (x) or (y), the Company shall execute, and the
Trustee shall authenticate and deliver, one or more
Permanent Offshore Physical Securities of like tenor and
amount.
(iii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global Security,
upon receipt by the Security Registrar of (x) the
document, if any, required by paragraph (i) or paragraph
(ii) and, as the case may be, (y) instructions in
accordance with the Depository's and the Security
Registrar's procedures therefor, the Security Registrar
shall reflect on its books and records the date and a
decrease in the principal amount of the U.S. Global
Security in an amount equal to the principal amount of the
beneficial interest in the U.S. Global Security to be
transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver, one or more
Temporary Offshore Global Securities or Permanent Offshore
Physical Securities, as applicable, of like tenor and
amount.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Securities not bearing the Private
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Placement Legend, the Security Registrar shall deliver
Securities that do not bear the Private Placement Legend. Upon
the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Security Registrar shall deliver
only Securities that bear the Private Placement Legend unless
either (i) the circumstances contemplated by paragraphs
(a)(i)(x), (d)(i) or (e)(ii) of this Section 3.14 exist,
(ii) there is delivered to the Security Registrar an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee
to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain
compliance with the provisions of the Securities Act or
(iii) such Securities have been sold pursuant to an effective
registration statement under the Securities Act.
(g) General. By its acceptance of any Security
bearing the Private Placement Legend, each Holder of such a
Security acknowledges the restrictions on transfer of such
Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security
only as provided in this Indenture.
The Security Registrar shall retain copies of all
letters, notices and other written communications received
pursuant to Section 3.13 or this Section 3.14. The Company
shall have the right to inspect and make copies of all such
letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to
the Security Registrar.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance
or Covenant Defeasance.
The Company may, at its option by Board Resolution,
at any time terminate certain of the obligations of the Company
with respect to Outstanding Securities, as set forth in this
Article, and elect to have either Section 4.02 or Section 4.03
be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon compliance with the conditions set forth
below in Section 4.04.
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Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.02, the Company shall be
deemed to have been released and discharged from its
obligations with respect to the Defeased Securities 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 Defeased Securities,
which shall thereafter be deemed to be "Outstanding" only for
the purposes of Section 4.05 and the other Sections of this
Indenture referred to in (a) and (b) below, 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 Defeased
Securities to receive, solely from the trust fund described in
Section 4.04 and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due, (b) the
Company's obligations with respect to such Defeased Securities
under Sections 3.04, 3.05, 3.06, 7.01, 10.01, 10.02 and 10.03,
(c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including, without limitation, the Trustee's
rights under Section 6.07, and (d) this Article Four. Subject
to compliance with this Article Four, the Company may exercise
its option under this Section 4.02 notwithstanding the prior
exercise of its option under Section 4.03 with respect to the
Securities.
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 of the
option applicable to this Section 4.03, the Company shall be
released from its obligations under any covenant or provision
contained in Sections 10.06 through 10.18 and the provisions of
Article Eight shall not apply, with respect to the Defeased
Securities on and after the date the conditions set forth below
are satisfied (hereinafter, "covenant defeasance"), and the
Securities shall thereafter be deemed not to be "Outstanding"
for the purposes of any direction, waiver, consent or
declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue
to be deemed "Outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with
respect to the
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Outstanding Securities, the Company may omit to comply with and
shall have no liability in respect of any term, condition or
limitation set forth in any such covenant whether directly or
indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenat
to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of
Default under Section 5.01(c) or (d), but, except as specified
above, the remainder of this Indenture and such Outstanding
Securities shall be unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application
of either Section 4.02 or Section 4.03 to the Outstanding
Securities:
(1) The Company shall have irrevocably 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
Four 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
United States dollars, in an amount, or (b) U.S.
Government Obligations maturing as to principal, premium,
if any, and interest in such amounts of money and at such
times as are sufficient without consideration of any
reinvestment of such interest, to pay principal of and
interest on Defeased Securities not later than one day
before the due date of any payment, or (c) a combination
thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered to
the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to
pay and discharge, the principal of, premium, if any, and
interest on the Defeased Securities on the Stated Maturity
or otherwise in accordance with the terms of this
Indenture and the Securities; provided, however, that the
Trustee (or other qualifying trustee) shall have received
an irrovacable written order from the Company instructing
the Trustee (or other qualifying trustee) to apply such
money or the proceeds of such U.S. Government Obligations
to said payments with respect to the Securities; and
provided, further, that from and after the time
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of deposit, the money or U.S. Government Obligations
deposited shall not be subject to the rights of the
holders of other Indebtedness of the Company;
(2) No Default shall have occurred and be continuing
on the date of such deposit or, insofar as Section 5.01
(h), (i) or (j) are concerned, at any time during the
period ending on the ninety-first day after the date of
such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such
period);
(3) Such defeasance or covenant defeasance shall not
cause the Trustee for the Securities to have a conflicting
interest with respect to any securities of the Company;
(4) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a
Default or Event of Default under, this Indenture or any
other agreement or instrument to which the Company is a
party or by which it is bound;
(5) In the case of an election under Section 4.02,
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 hereof, 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 defeasance
and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred;
(6) In the case of an election under Section 4.03,
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 Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the
same times as would have been the case if such covenant
defeasance had not occurred;
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(7) The Company shall have delivered to the Trustee,
an Opinion of Counsel in form and substance reasonably
acceptable to the Trustee to the effect that, (x) the
trust funds established pursuant to this Article will not
be subject to any rights of any other holders of
Indebtedness of the Company, and (y) after the 91st day
following the deposit, the trust funds established
pursuant to this Article will not be subject to the effect
of any applicable Bankruptcy law; and
(8) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that (i) all conditions precedent provided for
relating to either the defeasance under Section 4.02 or
the covenant defeasance under Section 4.03, as the case
may be, have been complied with and (ii) if any other
Indebtedness of the Company shall then be outstanding or
committed, such defeasance or covenant defeasance will not
violate the provisions of the agreements or instruments
evidencing such Indebtedness.
Opinions required to be delivered under this Section
may have such qualifications as are customary for opinions of
the type required and acceptable to the Trustee.
Section 4.05. 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 person that would qualify to act as successor trustee
under Article Six, collectively for purposes of this Section
4.05, the "Trustee") pursuant to Section 4.04 in respect of the
Defeased Securities 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 (other than the Company or any Affiliate of
the Company) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee and
hold it harmless against any tax, fee or other charge imposed
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on or assessed against the U.S. Government Obligations
deposited pursuant to Section 4.04 or the principal, premium,
if any, 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 Defeased Securities.
Anything in this Article Four 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
4.04 which, in the opinion of a nationally recognized firm of
independent public accountants satisfactory to the Trustee
expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance
or covenant defeasance.
Section 4.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
4.02 or 4.03, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the
obligations of the Company under this Indenture and the
Securities shall be revived and reinstated as though no deposit
had occurred pursuant to Section 4.02 or 4.03, as the case may
be, until such time as the Trustee or Paying Agent is permitted
to apply all such money and U.S. Government Obligations in
accordance with Section 4.02 or 4.03, as the case may be;
provided, however, that if the Company makes any payment of
principal, 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 and U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
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 voluntary or involuntary or
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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):
(a) default in the payment of the principal of or
premium, if any, when due and and payable, on any of the
Securities (whether at its Stated Maturity, upon optional
redemption or required purchase); or
(b) default in the payment of an installment of
interest on any of the Securities, when it becomes due and
payable, and continuance of such default for a period of
30 days or more; or
(c) default in the performance or observance of any
term, covenant or agreement contained in Article Eight or
Sections 10.11, 10.12, 10.14 or 10.15; or
(d) default in the performance or observance of any
term, covenant or agreement contained in the Securities or
this Indenture (other than a default specified in (a), (b)
or (c) above) and continuance of such default for a period
of 30 days or more after written notice specifying such
default or breach and requiring the same to be remedied
and stating that such notice is a "Notice of Default"
hereunder shall have been given (x) to the Company by the
Trustee or (y) to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of
the Securities then Outstanding; or
(e) either (i) default or defaults in the payment of
any principal, premium or interest under one or more
agreements, instruments, mortgages, bonds, debentures or
other evidences of Indebtedness (a "Debt Instrument")
under which the Company or one or more Restricted
Subsidiaries or the Company and one or more Restricted
Subsidiaries then have outstanding Indebtedness in excess
of $5,000,000, individually or in the aggregate, or
(ii) any other default or defaults under one or more Debt
Instruments under which the Company or one or more
Restricted Subsidiaries or the Company and one or more
Restricted Subsidiaries then have outstanding Indebtedness
in excess of $5,000,000, individually or in the aggregate,
and in the case of this clause (ii) either (x) such
Indebtedness is already due and payable in full or
(y) such default or defaults have resulted in the
acceleration of the maturity of such Indebtedness; or
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(f) one or more judgments, orders or decrees of any
court or regulatory or administrative agency of competent
jurisdiction for the payment of money in excess of
$5,000,000 either individually or in the aggregate, shall
be entered against the Company or any Restricted
Subsidiary or any of their respective properties and shall
not be discharged or fully bonded and there shall have
been a period of 60 days after the date on which any
period for appeal has expired and during which a stay of
enforcement of such judgment, order of decree shall not be
in effect; or
(g) any holder (or person acting on its behalf) of
at least $5,000,000 in aggregate principal amount of
Indebtedness of the Company or any of the Restricted
Subsidiaries shall, subsequent to the occurrence of a
default with respect to such Indebtedness and in
accordance with the terms of the document or agreement
governing such Indebtedness, commence judicial proceedings
to foreclose upon assets of the Company or one or more of
the Restricted Subsidiaries having an aggregate Fair
Market Value in excess of $5,000,000 or shall have
exercised any right under applicable law or applicable
security documents to take ownership of any such assets in
lieu of foreclosure; or
(h) the Company or any Significant Subsidiary of the
Company pursuant to or under or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the making of a Bankruptcy
Order in an involuntary case or proceeding or the
commencement of any case against it;
(iii) consents to the appointment of, or taking
possession by, a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit
of its creditors or files a proposal or other scheme
or arrangement involving the rescheduling or
composition of its indebtedness;
(v) files a petition in bankruptcy or an answer
or consent seeking reorganization or relief; or
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(vi) consents to the filing of a petition in
bankruptcy; or
(i) a court of competent jurisdiction in any
involuntary case or proceeding enters a Bankruptcy Order
against the Company or any Significant Subsidiary, and
such Bankruptcy Order remains unstayed and in effect for
30 consecutive days; or
(j) a Custodian shall be appointed out of court
(other than under any circumstance described in the
preceding paragraphs (h) or (i)) with respect to the
Company or any Significant Subsidiary or with respect to
all or any substantial part of the assets or properties of
the Company or any Significant Subsidiary, and such
appointment shall remain unstayed and in effect for 30
consecutive days.
Section 5.02. Acceleration of Maturity; Rescission
and Annulment.
If an Event of Default (other than an Event of
Default specified in Section 5.01(h), (i) or (j) with respect
to the Company occurs and is continuing, the Trustee, by notice
to the Company, or the Holders of at least 25% in aggregate
principal amount of the Securities Outstanding, by notice to
the Trustee and the Company, may declare all principal of,
premium, if any, and accrued interest on all of the Outstanding
Securities due and payable immediately, upon which declaration,
all amounts payable in respect of the Securities shall be
immediately due and payable. If an Event of Default specified
in Section 5.01(h), (i) or (j) (with respect to the Company)
above occurs and is continuing, then the principal of, premium,
if any, and accrued and unpaid interest on all of the
Outstanding Securities shall ipso facto become and be
immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder of Securities.
At any time after such declaration of acceleration
has been made and before a judgment or decree for payment of
the money due has been obtained by the Trustee as hereinafter
provided in this Article, the Holders of a majority in
aggregate principal amount of the Securities Outstanding, by
written notice to the Company and the Trustee, may rescind such
declaration of acceleration and its consequences if:
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(a) the Company has paid or deposited with the
Trustee a sum sufficient to pay
(i) all amounts due the Trustee under Section
6.07, including the reasonable compensation,
expenses, disbursements and advances of the Trustee,
its agents and counsel,
(ii) all overdue interest on all Securities,
(iii) 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 then borne by the Securities, and
(iv) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate
then borne by the Securities which has became due
otherwise than by such declaration of acceleration;
(b) all Events of Default, other than the non-
payment of principal of, premium, if any, and interest on
the Securities that has become due solely by such
declaration of acceleration, have been cured or waived;
and
(c) such recission or annulment of such declaration
of acceleration would not conflict with any judgment or
decree of any court of competent jurisdiction.
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:
(a) 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
more, or
(b) default is made in the payment of the principal
of or premium, if any, on any Security at the Stated
Maturity thereof,
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the Company will, upon demand of the Trustee, pay to the
Trustee, for the benefit of the Holders of such Securities, the
whole amount then due and payable on such Securities for
principal, premium, if any, and interest, with interest upon
the overdue principal, premium, if any, and, to the extent that
payment of such interest shall be legally enforceable, upon
overdue installments of interest, at the rate then 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, but is not obligated under this
paragraph to, institute a judicial proceeding for the
collection of the sums so due and unpaid and may, but is not
obligated under this paragraph to, prosecute such proceeding to
judgment or final decree, and may, but is not obligated under
this paragraph to, 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, but is not obligated under this
paragraph to, (i) proceed to protect and enforce its rights and
the rights of the Holders under this Indenture by such
appropriate private or judicial proceedings as the Trustee
shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise
of any power granted herein, or (ii) proceed to protect and
enforce any other proper remedy. No recovery of any such
judgment upon any property of the Company shall affect or
impair any rights, powers or remedies of the Trustee or the
Holders.
Section 5.04. Trustee May File Proofs of Claims.
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
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expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
but is not obligated under this paragraph
(a) to file and prove a claim for the whole amount
of principal, 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 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
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any Custodian, in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay 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 hereof.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the 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 and as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of
the
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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.
Any money collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal, 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 Trustee for amounts due under Section
6.07;
Second: to Holders for interest accrued on the
Securities, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Securities for interest;
Third: to Holders for principal amounts owing under
the Securities, ratably, without preference or priority of
any kind, according to the amounts due and payable on the
Securities for principal and premium; and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the
Company, may fix a record date and payment date for any payment
to Securityholders pursuant to this Section 5.06.
Section 5.07. Limitation on Suits.
No Holder of any Securities 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
(a) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in
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respect of such Event of Default in its own name as
Trustee hereunder;
(c) 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;
(d) the Trustee for 15 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such 15-day
period by the Holders of a majority in aggregate principal
amount of the Outstanding Securities;
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 or any Security 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
or any Security except in the manner provided in this Indenture
and for the equal and ratable benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right,
which is absolute and unconditional, to receive cash payment,
in United States dollars, of the principal of, premium, if any,
and (subject to Section 3.07 hereof) interest on such Security
on the respective Stated Maturities expressed in such Security
(or, in the case of redemption, on the respective Redemption
Dates) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the
consent of such Holder.
Section 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
or any Security 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 the
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Company the Trustee and the Holders shall, subject to any
determination in such proceeding, 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 provided in 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 be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may
be.
Section 5.12. Control by Majority.
The Holders of a majority in aggregate 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, however,
that:
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or any Security or
expose the Trustee to liability; and
(b) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
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Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate
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
(a) in the payment of the principal of, premium, if
any, or interest on any Security, or
(b) in respect of a covenant or provision under this
Indenture which cannot be modified or amended without the
consent of the Holder of each Outstanding Security
affected.
Upon any such waiver, such Default shall cease to
exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other
Default or Event of 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 Section shall not
apply 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, 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 respective Redemption Dates).
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Section 5.15. Waiver of Stay, Extension or Usury
Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury or other
law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or
any portion of the principal of, premium, if any, or interest
on the Securities contemplated herein or in the Securities or
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.
Section 5.16. Unconditional Right of Holders To
Institute Certain Suits.
Notwithstanding any other provision in this Indenture
and any other provision of any Security, the right of any
Holder of any Security to receive payment of the principal of,
premium, if any, and interest on such Security on or after the
respective Stated Maturities (or the respective Redemption
Dates, in the case of redemption) expressed in such Security,
or to institute suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
ARTICLE SIX
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
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(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 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 use the same degree
of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such
person's own affairs.
(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
willful misconduct, except that 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 so 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
6.01.
Section 6.02. Notice of Defaults.
Within 30 days after the occurrence of any Default,
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; provided, however,
that, except in the case of a Default in the payment of the
principal of, premium, if any, or interest on any Security, the
Trustee shall be protected in withholding such notice if and so
long as a trust committee of Responsible Officers of the
Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders.
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Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of
Section 315 of the Trust Indenture Act:
(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, approval,
appraisal, bond, debenture, note, coupon, security, 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 the Company may be sufficiently evidenced by a
Board Resolution thereof;
(c) the Trustee may consult, at the expense of the
Company, with counsel and any 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 in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request 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 the Trustee in compliance with
such request or direction;
(e) the Trustee shall not be liable for any action
taken or omitted by it in good faith and believed by it to
be authorized or within the discretion, rights or powers
conferred upon it by this Indenture other than any
liabilities arising out of its own negligence;
(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,
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approval, appraisal, bond, debenture, note, coupon,
security, other evidence of indebtedness or other paper or
document unless requested in writing so to do by the
Holders of not less than a majority in aggregate principal
amount of the Securities then Outstanding; provided,
however, that, if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely
to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms
of this Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Company or, if
paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand; provided, further, the
Trustee in its discretion may make such further inquiry or
investigation into such facts or matters as it may deem
fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Company,
personally or by agent or attorney during the reasonable
business hours of the Company; 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. Trustee Not Responsible for Recitals,
Dispositions of Securities or Application of Proceeds Thereof.
The recitals contained herein and 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
representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied
to the Company in connection with the registration of any
Securities issued hereunder are true and accurate subject to
the qualifications set forth therein. The Trustee shall not be
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accountable for the use or application by the Company of
Securities or the proceeds thereof.
Section 6.05. Trustee and Agents May Hold
Securities; Collections; Etc.
The Trustee, any Paying Agent, Security Registrar or
any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities, with
the same rights it would have if it were not the Trustee,
Paying Agent, Security Registrar or such other agent and,
subject to Sections 6.08 and 6.13 hereof and Sections 310 and
311 of the Trust Indenture Act, may otherwise deal with the
Company and receive, collect, hold and retain collections from
the Company with the same rights it would have if it were not
the Trustee, Paying Agent, Security Registrar or such other
agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used
or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be
segregated from other funds except to the extent required
herein or by law. The Trustee shall not be under any liability
for interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim.
The Company covenants and agrees: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled
to, reasonable compensation for all services rendered by it
hereunder (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express
trust); (b) to reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of
it in accordance with any of the provisions of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other
persons not regularly in its employ), except any such
reasonable expense, disbursement or advance as may arise from
its negligence or bad faith; and (c) to indemnify the Trustee
and each predecessor Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this
Indenture or the trusts hereunder and
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its duties hereunder, including enforcement of this Section 6.07.
The obligations of the Company under this Section to compensate
and indemnify the Trustee and each predecessor Trustee and to
pay or reimburse the Trustee and each predecessor Trustee for
expenses, disbursements and advances shall constitute an additional
obligation hereunder and shall survive the satisfaction and
discharge of this Indenture. To secure the obligations of the
Company to the Trustee under this Section 6.07, the Trustee
shall have a prior Lien upon all property and funds held or
collected by the Trustee as such, except funds and property
paid by the Company and held in trust for the benefit of the
Holders of particular Securities under this Indenture. All
such payments and reimbursements shall be made with interest at
the base (Prime) rate charged at the time by the Trustee for
loans to commercial customers. The Trustee shall be entitled
to file a proof of claim in any bankruptcy proceeding as a
secured creditor for its reasonable compensation, fees and
expenses under this Section 6.07.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the
provisions of Section 310(b) of the Trust Indenture Act.
Section 6.09. Corporate Trustee Required;
Eligibility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under Trust Indenture Act
Sections 310(a)(1) and 310(a)(5) and which shall have a
combined capital and surplus of at least $100,000,000, and have
a Corporate Trust Office in The City of New York. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of United States
Federal, state, territorial or District of Columbia 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, the Trustee shall resign
immediately in the manner and with the effect hereinafter
specified in this Article.
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Section 6.10. Resignation and Removal; Appointment
of Successor Trustee.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by
the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees
hereinafter appointed, may at any time resign by giving written
notice thereof to the Company at least 20 Business Days prior
to the date of such proposed resignation. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor trustee by written instrument executed by authority
of the Board of the Company, a copy of which shall be delivered
to the resigning Trustee and a copy to the successor trustee.
If an instrument of acceptance by a successor Trustee shall not
have been delivered to the Trustee within 20 Business Days
after the giving of such notice of resignation, the resigning
Trustee may, 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. Such
court may thereupon, after such notice, if any, as it may deem
proper, appoint a successor trustee.
(c) The Trustee may be removed at any time by an 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 the
provisions of Section 310(b) of the Trust Indenture Act in
accordance with Section 6.08 hereof after written request
therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under
Section 6.09 hereof and shall fail to resign after written
request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed or
any public officer shall take charge or control of the
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Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 5.14, the Holder
of any Security 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. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the
Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in the
office of Trustee for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor
Trustee shall be appointed by Act of the Holders of a majority
in principal amount of the Outstanding 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 of the Securities and accepted appointment in the
manner hereinafter provided, the Holder of any Security who has
been a bona fide Holder for at least six months may, subject to
Section 5.14, 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 the Holders
of Securities 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
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thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee
as if originally named as Trustee hereunder; but, nevertheless,
on the written request of the Company or the successor Trustee,
upon payment of amounts due it pursuant to Section 6.07, such
retiring Trustee shall duly assign, transfer and deliver to the
successor Trustee all moneys and property at the time held by
it hereunder and shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers,
duties and obligations of the retiring Trustee. Upon request
of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights and
powers. Any Trustee ceasing to act shall, nevertheless, retain
a prior claim upon all property or funds held or collected by
such Trustee to secure any amounts then due it pursuant to the
provisions of Section 6.07.
No successor Trustee with respect to the Securities
shall accept appointment as provided in this Section 6.11
unless at the time of such acceptance such successor Trustee
shall be eligible to act as Trustee under this Article.
Upon acceptance of appointment by any successor
Trustee as provided in this Section 6.11, the Company shall
give notice thereof to the Holders of the Securities, by
mailing such notice to such Holders at their addresses as they
shall appear on the Security Register. If the acceptance of
appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding
sentence may be combined with the notice called for by
Section 6.10(f). If the Company fails to give such notice
within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be
given at the expense of the Company.
Section 6.12. Successor Trustee by Merger, etc.
Any corporation into which the Trustee may be merged
or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder without the execution or filing of any
paper or any
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further act on the part of any of the parties hereto, provided
such corporation shall be eligible under this Article to serve as
Trustee hereunder.
In case at the time such successor to the Trustee
under this Section 6.12 shall succeed to the trusts created by
this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any
predecessor Trustee and deliver such Securities so
authenticated; and, in case at that time any of the Securities
shall not have been authenticated, any successor to the Trustee
under this Section 6.12 may authenticate such Securities either
in the name of any predecessor hereunder or in the name of the
successor Trustee; and in all such cases such certificate shall
have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee
shall have.
Section 6.13. Preferential Collection of Claims
Against Company.
The Trustee shall comply with Section 311(a) of the
Trust Indenture Act, excluding any creditor relationship listed
in Section 311(b) of that Act. If the present or any future
Trustee shall resign or be removed, it shall be subject to
Section 311(a) of the Trust Indenture Act to the extent
provided therein.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company
To Furnish Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve in as current a form
as is reasonably practicable the most recent list available to
it of the names and addresses of all Holders; provided,
however, that if and for so long as the Trustee shall be the
Security Registrar, the Security Register shall satisfy the
requirements relating to such list. Neither the Company nor
the Trustee shall be under any responsibility with regard to
the accuracy of such list.
(b) The Company will furnish or cause to be
furnished to the Trustee
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(i) semiannually, not more than 10 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
(ii) at such other times as the Trustee may request
in writing, within 30 days after receipt by the Company of
any such request, a list of similar form and content as of
a date not more than 15 days prior to the time such list
is furnished;
provided, however, that if and so long as the Trustee shall be
the Security Registrar, no such list need be furnished pursuant
to this Subsection 7.01(b).
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with
respect to their rights under this Indenture or under the
Securities pursuant to Section 312(b) of the Trust Indenture
Act. The Company and the Trustee and any and all other persons
benefited by this Indenture shall have the protection afforded
by Section 312(c) of the Trust Indenture Act.
Section 7.03. Reports by Trustee.
Within 60 days after May 15 of each year commencing
with the first May 15 following the date of this Indenture, the
Trustee shall mail to all Holders, as their names and addresses
appear in the Security Register, a brief report dated as of
such May 15 that complies with Section 313(a) of the Trust
Indenture Act. The Trustee shall also comply with Sections
313(b), 313(c) and 313(d) of the Trust Indenture Act. At the
time of its mailing to Holders, a copy of each report shall be
filed with the Company, the Commission and with each national
securities exchange on which the Securities are listed. The
Company shall notify the Trustee when the Securities are listed
on any stock exchange.
Section 7.04. Reports by Company.
The Company shall file with the Trustee, copies of
the reports and of the information and documents which the
Company is required to provide to any person under Section
10.09 hereof.
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ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
The Company will not, in a single transaction or a
series of transactions, consolidate with or merge with or into,
or sell, assign, convey, transfer, lease or otherwise dispose
of all or substantially all of its properties and assets as an
entirety to, any other person or persons, or permit any of its
Restricted Subsidiaries to enter into any such transaction or
series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale,
assignment, conveyance, transfer, lease or other disposition of
all or substantially all of the properties and assets of the
Company or the Company and the Restricted Subsidiaries, taken
as a whole, to any other person or persons, unless at the time
and after giving effect thereto:
(1) either (A) if the transaction or series of
transactions is a merger or consolidation, the Company shall be
the person surviving such merger or consolidation or (B) the
person (if other than the Company) formed by such consolidation
or into which the Company or such Restricted Subsidiary is
merged or to which the properties and assets of the Company or
such Restricted Subsidiary, as the case may be, substantially
as an entirety, are transferred (any such surviving person or
transferee person being the "Surviving Entity") shall be a
corporation organized and existing under the laws of the United
States of America, any State thereof or the District of
Columbia and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of
the principal of, premium, if any, and interest on all the
Securities and the performance and observance of every covenant
and obligation of this Indenture and the Securities on the part
of the Company to be performed or observed;
(2) immediately before and immediately after giving
effect to such transaction or series of transactions on a pro
forma basis (including, without limitation, any Indebtedness
incurred or anticipated to be incurred in connection with or in
respect of such tansaction or series of transactions), no
Default shall have occurred and be continuing;
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(3) immediately after giving effect to such
transaction or series of transactions on a pro forma basis
(including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of
such transaction or series of transactions), the Company or the
Surviving Entity, as the case may be, could incur $1.00 of
additional Indebtedness under the first paragraph of Section
10.11; and
(4) the company or the Surviving Entity, as the case
may be, shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each in form and
substance reasonably satisfactory to the Trustee, each stating
that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition and, if a supplemental
indenture is required in connection with such transaction or
series of transactions, such supplemental indenture, complies
with this Indenture and that all conditions precedent herein
provided for relating to such transaction or series of
transactions have been complied with.
Section 8.02. Successor Substituted.
Upon any consolidation or merger, or any sale,
assignment, conveyance, transfer, lease or disposition of all
or substantially all of the properties and assets of the
Company in accordance with Section 8.01 hereof, the successor
person or persons formed by such consolidated or into which the
Company is merged or the successor person to which such sale,
assignment, conveyance, transfer, lease or other disposition is
made, shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this
Indenture and the Securities with the same effect as if such
successor had been named as the Company herein; and thereafter,
except in the case of (a) a lease or (b) any sale, assignment,
conveyance, transfer, lease or other disposition to an
Affiliate of the Company, the Company shall be discharged from
all obligations and covenants under this Indenture and the
Securities.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
The Company, when authorized by a Board Resolution,
and the Trustee may amend, waive or supplement this Indenture
or the Securities without notice to or consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
provided that such amendment or supplement does not
adversely affect the rights of any Holder;
(b) to comply with Article Eight;
(c) to provide for uncertificated Securities in
addition to certificated Securities;
(d) to comply with any requirements of the
Commission in order to (i) effect or maintain the
qualification of this Indenture under the TIA or (ii)
satisfy the requirements of any change to Rule 144A,
Regulation D or Regulation S during any period that any
Security issued hereunder is required to bear the Private
Placement Legend or other similar restrictive legend; or
(e) to make any change that would provide any
additional benefit or rights to the Holders or that does
not adversely affect the rights of any Holder.
Notwithstanding the above, the Trustee and the
Company may not make any change that adversely affects the
legal rights of any Holders hereunder. The Company shall be
required to deliver to the Trustee an opinion of counsel
stating that any such change under Section 9.01(a) or (e) of
the preceding sentence does not adversely affect the rights of
any Holder.
Section 9.02. With Consent of Holders.
Subject to Section 5.13, the Company when authorized
by a Board Resolution, and the Trustee may amend this Indenture
or the Securities with the written consent of the Holders of
not less than a majority in aggregate principal amount of the
Outstanding Securities, and the Holders of not less than a
majority in aggregate principal amount of the Outstanding
Securities by written notice to the Trustee may waive future
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compliance by the Company with any provision of this Indenture
or the Securities.
Notwithstanding the provisions of this Section 9.02,
without the consent of each Holder affected, an amendment or
waiver, including a waiver pursuant to Section 5.13, may not:
(a) reduce the percentage in outstanding aggregate
principal amount of Securities the Holders of which must
consent to an amendment, supplement or waiver of any
provision of this Indenture or the Securities;
(b) reduce or change the rate or time for payment of
interest on any Security;
(c) reduce the principal amount outstanding of or
extend the fixed maturity of any Security or alter the
redemption provisions with respect thereto;
(d) waive a default in the payment of the principal
of, premium, if any, or interest on, or redemption or an
offer to purchase required hereunder with respect to, any
Security;
(e) make the principal of, premium, if any, or
interest on any Security payable in money other than that
stated in the Security;
(f) modify this Section 9.02 or Section 5.08 or
Section 5.13;
(g) amend, change or modify the obligation of the
Company to make and consummate a Change of Control Offer
in the event of a Change of Control or make and consummate
the offer with respect to any Asset Sale or modify any of
the provisions or definitions with respect thereto;
(h) modify or change any provision of this Indenture
affecting the ranking of the Securities in a manner
adverse to the Holders; or
(i) impair the right to institute suit for the
enforcement of any payment on or with respect to the
Securities.
It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form
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of any proposed amendment, supplement or waiver, but it shall
be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this
Section 9.02 becomes effective, the Company shall mail to the
Holders of each Security affected thereby, with a copy to the
Trustee, a notice briefly describing the amendment, supplement
or waiver. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or
affect the validity of any supplemental indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment of or supplement to this Indenture
or the Securities shall comply with the TIA as then in effect
and as applicable to this Indenture.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes
effective, a consent to it by a Holder is a continuing consent
by such Holder and every subsequent Holder of that Security or
portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent as to his Security or
portion of a Security prior to such amendment, supplement or
waiver becoming effective. Such revocation shall be effective
only if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver becomes effective.
Notwithstanding the above, nothing in this paragraph shall
impair the right of any Holder under Section 316(b) of the TIA.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver. If a record
date is fixed, then notwithstanding the second and third
sentences of the immediately preceding paragraph, those persons
who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent
to such amendment, supplement or waiver or to revoke any
consent previously given, whether or not such persons continue
to be Holders after such record date. Such consent shall be
effective only for actions taken within 90 days after such
record date.
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After an amendment, supplement or waiver becomes
effective, it shall bind every Holder; unless it makes a change
described in any of clauses (a) through (i) of Section 9.02; if
it makes such a change, the amendment, supplement or waiver
shall bind every subsequent Holder of a Security or portion of
a Security that evidences the same debt as the consenting
Holder's Security.
Section 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the
terms of a Security, the Trustee shall (in accordance with the
specific direction of the Company) request the Holder of the
Security to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Company) place an
appropriate notation on the Security about the changed terms
and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the
appropriate notation or issue a new Security shall not affect
the validity and effect of such amendment, supplement or
waiver.
Section 9.06. Trustee May Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or
waiver authorized pursuant to this Article Nine if the
amendment, supplement or waiver does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If
it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that the execution of any amendment,
supplement or waiver is authorized or permitted by this
Indenture, that it is not inconsistent herewith and that it
will be valid and binding upon the Company in accordance with
its terms.
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ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the
principal of, premium, if any, and interest on the Securities
in accordance with the terms of the Securities and this
Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in 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 and where notices and
demands to or upon the Company in respect of the Securities and
this Indenture may be served. The office of the Trustee at its
Corporate Trust Office shall be such office or agency of the
Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The
Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any
time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office,
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
obligation to maintain an office or agency in the Borough of
Manhattan in The City of New York for such purposes. The
Company will give prompt written notice to the Trustee of any
such designation or rescission and any change in the location
of any such other office or agency.
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Section 10.03. Money for Security Payments To Be
Held in Trust.
If the Company shall at any time act as its own
Paying Agent, it will, on or before each due date of the
principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the
Holders entitled thereto a sum sufficient to pay the principal,
premium, if any, or interest so becoming due until such sums
shall be paid to such persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its
action or failure so to act.
If the Company is not acting as Paying Agent, the
Company will, on or before each due date of the principal of,
premium, if any, or interest on, any Securities, deposit with a
Paying Agent a sum in same day funds sufficient to pay the
principal, premium, if any, or interest so becoming due, such
sum to be held in trust for the benefit of the Holders entitled
to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the
Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the
Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the
provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of, premium, if any, or interest on Securities
in trust for the benefit of the Holders entitled thereto
until such sums shall be paid to such Holders or otherwise
disposed of as herein provided;
(b) 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 of, premium, if any, or
interest on the Securities;
(c) 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; and
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(d) acknowledge, accept and agree to comply in all
aspects with the provisions of this Indenture relating to
the duties, rights and liabilities of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or
for any other purpose, pay, or by Company Order direct any
Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent
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, premium, if any, or interest on any Security
and remaining unclaimed for two years after such principal,
premium, if any, or interest has become due and payable shall
be paid to the Company upon receipt of a Company Request
therefor, 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 the
New York Times and the Wall Street Journal (national edition),
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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the
Company.
Section 10.04. Corporate Existence.
Subject to Article Eight, the Company will do or
cause to be done all things necessary to preserve and keep in
full force and effect the corporate existence, rights (charter
and statutory), licenses and franchises of the Company and each
of the Restricted Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right,
license or franchise if the Board shall determine that the
preservation thereof is no longer desirable in the conduct of
the business of the Company and the Restricted Subsidiaries as
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a whole and that the loss thereof is not disadvantageous in any
material respect to the Holders; provided, further, that the
foregoing shall not prohibit a sale, transfer or conveyance of
a Restricted Subsidiary of the Company or any of its assets in
compliance with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all
taxes, assessments and governmental charges levied or imposed
(i) upon the Company or any of its Subsidiaries or (ii) upon
the income, profits or property of the Company or any of its
Subsidiaries and (b) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the
property of the Company or any of its Subsidiaries; 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 properly instituted and diligently conducted.
Section 10.06. Maintenance of Properties.
The Company will cause all properties owned by the
Company or any of the Restricted Subsidiaries or used or held
for use in the conduct of its business or the business of any
of the Restricted Subsidiaries to be maintained and kept in
good condition, repair and working order (reasonable wear and
tear excepted) and supplied with all necessary equipment and
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; provided, however, that
nothing in this Section 10.06 shall prevent the Company from
discontinuing the 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 of the
Restricted Subsidiaries and is not disadvantageous in any
material respect to the Holders.
Section 10.07. Insurance.
The Company will at all times keep all of its and the
Restricted Subsidiaries' properties which are of an insurable
nature insured with insurers, believed by the Company in good
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faith to be financially sound and responsible, against loss or
damage to the extent that property of similar character is
usually so insured by corporations similarly situated and
owning like properties (which may include self-insurance, if
reasonable and in comparable form to that maintained by
companies similarly situated).
Section 10.08. Compliance Certificate.
(a) The Company will deliver to the Trustee within
60 days after the end of each of the Company's first three
fiscal quarters and within 90 days after the end of the
Company's fiscal years an Officers' Certificate stating whether
or not the signers know of any Default or Event of Default
under this Indenture by the Company that occurred during such
fiscal period. If they do know of such a Default or Event of
Default, the certificate shall describe any such Default or
Event of Default and its status. The first certificate to be
delivered pursuant to this Section 10.08(a) shall be for the
first fiscal quarter of the Company beginning after the Issue
Date. The Company shall also deliver a certificate to the
Trustee at least annually from its chief financial officer (or
if the Company does not have a chief financial officer, its
principal executive, financial or accounting officer) as to his
or her knowledge of the Company's compliance with all
conditions and covenants under this Indenture, such compliance
to be determined without regard to any period of grace or
requirement of notice provided herein.
(b) The Company shall deliver to the Trustee within
90 days after the end of each fiscal year a written statement
by the Company's independent certified public accountants
stating (A) that their audit examination has included a review
of the terms of this Indenture and the Securities as they
relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default
under this Indenture has come to their attention and, if such a
Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof;
provided, however, that, without any restriction as to the
scope of the audit examination, such independent certified
public accountants shall not be liable by reason of any failure
to obtain knowledge of any such Default or Event of Default
that would not be disclosed in the course of an audit
examination conducted in accordance with GAAP.
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(c) The Company will deliver to the Trustee as soon
as possible, and in any event within 10 days after the Company
becomes aware or should reasonably have become aware of the
occurrence of any Default or Event of Default, an Officers'
Certificate specifying such Default or Event of Default and
what action the Company is taking or proposes to take with
respect thereto.
Section 10.09. SEC Reports and Other Information.
(a) The Company shall file with the SEC the annual
reports, quarterly reports and the information, documents and
other reports required to be filed with the SEC pursuant to
Sections 13 and 15 of the Exchange Act, whether or not the
Company has a class of securities registered under the Exchange
Act. In accordance with the provisions of TIA Section 314(a), the
Company shall file with the Trustee, within 15 days after it
files them with the SEC, 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 SEC may by rules and
regulations prescribe) which the Company is required to file
with the SEC pursuant to Section 13 or 15 of the Exchange Act.
The Company also shall comply with the other provisions of TIA
Section 314(a). In addition, the Company shall cause its annual
report to stockholders and any quarterly or other financial
reports furnished by it to stockholders generally to be filed
with the Trustee and mailed, no later than the date such
materials are mailed or made available to the Company's
stockholders, to the Holders at their addresses as set forth in
the register of securities maintained by the Registrar.
(b) At any time when the Company is not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934,
upon the request of a Holder of a Series A Security, the
Company will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under
the Securities Act (or any successor provision thereto) to such
Holder or to a prospective purchaser of such Series A Security
designated by such Holder, as the case may be, in order to
permit compliance by such Holder with Rule 144A under the
Securities Act.
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Section 10.10. Designation of Unrestricted
Subsidiaries.
(a) The Company may designate any Subsidiary of the
Company as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") if:
(i) no Default shall have occurred and be continuing
at the time of or after giving effect to such Designation;
(ii) at the time of and after giving effect to such
Designation, the Company could incur $1.00 of additional
Indebtedness under the first paragraph of Section 10.11;
and
(iii) the Company would be permitted under this
Indenture to make an Investment at the time of Designation
(assuming the effectiveness of such Designation) in an
amount (the "Designation Amount") equal to the Fair Market
Value of such Subsidiary on such date.
In the event of any such Designation, the Company
shall be deemed to have made an Investment constituting a
Restricted Payment pursuant to Section 10.12 hereof for all
purposes of this Indenture in the Designation Amount. Further,
(i) neither the Company nor any Restricted Subsidiary shall at
any time (x) provide credit support for, subject any of its
property or assets to the satisfaction of, or guarantee, any
Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be directly
or indirectly liable for any Indebtedness which provides that
the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity
upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted
Subsidiary), except, in the case of clause (x) or (y), (1) with
respect to the Company's obligations under the Exchange
Agreement dated as of May 3, 1995 by and between the Company
and Creditanstalt Corporate Finance, Inc. as in effect on the
Issue Date and (2) to the extent otherwise permitted under the
terms of this Indenture, including, without limitation Sections
10.11 and 10.12 hereof and (ii) no Unrestricted Subsidiary
shall at any time
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guarantee or otherwise provide credit support for any obligation
of the Company or any Restricted Subsidiary.
(b) In addition, the Company may revoke any
Designation of a Subsidiary as an Unrestricted Subsidiary (a
"Revocation") if:
(i) no Default shall have occurred and be continuing
at the time of and after giving effect to such Revocation;
and
(ii) all Liens and Indebtedness of such Unrestricted
Subsidiary outstanding immediately following such
Revocation would, if incurred at such time, have been
permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations shall be evidenced
by Board Resolutions delivered to the Trustee certifying
compliance with the foregoing provisions.
Section 10.11. Limitation on Indebtedness.
The Company will not, and will not permit any of the
Restricted Subsidiaries to, create, incur, issue, assume,
guarantee or in any manner become directly or indirectly
liable, contingently or otherwise (in each case, to "incur"),
for the payment of any Indebtedness (including any Acquired
Indebtedness); provided that (i) the Company (and not the
Restricted Subsidiaries) will be permitted to incur
Indebtedness (including Acquired Indebtedness) and (ii) a
Restricted Subsidiary will be permitted to incur Acquired
Indebtedness if, at the time of any such incurrence and after
giving pro forma effect thereto (including the application of
the net proceeds therefrom), the Consolidated Fixed Charge
Coverage Ratio of the Company is at least equal to 2.25:1.00 if
such Indebtedness is incurred on or prior to December 31, 1996
or 2.50:1.00 if such Indebtedness is incurred on or after
January 1, 1997.
Notwithstanding the foregoing, the Company and the
Restricted Subsidiaries, as applicable, may incur each and all
of the following (each of which shall be given independent
effect):
(a) Indebtedness of the Company evidenced by the
Securities and other Indebtedness of the Company and the
Restricted Subsidiaries outstanding on the Issue Date;
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(b) Indebtedness of the Company under the Credit
Agreement in an aggregate principal amount at any time
outstanding not to exceed the sum of (1) 75% of the net
amount of accounts receivable (as determined under GAAP)
of the Company and the Restricted Subsidiaries plus (2) an
amount equal to $1,200 multiplied by the number of
Eligible Pay Telephones (as defined in the Credit
Agreement as in effect on the Issue Date), in each case as
determined in good faith by the Company at the time of
each incurrence of Indebtedness under the Credit
Agreement; provided in no event shall the aggregate
principal amount of Indebtedness under the Credit
Agreement permitted pursuant to this clause (b) exceed
$60,000,000 at any time outstanding;
(c) Indebtedness of the Company and/or any
Restricted Subsidiary used to finance the cost of
acquiring public pay telephones (including in any Asset
Acquisition) in an aggregate principal amount incurred
after the Issue Date not to exceed $10,000,000; provided
that (x) at the time of and after giving effect to any
such incurrence under this clause (c), the aggregate
principal amount of Indebtedness incurred under this
clause (c) after the Issue Date shall not exceed the
aggregate net cash proceeds (other than the net proceeds
from the UBS Capital Preferred Stock) received by the
Company after the Issue Date from the issuance of Capital
Stock (other than Redeemable Capital Stock) of the Company
and (y) the principal amount of Indebtedness being
incurred at any time under this clause (c) shall not
exceed the amount of Restricted Payments Availability at
the date of incurrence;
(d) Indebtedness of the Company and/or any
Restricted Subsidiary incurred in respect of performance
bonds, bankers' acceptances, letters of credit of the
Company and any Restricted Subsidiary and surety bonds
provided by the Company or any Restricted Subsidiary in
the ordinary course of business not to exceed $5,000,000
in the aggregate;
(e) (i) Interest Rate Protection Obligations of the
Company and/or any Restricted Subsidiary covering
Indebtedness of the Company or any Restricted Subsidiary;
provided that (x) any Indebtedness to which any such
Interest Rate Protection Obligations relate bears interest
at fluctuating interest rates and is otherwise permitted
to be
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incurred under this covenant and (y) the notional
principal amount of any such Interest Rate Protection
Obligations does not exceed the principal amount of the
Indebtedness to which such Interest Rate Protection
Obligations relate and (ii) Indebtedness under Currency
Agreements of the Company or any Restricted Subsidiary;
provided that such Currency Agreements do not increase the
Indebtedness of the Company and the Restricted
Subsidiaries in the aggregate other than as a result of
fluctuations in foreign currency exchange rates;
(f) (i) Indebtedness of a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, in each
case which is not subordinated in right of payment to any
Indebtedness of such Restricted Subsidiary, and
(ii) Indebtedness of the Company to a Restricted
Subsidiary (but only for so long as such Restricted
Subsidiary continues to be a Restricted Subsidiary) which
is unsecured and subordinated in right of payment from and
after such time as the Securities shall become due and
payable (whether at a Stated Maturity, by acceleration or
otherwise) to the payment and performance of the Company's
obligations under this Indenture and the Securities;
(g) Indebtedness of the Company to the extent the
proceeds are used to refinance (whether by amendment,
renewal, extension or refunding) Indebtedness of the
Company or any of the Restricted Subsidiaries; provided
that (i) the principal amount of Indebtedness incurred
pursuant to this clause (g) (or, if such Indebtedness
provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of
acceleration of the maturity thereof, the original issue
price of such Indebtedness) shall not exceed the sum of
the principal amount of Indebtedness so refinanced, plus
the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of
such Indebtedness or the amount of any premium reasonably
determined by the Company as necessary to accomplish such
refinancing by means of a tender offer or privately
negotiated purchase, plus the amount of reasonable and
customary expenses incurred in connection therewith, and
(ii) such Indebtedness being incurred does not have a
lower Average Life to Stated Maturity than the
Indebtedness being refinanced and, in the case of any such
refinancing of the Securities, does not have an earlier
Stated Maturity for any principal payment than the
Securities; and
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(h) additional Indebtedness of the Company and/or
any of the Restricted Subsidiaries not to exceed
$10,000,000 in aggregate principal amount at any one time
outstanding.
Section 10.12. Limitation on Restricted Payments.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, do any of the
following:
(i) declare or pay any dividend or make any other
distribution or payment on or in respect of Capital Stock
of the Company or make any payment to the direct or
indirect holders (in their capacities as such) of Capital
Stock of the Company (other than dividends or
distributions payable solely in Capital Stock (other than
Redeemable Capital Stock) of the Company or in options,
warrants or other rights to purchase Capital Stock (other
than Redeemable Capital Stock) of the Company),
(ii) purchase, redeem, defease or otherwise acquire
or retire for value any Capital Stock of the Company
(other than any such Capital Stock owned by a Restricted
Subsidiary),
(iii) make any principal payment on, or purchase,
defease, repurchase, redeem or otherwise acquire or retire
for value, prior to any scheduled maturity, scheduled
repayment, scheduled sinking fund payment or other Stated
Maturity, any Subordinated Indebtedness, or
(iv) make any Investment (other than any Permitted
Investment) in any person (other than in a Restricted
Subsidiary or a person that becomes a Restricted
Subsidiary as a result of such Investment or a person that
merges into the Company or a Restricted Subsidiary)
(such payments or Investments described in the preceding
clauses (i), (ii), (iii) and (iv) are collectively referred to
as "Restricted Payments"), unless, at the time of and after
giving effect to the proposed Restricted Payment (the amount of
any such Restricted Payment, if other than cash, shall be the
Fair Market Value of the asset(s) proposed to be transferred by
the Company or such Restricted Subsidiary, as the case may be,
pursuant to such Restricted Payment), (A) no Default shall have
occurred and be continuing, (B) the Company would be able to
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incur $1.00 of additional Indebtedness under the first
paragraph of Section 10.11 hereof and (C) the aggregate amount
of all Restricted Payments declared or made from and after the
Issue Date (including any Designation Amount) would not exceed
(1) 50% of the aggregate Consolidated Net Income of the Company
accrued on a cumulative basis during the period beginning on
April 1, 1995 and ending on the last day of the fiscal quarter
of the Company immediately preceding the date of such proposed
Restricted Payment (or, if such aggregate cumulative
Consolidated Net Income of the Company for such period shall be
a deficit, minus 100% of such deficit) plus (2) the aggregate
net cash proceeds received by the Company from the issuance or
sale of its Capital Stock (excluding (x) any net cash proceeds
from the issuance of the UBS Capital Preferred Stock or any
Capital Stock issued upon conversion thereof and (y) any net
cash proceeds from the issuance of Redeemable Capital Stock,
but including Capital Stock issued upon the conversion of
convertible Indebtedness, in exchange for outstanding
Indebtedness or from the exercise of options, warrants or
rights to purchase Capital Stock (other than Redeemable Capital
Stock)) of the Company to any person (other than to a
Restricted Subsidiary) after the Issue Date plus (3) in the
case of the disposition for cash or repayment in cash of any
Investment constituting a Restricted Payment made after the
Issue Date (other than pursuant to clause (v) of the next
paragraph of this Section 10.12), an amount equal to the lesser
of the return of capital with respect to such Investment and
the cost of such Investment, in either case, less the cost of
the disposition of such Investment minus (4) the aggregate
principal amount of Indebtedness incurred after the Issue Date
pursuant to clause (c) of the second paragraph of
Section 10.11. For purposes of the preceding clause (C)(2),
upon the issuance of Capital Stock from either the conversion
of convertible Indebtedness or in exchange for outstanding
Indebtedness or upon the exercise of options, warrants or
rights, the amount counted as net cash proceeds received will
be the cash amount received by the Company at the original
issuance of the Indebtedness that is so converted or exchanged
or from the issuance of options, warrants or rights, as the
case may be, plus the incremental amount received by the
Company, if any, upon the conversion, exchange or exercise
thereof.
None of the foregoing provisions will prohibit
(i) the payment of any dividend within 60 days after the date
of its declaration, if at the date of declaration such payment
would be permitted by the foregoing paragraph; (ii) so long as
no Default shall have occurred and be continuing, the
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redemption, repurchase or other acquisition or retirement of
any shares of any class of Capital Stock of the Company or any
Restricted Subsidiary in exchange for, or out of the net cash
proceeds of, a substantially concurrent issue and sale of other
shares of Capital Stock (other than Redeemable Capital Stock)
of the Company to any person (other than to a Restricted
Subsidiary); provided that such net cash proceeds so used are
excluded from clause (C)(2) of the preceding paragraph; (iii)
so long as no Default shall have occurred and be continuing,
any redemption, repurchase or other acquisition or retirement
of Subordinated Indebtedness in exchange for, or out of the net
cash proceeds of, a substantially concurrent issue and sale of
(1) Capital Stock (other than Redeemable Capital Stock) of the
Company; provided that any such net cash proceeds so used are
excluded from clause (C)(2) of the preceding paragraph, or (2)
Subordinated Indebtedness of the Company so long as such
Subordinated Indebtedness has no Stated Maturity earlier than
the 91st day after the Stated Maturity for the final scheduled
principal payment of the Securities; (iv) so long as no Default
shall have occurred and be continuing, the making of
Investments constituting Restricted Payments made as a result
of the receipt of non-cash consideration from any Asset Sale
made pursuant to and in compliance with Section 10.14;
(v) Investments constituting Restricted Payments not to exceed
$5,000,000 in the aggregate at any one time outstanding;
(vi) subsequent to the third anniversary of the issuance of the
UBS Capital Preferred Stock, so long as no Default shall have
occurred and be continuing and the Consolidated Fixed Charge
Coverage Ratio of the Company is at least equal to 3.0:1.0, the
payment of scheduled cash dividend payments on the UBS Capital
Preferred Stock in accordance with the terms of the UBS Capital
Preferred Stock as in effect on the Issue Date; and (vii) the
redemption of the UBS Capital Preferred Stock upon a Change of
Control if (1) a Change of Control Offer has been made under
this Indenture and all holders of Securities validly tendering
their Securities shall have had such Securities purchased by
the Company and (2) no Event of Default pursuant to clause (a)
or clause (b) of Section 5.01 arising after the Change of
Control Offer shall have occurred or be continuing. In
computing the amount of Restricted Payments previously made for
purposes of clause (C) of the preceding paragraph, Restricted
Payments under clauses (i), (iv), (v), (vi) and (vii) of this
paragraph shall be included without duplication and Restricted
Payments under clauses (ii) and (iii) of this paragraph shall
be excluded.
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Section 10.13. Limitation on Transactions with
Interested Persons.
The Company will not, and will not permit any of the
Restricted Subsidiaries to, directly or indirectly, enter into
or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale,
transfer, disposition, purchase, exchange or lease of assets,
property or services) with, or for the benefit of, any
Affiliate of the Company (other than a Wholly-Owned Restricted
Subsidiary), any officer or director of the Company or any
Restricted Subsidiary or any "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all
securities that such person has a right to acquire, whether
such right is exercisable immediately or only after the passage
of time) of five percent or more of the Company's Common Stock
at any time outstanding (each of the foregoing persons being
referred to as an "Interested Person") except (i) on terms that
are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those which could have
been obtained in a comparable transaction at such time from a
person who is not an Interested Person and (ii) with respect to
a transaction or series of transactions involving aggregate
payments or value equal to or greater than $100,000, the
Company shall have delivered an officers' certificate to the
Trustee certifying that such transaction or transactions comply
with the preceding clause (i) and that such transaction or
transactions have been approved by a majority of the Board
including a majority of the Independent Directors of the Board.
In addition to the foregoing, with respect to a transaction or
series of transactions with an Interested Person involving
aggregate payments or value equal to or greater than
$1,500,000, the Company must deliver to the Trustee a written
opinion from an Independent Financial Advisor stating that such
transaction or series of transactions are fair from a financial
point of view. This Section 10.13 will not restrict the
Company from (a) redeeming or paying dividends in respect of
its Capital Stock permitted under Section 10.12, (b) paying
reasonable and customary regular fees and other compensation,
including interests in Common Stock of the Company, to
directors of the Company who are not employees of the Company,
(c) paying any amounts pursuant to agreements existing, and as
in effect, on the Issue Date and disclosed in the Offering
Memorandum, (d) paying loans or advances to officers of the
Company and the Restricted Subsidiaries for bona fide business
purposes of the Company not in excess of $500,000 in the
aggregate at any one time outstanding and (e) engaging
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in banking or other transactions with Creditanstalt-Bankverein and
its Affiliates and any other lender under the Credit Agreement
relating to services customarily provided by
Creditanstalt-Bankverein or its Affiliates and any other lender
under the Credit Agreement in the ordinary course of its
respective commercial lending business.
Section 10.14. Disposition of Proceeds of Asset
Sales.
(a) The Company will not, and will not permit any of
the Restricted Subsidiaries to, directly or indirectly, make
any Asset Sale unless (a) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the Fair Market Value
of the assets or shares subject to such Asset Sale and (b) at
least 75% of such consideration consists of any combination of
(i) cash or Cash Equivalents or (ii) Indebtedness of the
Company or such Restricted Subsidiary assumed by the purchaser
of the assets or shares subject to such Asset Sale and the
Company or such Restricted Subsidiary is unconditionally
released from such Indebtedness. The Company may (a) use no
more than the Other Senior Debt Pro Rata Share of the Net Cash
Proceeds from such Asset Sale to repay, and thereby permanently
reduce the commitments or amounts available to be reborrowed
under, Other Senior Debt and/or (b) apply such Net Cash
Proceeds to acquire or construct property or assets in lines
(whether based on product, services or geography) of business
related to the businesses of the Company and the Restricted
Subsidiaries as conducted on the Issue Date (after giving
effect to the sale of (i) the Capital Stock or assets of PTC
Cellular, Inc. and (ii) the Company's inmate telephone
business) within 270 days after the consummation of such Asset
Sale. To the extent all or part of the Net Cash Proceeds of
any Asset Sale are not so applied, the Company or any
Restricted Subsidiary shall, within 270 days of such Asset
Sale, make an offer to purchase (an "Asset Sale Offer") from
all holders of Securities up to a maximum principal amount
(expressed as a multiple of $1,000) of Securities equal to such
Net Cash Proceeds, at a purchase price (the "Asset Sale Offer
Price") equal to 100% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of
purchase (the "Asset Sale Purchase Date"); provided that the
Company may defer the Asset Sale Offer until there are an
aggregate unutilized Net Cash Proceeds from such Asset Sales
equal to or in excess of $10,000,000, at which time the entire
unutilized amount of such Net Cash Proceeds, and not just the
amount in excess of $10,000,000, shall be applied as
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required pursuant to this paragraph. The Asset Sale Offer shall
remain open for a period of 20 business days or such longer period
as may be required by law. To the extent an Asset Sale Offer
is oversubscribed, Securities shall be purchased among holders
on a proportionate basis (based on the relative aggregate
principal amounts validly tendered for purchase by holders
thereof). To the extent the Asset Sale Offer is not fully
subscribed to by the holders of the Securities, the Company may
retain and utilize any unutilized portion of the Net Cash
Proceeds for any purpose consistent with the other terms of
this Indenture.
(b) Notwithstanding the foregoing, the Company and
any Restricted Subsidiary will not be required to comply with
clause (b) of the first sentence of the immediately preceding
paragraph with respect to Asset Sales by the Company or any
Restricted Subsidiary of (i) the Capital Stock or assets of PTC
Cellular, Inc., (ii) the Company's 23.75% interest in Artel
Business & Telecommunications, Inc. ("Artel") and (iii) the
Company's inmate telephone business; provided that, in the case
of the inmate telephone business, such noncompliance will only
be permitted to the extent the Company delivers to the Trustee
a written opinion from an Independent Financial Advisor to the
effect of clause (a) of the first sentence of the immediately
preceding paragraph. In addition to the foregoing, the Company
and any Restricted Subsidiary will not be required to comply
with the second sentence of the immediately preceding paragraph
with respect to Net Cash Proceeds from Asset Sales by the
Company or any Restricted Subsidiary of (i) the Capital Stock
or assets of PTC Cellular, Inc., (ii) the Company's inmate
telephone business, and (iii) the Company's 23.75% interest in
Artel; provided that the Net Cash Proceeds from any Asset Sale
of Discontinued Operations (exclusive of the Other Senior Debt
Pro Rata Share of such Net Cash Proceeds in the case of an
Asset Sale of the assets of PTC Cellular, Inc.) shall be
required to be applied as follows: (A) the Company or any
Restricted Subsidiary may retain up to $5,000,000 of such Net
Cash Proceeds; (B) the Company or any Restricted Subsidiary may
apply up to 50% of any such Net Cash Proceeds in excess of
$5,000,000 in the manner provided by clause (b) of the second
sentence of the preceding paragraph; and (C) up to 50% of any
such Net Cash Proceeds in excess of $5,000,000, together with
any such excess Net Cash Proceeds not applied as contemplated
by the preceding clause (B) within the time frame required by
clause (b) of the second sentence of the preceding paragraph
(collectively, "Discontinued Operations Excess Proceeds"),
shall be used by the Company to make an offer to purchase
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Securities at a purchase price equal to 100% of the principal
amount thereof plus accrued and unpaid interest to the date of
purchase; provided, further, that the Company may defer any
such offer to purchase contemplated by the preceding clause (C)
until the aggregate Discontinued Operations Excess Proceeds is
in excess of such $5,000,000, at which time the entire
Discontinued Operations Excess Proceeds, and not just the
amount in excess of $5,000,000, shall be utilized to make an
offer to purchase. Such offer to purchase shall be made within
45 days after such threshold is exceeded and shall comply with
the same requirements for an Asset Sale Offer otherwise set
forth in this Section 10.14.
(c) Notice of an Asset Sale Offer shall be mailed by
the Company to all Holders of Securities not less than
20 Business Days nor more than 40 Business Days before the
Asset Sale Purchase Date at their last registered address with
a copy to the Trustee and the Paying Agent. The Asset Sale
Offer shall remain open from the time of mailing for at least
20 Business Days and until at least 5:00 p.m., New York City
time, on the Asset Sale Purchase Date. The notice, which shall
govern the terms of the Asset Sale Offer, shall include such
disclosures as are required by law and shall state:
(i) that the Asset Sale Offer is being made pursuant
to this Section 10.14;
(ii) the Asset Sale Offer Price (including the amount
of accrued interest, if any) for each Security, the Asset
Sale Purchase Date and the date on which the Asset Sale
Offer expires;
(iii) that any Security not tendered or accepted for
payment will continue to accrue interest in accordance
with the terms thereof;
(iv) that, unless the Company shall default in the
payment of the Asset Sale Offer Price, any Security
accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest after the Asset Sale
Purchase Date;
(v) that Holders electing to have Securities
purchased pursuant to an Asset Sale Offer will be required
to surrender their Securities to the Paying Agent at the
address specified in the notice prior to 5:00 p.m., New
York City time, on the Asset Sale Purchase Date with the
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"Option of Holder to Elect Purchase" on the reverse
thereof completed and must complete any form of letter of
transmittal proposed by the Company and acceptable to the
Trustee and the Paying Agent;
(vi) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00
p.m., New York City time, on the Asset Sale Purchase Date,
a tested telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of
Securities the Holder delivered for purchase, the Security
certificate number (if any) and a statement that such
Holder is withdrawing his election to have such Securities
purchased;
(vii) that if Securities in a principal amount in
excess of the Holder's pro rata share of the amount of Net
Cash Proceeds are tendered pursuant to the Asset Sale
Offer, the Company shall purchase Securities on a pro rata
basis among the Securities tendered (with such adjustments
as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired);
(viii) that Holders whose Securities are purchased only
in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities
surrendered;
(ix) the instructions that Holders must follow in
order to tender their Securities; and
(x) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the Commission pursuant to the
Exchange Act (or, if the Company is not required to file
any such reports with the Commission, the comparable
reports prepared pursuant to Section 10.09), a description
of material developments in the Company's business,
information with respect to pro forma historical financial
information after giving effect to such Asset Sale and
Asset Sale Offer and such other information as would be
material to a Holder of Securities in connection with the
decision of such Holder as to whether or not it should
tender Securities pursuant to the Asset Sale Offer.
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(d) On the Asset Sale Purchase Date, the Company
shall (i) accept for payment, on a pro rata basis, Securities
or portions thereof tendered pursuant to the Asset Sale Offer,
(ii) deposit with the Paying Agent money, in immediately
available funds, in an amount sufficient to pay the Asset Sale
Offer Price of all Securities or portions thereof so tendered
and accepted and (iii) deliver to the Trustee the Securities so
accepted together with an Officers' Certificate setting forth
the Securities or portions thereof tendered to and accepted for
payment by the Company. The Paying Agent shall promptly (but
in any case, no later than five Business Days after the Asset
Sale Purchase Date) mail or deliver to Holders of Securities so
accepted payment in an amount equal to the Asset Sale Offer
Price, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal
amount to any unpurchased portion of the Security surrendered.
Any Securities not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company
will publicly announce the results of the Asset Sale Offer not
later than the first Business Day following the Asset Sale
Purchase Date. To the extent an Asset Sale Offer is not fully
subscribed to by such Holders, the Company may retain (free and
clear of the Lien of this Indenture) such unutilized portion of
the Net Cash Proceeds. The Paying Agent shall promptly deliver
to the Company the balance of any such Net Cash Proceeds held
by the Paying Agent after payment to the Holders of Securities
as aforesaid. For purposes of this Section 10.14, the Trustee
shall act as Paying Agent.
(e) The Company shall comply, to the extent
applicable, with the requirements of Section 14(e) and Rule
14e-1 under the Exchange Act and any other applicable
securities laws or regulations in connection with the
repurchase of Securities pursuant to the Asset Sale Offer. To
the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 10.14, the
Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its
obligations under this Section 10.14 by virtue thereof.
(f) Prior to the commencement of an Asset Sale
Offer, the Company shall deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all
conditions precedent to such Asset Sale Offer have been
complied with.
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Section 10.15. Change of Control.
Upon the occurrence of a Change of Control (the date
of such occurrence, the "Change of Control Date"), the Company
shall be obligated to make an offer to purchase (a "Change of
Control Offer"), and shall, subject to the provisions described
below, purchase, on a business day (the "Change of Control
Purchase Date") not more than 60 nor less than 30 days
following the occurrence of the Change of Control, all of the
then outstanding Securities at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Change
of Control Purchase Date. The Company shall be required to
purchase all Securities properly tendered into the Change of
Control Offer and not withdrawn.
Notice of a Change of Control Offer shall be mailed
by the Company not later than the 30th day after the Change of
Control Date to the Holders of Securities at their last
registered addresses with a copy to the Trustee and the Paying
Agent. The Change of Control Offer shall remain open from the
time of mailing for at least 20 Business Days and until 5:00
p.m., New York City time, on the Change of Control Purchase
Date. The notice, which shall govern the terms of the Change
of Control Offer, shall include such disclosures as are
required by law and shall state:
(a) that the Change of Control Offer is being made
pursuant to this Section 10.15 and that all Securities
validly tendered into the Change of Control Offer and not
withdrawn will be accepted for payment;
(b) the purchase price (including the amount of
accrued interest, if any) for each Security, the Change of
Control Purchase Date and the date on which the Change of
Control Offer expires;
(c) that any Security not tendered for payment will
continue to accrue interest in accordance with the terms
thereof;
(d) that, unless the Company shall default in the
payment of the purchase price, any Security accepted for
payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control
Purchase Date;
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(e) that Holders electing to have Securities
purchased pursuant to a Change of Control Offer will be
required to surrender their Securities to the Paying Agent
at the address specified in the notice prior to 5:00 p.m.,
New York City time, on the Change of Control Purchase Date
with the "Option of Holder to Elect Purchase" on the
reverse thereof completed and must complete any form
letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;
(f) that Holders of Securities will be entitled to
withdraw their election if the Paying Agent receives, not
later than 5:00 p.m., New York City time, on the Change of
Control Purchase Date, a tested telex, facsimile
transmission or letter setting forth the name of the
Holder, the principal amount of Securities the Holder
delivered for purchase, the Security certificate number
(if any) and a statement that such Holder is withdrawing
its election to have such Securities purchased;
(g) that Holders whose Securities are purchased only
in part will be issued Securities equal in principal
amount to the unpurchased portion of the Securities
surrendered;
(h) the instructions that Holders must follow in
order to tender their Securities; and
(i) information concerning the business of the
Company, the most recent annual and quarterly reports of
the Company filed with the SEC pursuant to the Securities
Exchange Act (or,if the Company is not then required to
file any such reports with the SEC, the comparable reports
prepared pursuant to Section 10.09), a description of
material developments in the Company's business,
information with respect to pro forma historical financial
information after giving effect to such Change of Control
and such other information concerning the circumstances
and relevant facts regarding such Change of Control and
Change of Control Offer as would be material to a Holder
of Securities in connection with the decision of such
Holder as to whether or not it should tender Securities
pursuant to the Change of Control Offer, including
information regarding the persons acquiring control and
such persons' business plans going forward.
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On the Change of Control Purchase Date, the Company
shall (i) accept for payment Securities or portions thereof
validly tendered pursuant to the Change of Control Offer,
(ii) deposit with the Paying Agent money, in immediately
available funds, sufficient to pay the purchase price of all
Securities or portions thereof so tendered and accepted and
(iii) deliver to the Trustee the Securities so accepted
together with an Officers' Certificate setting forth the
Securities or portions thereof tendered to and accepted for
payment by the Company. The Paying Agent shall promptly mail
or deliver to the Holders of Securities so accepted payment in
an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion
of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company will publicly announce the results
of the Change of Control Offer not later than the first
Business Day following the Change of Control Purchase Date.
The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements applicable to a
Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change
of Control Offer.
The Company shall comply, to the extent applicable,
with the requirements of Section 14(e) of the Exchange Act, and
any other securities laws or regulations in connection with the
repurchase of Securities pursuant to a Change of Control Offer.
Section 10.16. Limitation on Liens.
The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to
exist any Liens of any kind against or upon any of its property
or assets, or any proceeds therefrom, except for (a) Liens
existing as of the Issue Date; (b) Liens on property or assets
of the Company securing the obligations under the Credit
Agreement; (c) Liens in favor of the Company or any Restricted
Subsidiary of the Company; (d) Liens on property or assets
securing Subordinated Indebtedness; provided that the
Securities are secured by a Lien on such property or assets
that is senior in priority to such Liens; (e) Liens on property
or assets securing Indebtedness of the Company ranking pari
passu in right of
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payment with the Securities (other than pursuant to the preceding
clause (b)); provided that the Securities are secured by a Lien on
such property or assets that is equal and ratable with such Liens; and
(f) Permitted Liens.
Section 10.17. Limitation on Issuances and Sales of
Preferred Stock by Restricted Subsidiaries.
The Company (i) will not permit any of the Restricted
Subsidiaries to issue any Preferred Stock (other than to the
Company or to a Restricted Subsidiary) and (ii) will not permit
any person (other than the Company or a Restricted Subsidiary)
to own any Preferred Stock of any Restricted Subsidiary.
Section 10.18. Limitation on Dividends and Other
Payment Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on or in respect of its Capital Stock
or any other interest or participation in, or measured by, its
profits, (b) pay any Indebtedness owed to the Company or any
other Restricted Subsidiary, (c) make loans or advances to the
Company or any other Restricted Subsidiary, (d) transfer any of
its properties or assets to the Company or to any other
Restricted Subsidiary (other than any customary restriction on
transfers of property subject to a Lien permitted under this
Indenture which would not materially adversely affect the
Company's ability to satisfy its obligations under the
Securities and this Indenture) or (e) guarantee any
Indebtedness of the Company or any other Restricted Subsidiary,
except for such encumbrances or restrictions existing under or
by reason of (i) applicable law, (ii) customary non-assignment
provisions of any contract or any licensing agreement entered
into by the Company or any of the Restricted Subsidiaries in
the ordinary course of business or any lease governing a
leasehold interest of the Company or any Restricted Subsidiary,
(iii) the Credit Agreement as in effect on the Issue Date and
(iv) any agreement or other instrument of a person acquired by
the Company or any Restricted Subsidiary in existence at the
time of such acquisition (but not created in contemplation
thereof), which encumbrance or restriction is not applicable to
any person, or the properties or assets of any person, other
than the person, or the property or assets of the person, so
acquired.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.01. Right of Redemption.
The Securities may be redeemed as a whole or from
time to time in part, at any time on or after July 15, 2000, at
the option of the Company subject to the conditions and at the
Redemption Prices specified in the forms of Security, together
with accrued interest to the Redemption Date.
In addition, prior to July 15, 1998, in the event of
one or more Equity Offerings consummated after the Issue Date
(other than the sale of the UBS Capital Preferred Stock) for
aggregate gross proceeds to the Company equal to or exceeding
$10,000,000, the Company may redeem in the aggregate up to a
maximum of 20% of the principal amount of the Securities
originally issued with the net proceeds thereof at a redemption
price equal to 111-1/4% of the principal amount thereof, plus
accrued and unpaid interest to the Redemption Date.
Section 11.02. Applicability of Article.
Redemption of Securities at the election of the
Company or otherwise, 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 and an Officers' Certificate. 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 period shall be satisfactory
to the Trustee), notify the Trustee in writing 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 or portions thereof to be redeemed
shall be selected not more than 60 days and not less than
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30 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities not previously called for redemption in
compliance with the requirements of the principal national
securities exchange, if any, on which the Securities being
redeemed are listed, or, if the Securities are not listed on a
national securities exchange, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate;
provided that no Securities of a principal amount of $1,000 or
less shall be redeemed in part; provided, further, that any
redemption pursuant to the provisions of the Securities
relating to a sale of the Company's Common Stock pursuant to
one or more Equity Offerings shall be made on a pro rata basis
or as nearly a pro rata basis as practicable (subject to DTC
procedures).
For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to
redemption of Securities shall relate, in the case of any
Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security 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 the address of such Holder appearing in the
Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to
be redeemed, the identification of the particular
Securities to be redeemed;
(d) in the case of a Security to be redeemed in
part, the principal amount of such Security to be redeemed
and that after the Redemption Date upon surrender of such
Security, a new Security or Securities in the aggregate
principal amount equal to the unredeemed portion thereof
will be issued;
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(e) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(f) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security or
portion thereof, and that (unless the Company shall
default in payment of the Redemption Price) interest
thereon shall cease to accrue on and after said date;
(g) the place or places where such Securities are to
be surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such
Securities; and
(i) the paragraph of the Securities pursuant to
which the Securities are being redeemed.
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 written request, by the Trustee in the name
and at the expense of the Company.
The notice if mailed in the manner herein provided
shall be conclusively presumed to have been given, whether or
not the Holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the
Holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for
the redemption of any other Security.
Section 11.06. Deposit of Redemption Price.
On or 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 in
same day funds sufficient to pay the Redemption Price of, and
accrued interest on, all the Securities or portions thereof
which are to be redeemed on that date.
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,
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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) 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; 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 on the relevant
Regular Record Dates according to the 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 then borne by such Security.
Section 11.08. Securities Redeemed or Purchased in
Part.
Any Security which is to be redeemed or purchased
only in part shall be surrendered to the Paying Agent at the
office or agency maintained for such purpose pursuant to
Section 10.02 (with, if the Company, the Security Registrar or
the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to, the Company,
the Security Registrar or 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 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 portion of the
principal of the Security so surrendered that is not redeemed
or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of
Indenture.
This Indenture shall cease to be of further effect
(except as to surviving rights of registration of transfer or
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exchange of Securities herein expressly provided for, the
Company's obligations under Section 6.07 hereof, and the
Trustee's and Paying Agent's obligations under Section 4.06
hereof) and the Trustee, on written demand of and at the
expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture,
when
(a) either
(i) all Securities theretofore authenticated and
delivered (other than (A) Securities which have been
destroyed, lost or stolen and which have been replaced or
paid as provided in Section 3.06 hereof and (B) 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
(ii) all such Securities not theretofore delivered to
the Trustee for cancellation have become due and payable
and the Company has irrevocably deposited or caused to be
deposited with the Trustee in trust for the purpose an
amount of money sufficient to pay and discharge the entire
Indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for the principal of,
premium, if any, and interest to the date of such deposit;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee
(i) irrevocable instructions to apply the deposited money
toward payment of the Securities at the Stated Maturities and
the Redemption Dates thereof, and (ii) 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 to the Trustee under
Section 6.07 and, if money shall have been deposited with the
Trustee pursuant to subclause (a)(ii) of this Section 12.01,
the obligations of the Trustee under Section 12.02 and the last
paragraph of Section 10.03 shall survive.
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Section 12.02. 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 12.01 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 of, premium, if any, and interest on
the Securities for whose payment such money has been deposited
with the Trustee.
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IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed as of the day and year first
above written.
PEOPLES TELEPHONE COMPANY, INC.
By:
---------------------------
Name:
Title:
Attest: _________________
Title:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA, as Trustee
By:
----------------------------
Name:
Title:
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EXHIBIT A
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS TO
NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
PEOPLES TELEPHONE COMPANY, INC.
c/o First Union National Bank of
North Carolina
230 South Tryon Street, 8th Floor
Charlotte, North Carolina 28288-1179
Attention: Corporate Trust Administration
Dear Ladies and Gentlemen:
In connection with our proposed purchase of $
aggregate principal amount of the 12-1/4% Senior Notes due 2002
(the "Notes") of Peoples Telephone Company, Inc., a New York
corporation (the "Company"), we confirm that:
1. We understand that the Notes have not been
registered under the Securities Act of 1933, as amended
(the "Securities Act"). We agree on our own behalf and on
behalf of any investor account for which we are purchasing
the Notes to offer, sell or otherwise transfer such Notes
prior to the date which is three years after the later of
the date of original issue and the last date on which the
Company or any affiliate of the Company was the owner of
such Notes, or any predecessor thereto (the "Resale
Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been
declared effective under the Securities Act, (c) for so
long as the Notes are eligible for resale pursuant to Rule
144A under the Securities Act, to a person we reasonably
believe is a "qualified institutional buyer" under Rule
144A (a "QIB") that purchases for its own account or for
the account of a QIB to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pur-
suant to offers and sales to "non-U.S. persons" that occur
outside the United States within the meaning of Regulation
S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities
Act that is acquiring Notes for its own account or for the
account of such an institutional "accredited investor" for
investment purposes and not with a view to, or for offer
or sale in connection with, any distribution thereof in
violation of the Securities Act or (f) pursuant to any
<PAGE>
other available exemption from the registration
requirements of the Securities Act, subject in each of the
foregoing cases to any requirement of law that the
disposition of our property and the property of such
investor account or accounts be at all times within our or
their control and to compliance with any applicable state
securities laws. The foregoing restrictions on resale
will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the
Notes is proposed to be made pursuant to clause (e) above
prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Trustee,
which shall provide, among other things, that the
transferee is an institutional "accredited investor"
within the meaning of subparagraph (a)(1), (2), (3) and
(7) of Rule 501 under the Securities Act and that it is
acquiring such Notes for investment purposes and not for
distribution in violation of the Securities Act. We
acknowledge on our own behalf and on behalf of any
investor account for which we are purchasing Notes that
the Company and the Trustee reserve the right prior to any
offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Notes pursuant to
clauses (d), (e) and (f) above to require the delivery of
an opinion of counsel, certifications and/or other
information satisfactory to the Company and the Trustee.
2. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) purchasing for our own account
or for the account of such an institutional "accredited
investor," and we are acquiring the Notes for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the
Securities Act and we have such knowledge and experience
in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its
investment.
3. We are acquiring the Notes purchased by us for
our own account or for one or more accounts as to each of
which we exercise sole investment discretion.
A-2
<PAGE>
4. You are entitled to rely upon this letter and you
are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative
or legal proceeding or official inquiry with respect to
the matters covered hereby.
Very truly yours,
------------------------------
(NAME OF PURCHASER)
By:
---------------------------
Date:
---------------------------
Upon transfer, the Notes should be registered in the name of
the new beneficial owner as follows:
Name:
-------------------------------------------------------------
Address:
----------------------------------------------------------
Taxpayer ID Number:
-----------------------------------------------
A-3
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE TO BE DELIVERED
UPON TERMINATION OF RESTRICTED PERIOD
[On or after August 28, 1995]
PEOPLES TELEPHONE COMPANY, INC.
c/o First Union National Bank of
North Carolina
230 South Tryon Street, 8th Floor
Charlotte, North Carolina 28288-1179
Attention: Corporate Trust Administration
Re: Peoples Telephone Company, Inc. (the "Company")
12-1/4% Senior Notes due 2002 (the "Securities")
Dear Ladies and Gentlemen:
This letter relates to $_______ principal amount of
Securities represented by the temporary global note certificate
(the "Temporary Certificate"). Pursuant to Section 3.01 of the
Indenture dated as of July 15, 1995 relating to the Securities
(the "Indenture"), we hereby certify that (1) we are the
beneficial owner of such principal amount of Securities
represented by the Temporary Certificate and (2) we are a
person outside the United States to whom the Securities could
be transferred in accordance with Rule 904 of Regulation S
("Regulation S") promulgated under the U.S. Securities Act of
1933, as amended. Accordingly, you are hereby requested to
issue a Physical Security representing the undersigned's
interest in the principal amount of Securities represented by
the Temporary Certificate, all in the manner provided by the
Indenture.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or
a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Holder]
By:
--------------------------
Authorized Signature
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
PEOPLES TELEPHONE COMPANY, INC.
c/o First Union National Bank of
North Carolina
230 South Tryon Street, 8th Floor
Charlotte, North Carolina 28288-1179
Attention: Corporate Trust Administration
Re: Peoples Telephone Company, Inc. (the "Company")
12-1/4% Senior Notes due 2002 (the "Securities")
Dear Ladies and Gentlemen:
In connection with our proposed sale of $__________
aggregate principal amount of the Securities, we confirm that
such sale has been effected pursuant to and in accordance with
Regulation S ("Regulation S") under the U.S. Securities Act of
1933, as amended, and, accordingly, we represent that:
(1) the offer of the Securities was not made to a
person in the United States;
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States
or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States
or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in
the United States in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S, as applicable;
and
(4) the transaction is not part of a plan or scheme
to evade the registration requirements of the U.S.
Securities Act of 1933, as amended.
In addition, if the sale is made during a restricted period and
the provisions of Rule 903(c)(3) or Rule 904(c)(1) of
<PAGE>
Regulation S are applicable thereto, we confirm that such sale
has been made in accordance with the applicable provisions of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or
a copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-------------------------
Authorized Signature
Date:
------------------------
C-2
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REGISTRATION RIGHTS AGREEMENT
Dated July 19, 1995
between
PEOPLES TELEPHONE COMPANY, INC.
and
MERRILL LYNCH & CO.,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is made and entered into July 19, 1995 between PEOPLES
TELEPHONE COMPANY, INC., a New York corporation (the
"Company"), and MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED (the "Purchaser").
This Agreement is made pursuant to the Purchase
Agreement dated July 12, 1995 between the Company and the
Purchaser (the "Purchase Agreement"), which provides for the
sale by the Company to the Purchaser of an aggregate of
$100,000,000 principal amount of the Company's 12 1/4% Senior
Notes due 2002 (the "Securities"). In order to induce the
Purchaser to enter into the Purchase Agreement, the Company has
agreed to provide to the Purchaser and its direct and indirect
transferees the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to
the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following
meanings:
"Additional Interest" shall have the meaning set
forth in Section 2(e) hereof.
"Advice" shall have the meaning set forth in the last
paragraph of Section 3 hereof.
"Applicable Period" shall have the meaning set forth
in Section 3(t) hereof.
"Closing Time" shall mean the Closing Time as defined
in the Purchase Agreement.
"Company" shall have the meaning set forth in the
preamble to this Agreement and also includes the Company's
successors.
"Depositary" shall mean The Depository Trust Company,
or any other depositary appointed by the Company; provided
that such depositary must have an address in the Borough
of Manhattan, in the City of New York.
<PAGE>
"Effectiveness Period" shall have the meaning set
forth in Section 2(b) hereof.
"Event Date" shall have the meaning set forth in
Section 2(e) hereof.
"Exchange Offer" shall mean the exchange offer by the
Company of Exchange Securities for Securities pursuant to
Section 2(a) hereof.
"Exchange Offer Registration" shall mean a
registration under the 1933 Act effected pursuant to
Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form), and all
amendments and supplements to such registration statement,
in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by
reference therein.
"Exchange Period" shall have the meaning set forth in
Section 2(a) hereof.
"Exchange Securities" shall mean the 12 1/4% Senior
Notes due 2002, Series B issued by the Company under the
Indenture containing terms identical to the Securities
(except that (i) interest thereon shall accrue from the
last date on which interest was paid on the Securities or,
if no such interest has been paid, from July 19, 1995 and
(ii) the transfer restrictions thereon shall be
eliminated) to be offered to Holders of Securities in
exchange for Securities pursuant to the Exchange Offer.
"Holder" shall mean the Purchaser, for so long as it
owns any Registrable Securities, and each of its
successors, assigns and direct and indirect transferees
who become registered owners of Registrable Securities
under the Indenture.
"Indenture" shall mean the Indenture relating to the
Securities dated as of July 15, 1995 between the Company,
as issuer, and First Union National Bank of North
Carolina, as trustee, as the same may be amended from time
to time in accordance with the terms thereof.
2
<PAGE>
"Inspectors" shall have the meaning set forth in
Section 3(n) hereof.
"Majority Holders" shall mean the Holders of a
majority of the aggregate principal amount of outstanding
(as determined under the Indenture) Registrable
Securities.
"1933 Act" shall mean the Securities Act of 1933, as
amended from time to time.
"1934 Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Participating Broker-Dealer" shall have the meaning
set forth in Section 3(t) hereof.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth
in Section 2(a) hereof.
"Private Exchange Securities" shall have the meaning
set forth in Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary
prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities
covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus,
including post-effective amendments, and in each case
including all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth
in the preamble to this Agreement.
"Purchaser" shall have the meaning set forth in the
preamble to this Agreement.
"Records" shall have the meaning set forth in
Section 3(n) hereof.
3
<PAGE>
"Registrable Securities" shall mean the Securities
and, if issued, the Private Exchange Securities; provided
that Securities or Private Exchange Securities, as the
case may be, shall cease to be Registrable Securities when
(i) a Registration Statement with respect to such
Securities or Private Exchange Securities or the resale
thereof, as the case may be, shall have been declared
effective under the 1933 Act and such Securities or
Private Exchange Securities, as the case may be, shall
have been disposed of pursuant to such Registration
Statement, (ii) such Securities or Private Exchange
Securities, as the case may be, shall have been sold to
the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the 1933
Act, (iii) such Securities or Private Exchange Securities,
as the case may be, shall have ceased to be outstanding or
(iv) with respect to the Securities, such Securities have
been exchanged for Exchange Securities upon consummation
of the Exchange Offer.
"Registration Expenses" shall mean any and all
expenses incident to performance of or compliance by the
Company with this Agreement, including without limitation:
(i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. (the "NASD") registration and
filing fees, including, if applicable, the fees and
expenses of any "qualified independent underwriter" (and
its counsel) that is required to be retained by any Holder
of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses
incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders
in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities) and
compliance with the rules of the NASD, (iii) all expenses
of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments
or supplements thereto, and in preparing or assisting in
preparing, printing and distributing any underwriting
agreements, securities sales agreements and other
documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the
fees and disbursements of counsel for the Company and of
the independent certified public accountants of the
Company, including the expenses of any "cold comfort"
letters required by or
4
<PAGE>
incident to such performance and compliance, (vi) the fees
and expenses of the Trustee, and any exchange agent or
custodian, (vii) all fees and expenses incurred in connection
with the listing, if any, of any of the Registrable
Securities on any securities exchange or exchanges, and
(viii) any fees and disbursements of any underwriter
customarily required to be paid by issuers or sellers of
securities and the reasonable fees and expenses of any
special experts retained by the Company in connection with
any Registration Statement, but excluding fees of counsel to
the underwriters or the Holders and underwriting discounts
and commissions and transfer taxes, if any, relating to
the sale or disposition of Registrable Securities by a
Holder.
"Registration Statement" shall mean any registration
statement of the Company which covers any of the Exchange
Securities or Registrable Securities pursuant to the
provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including
post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange
Commission.
"Securities" shall have the meaning set forth in the
preamble to this Agreement.
"Shelf Registration" shall mean a registration
effected pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the
provisions of Section 2(b) of this Agreement which covers
all of the Registrable Securities or all of the Private
Exchange Securities, as the case may be, on an appropriate
form under Rule 415 under the 1933 Act, or any similar
rule that may be adopted by the SEC, and all amendments
and supplements to such registration statement, including
post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"TIA" shall have the meaning set forth in Section
3(l).
5
<PAGE>
"Trustee" shall mean the trustee with respect to the
Securities under the Indenture.
2. Registration Under the 1933 Act.
(a) Exchange Offer. To the extent not prohibited by
any applicable law or applicable interpretation of the staff of
the SEC, the Company shall, for the benefit of the Holders, at
the Company's cost, use its best efforts to cause to be filed
with the SEC within 30 days after the Closing Time an Exchange
Offer Registration Statement on an appropriate form under the
1933 Act covering the offer by the Company to the Holders to
exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange
Securities, to have such Exchange Offer Registration Statement
declared effective under the 1933 Act by the SEC not later than
the date which is 90 days after the Closing Time, to have such
Registration Statement remain effective until the closing of
the Exchange Offer and to cause the Exchange Offer to be
consummated not later than 120 days after the Closing Time.
The Exchange Securities will be issued under the Indenture.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Exchange
Offer, it being the objective of such Exchange Offer to enable
each Holder eligible and electing to exchange Registrable
Securities for Exchange Securities (assuming that such Holder
is not an affiliate of the Company within the meaning of Rule
405 under the 1933 Act and is not a broker-dealer tendering
Registrable Securities acquired directly from the Company for
its own account, acquires the Exchange Securities in the
ordinary course of such Holder's business and has no
arrangements or understandings with any Person to participate
in the Exchange Offer for the purpose of distributing the
Exchange Securities) to transfer such Exchange Securities from
and after their receipt without any limitations or restrictions
under the 1933 Act and under state securities or blue sky laws.
In connection with the Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(ii) keep the Exchange Offer open for acceptance for
a period of not less than 30 days after the date notice
6
<PAGE>
thereof is mailed to the Holders (or longer if required by
applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the
Exchange Offer;
(iv) permit Holders to withdraw tendered Securities
at any time prior to the close of business, New York time,
on the last business day of the Exchange Period, by
sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of
Securities delivered for exchange, and a statement that
such Holder is withdrawing his election to have such
Securities exchanged;
(v) notify each Holder that any Security not
tendered will remain outstanding and continue to accrue
interest, but will not retain any rights under this
Agreement (except in the case of the Purchaser and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer, the
Purchaser holds any Securities acquired by it and having the
status of an unsold allotment in the initial distribution, the
Company upon the request of the Purchaser shall, simultaneously
with the delivery of the Exchange Securities in the Exchange
Offer, issue and deliver to the Purchaser, in exchange (the
"Private Exchange") for the Securities held by the Purchaser, a
like principal amount of debt securities of the Company that
are identical (except that such securities shall bear
appropriate transfer restrictions) to the Exchange Securities
(the "Private Exchange Securities") and which are issued
pursuant to the Indenture (which will provide that the Exchange
Securities will not be subject to the transfer restrictions set
forth in the Indenture and that the Exchange Securities, the
Private Exchange Securities and the Securities will vote and
consent together on all matters as one class and that neither
the Exchange Securities, the Private Exchange Securities nor
the Securities will have the right to vote or consent as a
separate class on any matter). The Private Exchange Securities
shall be of the same series as and shall bear the same CUSIP
number as the Exchange Securities.
7
<PAGE>
As soon as practicable after the close of the
Exchange Offer or the Private Exchange, as the case may be, the
Company shall:
(i) accept for exchange all Securities or portions
thereof tendered and not validly withdrawn pursuant to the
Exchange Offer;
(ii) accept for exchange all Securities duly tendered
pursuant to the Private Exchange; and
(iii) deliver, or cause to be delivered, to the
Trustee for cancellation all Securities or portions
thereof so accepted for exchange by the Company, and
issue, and cause the Trustee under the Indenture to
promptly authenticate and deliver to each Holder, a new
Exchange Security or Private Exchange Security, as the
case may be, equal in principal amount to the principal
amount of the Securities surrendered by such Holder.
To the extent not prohibited by any law or applicable
interpretation of the staff of the SEC, the Company shall use
its best efforts to complete the Exchange Offer as provided
above, and shall comply with the applicable requirements of the
1933 Act, the 1934 Act and other applicable laws in connection
with the Exchange Offer. The Exchange Offer shall not be
subject to any conditions, other than that the Exchange Offer
does not violate applicable law or any applicable
interpretation of the staff of the SEC. Each Holder of
Registrable Securities who wishes to exchange such Registrable
Securities for Exchange Securities in the Exchange Offer will
be required to make certain customary representations in
connection therewith, including representations that such
Holder is not an affiliate of the Company within the meaning of
Rule 405 under the 1933 Act, that any Exchange Securities to be
received by it will be acquired in the ordinary course of
business and that at the time of the commencement of the
Exchange Offer it has no arrangement with any Person to
participate in the distribution (within the meaning of the 1933
Act) of the Exchange Securities. The Company shall inform the
Purchaser, after consultation with the Trustee and the
Purchaser, of the names and addresses of the Holders to whom
the Exchange Offer is made, and the Purchaser shall have the
right to contact such Holders and otherwise facilitate the
tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance
with this Section 2(a), the provisions of this Agreement shall
8
<PAGE>
continue to apply, mutatis mutandis, solely with respect to
Registrable Securities that are Private Exchange Securities and
Exchange Securities held by Participating Broker-Dealers, and
the Company shall have no further obligation to register
Registrable Securities (other than Private Exchange Securities)
pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. In the event that (i) the
Company or the Majority Holders reasonably determine, after
conferring with counsel (which may be in-house counsel), that
the Exchange Offer Registration provided in Section 2(a) above
is not available or may not be consummated as soon as
practicable after the last day of the Exchange Period because
it would violate applicable securities laws or because the
applicable interpretations of the staff of the SEC would not
permit the Company to effect the Exchange Offer, or (ii) the
Exchange Offer is not for any other reason consummated within
120 days of the Closing Time, or (iii) the Company or the
Majority Holders reasonably determine, after conferring with
counsel (which may be in-house counsel), that the Exchange
Securities would not, upon receipt, be freely tradeable by such
Holders which are not affiliates of the Company without
restriction under the 1933 Act and without restrictions under
applicable blue sky or state securities laws, or a Holder is
not permitted to participate in the Exchange Offer or (iv) upon
the request of the Purchaser with respect to any Registrable
Securities which it acquired directly from the Company and,
with respect to other Registrable Securities held by it, if the
Purchaser is not permitted, in the opinion of counsel to the
Purchaser, pursuant to applicable law or applicable
interpretations of the Staff of the SEC, to participate in the
Exchange Offer, the Company shall, at its cost, cause to be
filed as promptly as practicable after such determination or
date, as the case may be, and, in any event, within 30 days
thereafter, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Securities, and
shall use its best efforts to have such Shelf Registration
Statement declared effective by the SEC as soon as practicable.
No Holder of Registrable Securities may include any of its
Registrable Securities in any Shelf Registration pursuant to
this Agreement unless and until such Holder furnishes to the
Company in writing, within 15 days after receipt of a request
therefor, such information as the Company may, after conferring
with counsel with regard to information relating to Holders
that would be required by the SEC to be included in such Shelf
Registration Statement or Prospectus included therein,
reasonably request for inclusion in any Shelf Registration
Statement or Prospectus included
9
<PAGE>
therein. Each Holder as to which any Shelf Registration is being
effected agrees to furnish promptly to the Company all information
to be disclosed in the applicable Shelf Registration Statement or
Prospectus included therein in order to make the information
previously furnished to the Company by such Holder not
materially misleading.
The Company agrees to use its best efforts to keep
the Shelf Registration Statement continuously effective for a
period of three years from the date of issuance of the
Securities (subject to extension pursuant to the last paragraph
of Section 3) (the "Effectiveness Period"); provided that if
such Shelf Registration Statement has been filed solely at the
request of the Purchaser pursuant to clause (iv) above, the
Company shall only be required to use its best efforts to keep
such Shelf Registration Statement continuously effective for a
period of one year from the date of issuance of the Securities
(subject to extension pursuant to the last paragraph of Section
3 hereof) or for such shorter period which will terminate when
all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding. The Company
shall not permit any securities other than Registrable
Securities to be included in the Shelf Registration. The
Company further agrees, if necessary, to supplement or amend
the Shelf Registration Statement, if required by the rules,
regulations or instructions applicable to the registration form
used by the Company for such Shelf Registration Statement or by
the 1933 Act or by any other rules and regulations thereunder
for shelf registrations, and the Company agrees to furnish to
the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed
with the SEC.
(c) Expenses. The Company shall pay all
Registration Expenses in connection with the registration
pursuant to Section 2(a) or 2(b) and will reimburse the
Purchaser for the reasonable fees and disbursements of Cahill
Gordon & Reindel incurred in connection with the Registered
Exchange Offer and any one counsel designated in writing by the
Majority Holders to act as counsel for the Holders of the
Registrable Securities in connection with a Shelf Registration
Statement. Each Holder shall pay all expenses of its counsel,
underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration
Statement.
10
<PAGE>
(d) Effective Registration Statement. An Exchange
Offer Registration Statement pursuant to Section 2(a) hereof or
a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been
declared effective by the SEC; provided that if, after it has
been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with
by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such
Registration Statement will be deemed not to have been
effective during the period of such interference, until the
offering of Registrable Securities pursuant to such
Registration Statement may legally resume. The Company will be
deemed not to have used its reasonable efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, to become, or to remain,
effective during the requisite period if it voluntarily takes
any action that would result in any such Registration Statement
not being declared effective or in the Holders of Registrable
Securities covered thereby not being able to exchange or offer
and sell such Registrable Securities during that period unless
such action is required by applicable law.
(e) Additional Interest. In the event that either
(i) the Exchange Offer Registration Statement is not filed with
the SEC on or prior to the 30th calendar day following the
Closing Time, (ii) the Exchange Offer Registration Statement is
not declared effective on or prior to the 90th calendar day
following the Closing Time, (iii) the Exchange Offer is not
consummated on or prior to the 120th calendar day following the
Closing Time or (iv) if the law or applicable interpretations
of the SEC thereof prohibit a Holder from participating in the
Exchange Offer or if such Holder does not receive freely
tradeable Exchange Securities pursuant to the Exchange Offer or
if for any reason the Exchange Offer is not consummated within
120 days of the Closing Time, and if by 150 days after the
Closing Time a Shelf Registration Statement is not declared
effective, the interest rate borne by the Securities shall be
increased (the "Additional Interest") by one-quarter of one
percent per annum from and including the 31st day following the
Closing Time in the case of (i) above, from and including the
91st day following the Closing Time in the case of clause (ii)
above, from and including the 121st day following the Closing
Time in the case of (iii) above or, solely with respect to
Securities which could not be exchanged as set forth above,
Exchange Securities that are not freely tradeable and Private
Exchange Securities, from and including the 151st day after the
Closing Time
11
<PAGE>
in the case of clause (iv) above. Upon (w) the filing of the
Exchange Offer Registration Statement in the case of clause (i)
above, (x) the effectiveness of the Exchange Offer Registration
Statement in the case of clause (ii) above, (y) the date of the
consummation of the Exchange Offer in the case of clause (iii)
above or (z) the effectiveness of a Shelf Registration Statement
in the case of clause (iv) above, and provided that none of the
conditions set forth in clauses (i), (ii), (iii) and (iv) above
continues to exist, the interest rate borne by the Securities
from the date of such filing, effectiveness or consummation, as
the case may be, will be reduced to the original interest rate.
In addition, such interest rate shall be increased by an
additional one-quarter of one percent per annum for each 90-day
period that any Additional Interest continues to accrue pursuant
to this Section 2(e); provided that the aggregate increase in
such interest rate pursuant to this Section 2(e) will in no event
exceed one percent per annum.
In the event that the Shelf Registration Statement
has been declared effective and subsequently ceases to be
effective prior to the end of the Effectiveness Period, or if
such a Shelf Registration Statement was filed solely at the
request of the Purchaser pursuant to Section 2(b)(iv) hereof,
one year after the date of issuance of the Securities (in each
instance, subject to extension pursuant to the last paragraph
of Section 3 hereof), for a period in excess of 15 days,
whether or not consecutive, in any given year, then, the
interest rate borne by the Securities, or the Private Exchange
Securities, as the case may be, shall be increased by an
additional one-quarter of one percent per annum on the 16th day
in the applicable year such Shelf Registration Statement ceases
to be effective. Such interest rate shall be increased by an
additional one-quarter of one percent per annum for each
additional 90 days that such Shelf Registration Statement is
not effective, subject to the same aggregate maximum increase
in the interest rate per annum of one percent referred to
above. Upon the effectiveness of a Shelf Registration
Statement, the interest rate borne by the Securities, or the
Private Exchange Securities, as the case may be, shall be
reduced to their original interest rate unless and until
increased as described in this paragraph.
The Company shall notify the Trustee within three
business days after each and every date on which an event
occurs in respect of which Additional Interest is required to
be paid (an "Event Date"). Additional Interest shall be paid
by depositing with the Trustee, in trust, for the benefit of
12
<PAGE>
the Holders of Securities or of Private Exchange Securities, as
the case may be, on or before the applicable semiannual
interest payment date, immediately available funds in sums
sufficient to pay the Additional Interest then due. The
Additional Interest due shall be payable on each interest
payment date to the record Holder of Securities entitled to
receive the interest payment to be paid on such date as set
forth in the Indenture. Each obligation to pay Additional
Interest shall be deemed to accrue from and including the day
following the applicable Event Date.
(f) Specific Enforcement. Without limiting the
remedies available to the Purchaser and the Holders, the
Company acknowledges that any failure by the Company to comply
with its obligations under Section 2(a) and Section 2(b) hereof
may result in material irreparable injury to the Purchaser or
the Holders for which there is no adequate remedy at law, that
it would not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the
Purchaser or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations
under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the
obligations of the Company with respect to the Registration
Statements pursuant to Sections 2(a) and 2(b) hereof, the
Company shall:
(a) prepare and file with the SEC a Registration
Statement or Registration Statements as prescribed by
Sections 2(a) and 2(b) hereof within the relevant time
period specified in Section 2 hereof on the appropriate
form under the 1933 Act, which form (i) shall be selected
by the Company, (ii) shall, in the case of a Shelf
Registration, be available for the sale of the Registrable
Securities by the selling Holders thereof and (iii) shall
comply as to form in all material respects with the
requirements of the applicable form and include all
financial statements required by the SEC to be filed
therewith; and use its best efforts to cause such
Registration Statement to become effective and remain
effective in accordance with Section 2 hereof; provided
that if (1) such filing is pursuant to Section 2(b), or
(2) a Prospectus contained in an Exchange Offer
Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the 1933 Act by any
Participating Broker-Dealer who seeks to sell Exchange
Securities, before filing any Registration
13
<PAGE>
Statement or Prospectus or any amendments or supplements
thereto, the Company shall furnish to and afford the
Holders of the Registrable Securities and each such
Participating Broker-Dealer, as the case may be, covered
by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity
to review copies of all such documents (including copies
of any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed (at least
10 business days prior to such filing). The Company shall
not file any Registration Statement or Prospectus or any
amendments or supplements thereto in respect of which the
Holders must be afforded an opportunity to review prior to
the filing of such document if the Majority Holders or such
Participating Broker-Dealer, as the case may be, their
counsel or the managing underwriters, if any, shall
reasonably object;
(b) prepare and file with the SEC such amendments
and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration
Statement effective for the Effectiveness Period or the
Applicable Period, as the case may be; and cause each
Prospectus to be supplemented by any required prospectus
supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) under
the 1933 Act, and comply with the provisions of the 1933
Act, the 1934 Act and the rules and regulations
promulgated thereunder applicable to it with respect to
the disposition of all securities covered by each
Registration Statement during the Effectiveness Period or
the Applicable Period, as the case may be, in accordance
with the intended method or methods of distribution by the
selling Holders thereof described in this Agreement
(including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify
each Holder of Registrable Securities, at least three
business days prior to filing, that a Shelf Registration
Statement with respect to the Registrable Securities is
being filed and advising such Holder that the distribution
of Registrable Securities will be made in accordance with
the method selected by the Majority Holders; (ii) furnish
to each Holder of Registrable Securities and to each
underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any
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<PAGE>
amendment or supplement thereto and such other documents
as such Holder or underwriter may reasonably request, in
order to facilitate the public sale or other disposition
of the Registrable Securities; and (iii) hereby consent to
the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable
Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(d) in the case of a Shelf Registration, use its
best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue
sky" laws of such jurisdictions by the time the applicable
Registration Statement is declared effective by the SEC as
any Holder of Registrable Securities covered by a
Registration Statement and each underwriter of an
underwritten offering of Registrable Securities shall
reasonably request in advance of such date of
effectiveness, and do any and all other acts and things
which may be reasonably necessary or advisable to enable
such Holder and underwriter to consummate the disposition
in each such jurisdiction of such Registrable Securities
owned by such Holder; provided that the Company shall not
be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this Section
3(d), (ii) file any general consent to service of process
or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject;
(e) in the case of (1) a Shelf Registration or
(2) Participating Broker-Dealers who have notified the
Company that they will be utilizing the Prospectus
contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, are seeking to sell
Exchange Securities and are required to deliver Prospec-
tuses, notify each Holder of Registrable Securities, or
such Participating Broker-Dealers, as the case may be,
their counsel and the managing underwriters, if any,
promptly and confirm such notice in writing (i) when a
Registration Statement has become effective and when any
post-effective amendments and supplements thereto become
effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a
Registration Statement or Prospectus or for additional
information after the Registration Statement has become
15
<PAGE>
effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the
effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iv) in
the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing
of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to such offering
cease to be true and correct in all material respects,
(v) if the Company receives any notification with respect
to the suspension of the qualification of the Registrable
Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any
jurisdiction or the initiation of any proceeding for such
purpose, (vi) of the happening of any event or the failure
of any event to occur or the discovery of any facts or
otherwise, during the period a Shelf Registration
Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus
untrue in any material respect or which causes such
Registration Statement or Prospectus to omit to state a
material fact necessary to make the statements therein, in
the light of the circumstances under which they were made,
not misleading and (vii) the Company's reasonable
determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement at the earliest possible moment;
(g) in the case of a Shelf Registration, furnish to
each Holder of Registrable Securities, without charge, at
least one conformed copy of each Registration Statement
and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits
thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate
with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be
sold and not bearing any restrictive legends; and cause
such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and
registered in
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<PAGE>
such names as the selling Holders or the underwriters may
reasonably request at least two business days prior to the
closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration or an
Exchange Offer Registration, upon the occurrence of any
circumstance contemplated by Section 3(e)(ii), 3(e)(iii),
3(e)(v), 3(e)(vi) or 3(e)(vii) hereof, use its best
efforts to prepare a supplement or post-effective
amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by
reference or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Company agrees to notify each Holder to
suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) in the case of a Shelf Registration, a
reasonable time prior to the filing of any document which
is to be incorporated by reference into a Registration
Statement or a Prospectus after the initial filing of a
Registration Statement, provide a reasonable number of
copies of such document to the Purchaser on behalf of such
Holders; and make such of the representatives of the
Company as shall be reasonably requested by the Holders of
Registrable Securities or the Purchaser on behalf of such
Holders available for discussion of such document;
(k) obtain a CUSIP number for all Exchange
Securities or Registrable Securities, as the case may be,
not later than the effective date of a Registration
Statement, and provide the Trustee with printed
certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form
eligible for deposit with the Depositary;
(l) cause the Indenture to be qualified under the
Trust Indenture Act of 1939 (the "TIA") in connection with
the registration of the Exchange Securities or Registrable
Securities, as the case may be, cooperate with the Trustee
17
<PAGE>
and the Holders to effect such changes to the Indenture as
may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use
its best efforts to cause the Trustee to execute, all
documents as may be required to effect such changes, and
all other forms and documents required to be filed with
the SEC to enable the Indenture to be so qualified in a
timely manner;
(m) in the case of a Shelf Registration, enter into
such agreements (including underwriting agreements) as are
customary in underwritten offerings and take all such
other appropriate actions as are reasonably requested in
order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such
connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an
underwritten registration: (i) make such representations
and warranties to Holders of such Registrable Securities
and the underwriters (if any), with respect to the
business of the Company and its subsidiaries and the
Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers
to underwriters in underwritten offerings, and confirm the
same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof in form and
substance reasonably satisfactory to the managing
underwriters (if any) and the Holders of a majority in
principal amount of the Registrable Securities being sold,
addressed to each selling Holder and the underwriters (if
any) covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters
as may be reasonably requested by such Holders and
underwriters; (iii) obtain "cold comfort" letters and
updates thereof in form and substance reasonably
satisfactory to the managing underwriters from the
independent certified public accountants of the Company
(and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial
statements and financial data are, or are required to be,
included in the Registration Statement), addressed to the
selling Holders of Registrable Securities and to each of
the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings
and such other matters as
18
<PAGE>
reasonably requested by such selling Holders and underwriters;
and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 4 hereof (or
such other provisions and procedures acceptable to Holders
of a majority in aggregate principal amount of Registrable
Securities covered by such Registration Statement and the
managing underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting
agreement, or as and to the extent required thereunder;
(n) if (1) a Shelf Registration is filed pursuant to
Section 2(b) or (2) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section
2(a) is required to be delivered under the 1933 Act by any
Participating Broker-Dealer who seeks to sell Exchange
Securities during the applicable period, make available
for inspection by any selling Holder of such Registrable
Securities being sold, or each such Participating Broker-
Dealer, as the case may be, any underwriter participating
in any such disposition of Registrable Securities, if any,
and any attorney, accountant or other agent retained by
any such selling Holder or each such Participating Broker-
Dealer, as the case may be, or underwriter (collectively,
the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of
the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them
to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the
Company and its subsidiaries to supply all information in
each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records
which the Company determines, in good faith, to be
confidential and any Records which it notifies the
Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission
in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (iii) the
information in such Records has been made generally
available to the public. Each selling Holder of such
Registrable Securities and each such Participating Broker-
Dealer will be required to
19
<PAGE>
agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be
used by it as the basis for any market transactions in the
securities of the Company unless and until such is made
generally available to the public. Each selling Holder of
such Registrable Securities and each such Participating
Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice
to the Company and allow the Company at its expense to
undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(o) comply with all applicable rules and regulations
of the SEC and make generally available to its security-
holders earnings statements satisfying the provisions of
Section 11(a) of the 1933 Act and Rule 158 thereunder (or
any similar rule promulgated under the 1933 Act) no later
than 45 days after the end of any 12-month period (or 90
days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts
underwritten offering and (ii) if not sold to underwriters
in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall
cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a
Private Exchange, obtain an opinion of counsel to the
Company addressed to the Trustee for the benefit of all
Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may
be, and which includes an opinion that (i) the Company has
duly authorized, executed and delivered the Exchange
Securities and Private Exchange Securities and the
Indenture, and (ii) each of the Exchange Securities or the
Private Exchange Securities, as the case may be, and the
Indenture constitute a legal, valid and binding obligation
of the Company, enforceable against the Company in
accordance with its respective terms (in each case, with
customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Registrable
Securities by Holders to the Company (or to such other
Person as
20
<PAGE>
directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as
the case may be, the Company shall mark, or cause to be
marked, on such Registrable Securities delivered by such
Holders that such Registrable Securities are being
cancelled in exchange for the Exchange Securities or the
Private Exchange Securities, as the case may be; in no
event shall such Registrable Securities be marked as paid
or otherwise satisfied;
(r) cooperate with each seller of Registrable
Securities covered by any Registration Statement and each
underwriter, if any, participating in the disposition of
such Registrable Securities and their respective counsel
in connection with any filings required to be made with
the NASD;
(s) use its best efforts to take all other steps
necessary to effect the registration of the Registrable
Securities covered by a Registration Statement
contemplated hereby;
(t) (A) in the case of the Exchange Offer
Registration Statement (i) include in the Exchange Offer
Registration Statement a section entitled "Plan of
Distribution," which section shall be reasonably
acceptable to the Purchaser or another representative of
the Participating Broker-Dealers, and which shall contain
a summary statement of the positions taken or policies
made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer (a
"Participating Broker-Dealer") that holds Registrable
Securities acquired for its own account as a result of
market-making activities or other trading activities and
that will be the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Exchange Securities to be
received by such broker-dealer in the Exchange Offer,
whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or
policies, in the reasonable judgment of the Purchaser or
such other representative, represent the prevailing views
of the staff of the SEC, including a statement that any
such broker-dealer who receives Exchange Securities for
Registrable Securities pursuant to the Exchange Offer may
be deemed a statutory underwriter and must deliver a
prospectus meeting the requirements of the 1933 Act in
connection with any resale of such Exchange Securities,
(ii) furnish to each Participating
21
<PAGE>
Broker-Dealer who has delivered to the Company the notice
referred to in Section 3(e), without charge, as many
copies of each Prospectus included in the Exchange Offer
Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request, (iii)
hereby consent to the use of the Prospectus forming part of
the Exchange Offer Registration Statement or any amendment
or supplement thereto, by any Person subject to the
prospectus delivery requirements of the SEC, including all
Participating Broker-Dealers, in connection with the sale or
transfer of the Exchange Securities covered by the Prospectus
or any amendment or supplement thereto, (iv) use its best
efforts to keep the Exchange Offer Registration Statement
effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to
be lawfully delivered by all Persons subject to the
prospectus delivery requirements of the 1933 Act for such
period of time as such Persons must comply with such
requirements in order to resell the Exchange Securities;
provided that such period shall not be required to exceed
180 days (or such longer period if extended pursuant to
the last sentence of Section 3 hereof) (the "Applicable
Period"), and (v) include in the transmittal letter or
similar documentation to be executed by an exchange
offeree in order to participate in the Exchange Offer (x)
the following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale
of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and
(y) a statement to the effect that by a broker-dealer
making the acknowledgment described in clause (x) and by
delivering a Prospectus in connection with the exchange of
Registrable Securities, the broker-dealer will not be
deemed to admit that it is an underwriter within the
meaning of the 1933 Act; and
(B) in the case of any Exchange Offer
Registration Statement, the Company agrees to deliver to
the Purchaser or to another representative of the
Participating
22
<PAGE>
Broker-Dealers on behalf of the Participating Broker-
Dealers upon consummation of the Exchange Offer (i) an
opinion of counsel substantially in the form attached
hereto as Exhibit A, (ii) an officers certificate containing
certifications substantially similar to those set forth in
Section 7(e)(i) of the Purchase Agreement and such additional
certifications as are customarily delivered in a public
offering of debt securities and (iii) as well as upon the
effectiveness of the Exchange Offer Registration Statement, a
comfort letter, in each case, in customary form if permitted
by Statement on Auditing Standards No. 72 of the American
Institute of Certified Public Accountants.
The Company may require each seller of Registrable
Securities as to which any registration is being effected to
furnish to the Company such information regarding such seller
and the proposed distribution of such Registrable Securities,
as the Company may from time to time reasonably request in
writing. The Company may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to
furnish such information within a reasonable time after
receiving such request.
In the case of (1) a Shelf Registration Statement or
(2) Participating Broker-Dealers who have notified the Company
that they will be utilizing the Prospectus contained in the
Exchange Offer Registration Statement as provided in Section
3(t) hereof, are seeking to sell Exchange Securities and are
required to deliver Prospectuses, each Holder agrees that, upon
receipt of any notice from the Company of the happening of any
event of the kind described in Section 3(e)(ii), 3(e)(iii),
3(e)(v), 3(e)(vi) or 3(e)(vii) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof or until it is advised in
writing (the "Advice") by the Company that the use of the
applicable Prospectus may be resumed, and, if so directed by
the Company, such Holder will deliver to the Company (at the
Company's expense) all copies in such Holder's possession,
other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable
Securities or Exchange Securities, as the case may be, current
at the time of receipt of such notice. If the Company shall
give any such notice to suspend the disposition of Registrable
Securities or Exchange Securities, as the case may be, pursuant
to a Registration Statement, the Company shall use its best
efforts to file and
23
<PAGE>
have declared effective (if an amendment) as soon as practicable
an amendment or supplement to the Registration Statement and shall
extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement by the number of
days in the period from and including the date of the giving of
such notice to and including the date when the Company shall have
made available to the Holders (x) copies of the supplemented or
amended Prospectus necessary to resume such dispositions or (y)
the Advice.
4. Indemnification and Contribution. (a) The
Company shall indemnify and hold harmless the Purchaser, each
Holder, each Participating Broker-Dealer, each underwriter who
participates in an offering of Registrable Securities, their
respective affiliates, each Person, if any, who controls any of
such parties within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and each of their respective
directors, officers, employees and agents, as follows:
(i) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto),
covering Registrable Securities or Exchange Securities,
including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary
to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of
a material fact contained in any Prospectus (or any
amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability,
claim, damage and expense whatsoever, joint or several, as
incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body,
commenced or threatened, or of any claim whatsoever based
upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement
is effected with the prior written consent of the Company;
and
24
<PAGE>
(iii) from and against any and all expenses
whatsoever, as incurred (including reasonable fees and
disbursements of counsel chosen by the Purchaser, such
Holder, such Participating Broker-Dealer or any
underwriter (except to the extent otherwise expressly
provided in Section 4(c) hereof)), reasonably incurred in
investigating, preparing or defending against any
litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section
4(a);
provided that this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out
of an untrue statement or omission or alleged untrue statement
or omission (i) made in reliance upon and in conformity with
written information furnished to the Company by the Purchaser,
such Holder, such Participating Broker-Dealer or any
underwriter in writing expressly for use in the Registration
Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) or (ii) contained in any
preliminary prospectus if the Purchaser, such Holder, such
Participating Broker-Dealer or such underwriter failed to send
or deliver a copy of the Prospectus (in the form it was first
provided to such parties for confirmation of sales) to the
Person asserting such losses, claims, damages or liabilities on
or prior to the delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where
such delivery is required by the 1933 Act and a court of
competent jurisdiction in a judgment not subject to appeal or
final review shall have determined that such Prospectus would
have corrected such untrue statement or omission. Any amounts
advanced by the Company to an indemnified party pursuant to
this Section 4 as a result of such losses shall be returned to
the Company if it shall be finally determined by such a court
in a judgment not subject to appeal or final review that such
indemnified party was not entitled to indemnification by the
Company.
(b) Each Holder agrees, severally and not jointly,
to indemnify and hold harmless the Company, the Purchaser, each
underwriter who participates in an offering of Registrable
Securities and the other selling Holders and each of their
respective directors, officers (including each officer of the
Company who signed the Registration Statement), employees and
agents and each Person, if any, who controls the Company, the
25
<PAGE>
Purchaser, any underwriter or any other selling Holder within
the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, from and against any and all loss, liability, claim,
damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such selling
Holder expressly for use in the Registration Statement (or any
amendment thereto), or any such Prospectus (or any amendment or
supplement thereto); provided, however, that, in the case of
Shelf Registration Statement, no such Holder shall be liable
for any claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.
(c) Each indemnified party shall give prompt notice
to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder,
enclosing a copy of all papers properly served on such
indemnified party, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any
liability which it may have other than on account of this
indemnity agreement. An indemnifying party may participate at
its own expense in the defense of any such action. If an
indemnifying party so elects within a reasonable time after
receipt of such notice, such indemnifying party, jointly with
any other indemnifying party, may assume the defense of such
action with counsel chosen thereby and approved by the
indemnified parties defendant in such action, provided that if
any such indemnified party reasonably determines that there may
be legal defenses available to such indemnified party which are
different from or in addition to those available to such
indemnifying party or that representation of such indemnifying
party and any indemnified party by the same counsel would
present a conflict of interest, then such indemnifying party or
parties shall not be entitled to assume such defense. If an
indemnifying party is not entitled to assume the defense of
such action as a result of the proviso to the preceding
sentence, counsel for such indemnifying party shall be entitled
to conduct the defense of such indemnifying party and counsel
for each indemnified party or parties shall be entitled to
conduct the defense of such indemnified party or parties. If
an indemnifying party assumes the defense of an action in
accordance with and as permitted by the provisions of this
paragraph, such indemnifying party shall not
26
<PAGE>
be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one
counsel (in addition to any local counsel), separate from its
own counsel, for all indemnified parties in connection with
any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general
allegations or circumstances.
(d) In order to provide for just and equitable
contribution in circumstances under which any of the indemnity
provisions set forth in this Section 4 is for any reason held
to be unavailable to the indemnified parties although
applicable in accordance with its terms, the Company, the
Purchaser and the Holders shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the
Company, the Purchaser and the Holders, as incurred; provided
that no Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled
to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Company, the
Purchaser and the Holders, such parties shall contribute to
such aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by such indemnity agreement
in such proportion as shall be appropriate to reflect the
relative fault of the Company, on the one hand, and the
Purchaser and the Holders, on the other hand, with respect to
the statements or omissions which resulted in such loss,
liability, claim, damage or expense, or action in respect
thereof, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one
hand, and of the Purchaser and the Holders, on the other hand,
shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, on the
one hand, or by or on behalf of the Purchaser or the Holders,
on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such statement or omission. The Company, the Purchaser and the
Holders of the Registrable Securities agree that it would not
be just and equitable if contribution pursuant to this
Section 4 were to be determined by pro rata allocation or by
any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this
Section 4, each affiliate of the Purchaser or Holder, and
27
<PAGE>
each director, officer, employee, agent and Person, if any, who
controls a Purchaser or Holder or such affiliate within the
meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as such Purchaser or Holder, and each
director of the Company, each officer of the Company who signed
the Registration Statement, and each Person, if any, who
controls the Company within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the
Company.
5. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and
executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other
documents reasonably required under the terms of such
underwriting arrangements.
6. Selection of Underwriters. The Holders of
Registrable Securities covered by the Shelf Registration
Statement who desire to do so may sell the securities covered
by such Shelf Registration in an underwritten offering. In any
such underwritten offering, the underwriter or underwriters and
manager or managers that will administer the offering will be
selected by the Holders of a majority in aggregate principal
amount of the Registrable Securities included in such offering;
provided that such underwriters and managers must be reasonably
satisfactory to the Company.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the
Company is subject to the reporting requirements of Section 13
or 15 of the 1934 Act and any Registrable Securities remain
outstanding, the Company covenants that it will file the
reports required to be filed by it under the 1933 Act and
Section 13(a) or 15(d) of the 1934 Act and the rules and
regulations adopted by the SEC thereunder, that if it ceases to
be so required to file such reports, it will upon the request
of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales
pursuant to Rule 144 under the 1933 Act, (b) deliver such
information to a prospective purchaser as is necessary to
permit sales pursuant to Rule 144A under the 1933 Act and it
will take such further action as any Holder of Registrable
Securities may reasonably request,
28
<PAGE>
and (c) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time
to time to enable such Holder to sell its Registrable Securities
without registration under the 1933 Act within the limitation of
the exemptions provided by (i) Rule 144 under the 1933 Act, as
such rule may be amended from time to time, (ii) Rule 144A under
the 1933 Act, as such rule may be amended from time to time, or
(iii) any similar rules or regulations hereafter adopted by the
SEC. Upon the request of any Holder of Registrable Securities,
the Company will deliver to such Holder a written statement as
to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company has
not entered into nor will the Company on or after the date of
this Agreement enter into any agreement which is inconsistent
with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued
and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders
of at least a majority in aggregate principal amount of the
outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or departure; provided no
amendment, modification or supplement or waiver or consent to
the departure with respect to the provisions of Section 4
hereof shall be effective as against any Holder of Registrable
Securities unless consented to in writing by such Holder of
Registrable Securities.
(d) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier,
or any courier guaranteeing overnight delivery (i) if to a
Holder, at the most current address given by such Holder to the
Company by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is,
with respect to the Purchaser, the address set forth in the
Purchase Agreement; and (ii) if to the Company, initially at
the Company's address set forth in the Purchase Agreement and
thereafter
29
<PAGE>
at such other address, notice of which is given in accordance
with the provisions of this Section 7(d).
All such notices and communications shall be deemed
to have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited
in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other
communications shall be concurrently delivered by the Person
giving the same to the Trustee, at the address specified in the
Indenture.
(e) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the successors,
assigns and transferees of the Purchaser, including, without
limitation and without the need for an express assignment,
subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition
of Registrable Securities in violation of the terms of the
Purchase Agreement or the Indenture. If any transferee of any
Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable
Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and
provisions of this Agreement and such Person shall be entitled
to receive the benefits hereof.
(f) Third Party Beneficiary. The Purchaser shall be
a third party beneficiary of the agreements made hereunder
between the Company, on the one hand, and the Holders, on the
other hand, and shall have the right to enforce such agreements
directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders
hereunder.
(g) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
30
<PAGE>
(h) Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED
TO HAVE BEEN MADE IN THE STATE OF NEW YORK. THE VALIDITY AND
INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS
SET FORTH HEREIN, SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof
in any circumstance, is held invalid, illegal or unenforceable,
the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company or Its
Affiliates. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its
affiliates (as such term is defined in Rule 405 under the 1933
Act) shall not be counted in determining whether such consent
or approval was given by the Holders of such required
percentage.
31
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
PEOPLES TELEPHONE COMPANY, INC.
By:
-------------------------
Name:
Title:
Confirmed and accepted as of
the date first above
written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
---------------------------
Name:
Title:
32
<PAGE>
Exhibit A
Form of Opinion of Counsel
1. Each of the Exchange Offer Registration
Statement and the Prospectus (other than the financial
statements, notes or schedules thereto and other financial and
statistical data and supplemental schedules included or
referred to therein or omitted therefrom and the Form T-1, as
to which such counsel need express no opinion), complies as to
form in all material respects with the applicable requirements
of the 1933 Act and the applicable rules and regulations
promulgated under the 1933 Act.
2. In the course of such counsel's review and
discussion of the contents of the Exchange Offer Registration
Statement and the Prospectus with certain officers and other
representatives of the Company and representatives of the
independent certified public accountants of the Company, but
without independent check or verification or responsibility for
the accuracy, completeness or fairness of the statements
contained therein, on the basis of the foregoing (relying as to
materiality to a large extent upon representations and opinions
of officers and other representatives of the Company), no facts
have come to such counsel's attention which cause such counsel
to believe that the Exchange Offer Registration Statement
(other than the financial statements, notes and schedules
thereto and other financial and statistical information
contained or referred to therein and the Form T-1, as to which
such counsel need express no belief), at the time the Exchange
Offer Registration Statement became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements contained therein not misleading, or that
the Prospectus (other than the financial statements, notes and
schedules thereto and other financial and statistical
information contained or referred to therein, as to which such
counsel need express no belief) contains any untrue statement
of a material fact or omits to state a material fact necessary
to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.
July 18, 1995
Appian Capital Partners, L.L.C.
c/o Archon Capital Partners, L.P.
11111 Santa Monica Boulevard
Suite 1100
Los Angeles, California 90025
Attention: Ronald N. Beck
UBS Capital Corporation
299 Park Avenue
New York, New York 10171
Attention: Justin S. Maccarone
UBS Partners, Inc.
299 Park Avenue
New York, New York 10171
Attention: Justin S. Maccarone
Re: Securities Purchase Agreement, dated as of July 3, 1995
(the "Securities Purchase Agreement"), among Peoples
Telephone Company, Inc. ("PTC"), UBS Capital Corporation
("UBS Capital") and Appian Capital Partners, L.L.C.
("ACP"), as amended.
Gentlemen:
Unless otherwise defined herein, each capitalized term used herein has
the meaning given such term in the Securities Purchase Agreement.
We understand that UBS Capital desires to assign to UBS Partners, Inc.
("UBS Partners") all of its rights under the Securities Purchase Agreement and
that, to induce UBS Capital to assign such rights to UBS Partners, UBS Partners
will assume the obligations of UBS Capital to purchase the Preferred Stock
thereunder. By executing this letter agreement in the spaces provided below,
UBS Capital hereby assigns to UBS Partners all of its rights under the
Securities Purchase Agreement, including without limitation the right to
purchase the Preferred Stock at the Closing on the terms specified therein, and
UBS Capital delegates and UBS Partners hereby agrees to assume all of UBS
Capital's obligations under the Securities Purchase Agreement, subject to the
terms and conditions set forth therein, including to purchase and pay for the
Preferred Stock thereunder at the Closing. PTC hereby acknowledges and consent
to such assignment and assumption and, effective upon such assignment and
assumption, releases UBS Capital of all liability under the Securities Purchase
Agreement and UBS Capital releases PTC of all liabilities under the Securities
Purchase Agreement.
<PAGE>
This letter agreement also sets forth our mutual understanding that
the conditions precedent to the respective obligations of UBS Partners and ACP
to consummate the transactions contemplated by the Securities Purchase Agreement
set forth in (a) Section 2.1(h) thereof shall be deemed to have been satisfied
if, effective as of the Closing, the Board of Directors shall be comprised of
six members, including the Chief Executive Officer of the Company, the President
of the Company, one director designated by UBS Partners and three other persons
who are currently serving as directors of the Company; and (b) Section 2.1(k)
thereof shall be deemed to have been satisfied if the opinion of New York
counsel delivered at the Closing is in substantially the form attached hereto as
Exhibit A. The parties hereto acknowledge that the foregoing shall not
constitute a waiver by UBS Partners or the holders of a majority of the shares
of Preferred Stock of any rights pursuant to PTC's certificate of incorporation,
the Certificate of Amendment or otherwise.
In addition, UBS Partners and ACP hereby waive any breach of PTC's
representations and warranties set forth in Sections 4.1, 4.3 and 4.4 of the
Securities Purchase Agreement as a result of the failure to set forth in
Schedules 4.1,4.3 and 4.4 attached thereto the information set forth in the
addenda to such Schedules attached to this letter, and UBS Partners and ACP
further agree and acknowledge that they shall not have any basis to refuse to
perform their respective obligations to consummate the transactions contemplated
by the Securities Purchase Agreement as a result of such failure, nor shall any
such failure constitute an Event of Noncompliance (as defined in the Certificate
of Amendment) or be a basis for a claim for damages pursuant to Section 8.2 of
the Securities Purchase Agreement or otherwise.
In consideration of your agreements and waivers set forth above, PTC hereby
agrees with UBS Partners and ACP that the Securities Purchase Agreement shall be
hereby amended as follows:
1. Section 3.1 is amended by deleting the word "and" following the
semi-colon at the end of paragraph (l) thereof, by adding ";" in lieu of
the period after the word "hereto" at the end of paragraph (m) thereof, and
by adding two new paragraphs thereafter to read as follows:
"(n) the Company shall take all steps necessary to cause paragraph
EIGHTH of its Amended and Restated Certificate of Incorporation (the
"Charter") to be amended so that such paragraph shall not conflict with the
terms of Section 3.2(d) of this Agreement, Section 4 of the Warrants,
Section 4 of the Contingent Warrants and SECTION I of the Certificate of
Amendment and shall cause such amendment to be voted upon by the holders of
the Company's Stock entitled to vote thereon at the Company's second annual
meeting of shareholders succeeding the Closing (disregarding for such
purposes the clause (A) "to the extent not prohibited by paragraph EIGHTH
of the Company's certificate of incorporation" in (i) Section 3.2(d)
hereof, (ii) SECTION 4 of the Warrants, and (iii) SECTION 4 of the
Contingent Warrants and (B) "to the extent not prohibited by paragraph
EIGHTH of the Corporation's Certificate of Incorporation" in SECTION I of
the Certificate of Amendment. In the event that such amendment shall not be
approved at such annual meeting, then such Section 3.2(d) hereof, Section 4
of the Warrants, Section 4 of the Contingent Warrants and SECTION I shall
be amended in a manner mutually and reasonably satisfactory to the Company
and the Purchasers, in the case of such Section 3.2(d), the Company and
UBS, in the case of such SECTION I and Section 4 of the Contingent
Warrants, and the Company and
<PAGE>
ACP in the case of such Section 4 of the Warrants, so that the intent and
purpose of each thereof shall be preserved and further effectuated to the
fullest extent possible without conflicting with such paragraph EIGHTH of
the Charter. Until such amendment to the Charter is effective, the Company
shall not take the action specified in the clauses preceding the second
comma of SECTION I of the Certificate of Amendment, SECTION 4 of the
Warrants and SECTION 4 of the Contingent Warrants without the prior written
consent of UBS Partners in the case of the Certificate of Amendment and the
Contingent Warrants or ACP in the case of the Warrants; and
(o) the Company shall take all steps necessary to ensure that (i) any
vacancy on the Board of Directors shall be filled by a person designated by
the holders of a majority of the shares of the Preferred Stock at any time
the number of directors elected by such holders is less than the number of
directors which the Preferred Stock has the right to elect pursuant to the
terms thereof and (ii) from and after the Closing until such time as two
directors elected by the holders of a majority of the Preferred Stock have
first been elected to the Board of Directors and are serving thereon (to
the extent that pursuant to the Certificate of Amendment, the Preferred
Stock is entitled to elect two directors), the Company shall not take any
of the actions described in paragraphs (e) through (1) of Section 3.2 of
this Agreement without the prior written consent of UBS Partners.";
2. Section 3.2(c) is amended to include the following prior to the
semi-colon at the end thereof: "(including rights of such holders pursuant
to this Agreement)";
3. Section 3.2(d) is amended by adding thereto", to the extent not
prohibited by paragraph EIGHTH of the Company's certificate of
incorporation," after the word "and" and prior to the word "grants"
appearing in the 7th and 8th lines thereof, respectively;
4. SECTION G of Exhibit A attached to the Securities Purchase
Agreement is hereby amended by deleting from the fourth line thereof
"except in the election of directors and as otherwise provided herein";
5. SECTION I of Exhibit A attached to the Securities Purchase
Agreement is hereby amended by striking the word "If" at the beginning of
the first sentence thereof and adding in its place, "To the extent not
prohibited by paragraph EIGHTH of the Corporation's Certificate of
Incorporation, if";
6. SECTION 4 of Exhibit B attached to the Securities Purchase
Agreement is hereby amended by striking the word "If" at the beginning of
the first sentence thereof and adding in its place, "To the extent not
prohibited by paragraph EIGHTH of the Corporation's Certificate of
Incorporation, if";
7. SECTION 4 of Exhibit F attached to the Securities Purchase
Agreement is hereby amended by striking the word "If" at the beginning of
the first sentence thereof and adding in its place, "To the extent not
prohibited by paragraph EIGHTH of the Corporation's Certificate of
Incorporation, if";
<PAGE>
8. Section 8.8 is amended by substituting "$400,000" for "$300,000"
at the end thereof;
9. Section 1.1(b) is amended by substituting "$1.00" for "$100,000"
at the end thereof and Section 1.2(b) is amended by substituting "$1.00"
for $100,000 in clause (ii) thereof;
The Company and ACP agree that the certain engagement letter dated July 3,
1995 between them shall be amended to reduce the fee payable to ACP pursuant to
clause (i) of the second paragraph thereof to $350,000.
This letter agreement may be executed in two or more counterparts which
together shall constitute a single instrument. Whenever possible, each
provision of this letter agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this letter
agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this agreement.
* * * * *
<PAGE>
Please acknowledge your agreement with the provisions of this letter by
executing in places provided below.
Very truly yours,
PEOPLES TELEPHONE COMPANY, INC.
By:_________________________
Robert D. Rubin
President
Agreed and accepted as of the date first written above:
UBS PARTNERS, INC. APPIAN CAPITAL PARTNERS, L.L.C.
By:_______________________ By:____________________________
By:_______________________ Its:____________________________
UBS CAPITAL CORPORATION
By:_______________________
By:_______________________
THIS WARRANT WAS ORIGINALLY ISSUED ON JULY 19,
1995 AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,
THE RULES AND REGULATIONS THEREUNDER OR THE
PROVISIONS OF THIS WARRANT. THIS WARRANT IS
ALSO SUBJECT TO A SECURITIES PURCHASE
AGREEMENT DATED AS OF JULY 3, 1995 BETWEEN
PEOPLES TELEPHONE COMPANY, INC. (THE
"COMPANY") AND THE PARTIES NAMED THEREIN,
INCLUDING THE ORIGINAL HOLDER HEREOF. A COPY
OF THE SECURITIES AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
HEREOF UPON REQUEST.
STOCK PURCHASE WARRANT
Date of Issuance: July 19, 1995 Certificate No. W-1
FOR VALUE RECEIVED, PEOPLES TELEPHONE COMPANY, INC., a
New York corporation (the "Company"), hereby grants to APPIAN
CAPITAL PARTNERS, L.L.C., a Delaware limited liability company
("ACP") or its transferees and assigns the right to purchase from
the Company at any time after the Date of Issuance (as defined
below) a total of 275,000 Warrant Shares (as defined herein) at a
price per share of $5.25 (the "Initial Exercise Price"). This
Warrant is issued pursuant to the terms of the Securities Purchase
Agreement, dated as of July 3, 1995 (the "Securities Purchase
Agreement"), among the Company, ACP and UBS Capital Corporation, a
New York corporation, as amended from time to time in accordance
with its terms. Certain capitalized terms used herein are defined
in Section 8 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for
such securities are subject to adjustment pursuant to the
provisions contained in this Warrant.
<PAGE>
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by
this Warrant may be exercised, in whole or in part, at any time and
from time to time after the Date of Issuance to and including 5:00
p.m., New York time, on July 19, 2005 or, if such day is not a
business day, on the next following business day (the "Exercise
Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised
when all of the following items have been delivered to the Company
(the "Exercise Time"):
(a) a completed Exercise Agreement, as
described in Section 1C below, executed by the Person
exercising all or part of the purchase rights represented by
this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered
Holder, an Assignment or Assignments in the form set forth in
Exhibit II hereto evidencing the assignment of this Warrant to
the Purchaser; and
(d) either (1) a check payable to the Company
in an amount equal to the product of the Exercise Price (as
defined below) multiplied by the number of Warrant Shares
being purchased upon such exercise (the "Aggregate Exercise
Price"), (2) the surrender to the Company of shares of Common
Stock, shares of Preferred Stock or debt securities of the
Company having a value equal to the Aggregate Exercise Price
of the Warrant Shares being purchased upon such exercise
(provided that for purposes of this subparagraph, the value of
any note or other debt security or any preferred stock shall
be deemed to be equal to the aggregate outstanding principal
amount or liquidation value thereof plus all accrued and
unpaid interest thereon or accrued or declared and unpaid
dividends thereon), or (3) a written notice to the Company
that the Purchaser is exercising the Warrant (or a portion
thereof) by authorizing the Company to withhold from issuance
a number of Warrant Shares issuable upon such exercise of the
Warrant which when multiplied by the Fair Market Value of one
Warrant Share is equal to the Aggregate Exercise Price (and
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<PAGE>
such withheld shares shall no longer be issuable under this
Warrant).
(ii) Certificates for Warrant Shares purchased upon
exercise of this Warrant shall be delivered by the Company to the
Purchaser within five days after the date of the Exercise Time
together with any cash payable in lieu of a fraction of a share
pursuant to Section 13 hereof. Unless this Warrant has expired or
all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new warrant, substantially identical
hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and shall, within
such five-day period, deliver such new warrant to the Person
designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise
of this Warrant shall be deemed to have been issued to the
Purchaser at the Exercise Time, and the Purchaser shall be deemed
for all purposes to have become the Registered Holder of such
Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares
upon exercise of this Warrant shall be made without charge to the
Registered Holder or the Purchaser for any issuance tax in respect
thereof or other cost incurred by the Company in connection with
such exercise and the related issuance of Warrant Shares (other
than transfer taxes payable because the holder of the Warrant
Shares is other than the Registered Holder).
(v) The Company shall not close its books against
the transfer of this Warrant or of any Warrant Shares issued or
issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant. The Company
shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to
or less than the Exercise Price then in effect. In the event that
the Company fails to comply with its obligations set forth in the
foregoing sentence, the Purchaser may (but shall not be obligated
to) purchase Warrant Shares hereunder at par value, and the Company
shall be obligated to reimburse the Purchaser for the aggregate
amount of consideration paid in connection with such exercise in
excess of the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with the
Registered Holder or any Purchaser required to make any
governmental filings or obtain any governmental approvals prior to
or in connection with any exercise of this Warrant (including,
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<PAGE>
without limitation, making any filings required to be made by the
Company).
(vii) Notwithstanding any other provision hereof,
if an exercise of any portion of this Warrant is to be made in
connection with a Change of Control (as defined in the Amended
Certificate of Incorporation) or other transaction affecting the
Company, such exercise may at the election of the Registered Holder
be conditioned upon the consummation of such transaction, in which
case such exercise shall not be deemed to be effective until
immediately prior to the consummation of such transaction.
(viii) The Company shall at all times reserve and
keep available out of its authorized but unissued Common Stock
solely for the purpose of issuance upon the exercise of this
Warrant, the maximum number of Warrant Shares issuable upon the
exercise of this Warrant. All Warrant Shares which are so issuable
shall, when issued and upon the payment of the applicable Exercise
Price, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Company shall take all
such actions as may be necessary to ensure that all such Warrant
Shares may be so issued without violation by the Company of any
applicable law or governmental regulation or any requirements of
any domestic securities exchange or the NASDAQ National Market upon
which shares of Common Stock or other securities constituting
Warrant Shares may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon
each such issuance). The Company shall not take any action which
would cause the number of authorized but unissued Warrant Shares to
be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrant.
(ix) If the Warrant Shares issuable by reason of
exercise of this Warrant are at the time of exercise of this
Warrant convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's
option and upon surrender of this Warrant by such Purchaser as
provided above together with any notice, statement or payment
required to effect such conversion or exchange of Warrant Shares,
deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or
securities into which the Warrant Shares issuable by reason of such
conversion are convertible or exchangeable, registered in such name
or names and in such denomination or denominations as such
Purchaser has specified.
(x) The Company shall not, and shall not permit its
subsidiaries to, directly or indirectly, by any action (including,
without limitation, reincorporation in a jurisdiction other than
-4-
<PAGE>
New York, amending its certificate of incorporation or through any
Organic Change (as defined below), issuance or sale of securities
or any other voluntary action) avoid or seek to avoid the
observance or performance of any of terms of this Warrant or impair
or diminish its value (except for any action which ratably affects
all Warrant Shares and shares of Common Stock), but shall at all
times in good faith assist in the carrying out of all such terms of
this Warrant. Without limiting the generality of the foregoing,
the Company shall (a) obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant and (b) not undertake any reverse
stock split, combination, reorganization or other reclassification
of its capital stock which would have the effect of causing a
material portion of the purchase rights represented hereby to
become exercisable for less than one share of Common Stock.
1C. Exercise Agreement. Upon any exercise of this
Warrant, the Purchaser shall deliver to the Company an Exercise
Agreement in substantially the form set forth in Exhibit I hereto,
except that if the Warrant Shares are not to be issued in the name
of the Registered Holder, the Exercise Agreement shall also state
the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be
issued does not include all of the Warrant Shares purchasable
hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to
be issued.
SECTION 2. Adjustment of Exercise Price and Number of
Shares. In order to prevent dilution of the rights granted under
this Warrant, the Initial Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2 (as so
adjusted, the "Exercise Price"), and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time, each as provided in this Section 2.
2A. If and whenever on or after the Date of Issuance the
Company issues or sells, or in accordance with Section 2C is deemed
to have issued or sold, any shares of Common Stock for a
consideration per share less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then
immediately upon such issue or sale or deemed issue or sale the
Exercise Price shall be reduced to the Exercise Price determined by
dividing (i) the sum of (1) the product derived by multiplying the
Exercise Price in effect immediately prior to such issue or sale by
the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (2) the consideration, if any,
received by the Company upon such issue or sale, by (ii) the number
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of shares of Common Stock Deemed Outstanding immediately after such
issue or sale.
2B. Notwithstanding the foregoing, there shall be no
adjustment in the Exercise Price as a result of any issue or sale
(or deemed issue or sale) of (i) shares of Common Stock upon
conversion of the Preferred Stock in accordance with the terms
thereof as in effect as of the Date of Issuance, (ii) shares of
Common Stock pursuant to exercise of stock options, warrants and
other rights to acquire Common Stock described in Schedule 4.3 to
the Securities Purchase Agreement (as such number of shares is
proportionately adjusted for subsequent stock splits, combinations
of shares and stock dividends affecting the Common Stock), in each
case pursuant to the terms thereof as in effect on the date of the
Securities Purchase Agreement or as such terms may thereafter be
adjusted as described in Schedule 4.3 thereto, (iii) shares of
Common Stock upon exercise of stock options granted to employees
and directors of the Company and its Subsidiaries pursuant to the
terms of stock option plans and stock ownership plans approved by
the Company's Board of Directors, and (iv) shares of Common Stock
as consideration for the acquisition of any interest in any
business or company from a Person other than an Affiliate (A) which
acquisition is not prohibited pursuant to the Securities Purchase
Agreement, and (B) so long as the Fair Market Value of one Warrant
Share as of the closing of such acquisition exceeds $4.50 per share
(as such price is proportionately adjusted for subsequent stock
splits, combinations of shares and stock dividends affecting the
Warrant Shares) and so long as the Fair Market Value of one Warrant
Share has not at any time from the Date of Issuance through such
time been equal to greater than $5.25 per share (as so adjusted).
2C. Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Section
2B, the following shall be applicable:
(1) Issuance of Rights or Options. If the Company
in any manner grants or sells any Options and the price per share
for which Common Stock is issuable upon the exercise of such
Options, or upon conversion or exchange of any Convertible
Securities issuable upon exercise of such Options, is less than the
Exercise Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to be outstanding and to have been issued and sold
by the Company at the time of the granting or sale of such Options
for such price per share. For purposes of this paragraph, the
"price per share for which Common Stock is issuable" shall be
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determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting or sale
of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon exercise of all such
Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options. No further adjustment of the Exercise
Price shall be made when Convertible Securities are actually issued
upon the exercise of such Options or when Common Stock is actually
issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. If the
Company in any manner issues or sells any Convertible Securities
and the price per share for which Common Stock is issuable upon
conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then
the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable"
shall be determined by dividing (i) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities. No further adjustment of the
Exercise Price shall be made when Common Stock is actually issued
upon the conversion or exchange of such Convertible Securities, and
if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for which adjustments of the Exercise
Price had been or are to be made pursuant to other provisions of
this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(3) Change in Option Price or Conversion Rate. If
the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
changes at any time, the Exercise Price in effect at the time of
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such change shall be immediately adjusted to the Exercise Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 2C, if the terms of any Option or
Convertible Security which was outstanding as of the Date of
Issuance of this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued
as of the date of such change; provided that no such change shall
at any time cause the Exercise Price hereunder to be increased.
(4) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Security without the exercise of any such Option or right, the
Exercise Price then in effect hereunder shall be adjusted
immediately to the Exercise Price which would have been in effect
at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued. For purposes
of this Section 2C, the expiration or termination of any Option or
Convertible Security which was outstanding as of the Date of
Issuance shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms
of such Option or Convertible Security caused it to be deemed to
have been issued after the Date of Issuance.
(5) Calculation of Consideration Received. If any
Common Stock, Option or Convertible Security is issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the
Company therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is
issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be
the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company shall be the Fair Market
Value thereof as of the date of receipt. If any Common Stock,
Option or Convertible Security is issued to the owners of the
non-surviving entity in connection with any merger in which the
Company is the surviving Company, the amount of consideration
therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Option or Convertible Security,
as the case may be. The fair value of any consideration other than
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cash and securities shall be determined jointly by the Company and
the holders of a majority of the outstanding Warrants. If such
parties are unable to reach agreement within a reasonable period of
time, the fair value of such consideration shall be determined by
an independent appraiser experienced in valuing such type of
consideration jointly selected by the Company and the holders of a
majority of the outstanding Warrants. The determination of such
appraiser shall be final and binding upon the parties, and the fees
and expenses of such appraiser shall be borne by the Company.
(6) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other securities of
the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Option by the
parties thereto, the Option shall be deemed to have been issued for
a consideration of $.01.
(7) Treasury Shares. The number of shares of
Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company or any
Subsidiary, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock.
(8) Record Date. If the Company takes a record of
the holders of Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or in Convertible Securities or (ii) to subscribe
for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of
such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
2D. Subdivision or Combination of Common Stock. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and if the Company at any time
combines (by reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
2E. Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets or other transaction in
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each case which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic
Change". Prior to the consummation of any Organic Change, the
Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holders of a majority of the
Warrants) to ensure that each Registered Holder of Warrant(s) shall
thereafter have the right to acquire and receive upon exercise
thereof, in lieu of or addition to (as the case may be) the Warrant
Shares immediately theretofore acquirable and receivable upon
exercise of such Registered Holder's Warrant(s), such shares of
stock, securities or assets as such holder would have received in
connection with such Organic Change if such holder had exercised
its Warrants immediately prior to such Organic Change. In each
such case, the Company shall also make appropriate provision (in
form and substance satisfactory to the Registered Holders of a
majority of the Warrants then outstanding) to insure that the
provisions of this Section 2 and Section 5 hereof shall thereafter
be applicable to the Warrants (including, in the case of any such
Organic Change in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of the Exercise
Price to the value for the Common Stock reflected by the terms of
such Organic Change and a corresponding immediate adjustment in the
number of Warrant Shares acquirable and receivable upon exercise of
the Warrants, if the value so reflected is less than the Fair
Market Value of the Common Stock in effect immediately prior to
such Organic Change). The Company shall not effect any such
Organic Change unless, prior to the consummation thereof, the
successor entity (if other than the Company) resulting from such
Organic Change assumes by written instrument (in form and substance
reasonably satisfactory to the Registered Holders of a majority of
the Warrants then outstanding) the obligation to deliver to each
Registered Holder of Warrant(s) such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such
Registered Holder may be entitled to acquire.
2F. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly
provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of
Directors shall make an appropriate adjustment in the Exercise
Price and the number of Warrant Shares obtainable upon exercise of
this Warrant so as to protect the rights of the Registered Holder
of this Warrant; provided that no adjustment shall be made for
stock appreciation rights and phantom stock rights granted to
employees pursuant to employee benefit plans approved by the
Company's Board of Directors; and provided further that no such
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<PAGE>
adjustment shall increase the Exercise Price as otherwise
determined pursuant to this Section 2 or decrease the number of
Warrant Shares issuable upon conversion of any Warrant.
2G. Notices.
(i) Promptly after any adjustment of the Exercise
Price, the Company shall give written notice thereof to the Registered
Holder, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Company shall give written notice to the
Registered Holder at least 20 days prior to the date on which any
Organic Change shall take place.
(iii) The Company shall also give written notice to the
Registered Holder at least 20 days prior to the date on which any
Organic Change, dissolution or liquidation shall take place.
SECTION 3. Liquidating Dividends. If the Company
declares or pays a dividend upon the Common Stock payable otherwise
than in cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company shall pay to the Registered
Holder of this Warrant at the time of payment thereof the Liquidating
Dividend which would have been paid to such Registered Holder on the
Warrant Stock had this Warrant been fully exercised immediately prior
to the date on which a record is taken for such Liquidating Dividend,
or, if no record is taken, the date as of which the record holders of
Common Stock entitled to such dividends are to be determined.
SECTION 4. Purchase Rights. To the extent not
prohibited by paragraph EIGHTH of the Corporation's Certificate of
Incorporation, if at any time the Company grants, issues or sells
any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the "Purchase Rights"), then
each holder of Warrants shall be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase
Rights which such holder could have acquired if such holder had
held the number of Warrant Shares acquirable upon conversion of
such holder's Warrants immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase
Rights, or if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
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SECTION 5. No Voting Rights; Limitations of Liability.
This Warrant shall not entitle the Registered Holder hereof to any
voting rights or other rights as a stockholder of the Company. No
provision hereof, in the absence of affirmative action by the
Registered Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the
Exercise Price of Warrant Shares acquirable by exercise hereof or
as a stockholder of the Company.
SECTION 6. Transferability. Subject to the transfer
conditions referred to in the legend endorsed hereon, this Warrant
and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit
II hereto) at the principal office of the Company.
SECTION 7. Warrant Exchangeable for Different
Denominations. This Warrant is exchangeable, upon the surrender
hereof by the Registered Holder at the principal office of the
Company, for new Warrants of like tenor representing in the
aggregate the purchase rights hereunder, and each of such new
Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender.
At the request of the Registered Holder (pursuant to a transfer of
Warrants or otherwise), this Warrant may be exchanged for one or
more Warrants to purchase Common Stock. The date the Company
initially issues Warrants pursuant to the Securities Purchase
Agreement shall be deemed to be the "Date of Issuance" regardless
of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall
be issued. All Warrants representing portions of the rights
hereunder are referred to herein as the "Warrants."
SECTION 8. Definitions. The following terms have the
meanings set forth below:
"Affiliate" means with respect to any Person, any other
Person directly or indirectly controlling or controlled by or is
under direct or indirect control with such specified Person.
"Amended Certificate of Incorporation" means the
Company's Amended Certificate of Incorporation filed with the
Secretary of the State of New York on July 18, 1995.
"Common Stock" means the Company's Common Stock, $.01 par
value per share, or any securities into which such Common Stock is
hereafter converted or exchanged.
"Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock actually outstanding at
such time, plus the number of shares of Common Stock deemed to be
outstanding pursuant to Sections 2C(1) and 2C(2) hereof.
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"Convertible Securities" means any stock or securities
directly or indirectly convertible into or exchangeable for Common
Stock, other than any such securities referred to in Section 2B
above.
"Fair Market Value" of any security means the average of
the closing prices of such security's sales on all securities
exchanges on which such security may at the time be listed or as
reported on the NASDAQ National Market, or, if there has been no
sales on any such exchange or reported on the NASDAQ National
Market on any day, the average of the highest bid and lowest asked
prices on all such exchanges or reported at the end of such day,
or, if on any day such security is not so listed or included in the
NASDAQ National Market, the average of the representative bid and
asked prices quoted in the NASDAQ Stock Market as of 4:00 P.M., New
York time, or, if on any day such security is not quoted in the
NASDAQ Stock Market, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a
period of 21 days consisting of the day as of which "Fair Market
Value" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the NASDAQ National Market,
the NASDAQ Stock Market or the over-the-counter market, the "Fair
Market Value" shall be the fair value thereof determined jointly by
the Company and the Registered Holders of a majority of the
Warrants. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by
an independent appraiser experienced in valuing securities jointly
selected by the Company and the Registered Holders of a majority of
the Warrants. The determination of such appraiser shall be final
and binding upon the parties, and the Company shall pay the fees
and expenses of such appraiser.
"Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities
other than rights, warrants or options referred to in Section 2B
above.
"Person" means an individual, a partnership (including a
limited partnership), a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means the Cumulative Convertible
Preferred Stock issued pursuant to the Securities Purchase
Agreement.
"Registered Holder" means the holder of this Warrant as
reflected in the records of the Company maintained pursuant to
Section 13.
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"Warrant Shares" means shares of the Company's Common
Stock issuable upon exercise of the Warrant; provided, that if the
securities issuable upon exercise of the Warrants are issued by an
entity other than the Company or there is a change in the class of
securities so issuable, then the term "Warrant Shares" shall mean
shares of the security issuable upon exercise of the Warrants if
such security is issuable in shares, or shall mean the equivalent
units in which such security is issuable if such security is not
issuable in shares.
SECTION 9. Replacement. Upon receipt of evidence
reasonably satisfactory to the Company (an affidavit of the
Registered Holder shall be satisfactory) of the ownership and the
loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to
the Company (provided that if the Registered Holder is a financial
institution or other institutional investor its own agreement shall
be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense)
execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly
provided herein, all notices referred to herein shall be in writing
and shall be delivered by registered or certified mail, return
receipt requested, postage prepaid and will be deemed to have been
given when so mailed (i) to the Company, at its principal executive
offices and (ii) to a Registered Holder, at such Registered
Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. No amendment,
modification or waiver will be binding or effective with respect to
any provision of this Warrant without the prior written consent of
the Registered Holders of the Warrants then outstanding.
SECTION 12. Warrant Register. The Company shall
maintain at its principal executive offices a register for the
registration of transfer of Warrants. Upon the surrender of any
certificate representing Warrants at such place, the Company will,
at the request of the record holder of such certificate, execute
and deliver (at the Company's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the
number of Warrant Shares represented by the surrendered
certificate. Each such new certificate will be registered in such
name and will represent such number of Warrant Shares as is
requested by the holder of the surrendered certificate and will be
substantially identical in form to the surrendered certificate.
SECTION 13. Fractions of Shares. If any fractional
interest in a Warrant Share would, except for the provisions of
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this subparagraph, be delivered upon any exercise of the Warrant,
at the request of the Registered Holder the Company, in lieu of
delivering the fractional share therefor, shall pay an amount to
the Registered Holder thereof equal to the Fair Market Value of
such fractional interest as of the date of exercise.
SECTION 14. Descriptive Headings; Governing Law. The
descriptive headings of the several Sections and paragraphs of this
Warrant are inserted for convenience only and do not constitute a
part of this Warrant. THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant
to be signed and attested by its duly authorized officers under its
corporate seal and to be dated as of the date hereof.
PEOPLES TELEPHONE COMPANY, INC.
By: _________________________
Name:
Title:
Attest:
____________________________
Assistant Secretary
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in
the attached Warrant (Certificate No. W-____), hereby agrees to
subscribe for the purchase of ______ Warrant Shares covered by such
Warrant and makes payment herewith in full therefor at the price
per share provided by such Warrant.
Signature ____________________
Address ______________________
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EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________ hereby
sells, assigns and transfers all of the rights of the undersigned
under the attached Warrant (Certificate No. W-_____) with respect
to the number of the Warrant Shares covered thereby set forth
below, unto:
Names of Assignee Address No. of Shares
- - - ----------------- ------- -------------
Dated: Signature _______________________
_______________________
Witness _______________________
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THIS WARRANT WAS ORIGINALLY ISSUED ON JULY 19,
1995 AND HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,
THE RULES AND REGULATIONS THEREUNDER OR THE
PROVISIONS OF THIS WARRANT. THIS WARRANT IS
ALSO SUBJECT TO A SECURITIES PURCHASE
AGREEMENT DATED AS OF JULY 3, 1995 BETWEEN
PEOPLES TELEPHONE COMPANY, INC. (THE
"COMPANY") AND THE PARTIES NAMED THEREIN,
INCLUDING THE ORIGINAL HOLDER HEREOF. A COPY
OF THE SECURITIES AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
HEREOF UPON REQUEST.
CONTINGENT STOCK PURCHASE WARRANT
Date of Issuance: July 19, 1995 Certificate No. W-2
This Warrant is being issued simultaneously with the
issuance of 150,000 shares of the Company's Series C Cumulative
Convertible Preferred Stock (the "Convertible Preferred Stock"),
represented by stock certificate no. 1 (the "Subject Shares"), to
UBS PARTNERS, INC., a New York Corporation ("UBS") pursuant to the
Securities Purchase Agreement dated as of July 3, 1995 (the
"Securities Purchase Agreement"), between PEOPLES TELEPHONE
COMPANY, INC. a New York Corporation (the "Company"), and certain
investors, as amended from time to time in accordance with its
terms.
For value received, the Company hereby grants to UBS or
its registered assigns (the "Registered Holder") the right to
purchase from the Company after an Optional Redemption of any
Subject Shares a number of shares of the Company's Common Stock
equal to the aggregate number of shares of Common Stock into which
the Redeemed Shares were convertible as of the respective
Redemption Dates thereof at a price per share equal to $5.25 (the
"Initial Exercise Price") (such price as adjusted and readjusted
from time to time in accordance with Section 2 hereof).
Certain capitalized terms used herein are defined in
Section 8 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for
<PAGE>
such securities are subject to adjustment pursuant to the
provisions contained in this Warrant.
This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by
this Warrant may be exercised, in whole or in part, at any time and
from time to time after the Redemption Date of the Redeemed Shares
to which such rights relate, to and including the Scheduled
Redemption Date of the Redeemed Shares to which such purchase
rights relate, but no later than six years after the Optional
Redemption of all outstanding shares of Convertible Preferred Stock
(the "Exercise Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised
when all of the following items have been delivered to the Company (the
"Exercise Time"):
(a) a completed Exercise Agreement, as
described in Section 1C below, executed by the Person
exercising all or part of the purchase rights represented by
this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered
Holder, an Assignment or Assignments in the form set forth in
Exhibit II hereto evidencing the assignment of this Warrant to
the Purchaser; and
(d) either (1) a check payable to the Company
in an amount equal to the product of the Exercise Price
multiplied by the number of Warrant Shares being purchased
upon such exercise (the "Aggregate Exercise Price"), (2) the
surrender to the Company of shares of Common Stock, shares of
Convertible Preferred Stock or debt securities of the Company
having a value equal to the Aggregate Exercise Price of the
Warrant Shares being purchased upon such exercise (provided
that for purposes of this subparagraph, the value of any note
or other debt security or any preferred stock shall be deemed
to be equal to the aggregate outstanding principal amount or
liquidation value thereof plus all accrued and unpaid interest
thereon or accrued or declared and unpaid dividends thereon),
or (3) a written notice to the Company that the Purchaser is
exercising the Warrant (or a portion thereof) by authorizing
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<PAGE>
the Company to withhold from issuance a number of Warrant
Shares issuable upon such exercise of the Warrant which when
multiplied by the Fair Market Value of one Warrant Share is
equal to the Aggregate Exercise Price (and such withheld
shares shall no longer be issuable under this Warrant).
(ii) Certificates for Warrant Shares purchased upon
exercise of this Warrant shall be delivered by the Company to the
Purchaser within five days after the date of the Exercise Time
together with any cash payable in lieu of a fraction of a share
pursuant to Section 13 hereof. Unless this Warrant has expired or
all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new warrant, substantially identical
hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and shall, within
such five-day period, deliver such new warrant to the Person
designated for delivery in the Exercise Agreement.
(iii) The Warrant Shares issuable upon the exercise
of this Warrant shall be deemed to have been issued to the
Purchaser at the Exercise Time, and the Purchaser shall be deemed
for all purposes to have become the Registered Holder of such
Warrant Shares at the Exercise Time.
(iv) The issuance of certificates for Warrant Shares
upon exercise of this Warrant shall be made without charge to the
Registered Holder or the Purchaser for any issuance tax in respect
thereof or other cost incurred by the Company in connection with
such exercise and the related issuance of Warrant Shares (other
than transfer taxes payable because the holder of the Warrant
Shares is other than the Registered Holder).
(v) The Company shall not close its books against
the transfer of this Warrant or of any Warrant Shares issued or
issuable upon the exercise of this Warrant in any manner which
interferes with the timely exercise of this Warrant. The Company
shall from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Warrant Shares
acquirable upon exercise of this Warrant is at all times equal to
or less than the Exercise Price then in effect. In the event that
the Company fails to comply with its obligations set forth in the
foregoing sentence, the Purchaser may (but shall not be obligated
to) purchase Warrant Shares hereunder at par value, and the Company
shall be obligated to reimburse the Purchaser for the aggregate
amount of consideration paid in connection with such exercise in
excess of the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with the
Registered Holder or any Purchaser required to make any
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governmental filings or obtain any governmental approvals prior to
or in connection with any exercise of this Warrant (including,
without limitation, making any filings required to be made by the
Company).
(vii) Notwithstanding any other provision hereof,
if an exercise of any portion of this Warrant is to be made in
connection with a Change of Control (as defined in the Amended
Certificate of Incorporation) or other transaction affecting the
Company, such exercise may at the election of the Registered Holder
be conditioned upon the consummation of such transaction, in which
case such exercise shall not be deemed to be effective until
immediately prior to the consummation of such transaction.
(viii) The Company shall at all times reserve and
keep available out of its authorized but unissued Common Stock
solely for the purpose of issuance upon the exercise of this
Warrant, the maximum number of Warrant Shares issuable upon the
exercise of this Warrant. All Warrant Shares which are so issuable
shall, when issued and upon the payment of the applicable Exercise
Price, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Company shall take all
such actions as may be necessary to ensure that all such Warrant
Shares may be so issued without violation by the Company of any
applicable law or governmental regulation or any requirements of
any domestic securities exchange or the NASDAQ National Market upon
which shares of Common Stock or other securities constituting
Warrant Shares may be listed (except for official notice of
issuance which shall be immediately delivered by the Company upon
each such issuance). The Company shall not take any action which
would cause the number of authorized but unissued Warrant Shares to
be less than the number of such shares required to be reserved
hereunder for issuance upon exercise of the Warrant.
(ix) If the Warrant Shares issuable by reason of
exercise of this Warrant are at the time of exercise of this
Warrant convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's
option and upon surrender of this Warrant by such Purchaser as
provided above together with any notice, statement or payment
required to effect such conversion or exchange of Warrant Shares,
deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or
securities into which the Warrant Shares issuable by reason of such
conversion are convertible or exchangeable, registered in such name
or names and in such denomination or denominations as such
Purchaser has specified.
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(x) The Company shall not, and shall not permit its
subsidiaries to, directly or indirectly, by any action (including,
without limitation, reincorporation in a jurisdiction other than
New York, amending its certificate of incorporation or through any
Organic Change (as defined below), issuance or sale of securities
or any other voluntary action) avoid or seek to avoid the
observance or performance of any of terms of this Warrant or impair
or diminish its value (except for any action which ratably affects
all Warrant Shares and shares of Common Stock), but shall at all
times in good faith assist in the carrying out of all such terms of
this Warrant. Without limiting the generality of the foregoing,
the Company shall (a) obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its
obligations under this Warrant and (b) not undertake any reverse
stock split, combination, reorganization or other reclassification
of its capital stock which would have the effect of causing a
material portion of the purchase rights represented hereby to
become exercisable for less than one share of Common Stock.
1C. Exercise Agreement. Upon any exercise of this
Warrant, the Purchaser shall deliver to the Company an Exercise
Agreement in substantially the form set forth in Exhibit I hereto,
except that if the Warrant Shares are not to be issued in the name
of the Registered Holder, the Exercise Agreement shall also state
the name of the Person to whom the certificates for the Warrant
Shares are to be issued, and if the number of Warrant Shares to be
issued does not include all of the Warrant Shares purchasable
hereunder, it shall also state the name of the Person to whom a new
Warrant for the unexercised portion of the rights hereunder is to
be issued.
SECTION 2. Adjustment of Exercise Price and Number of
Shares. In order to prevent dilution of the rights granted under
this Warrant, the Initial Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2 (as so
adjusted, the "Exercise Price"), and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time, each as provided in this Section 2.
2A. If and whenever on or after the Date of Issuance the
Company issues or sells, or in accordance with Section 2C is deemed
to have issued or sold, any shares of Common Stock for a
consideration per share less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then
immediately upon such issue or sale or deemed issue or sale the
Exercise Price shall be reduced to the Exercise Price determined by
dividing (i) the sum of (1) the product derived by multiplying the
Exercise Price in effect immediately prior to such issue or sale by
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the number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale, plus (2) the consideration, if any,
received by the Company upon such issue or sale, by (ii) the number
of shares of Common Stock Deemed Outstanding immediately after such
issue or sale.
2B. Notwithstanding the foregoing, there shall be no
adjustment in the Exercise Price as a result of any issue or sale
(or deemed issue or sale) of (i) shares of Common Stock upon
conversion of the Preferred Stock in accordance with the terms
thereof as in effect as of the Date of Issuance, (ii) shares of
Common Stock pursuant to exercise of stock options, warrants and
other rights to acquire Common Stock described in Schedule 4.3 to
the Securities Purchase Agreement (as such number of shares is
proportionately adjusted for subsequent stock splits, combinations
of shares and stock dividends affecting the Common Stock), in each
case pursuant to the terms thereof as in effect on the date of the
Securities Purchase Agreement or as such terms may thereafter be
adjusted as described in Schedule 4.3 thereto, (iii) shares of
Common Stock upon exercise of stock options granted to employees
and directors of the Company and its Subsidiaries pursuant to the
terms of stock option plans and stock ownership plans approved by
the Company's Board of Directors, and (iv) shares of Common Stock
as consideration for the acquisition of any interest in any
business or company from a Person other than an Affiliate (A) which
acquisition is not prohibited pursuant to the Securities Purchase
Agreement, and (B) so long as the Fair Market Value of one Warrant
Share as of the closing of such acquisition exceeds $4.50 per share
(as such price is proportionately adjusted for subsequent stock
splits, combinations of shares and stock dividends affecting the
Warrant Shares) and so long as the Fair Market Value of one Warrant
Share has not at any time from the Date of Issuance through such
time been equal to greater than $5.25 per share (as so adjusted).
2C. Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Section
2B, the following shall be applicable:
(1) Issuance of Rights or Options. If the Company
in any manner grants or sells any Options and the price per share
for which Common Stock is issuable upon the exercise of such
Options, or upon conversion or exchange of any Convertible
Securities issuable upon exercise of such Options, is less than the
Exercise Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options
or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to be outstanding and to have been issued and sold
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by the Company at the time of the granting or sale of such Options
for such price per share. For purposes of this paragraph, the
"price per share for which Common Stock is issuable" shall be
determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting or sale
of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon exercise of all such
Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or
sale of such Convertible Securities and the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the
exercise of such Options. No further adjustment of the Exercise
Price shall be made when Convertible Securities are actually issued
upon the exercise of such Options or when Common Stock is actually
issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. If the
Company in any manner issues or sells any Convertible Securities
and the price per share for which Common Stock is issuable upon
conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then
the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be
deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable"
shall be determined by dividing (i) the total amount received or
receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities. No further adjustment of the
Exercise Price shall be made when Common Stock is actually issued
upon the conversion or exchange of such Convertible Securities, and
if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for which adjustments of the Exercise
Price had been or are to be made pursuant to other provisions of
this Section 2, no further adjustment of the Exercise Price shall
be made by reason of such issue or sale.
(3) Change in Option Price or Conversion Rate. If
the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of
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any Convertible Securities or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
changes at any time, the Exercise Price in effect at the time of
such change shall be immediately adjusted to the Exercise Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this Section 2C, if the terms of any Option or
Convertible Security which was outstanding as of the Date of
Issuance of this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued
as of the date of such change; provided that no such change shall
at any time cause the Exercise Price hereunder to be increased.
(4) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Security without the exercise of any such Option or right, the
Exercise Price then in effect hereunder shall be adjusted
immediately to the Exercise Price which would have been in effect
at the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior
to such expiration or termination, never been issued. For purposes
of this Section 2C, the expiration or termination of any Option or
Convertible Security which was outstanding as of the Date of
Issuance shall not cause the Exercise Price hereunder to be
adjusted unless, and only to the extent that, a change in the terms
of such Option or Convertible Security caused it to be deemed to
have been issued after the Date of Issuance.
(5) Calculation of Consideration Received. If any
Common Stock, Option or Convertible Security is issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the
Company therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is
issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company shall be
the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company shall be the Fair Market
Value thereof as of the date of receipt. If any Common Stock,
Option or Convertible Security is issued to the owners of the
non-surviving entity in connection with any merger in which the
Company is the surviving Company, the amount of consideration
therefor shall be deemed to be the fair value of such portion of
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the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Option or Convertible Security,
as the case may be. The fair value of any consideration other than
cash and securities shall be determined jointly by the Company and
the holders of a majority of the outstanding Warrants. If such
parties are unable to reach agreement within a reasonable period of
time, the fair value of such consideration shall be determined by
an independent appraiser experienced in valuing such type of
consideration jointly selected by the Company and the holders of a
majority of the outstanding Warrants. The determination of such
appraiser shall be final and binding upon the parties, and the fees
and expenses of such appraiser shall be borne by the Company.
(6) Integrated Transactions. In case any Option is
issued in connection with the issue or sale of other securities of
the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Option by the
parties thereto, the Option shall be deemed to have been issued for
a consideration of $.01.
(7) Treasury Shares. The number of shares of
Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company or any
Subsidiary, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock.
(8) Record Date. If the Company takes a record of
the holders of Common Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in Common
Stock, Options or in Convertible Securities or (ii) to subscribe
for or purchase Common Stock, Options or Convertible Securities,
then such record date shall be deemed to be the date of the issue
or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of
such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
2D. Subdivision or Combination of Common Stock. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and if the Company at any time
combines (by reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased.
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2E. Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets or other transaction in
each case which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic
Change". Prior to the consummation of any Organic Change, the
Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holders of a majority of the
Warrants) to ensure that each Registered Holder of Warrant(s) shall
thereafter have the right to acquire and receive upon exercise
thereof, in lieu of or addition to (as the case may be) the Warrant
Shares immediately theretofore acquirable and receivable upon
exercise of such Registered Holder's Warrant(s), such shares of
stock, securities or assets as such holder would have received in
connection with such Organic Change if such holder had exercised
its Warrants immediately prior to such Organic Change. In each
such case, the Company shall also make appropriate provision (in
form and substance satisfactory to the Registered Holders of a
majority of the Warrants then outstanding) to insure that the
provisions of this Section 2 and Section 5 hereof shall thereafter
be applicable to the Warrants (including, in the case of any such
Organic Change in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of the Exercise
Price to the value for the Common Stock reflected by the terms of
such Organic Change and a corresponding immediate adjustment in the
number of Warrant Shares acquirable and receivable upon exercise of
the Warrants, if the value so reflected is less than the Fair
Market Value of the Common Stock in effect immediately prior to
such Organic Change). The Company shall not effect any such
Organic Change unless, prior to the consummation thereof, the
successor entity (if other than the Company) resulting from such
Organic Change assumes by written instrument (in form and substance
reasonably satisfactory to the Registered Holders of a majority of
the Warrants then outstanding) the obligation to deliver to each
Registered Holder of Warrant(s) such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such
Registered Holder may be entitled to acquire.
2F. Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly
provided for by such provisions (including, without limitation, the
granting of stock appreciation rights, phantom stock rights or
other rights with equity features), then the Company's Board of
Directors shall make an appropriate adjustment in the Exercise
Price and the number of Warrant Shares obtainable upon exercise of
this Warrant so as to protect the rights of the Registered Holder
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of this Warrant; provided that no adjustment shall be made for
stock appreciation rights and phantom stock rights granted to
employees pursuant to employee benefit plans approved by the
Company's Board of Directors; and provided further that no such
adjustment shall increase the Exercise Price as otherwise
determined pursuant to this Section 2 or decrease the number of
Warrant Shares issuable upon conversion of any Warrant.
2G. Notices.
(i) Promptly after any adjustment of the Exercise Price,
the Company shall give written notice thereof to the Registered
Holder, setting forth in reasonable detail and certifying the
calculation of such adjustment.
(ii) The Company shall give written notice to the
Registered Holder at least 20 days prior to the date on which any
Organic Change shall take place.
(iii) The Company shall also give written notice to the
Registered Holder at least 20 days prior to the date on which any
Organic Change, dissolution or liquidation shall take place.
SECTION 3. Liquidating Dividends. If the Company
declares or pays a dividend upon the Common Stock payable otherwise
than in cash out of earnings or earned surplus (determined in accordance
with generally accepted accounting principles, consistently applied)
except for a stock dividend payable in shares of Common Stock (a
"Liquidating Dividend"), then the Company shall pay to the Registered
Holder of this Warrant at the time of payment thereof the Liquidating
Dividend which would have been paid to such Registered Holder on the
Warrant Stock had this Warrant been fully exercised immediately prior
to the date on which a record is taken for such Liquidating Dividend,
or, if no record is taken, the date as of which the record holders of
Common Stock entitled to such dividends are to be determined.
SECTION 4. Purchase Rights. To the extent not
prohibited by the Corporation's Certificate of Incorporation, if at
any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any
class of Common Stock (the "Purchase Rights"), then each holder of
Warrants shall be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such
holder could have acquired if such holder had held the number of
Warrant Shares acquirable upon conversion of such holder's Warrants
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or if no such
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record is taken, the date as of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
SECTION 5. No Voting Rights; Limitations of Liability.
This Warrant shall not entitle the Registered Holder hereof
to any voting rights or other rights as a stockholder of the
Company. No provision hereof, in the absence of affirmative action
by the Registered Holder to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of the Registered
Holder shall give rise to any liability of such Registered Holder
for the Exercise Price of Warrant Shares acquirable by exercise
hereof or as a stockholder of the Company.
SECTION 6. Transferability. Subject to the transfer
conditions referred to in the legend endorsed hereon, this Warrant
and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit
II hereto) at the principal office of the Company.
SECTION 7. Warrant Exchangeable for Different
Denominations. This Warrant is exchangeable, upon the surrender
hereof by the Registered Holder at the principal office of the
Company, for new Warrants of like tenor representing in the
aggregate the purchase rights hereunder, and each of such new
Warrants shall represent such portion of such rights as is
designated by the Registered Holder at the time of such surrender.
At the request of the Registered Holder (pursuant to a transfer of
Warrants or otherwise), this Warrant may be exchanged for one or
more Warrants to purchase Common Stock. The date the Company
initially issues Warrants pursuant to the Securities Purchase
Agreement shall be deemed to be the "Date of Issuance" regardless
of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall
be issued. All Warrants representing portions of the rights
hereunder are referred to herein as the "Warrants."
SECTION 8. Definitions. The following terms have the
meanings set forth below:
"Affiliate" means with respect to any Person, any other
Person directly or indirectly controlling or controlled by or is
under direct or indirect control with such specified Person.
"Amended Certificate of Incorporation" means the
Company's Amended Certificate of Incorporation filed with the
Secretary of the State of New York on July 18, 1995.
"Common Stock" means the Company's Common Stock, $.01 par
value per share, or any securities into which such Common Stock is
hereafter converted or exchanged.
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"Common Stock Deemed Outstanding" means, at any given
time, the number of shares of Common Stock actually outstanding at
such time, plus the number of shares of Common Stock deemed to be
outstanding pursuant to Sections 2C(1) and 2C(2) hereof.
"Convertible Securities" means any stock or securities
directly or indirectly convertible into or exchangeable for Common
Stock, other than any such securities referred to in Section 2B
above.
"Fair Market Value" of any security means the average of
the closing prices of such security's sales on all securities
exchanges on which such security may at the time be listed or as
reported on the NASDAQ National Market, or, if there has been no
sales on any such exchange or reported on the NASDAQ National
Market on any day, the average of the highest bid and lowest asked
prices on all such exchanges or reported at the end of such day,
or, if on any day such security is not so listed or included in the
NASDAQ National Market, the average of the representative bid and
asked prices quoted in the NASDAQ Stock Market as of 4:00 P.M., New
York time, or, if on any day such security is not quoted in the
NASDAQ Stock Market, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any
similar successor organization, in each such case averaged over a
period of 21 days consisting of the day as of which "Fair Market
Value" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on
any securities exchange or quoted in the NASDAQ National Market,
the NASDAQ Stock Market or the over-the-counter market, the "Fair
Market Value" shall be the fair value thereof determined jointly by
the Company and the Registered Holders of a majority of the
Warrants. If such parties are unable to reach agreement within a
reasonable period of time, such fair value shall be determined by
an independent appraiser experienced in valuing securities jointly
selected by the Company and the Registered Holders of a majority of
the Warrants. The determination of such appraiser shall be final
and binding upon the parties, and the Company shall pay the fees
and expenses of such appraiser.
"Optional Redemption" means a redemption of all or any
portion of the Subject Shares pursuant to Section D2 of the Amended
Certificate of Incorporation.
"Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities
other than rights, warrants or options referred to in Section 2B
above.
"Person" means an individual, a partnership (including a
limited partnership), a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
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"Preferred Stock" means the Cumulative Convertible
Preferred Stock issued pursuant to the Securities Purchase
Agreement.
"Redeemed Shares" means the aggregate number of Subject
Shares redeemed by the Company pursuant to any Optional Redemption.
"Redemption Date" and "Scheduled Redemption Date" shall
have the meanings set forth in the terms of the Convertible
Preferred Stock in the Amended Certificate of Incorporation.
"Registered Holder" means the holder of this Warrant as
reflected in the records of the Company maintained pursuant to
Section 13.
"Warrant Shares" means shares of the Company's Common
Stock issuable upon exercise of the Warrant; provided, that if the
securities issuable upon exercise of the Warrants are issued by an
entity other than the Company or there is a change in the class of
securities so issuable, then the term "Warrant Shares" shall mean
shares of the security issuable upon exercise of the Warrants if
such security is issuable in shares, or shall mean the equivalent
units in which such security is issuable if such security is not
issuable in shares.
SECTION 9. Replacement. Upon receipt of evidence
reasonably satisfactory to the Company (an affidavit of the
Registered Holder shall be satisfactory) of the ownership and the
loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to
the Company (provided that if the Registered Holder is a financial
institution or other institutional investor its own agreement shall
be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense)
execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate.
SECTION 10. Notices. Except as otherwise expressly
provided herein, all notices referred to herein shall be in writing
and shall be delivered by registered or certified mail, return
receipt requested, postage prepaid and will be deemed to have been
given when so mailed (i) to the Company, at its principal executive
offices and (ii) to a Registered Holder, at such Registered
Holder's address as it appears in the records of the Company
(unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. No amendment,
modification or waiver will be binding or effective with respect to
any provision of this Warrant without the prior written consent of
the Registered Holders of the Warrants then outstanding.
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SECTION 12. Warrant Register. The Company shall
maintain at its principal executive offices a register for the
registration of transfer of Warrants. Upon the surrender of any
certificate representing Warrants at such place, the Company will,
at the request of the record holder of such certificate, execute
and deliver (at the Company's expense) a new certificate or
certificates in exchange therefor representing in the aggregate the
number of Warrant Shares represented by the surrendered
certificate. Each such new certificate will be registered in such
name and will represent such number of Warrant Shares as is
requested by the holder of the surrendered certificate and will be
substantially identical in form to the surrendered certificate.
SECTION 13. Fractions of Shares. If any fractional
interest in a Warrant Share would, except for the provisions of
this subparagraph, be delivered upon any exercise of the Warrant,
at the request of the Registered Holder the Company, in lieu of
delivering the fractional share therefor, shall pay an amount to
the Registered Holder thereof equal to the Fair Market Value of
such fractional interest as of the date of exercise.
SECTION 14. Descriptive Headings; Governing Law. The
descriptive headings of the several Sections and paragraphs of this
Warrant are inserted for convenience only and do not constitute a
part of this Warrant. THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant
to be signed and attested by its duly authorized officers under its
corporate seal and to be dated as of the date hereof.
PEOPLES TELEPHONE COMPANY, INC.
By: _________________________
Name:
Title:
Attest:
____________________________
Assistant Secretary
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EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in
the attached Warrant (Certificate No. W-____), hereby agrees to
subscribe for the purchase of ______ Warrant Shares covered by such
Warrant and makes payment herewith in full therefor at the price
per share provided by such Warrant.
Signature ____________________
Address ______________________
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EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________ hereby
sells, assigns and transfers all of the rights of the undersigned
under the attached Warrant (Certificate No. W-_____) with respect
to the number of the Warrant Shares covered thereby set forth
below, unto:
Names of Assignee Address No. of Shares
- - - ----------------- ------- -------------
Dated: Signature _______________________
_______________________
Witness _______________________
-18-
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as
of July 19, 1995 by and among Peoples Telephone Company, Inc., a
New York corporation (the "Company"), UBS Partners, Inc., a New
York corporation ("UBS"), and Appian Capital Partners, L.L.C., a
Delaware limited liability company ("ACP" and together with UBS,
the "Purchasers"). Except as otherwise indicted herein,
capitalized terms used herein are defined in Section 1 hereof.
UBS has purchased shares of the Company's Series C
Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Convertible Preferred Stock"), convertible at any time after
the date hereof into shares of the Company's Common Stock, pursuant
to the Securities Purchase Agreement, dated as of July 3, 1995
among the Company, UBS and ACP, as amended to the date hereof (the
"Securities Purchase Agreement").
ACP has purchased a warrant to purchase at any time after
the date hereof shares of Common Stock (together with all warrants
issued in substitution or replacement therefor, the "Warrants")
pursuant to the Securities Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties to this Agreement hereby agree as follows:
1. Definitions. As used herein, the following terms
shall have the following meanings.
"Affiliates" means with respect to any Person, any other
Person (i) directly or indirectly controlling or controlled by or
under direct or indirect control with such specified Person, (ii)
related by blood or marriage to any such specified Person or any
Affiliate of such specified Person, (iii) controlled by any Person
described in clause (ii) foregoing or (iv) in the case of any
limited liability company, each member.
"Closing Date" means July 19, 1995.
"Common Stock" means, the Company's Common Stock, par
value $.01 per share and (ii) any capital stock of the Company
issued or issuable with respect to the security referred to in
clause (i) by way of stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization.
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Person" means an individual, a partnership (including a
limited partnership), a corporation, a limited liability company,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Registrable Securities" means (i) any shares of Common
Stock issued or issuable upon conversion or exercise of any
Convertible Preferred Stock or Warrants or acquired after the date
hereof by a Purchaser or any of its Affiliates holding Registrable
Securities and (ii) any shares of capital stock of the Company
issued or issuable with respect to the securities referred to in
clause (i) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular
Registrable Securities, such securities shall cease to be
Registrable Securities when they have been (x) distributed to the
public pursuant to an offering registered under the Securities Act
or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act unless such
securities are held at such time by a holder of other Registrable
Securities or (y) repurchased by the Company or any Subsidiary.
For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the right
to acquire directly or indirectly such Registrable Securities (upon
conversion or exercise in connection with a transfer of securities
or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has
actually been effected.
"Registration Expenses" means all expenses incident to
the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and of one counsel for the
holders of a majority of Registrable Securities and all independent
certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (in addition
to the Company's internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance and the
expenses and fees for listing the securities to be registered on
each securities exchange on which similar securities issued by the
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<PAGE>
Company are then listed or on the NASD automated quotation system,
which expenses the Company will pay in any event). The Company
will pay all Registration Expenses of registrations initiated as
Demand Registrations, whether or not consummated as such.
"Rule 144" means Rule 144 under the Securities Act (or
any similar rule then in force).
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
2. Demand Registrations.
(a) Requests for Registration. Subject to Sections
2(b)and 2(c) below, (i) at any time and from time to time, the
holders of a majority of Registrable Securities may request
registration, whether underwritten or otherwise, under the
Securities Act of all or any portion of the Registrable Securities
held by any holder thereof which such holder requests to be so
registered on Form S-1 or any similar long-form registration
("Long-Form Registrations") or on Form S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations") if available
to the Companywhich Short Form Registrations may be for continuous
offerings pursuant to Rule 415 under the Securities Act Each
request for a Long-Form Registration or Short-Form Registration
shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price
range for such offering. Within 10 days after receipt of any such
request for a Long-Form Registration or Short-Form Registration,
the Company will give written notice of such requested registration
to all other holders of Registrable Securities and will include
(subject to the provisions of this Agreement) in such registration,
all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days
after the receipt of the Company's notice. All registrations
requested pursuant to in this Section 2(a) are referred to herein
as "Demand Registrations".
(b) Long-Form Registrations. The holders of a majority
of Registrable Securities will be entitled to request up to two (2)
Long-Form Registrations in which the Company will pay all
Registration Expenses. A registration will not count as the second
and final Long-Form Registration until it has become effective and
unless the holders of Registrable Securities are able to register
and sell at least 90% of the Registrable Securities requested to be
included in such registration within a price range reasonably
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<PAGE>
acceptable to the holders of a majority of the Registrable
Securities initially requesting registration.
(c) Short-Form Registrations. The holders of
Registrable Securities will be entitled to request up to one (1)
Short-Form Registration per year in which the Company will pay all
Registration Expenses. Demand Registrations will be Short-Form
Registrations whenever the Company is permitted to use any
applicable short form.
The holders of a majority of Registrable Securities will
be entitled to an unlimited number of Long-Form Registrations and
Short-Form Registrations at the expense of such holders; provided,
however, that the Company shall in no event be requested to effect
more than two registrations pursuant to this agreement in any 12
month period.
(d) Priority on Demand Registrations. The Company will
not include in any Long-Form Registration or Short-Form
Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of
the Registrable Securities included in such registration, except
that shares of Common Stock may be included as required pursuant to
Existing Registration Rights (as defined below) so long as the
number of such securities so included, when combined with the
number of Registrable Securities proposed to be included therein,
does not exceed the number which, in the reasonable judgment of the
managing underwriter thereof, can be sold at the price and on the
terms substantially as proposed by the holders of a majority of the
Registrable Securities requested to be included therein. For
purposes hereof, "Existing Registration Rights" means rights in
effect on the Closing Date, set forth in the agreements listed on
the Schedule attached hereto and held on the Closing Date (x) by
stockholders of the Company, to cause the Company to register
shares of Common Stock held by such holders on the Closing Date,
and (y) by other Persons, to cause the Company to register shares
of Common Stock issuable to such Persons under, and subject to the
then existing terms of, options, warrants or other rights held by
such Persons on the Closing Date. If a Long-Form Registration or
a Short-Form Registration is an underwritten offering and the
managing underwriter(s) advise the Company in writing that in their
opinion the number of Registrable Securities and, if permitted
hereunder, other securities requested to be included in such
offering, exceeds the number of Registrable Securities and other
securities, if any, which can be sold therein without adversely
affecting the marketability of the offering then, subject to the
first sentence of this paragraph, the Company will include in such
registration (i) first, the number of Registrable Securities
requested to be included in such registration pro rata, if
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<PAGE>
necessary, among the holders of Registrable Securities based on the
number of shares of Registrable Securities owned by each such
holder and (ii) second, other securities of the Company requested
to be included in such registration pursuant to Existing
Registration Rights pro rata, if necessary, on the basis of the
number of shares of such other securities owned by each such
holder.
(e) Restrictions on Demand Registrations. The Company
will not be obligated to effect any Demand Registration within six
months after the effective date of a previous Demand Registration.
The Company may postpone for no more than 120 days in each 360-day
period, the filing or the effectiveness of a registration statement
for a Demand Registration if the Board of Directors of the Company,
acting in good faith, determines that such Demand Registration
might reasonably be expected to have a material and adverse effect
on any proposal or plan to engage in any acquisition or disposal of
stock or assets or any merger, consolidation, tender offer or
similar transaction; provided, that in such event, the holders of
Registrable Securities requesting such Demand Registration will be
entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration will not count as a Demand
Registration.
(f) Selection of Underwriters. In the case of a Demand
Registration for an underwritten offering, the holders of a
majority of the Registrable Securities to be included in such
Demand Registration will have the right to select the investment
banker(s) and manager(s) to administer the offering, subject to the
Company's approval which will not be unreasonably withheld.
(g) 415 Registrations.
(i) After the Company receives written notice of
a request for a Short Form Registration pursuant to Rule 415 under
the Securities Act (a "415 Registration"), the Company shall file
with the SEC a registration statement under the Securities Act for
the 415 Registration. The Company shall use its best efforts to
cause the 415 Registration to be declared effective under the
Securities Act as soon as practicable after filing and, once
effective, the Company shall (subject to the provisions of clause
(ii) below) cause such 415 Registration to remain effective for
such time period as is specified in such request, but for no time
period longer than the period ending on the earlier of (x) the
third anniversary of the date of filing of the 415 Registration or
(y) the date on which all Registrable Securities have been sold
pursuant to the 415 Registration or (iii) the date as of which
there are no longer any Registrable Securities in existence.
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<PAGE>
(ii) If the holders of a majority of the Registrable
Securities notify the Company in writing that they intend to effect
the sale of all or substantially all of the Registrable Securities
held by such holders pursuant to a single integrated offering
pursuant to a then effective registration statement for a 415
Registration (a "Takedown"), the Company and each holder of
Registrable Securities shall not effect any public sale or
distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for its equity
securities, during the 90-day period beginning on the date such
notice of a Takedown is received unless the holders of a majority
of the Registrable Securities who have given the Takedown notice
shall agree to a shorter period.
(iii) If in connection with any Takedown the
managing underwriter(s) (selected in accordance with clause (iv)
below) advise the Company that, in their reasonable judgment, the
inclusion of any other securities other than Registrable Securities
would adversely affect the marketability of the offering, then no
such securities shall be permitted to be included. Additionally,
if in connection with such an offering, the number of Registrable
Securities and other securities (if any) requested to be included
in such Takedown exceeds the number of Registrable Securities and
other securities which can be sold in such offering in an orderly
manner in such offering within a price range reasonably acceptable
to the holders of a majority of the Registrable Securities
initially requesting registration, the Company shall include in
such sale (x) first, the Registrable Securities requested to be
included in such Takedown, pro rata among the holders of such
Registrable Securities on the basis of the number of Registrable
Securities owned by each such holder and (y) second, other
securities requested pursuant Existing Registration Rights to be
included in such Takedown to the extent permitted hereunder.
(iv) The holders of a majority of the Registrable
Securities shall have the right to retain and select an investment
banker and manager to administer the 415 Registration and any
Takedown pursuant thereto, subject to the Company's approval which
will not be unreasonably withheld.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes
to register any of its Common Stock or other equity securities
under the Securities Act (other than any registration filed but not
yet effective on the date hereof and other than pursuant to a
Demand Registration, and other than pursuant to a registration
statement on Form S-8 or S-4 or successor forms thereto which may
be used solely for registering stock issued to employees or in
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<PAGE>
business combinations) and a registration form to be used may be
used for the registration of Registrable Securities (a "Piggyback
Registration"), the Company will give prompt written notice to all
holders of Registrable Securities of its intention to effect such
a registration and will include in such registration all or any
portion of Registrable Securities with respect to which the Company
has received written requests for inclusion therein within 20 days
after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of
the holders of Registrable Securities will be paid by the Company
in all Piggyback Registrations.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of
the Company, the Company will include in such registration all
securities requested to be included in such registration; provided,
that if the managing underwriter(s) advise the Company in writing
that in their reasonable judgment the number of securities
requested to be included in such registration exceeds the number
which can be sold substantially as proposed in such offering
without adversely affecting the marketability of the offering, the
Company will include in such registration (i) first, the securities
proposed to be sold for the account of the Company, (ii) second,
the Registrable Securities requested to be included in such
registration and other securities required to be included therein
pursuant to Existing Registration Rights, pro rata among the
holders of such Registrable Securities and other securities
required to be included therein pursuant to Existing Registration
Rights on the basis of the number of shares of Registrable
Securities and other securities required to be included therein
pursuant to Existing Registration Rights owned by each such holder
and (iii) third, other securities, if any, requested to be included
in such registration.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration in
accordance with a demand made pursuant to Existing Registration
Rights on behalf of one or more holders of the Company's securities
and the managing underwriter(s) advise the Company in writing that
in their reasonable judgment the number of securities requested to
be included in such registration exceeds the number which can be
sold substantially as proposed in such offering in an orderly
manner within a price range reasonably acceptable to the holders of
a majority of the securities having Existing Registration Rights
initially requesting registration, the Company will include in such
registration (i) first, the securities proposed to be sold in
accordance with Existing Registration Rights, (ii) second, the
Registrable Securities requested to be included in such
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<PAGE>
registration, pro rata among the holders of such Registrable
Securities on the basis of the number of shares of Registrable
Securities owned by each such holder and (iii) third, other
securities, if any, requested to be included in such registration.
If a Piggyback Registration is an underwritten secondary
registration on behalf of one or more holders of the Company's
securities and is not pursuant to Existing Registration Rights and
the managing underwriter(s) advise the Company in writing that in
their reasonable judgment the number of securities requested to be
included in such registration exceeds the number which can be sold
substantially as proposed in such offering without adversely
affecting the marketability of the offering and such registration,
the Company will include in such registration (i) first, the
securities proposed to be sold in accordance with Existing
Registration Rights and the Registrable Securities requested to be
included in such registration, pro rata among the holders of such
Registrable Securities on the basis of the number of shares of
Registrable Securities owned by each holder thereof and
(ii) second, other securities, if any, requested to be included in
such registration.
(e) Selection of Underwriters. If any Piggyback
Registration is an underwritten offering, the investment banker(s)
and manager(s) for the offering will be selected by the Company
(unless the Company has granted another person the right to make
such selection) and such selection must be approved by the holders
of a majority of the Registrable Securities included in such
Piggyback Registration. Such approval shall not be unreasonably
withheld.
4. Holdback Agreements.
(a) Each holder of Registrable Securities hereby agrees
not to effect any public sale or distribution (including sales
pursuant to Rule 144) of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such
securities in an underwritten offering of Registrable Securities
during the period beginning seven days before and extending 120
days (or such lesser number of days as reasonably requested by the
managing underwriter(s) of such underwritten offering of
Registrable Securities) after the effective date of any Demand
Registration (other than a 415 Registration) or Piggyback
Registration for a public offering in which Registrable Securities
are included (except as part of such underwritten registration),
unless the managing underwriter(s) of the offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale
or distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities
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<PAGE>
in an underwritten offering of Registrable Securities, during the
period beginning seven days before and extending 120 days (or such
lesser number of days as requested by the managing underwriter of
such underwritten offering of Registrable Securities) after the
effective date of any underwritten Demand Registration (other than
a 415 Registration) or Piggyback Registration (except as part of
such underwritten registration or pursuant to registrations on
Forms S-4 or S-8 or any successor forms thereto which may be used
solely for registering stock issued to employees or in business
combinations), unless the managing underwriter(s) of the
underwritten offering otherwise agree and (ii) to require each
holder of Registrable Securities and each other holder of at least
5% (on a fully diluted basis) of Common Stock, or any securities
convertible into or exchangeable or exercisable for Common Stock,
purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not
to effect any public sale or distribution (including sales pursuant
to Rule 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted),
unless the underwriters managing the registered public offering
otherwise agree.
5. Registration Procedures. Whenever the holders of
Registrable Securities have requested that any Registrable
Securities be registered pursuant to this Agreement, the Company
will use its best efforts to effect the registration and the sale
of such Registrable Securities in accordance with the intended
method of disposition thereof (including the registration of
Preferred Stock and/or Warrants held by a holder of Registrable
Securities requesting registration as to which the Company has
received reasonable assurances that only Registrable Securities
shall be distributed to the public), and pursuant thereto the
Company will as expeditiously as possible:
(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company
will furnish to the counsel selected by the holders of a majority
of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed);
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than six
months (or until all Registrable Securities registered thereunder
have been sold in accordance therewith, if sooner) and comply with
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the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement;
(c) furnish to each seller of Registrable Securities
such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such
registration statement (including each preliminary prospectus) and
such other documents as such seller may reasonably request in order
to facilitate the disposition of the Registrable Securities owned
by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws
of such jurisdictions as any seller reasonably requests and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subsection,
(ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process (i.e., service of
process which is not limited solely to securities law violations in
any such jurisdiction);
(e) notify each seller of such Registrable Securities,
at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits
any fact necessary to make the statements therein not misleading,
and, at the request of any such seller, the Company will promptly
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by
the Company are then listed and, if not so listed, to be listed on
the Nasdaq National Market (the "Nasdaq Market") and, if listed on
the Nasdaq Market, use its best efforts to secure designation of
all such Registrable Securities covered by such registration
statement as a Nasdaq "National Market System security" within the
meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure
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Nasdaq Market authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at
least two market makers to register as such with respect to such
Registrable Securities with the National Association of Securities
Dealers, Inc;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order
to facilitate the disposition of such Registrable Securities;
(i) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such seller or
underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to
its security holders, as soon as reasonably practicable, an earning
statement covering the period of at least twelve months beginning
with the first day of the Company's first full calendar quarter
after the effective date of the registration statement, which
earning statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 promulgated thereunder;
(k) permit any holder of Registrable Securities which
holder, in its sole and exclusive judgment, might be deemed to be
an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable
statement and to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable
judgment of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any
order suspending or preventing the use of any related prospectus or
suspending the qualification of any common stock included in such
registration statement for sale in any jurisdiction, the Company
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<PAGE>
will use its reasonable best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such Registrable
Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities
as may be necessary to enable the sellers thereof to consummate
the disposition of such Registrable Securities; and
(n) in the case of any underwritten offering, obtain a
"cold comfort" letter from the Company's independent public
accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as the managing
underwriter(s) of such underwritten offering may reasonably
request.
If any such registration or comparable statement refers to any
holder by name or otherwise as the holder of any securities of the
Company and if, in its sole and exclusive judgment, such holder is
or might be deemed to be an underwriter or a controlling person of
the Company, such holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory
to such holder and presented to the Company in writing, to the
effect that the holding by such holder of such securities is not to
be construed as a recommendation by such holder of the investment
quality of the Company's securities covered thereby and that such
holding does not imply that such holder will assist in meeting any
future financial requirements of the Company, or (ii) in the event
that such reference to such holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then
in force, the deletion of the reference to such holder; provided
that with respect to this clause (ii) such holder shall furnish to
the Company an opinion of counsel to such effect, which opinion of
counsel shall be reasonably satisfactory to the Company.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent
permitted by law, each holder of Registrable Securities, its
officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses arising out of or based
upon any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and shall reimburse such holder, director, officer or
controlling person for any legal or other expenses reasonably
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incurred by such holder, director, officer or controlling person in
connection with the investigation or defense of such loss, claim,
damage, liability or expense, except insofar as the same are caused
by or contained in any information furnished in writing to the
Company by such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of
copies of the same. In connection with an underwritten offering,
the Company will indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided
above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in
which a holder of Registrable Securities is participating, each
such holder will furnish to the Company in writing such information
and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and,
to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue
or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only
to the extent that such untrue statement or omission is contained
in any information or affidavit so furnished in writing by such
holder; provided, that the obligation to indemnify will be
individual to each holder and will be limited to the net amount of
proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder
will (i) give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification (provided
that the failure to give prompt notice shall not impair any
Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party), and (ii) unless
in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party, but only so long as, prior
to assuming such defense (x) the indemnifying party acknowledges in
writing to the indemnified Person that (1) it is not aware of any
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basis to believe that the indemnifying party is not responsible for
all liabilities and expenses arising from such claim, and (2) upon
becoming aware of any basis for a belief that the indemnifying
party will not be solely responsible for all such liabilities and
expenses, it will promptly notify such indemnified party in writing
thereof and offer to resign from such defense, and (y) the
indemnified person is reasonably satisfied that the indemnifying
party will have financial resources, or valid insurance, available
to satisfy such liabilities and expenses. The indemnifying party
will not be subject to any liability for any settlement made by the
indemnified party without its consent (but such consent may not be
unreasonably withheld, it being understood in any event that the
withholding of such consent shall be deemed to be unreasonable if
the indemnifying party fails to acknowledge in writing that it is
responsible for all liabilities and expenses arising from such
settlement). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party
a conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this
Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party
and will survive the transfer of securities. The Company also
agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the
Company's indemnification is unavailable for any reason.
7. Participation in Underwritten Registrations. No
Person may participate in any registration hereunder which is
underwritten unless such Person (a) agrees to sell such Person's
securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve
such arrangements and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms
of such underwriting arrangements; provided, that no holder of
Registrable Securities included in any underwritten registration
shall be required to make any representations or warranties to the
Company or the underwriters, or provide any indemnities, other than
representations, warranties and indemnities regarding such holder
and such holder's intended method of distribution, or to undertake
any indemnification or contribution obligations to the Company or
the underwriters with respect thereto, except as otherwise provided
in paragraph 6 hereof.
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8. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the
provisions of this Agreement will be in writing and will be deemed
to have been given when delivered personally, 5 business days after
being deposited with the U.S. Mail by certified or registered mail,
return receipt requested and postage prepaid, or one business day
after being deposited with a nationally recognized overnight
courier, or sent via confirmed facsimile to the recipient. Such
notices, demands and other communications will be sent to the
address indicated below:
Notices to the Company:
Peoples Telephone Company, Inc.
2300 N.W. 89th Place
Miami, Florida 33172
Attention: Robert D. Rubin
Telecopy: (305) 477-9890
with a Copy to:
Steel Hector & Davis
200 S. Biscayne Boulevard
Suite 4000
Miami, Florida 33131
Attention: Richard Lampen, Esq.
Telecopy: (305) 577-7001
Notices to the Purchasers:
Appian Capital Partners, L.L.C.
c/o Archon Capital Partners, L.P.
11111 Santa Monica Boulevard
Suite 1100
Los Angeles, California 90025
Attention: Ronald N. Beck
Telecopy: (310) 914-0470
UBS Partners, Inc.
299 Park Avenue
New York, New York 10171
Attention: Justin S. Maccarone
Telecopy: (212) 821-6333
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with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: John A. Weissenbach, Esq.
Telecopy: (312) 861-2200
or such other address or to the attention of such other person as
the recipient party shall have specified by prior written notice to
the sending party.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
enter into any agreement which is inconsistent with or violates the
rights granted to the holders of Registrable Securities in this
Agreement without the written consent of the holders of a majority
of Registrable Securities.
(b) Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights
specifically to recover damages caused by reason of any breach of
any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent
jurisdiction (without posting any bond or other security) for
specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
(c) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may be amended or
waived only upon the prior written consent of the Company and
holders of a majority of the Registrable Securities.
(d) Successors and Assigns. All covenants and
agreements in this Agreement by or on behalf of any of the parties
hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed
or not. In addition, whether or not any express assignment has
been made, the provisions of this Agreement which are for the
benefit of purchasers or holders of Registrable Securities are also
for the benefit of, and enforceable by, any subsequent holder of
Registrable Securities.
(e) Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be
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effective and valid under applicable law, but if any provision of
this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
(f) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need
not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
Agreement.
(g) Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(H) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF
LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date first above written.
PEOPLES TELEPHONE COMPANY, INC.
By: ---------------------------
Name:
Title:
UBS PARTNERS, INC.
By: ---------------------------
Name:
Title:
By: ---------------------------
Name:
Title:
APPIAN CAPITAL PARTNERS, L.L.C.
By: ---------------------------
Name:
Title:
