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): March 23, 1995
ULTIMATE ELECTRONICS, INC.
--------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-22532 84-0585211
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
321 West 84th Avenue, Suite A, Thornton, Colorado 80260
-------------------------------------------------------
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (303) 412-2525
Not Applicable
Former Name or Former Address if Changed Since Last Report
<PAGE>
ITEM 5. OTHER EVENTS
The executed Indenture, dated as of March 23, 1995, between the
Registrant and Colorado National Bank, as Trustee for the 10.25% First Mortgage
Bonds Due January 31, 2005 is hereby filed in place of the Form of Indenture
that was filed on March 14, 1995 with Amendment No. 3 to the Registrant's
Registration Statement on Form S-1 (File No. 33-88740) Commission.
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 hereunto duly authorized.
ULTIMATE ELECTRONICS, INC.
(Registrant)
Date: October 15, 1999 By: /s/ ALAN E. KESSOCK
--------------------------------------
Alan E. Kessock
Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
-2-
<PAGE>
EXHIBIT INDEX
4.1 Indenture, dated as of March 23, 1995, between Ultimate Electronics,
Inc. and Colorado National Bank, as Trustee for the 10.25% First
Mortgage Bonds Due January 31, 2005
-3-
INDENTURE dated as of March 23, 1995 between Ultimate Electronics,
Inc., a Delaware corporation (the "Company") and Colorado National Bank, a
national banking association, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10.25% First
Mortgage Bonds due 2005 of the Company (the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01 DEFINITIONS.
"Accounts" means the Cash Collateral Account and each Restoration
Collateral Account.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Appraisal Value" means, (i) as of any date of determination prior to
March 31, 2000, the appraised Use Value of the Mortgaged Property and (ii) as of
any date of determination on and after March 31, 2000, the appraised market
value (as defined in 12 Code of Federal Regulations ss. 722.2, as the same may
be modified, amended or superseded from time to time) of the Mortgaged Property,
in each case as evidenced by a certificate of an independent appraiser and
determined by an appraisal that, in the opinion of the appraiser, conforms to
the guidelines set forth in the Uniform Standards of Professional Appraisal
Practice, as adopted by the Appraisal Standards Board of the Appraisal
Foundation; provided that any Appraisal Value determined prior to the completion
of the improvements on the Mortgaged Property as certified by the Company to
Trustee pursuant to Section 11.04 hereof shall include any amounts in the
Accounts.
"Assignment" means each Conditional Assignment of Construction Contract
which may be executed and delivered by the Company pursuant to Section 4.15
hereof in substantially the form attached hereto as Exhibit C.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Business Day" means any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York or Denver, Colorado are
authorized or obliged by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized and reflected as a liability on
the balance sheet in accordance with GAAP.
<PAGE>
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, including,
without limitation, with respect to partnerships, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Cash Collateral Account" means the separate custodial account
established and maintained by the Company with the Collateral Agent, subject to
the security interest of the Trustee, for the benefit of the Holders pursuant to
Section 11.01.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any commercial bank having, at
the time of acquisition, capital and surplus in excess of $500,000,000 and a
Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) entered into with any financial institution
meeting the qualifications specified in clause (iii) above and (v) commercial
paper rated A-1, at the time of acquisition, or the equivalent thereof by
Moody's Investors Service or Standard & Poor's Rating Group and in each case
maturing within six months after the date of acquisition.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease or transfer, in one of a series of related transactions, of all
of substantially all of the Company's assets, other than in connection with a
merger or consolidation, to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than to the Principals or their Related
Parties (as defined below); (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company; (iii) any Person or group (as such
term is used in Section 13(d)(3) of the Exchange Act) (other than the Principals
and their Related Parties) becomes the "beneficial owner" (as defined in Rules
13d-d 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 upon the passage
of time, upon the happening of an event or otherwise) of more than 50% of the
voting power of the voting stock of the Company; (iv) any Person or group (other
than the Principals and their Related Parties) becomes the "beneficial owner" of
more of the voting power of the voting stock of the Company than the Principals
and their Related Parties or (v) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
For purposes of this definition, any transfer of an equity interest of an entity
that was formed for the purpose of acquiring voting stock of the Company shall
be deemed to be a transfer of such portion of such voting stock as corresponds
to the portion of the equity of such entity that has been so transferred.
"Collateral" means the property and assets, now owned or hereafter
acquired, of the Company, subject to the Liens created by this Indenture and the
Collateral Documents.
"Collateral Agent" means Colorado National Bank as collateral agent
with respect to the accounts and any successor thereto, or any other person
appointed by the Trustee as a collateral agent hereunder.
"Collateral Documents" means, collectively, the Deed of Trust, each
Assignment and any other agreement, instrument, financing statement or other
document that evidences, sets forth or limits the Lien of the Trustee in the
Collateral.
-2-
<PAGE>
"Company" means Ultimate Electronics Inc., a Delaware corporation,
until a successor replaces it in accordance with the applicable provisions of
this Indenture, and thereafter means such successor.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income of any Person that is not a Subsidiary or that
is accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid to the referent
Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any Person
that is a Subsidiary (other than a Subsidiary of which at least 80% of the
capital stock having ordinary voting power for the election of directors or
other governing body of such Subsidiary is owned by the referent Person directly
or indirectly through one or more Subsidiaries) shall be included only to the
extent of the amount of dividends or distributions paid to the referent Person
or a Wholly Owned Subsidiary thereof, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded and (iv) the cumulative effect of a change
in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries and (z) all unamortized debt discount and expense and
unamortized deferred charges as of such date, all of the foregoing determined in
accordance with GAAP.
"Consolidated Total Capitalization" means the sum of the Company's
Consolidated Net Worth and Total Funded Indebtedness.
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of the
Board of Directors on the date of the Indenture or (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.02 or such other address as the Trustee may give
notice to the Company.
"Credit Agreement" means that certain Credit Agreement, as amended,
dated as of September 20, 1994, by and between the Company and Norwest Bank
Colorado, National Association, providing for up to the lesser of $15 million or
50% of inventory of revolving credit borrowings, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time.
"Deed of Trust" means the Deed of Trust, Assignment of Rents and
Security Agreement, dated as of March 23, 1995 in substantially the form
attached hereto as Exhibit B, as the same may be amended, supplemented or
modified from time to time in accordance with its terms or the terms of the
Indenture.
-3-
<PAGE>
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to January
31, 2005.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended.
"Force Majeure" means war, civil disturbance, riot, fire, flood,
casualty, strikes, lockouts, labor disputes, compliance with or other action
taken to carry out the intent or purpose of any act, law, rule, regulation,
order or decree of any governmental agency, any department or subdivision
thereof or any court or other judicial or quasi-judicial body, or any other
emergency, cause or event beyond the reasonable control of the Company.
"Funded Indebtedness" means (i) all Indebtedness of the Company and its
Subsidiaries maturing by its terms more than one year after the date as of which
such amount is being determined, or which is renewable or extendable for such
period at the option of the Company or any such Subsidiary (other than
intercompany Indebtedness between or among the Company and any of its Wholly
Owned Subsidiaries) and (ii) any preferred stock issued by the Company or any of
its Subsidiaries, to the extent set forth on the balance sheet of the Company or
any of its Subsidiaries, prepared in accordance with GAAP.
"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 have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or representing the
balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such person prepared in accordance with
GAAP, as well as indebtedness of others secured by a Lien or any asset of such
Person (whether or not such indebtedness is assumed by such person) and to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person.
-4-
<PAGE>
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such property or asset, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Mortgaged Property" means the Collateral subject to the Liens created
by the Deed of Trust.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any asset sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (b)
the disposition of any securities or the extinguishment of any Indebtedness of
such Person or any of its Subsidiaries, and (ii) any extraordinary gain (but not
loss), together with any related provision for taxes on such extraordinary gain
(but not loss).
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any indebtedness.
"Officer" means any of the Chairman of the Board, the President, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, Controller,
Secretary or any Vice-President of the Company.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the principal executive officer, principal financial officer or
principal accounting officer of the Company.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
-5-
<PAGE>
"Pearse Family Trusts" means
1992 William James Pearse, III Trust No. 1
Alan E. Kessock, Trustee
1992 William James Pearse, III Trust No. 2
Alan E. Kessock, Trustee
1992 Megan Pearse, Trust No. 1
Alan E. Kessock, Trustee
1992 Megan Pearse, Trust No. 2
Alan E. Kessock, Trustee
1992 Bradford Pearse, Trust No. 1
Alan E. Kessock, Trustee
1992 Bradford Pearse, Trust No. 2
Alan E. Kessock, Trustee
"Permitted Encumbrances" means (i) Liens on the Collateral created by
the Collateral Documents, (ii) mechanics', materialmen's, suppliers' or
contractors' Liens arising in the ordinary course of business, as long as the
Company complies with the provisions of the Collateral Documents relating to the
removal of such Liens, (iii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent and (iv) other Liens expressly
permitted by the Collateral Documents.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal Operations Office of Trustee" shall be at the address of the
Trustee specified in Section 12.02 or such other address as to which the Trustee
may give notice to the Company.
"Principals" means Williams J. Pearse and Barbara A. Pearse.
"property" means any right, or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible,
intangible, contingent, indirect or direct.
"Related Party" means, as to any Principal, (a) any spouse of such
Principal, (b) any child of such Principal, (c) each of the Pearse Family Trusts
(including any trustee thereof acting in his or her capacity as such), (d) any
trust (including any trustee thereof acting in his or her capacity as such),
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or any Person described in
clauses (a) or (b) above or (e) any estate of such Principal or any Persons
described in clauses (a) or (b) above (including any executor, administrator or
personal representative thereof acting in his or her capacity as such).
"Restoration Collateral Account" means a separate custodial account
which may be established and maintained by the Company with the Collateral
Agent, subject to the security interest of the Trustee, for the benefit of the
Holders pursuant to Section 11.01 and the Deed of Trust.
-6-
<PAGE>
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"Total Indebtedness" means (i) Funded Indebtedness, excluding therefrom
any Funded Indebtedness under revolving credit facilities, (ii) an amount equal
to the lowest average outstanding balance (excluding letters of credit) for any
30 consecutive days under all revolving credit facilities of the Company or its
Subsidiaries for the four full fiscal quarters immediately preceding the date of
determination and (iii) an amount equal to 50% of the lowest average outstanding
obligations for any 30 consecutive days under letters of credit issued or
guaranteed by the Company or its Subsidiaries for the four full fiscal quarters
immediately preceding the date of determination.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Trust Officer" means any Senior Vice President, Vice President,
Assistant Vice President, Secretary or any other officer or assistant officer of
the Trustee assigned by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means direct obligations of the United
States of America, or any agency or instrumentality thereof, for the payment of
which the full faith and credit of the United States of America is pledged.
"Use Value" means the value that a specific property has for a specific
use, without regard to such property's highest and best use or the monetary
amount that might be realized upon its sale.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such person or by one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction".............................. 4.09
"Bankruptcy Law"..................................... 6.01
"Change of Control Date"............................. 4.11
"Change of Control Offer"............................ 4.11
"Change of Control Payment Date"..................... 4.11
-7-
<PAGE>
"covenant defeasance"................................ 8.01
"Custodian".......................................... 6.01
"defeasance trust"................................... 8.02
"Event of Default"................................... 6.01
"legal defeasance"................................... 8.01
"Legal Holiday"...................................... 12.07
"Paying Agent"....................................... 2.03
"Project Disbursement"............................... 11.02
"Project Disbursement Date".......................... 11.02
"Payment Default".................................... 6.01(5)
"Registrar".......................................... 2.03
"Restricted Payments"................................ 4.07
"Securities".........................................
preface
"Securities Register"................................ 2.03
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company and any successor
obligor.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
-8-
<PAGE>
(5) the male, female and neuter genders include one another; and
(6) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto which is incorporated in and made
a part of this Indenture. Subject to Section 2.07 hereof, the Securities shall
be in an aggregate principal amount of $13,000,000. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
principal denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture. To the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Subject to the terms and conditions of this Indenture, payment of the
principal of and any interest on any Security, as the case may be, shall be made
to the Holder thereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Security has been authenticated under this Indenture. The form
of Trustee's certificate of authentication to be borne by the Securities shall
be substantially as set forth in Exhibit A hereto.
The Trustee, upon a written order of the Company signed by an Officer
of the Company shall authenticate Securities for original issue up to an
aggregate principal amount as stated in Section 2.01 hereof. Thereafter, upon
such an order, the Trustee shall authenticate Securities as provided herein. The
aggregate principal amount of Securities outstanding at any time may not exceed
such amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate.
-9-
<PAGE>
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Securities may
be presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Securities may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange (the "Securities Register"). The Company may appoint one
or more co-Registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to any Holder. The Company shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent, Registrar or co-Registrar, except that
for purposes of Articles 3 and 8 and Section 4.11 neither the Company nor any of
its Subsidiaries shall act as Paying Agent.
The Company initially appoints the Trustee as Registrar and Paying
Agent and agent for service of notices and demands in connection with the
Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal or interest on the Securities, and will notify the Trustee of any
default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a Subsidiary of the Company) shall have no further
liability for the money delivered to the Trustee. If the Company or a Subsidiary
of the Company acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders or the Trustee all money held by it as
Paying Agent.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before each interest payment date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders.
SECTION 2.06. TRANSFER AND EXCHANGE.
When Securities are presented to the Registrar or a co-Registrar with a
request to register, transfer or exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met; provided,
however, that any Security presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar and the Trustee duly executed by
the Holder thereof or by his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall issue and the Trustee
shall authenticate Securities at the Registrar's request, subject to such rules
as the Trustee may reasonably require.
Neither the Company nor the Registrar shall be required (i) to issue,
register the transfer of or exchange Securities during a period beginning at the
opening of business on a Business Day 15 days before the day of any selection of
Securities for redemption under Section 3.02 and ending at the close of business
on the day of
-10-
<PAGE>
selection, (ii) to register the transfer of or exchange any Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part, or (iii) to register the transfer or exchange
of a Security between a record date and the next succeeding interest payment
date.
No service charge shall be made to any Holder for any registration of
transfer or exchange (except as otherwise expressly permitted herein), but the
Company may require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than such
transfer tax or similar governmental charge payable upon exchanges pursuant to
Sections 2.10, 3.06 or 9.05 hereof, which charges shall be paid by the Company).
Prior to due presentment for registration of transfer or exchange of
any Security, either the Trustee, any Agent, or the Company may deem and treat
the person in whose name any Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of and interest
on such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
SECTION 2.07. REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Trustee, or the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Security, the Company shall issue and the Trustee shall
authenticate (upon receipt of a written order of the Company signed by two
Officers instructing it to do so) a replacement Security if the Trustee's
requirements for replacements of Securities are met. If required by the Trustee
or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent or any authenticating agent from any loss that
any of them may suffer if a Security is incorrectly replaced. The Company and
the Trustee may charge for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
SECTION 2.08. OUTSTANDING SECURITIES.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the principal amount of any Security is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If a Paying Agent holds, on a redemption date, repurchase date or
maturity date, money sufficient to pay Securities payable on that date, then on
and after that date such Securities shall be deemed no longer outstanding and
shall cease to accrue interest.
Except as set forth in Section 2.09 hereof, a Security does not cease
to be outstanding because the Company or an Affiliate of the Company holds the
Security.
-11-
<PAGE>
SECTION 2.09. TREASURY SECURITIES.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer knows to be so owned shall be so considered.
SECTION 2.10. TEMPORARY SECURITIES.
Until final certificates representing Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of the
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate (upon receipt of a written order in accordance
with Section 2.02 hereof) final Securities in exchange for temporary Securities
if any are issued. Until such exchange, temporary Securities shall be entitled
to the same rights, benefits and privileges as final Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and, unless otherwise
directed by the Company, shall destroy cancelled Securities. The Company may not
issue new Securities to replace Securities that they have redeemed or paid or
delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Securities and in Section 4.01 hereof. The Company shall promptly fix
each such special record date and payment date and if the Company does not
promptly fix any such special record date and payment date the Trustee may fix
such dates. At least 15 days before any such special record date, the Company
(or the Trustee, in the name of and at the expense of the Company) shall mail to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The Company may fix a record date for purposes of determining the
identity of Holders entitled to vote or consent to any action authorized or
permitted under this Indenture. If the Company fixes a record date, the record
date shall be fixed at (i) the later of 30 days prior to the first solicitation
of such vote or consent or the date of the most recent list of Holders furnished
to the Trustee prior to such solicitation pursuant to Section 2.05 or (ii) such
other date as the Company shall designate.
-12-
<PAGE>
ARTICLE 3
REDEMPTIONS AND OFFERS TO PURCHASE
SECTION 3.01. NOTICES TO TRUSTEE.
Pursuant to Sections 4.4 and 4.8 of the Deed of Trust, in the event of
a casualty or condemnation affecting the Mortgaged Property, the Company may
elect, or may be required, to redeem all or a portion of the Securities. If the
Company elects, or is required, to redeem Securities pursuant to the Deed of
Trust or the optional redemption provisions of Section 3.07 hereof, it shall
furnish to the Trustee, at least 45 days but not more than 60 days before a
redemption date (unless a shorter notice period shall be satisfactory to the
Trustee), an Officers' Certificate setting forth (i) the Section of this
Indenture and/or the Deed of Trust pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Securities to be
redeemed, and (iv) the redemption price and (v) certification as to the
Company's compliance with any restrictions on and conditions to such redemption
set forth in the Deed of Trust and this Indenture.
If the Company is required to make an offer to purchase Securities
pursuant to the provisions of Section 4.11, it shall furnish to the Trustee, at
least 30 days before the scheduled purchase date, an Officers' Certificate
setting forth (i) the Section of this Indenture pursuant to which the offer to
purchase shall occur, (ii) the offer's terms, (iii) the purchase price, (iv) the
principal amount of the Securities to be purchased and (v) a statement to the
effect that a Change of Control has occurred.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to the mandatory redemption provisions of Section 3.08
hereof by crediting against any such redemption Securities it has not previously
delivered to the Trustee for cancellation, at least 45 days but not more than 60
days before a redemption date, it shall notify the Trustee of the amount of the
reduction and shall deliver the Securities to be credited with the Officers'
Certificate referred to in Section 3.08 hereof.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED OR PURCHASED.
If less than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed on a pro rata basis, by lot or by
such other method as the Trustee shall deem fair and appropriate (and in such
manner as complies with applicable legal and stock exchange requirements). In
the event of partial redemption, other than pro rata, the particular Securities
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Securities not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Security selected for
partial redemption, the principal amount thereof to be redeemed. Securities and
portions of them selected shall be in principal amounts of $1,000 or whole
multiples of $1,000; except that if all of the Securities of a Holder are to be
redeemed, the entire outstanding principal amount of Securities held by such
Holder shall be redeemed or purchased. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail, by first class mail, a notice of redemption to each
Holder whose Securities are to be redeemed at its registered address.
-13-
<PAGE>
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date upon surrender of such Security, a new Security of the same
series in principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the redemption date;
(7) the paragraph of the Securities and/or Section of this Indenture
and/or Deeds of Trust pursuant to which the Securities called for
redemption are being redeemed; and
(8) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least five Business Days prior
to the date such notice is to be given, an Officers' Certificate requesting that
the Trustee give such notice and setting forth the information to be stated in
such notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Securities called for redemption become due and payable on the
redemption date at the redemption price. On and after the redemption date,
unless the Company defaults in the payment of the redemption price, interest
will cease to accrue on the Securities or portions of them called for redemption
and all rights of Holders of such Securities will terminate except for the right
to receive the redemption price.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
At least one Business Day before the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money in immediately available
funds sufficient to pay the redemption price of and, if applicable, accrued
interest on all Securities to be redeemed on that date. The Trustee or the
Paying Agent shall return to the Company any money deposited with the Trustee or
the Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Securities to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
interest on the Securities or the portions of Securities to be redeemed will
cease to accrue on the applicable redemption date, whether or not such
Securities are presented for payment. If any Security called for redemption
shall not be so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest
-14-
<PAGE>
will be paid on the unpaid principal, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, from the redemption date until such unpaid interest is paid,
in each case at the rate provided in the Securities and in Section 4.01 hereof.
SECTION 3.06. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
From and after March 31, 2000, the Securities may be redeemed at the
option of the Company in whole or in part, upon not less than 30 nor more than
60 days' written notice, at 100% of principal amount, plus accrued and unpaid
interest thereon to the applicable redemption date.
Any redemption pursuant to this Section 3.07 shall be made, to the
extent applicable, pursuant to the provisions of Sections 3.01 through 3.06
hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Securities are subject to mandatory redemption by the Company on
January 31 in each of the years 2002, 2003, 2004 and 2005. The Company will
redeem $3,250,000 principal amount of Securities on each such date at a
redemption price equal to 100% of the aggregate principal amount thereon plus
accrued interest to the date of redemption.
Mandatory redemptions shall be made by depositing immediately available
funds sufficient therefor with the Paying Agent one Business Day prior to
January 31 in each of the years 2002, 2003, 2004 and 2005. Mandatory redemptions
shall be made by the Trustee in the manner set forth in Section 3.02 hereof and
notice shall be made by the Company in the manner set forth in Section 3.03
hereof.
In satisfaction of all or part of any future mandatory redemptions with
respect to Securities, the Company may elect to credit against such redemptions
an amount equal to 100% of the principal amount of any Securities that the
Company has acquired (otherwise than pursuant to this Section 3.08 or 4.11
hereof or pursuant to the Deed of Trust) and delivered to the Trustee for
cancellation and not previously applied as a credit against any mandatory
redemption payments. Securities shall be applied pro rata based upon the
principal amount to be redeemed or paid on each mandatory redemption payment
date or the maturity date, against (a) all mandatory redemption payments to be
made in such year and in all subsequent years and (b) the principal payment due
under this Indenture and the Securities upon maturity thereof as provided in the
Officers' Certificate described in the next sentence. The Company shall, no
later than December 15 in the year prior to the year in which the mandatory
redemption payment is required, provide the Trustee with an Officers'
Certificate stating that (i) the application of such Securities to the mandatory
redemption payment complies with the provisions of this Section 3.08 and stating
(ii) the aggregate principal amount of Securities to be credited against
mandatory redemption payments and (iii) the principal amount of such Securities
to be credited to the next mandatory redemption payment and to all subsequent
mandatory redemption payments due on the Securities, and the Company shall
deliver the Securities that are to be so credited to the Trustee with such
Officers' Certificate (if not previously delivered to the Trustee for
cancellation) for retention and credit in accordance with such Officers'
Certificate.
-15-
<PAGE>
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. Principal and
interest shall be considered paid on the date due if the Paying Agent, if other
than the Company or a Subsidiary of the Company, holds on that date money
deposited by the Company in immediately available funds and designated for and
sufficient to pay all principal and interest then due.
The Company shall pay interest (including post-petition interest) on
overdue principal at the interest rate on the Securities to the extent lawful;
the Company shall pay interest (including post-petition interest) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Denver metropolitan area an office or
agency (which may be an office or agency of the Trustee, Registrar or
co-Registrar) 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 Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such notices and demands may be made or served at the Corporate
Trust Office of the Trustee and such presentations and surrenders may be made or
served at the Principal Operations Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. REPORTS.
(a) So long as any of the Securities remain outstanding, the Company
shall file with the Trustee within 15 days after the filing thereof 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 rule and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act, other than those documents
or reports filed with the SEC on a confidential basis. All obligors on the
Securities shall comply with the provisions of TIA ss. 314(a). If the Company is
at any time not required to file annual or quarterly reports pursuant to Section
13 or 15(d) of the Exchange Act, the Company will file with the Trustee, within
15 days after the last date on which it would have been required to make such a
filing with the SEC, audited annual financial statements or unaudited quarterly
financial statements, as the case may be. Such financial statements shall be
accompanied by a Management's Discussion and Analysis of Financial Condition and
Results of Operations of the Company for the period reported upon in
substantially the form required under the rules and regulations of the SEC, or
any successor form of similar disclosure then required under the rules and
regulations of the SEC and, with respect to the annual information only, a
report thereon by the Company's
-16-
<PAGE>
independent accountants. Each of such reports will be prepared in accordance
with GAAP. The Company also shall file with the Trustee, within 15 days after
the last date on which it would have been required to make such a filing with
the SEC, all reports that would be required to be filed with the SEC on Form 8-K
if the Company were required to file such reports.
(b) The Trustee, at the Company's expense, will promptly mail copies of
such annual reports, information, documents and other reports filed with the
Trustee pursuant to Section 4.03(a) to the Holders at their addresses appearing
in the register of Securities maintained by the Registrar.
(c) If the Company is not required to file such annual reports,
information, documents and other reports with the SEC, the Company shall, after
the dates for filing set forth above, promptly upon written request make copies
of such annual reports, information, documents and other reports available to
prospective purchasers of the Securities, and to securities analysts and
broker-dealers upon their request.
(d) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Trustee may
be required to deliver to the Holders under this Section 4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether each of the Company and its Subsidiaries has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that, to the best of
his or her knowledge, each of the Company and its Subsidiaries has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action each of the Company and its
Subsidiaries is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if any, on
the Securities are prohibited or if such event has occurred, a description of
the event and what action each is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the financial statements
delivered pursuant to Section 4.03 above shall be accompanied by a written
statement of the Company's independent public accountants (who shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
that would lead them to believe that the Company has violated any provisions of
Section 4.01, 4.07, 4.08, 4.09, 4.10 or 4.11 hereof or of Article 5 of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any person for any failure to obtain
knowledge of any such violation.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of (i) any Default or Event of Default or (ii) any event of default under any
other mortgage, indenture or instrument which with the passage of time or giving
of notice would be a Default or an Event of Default under Section 6.01(5)
hereof, an Officers' Certificate specifying such Default, Event of Default or
event of default and what action the Company is taking or proposes to take with
respect thereto.
-17-
<PAGE>
SECTION 4.05. TAXES.
The Company shall, and shall cause each of its Subsidiaries to, pay
prior to delinquency, all material taxes, assessments, and governmental levies
except as contested in good faith and by appropriate proceedings.
SECTION 4.06. [INTENTIONALLY DELETED]
SECTION 4.07. LIMITATION ON RESTRICTED PAYMENTS.
Subject to the other provisions of this Section 4.07, the Company will
not, and will not permit any of its Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any distribution on account of
the Company's Equity Interests (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any wholly owned Subsidiary of the
Company); or
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any Subsidiary or other Affiliate of the
Company (other than any such Equity Interests owned by the Company or any wholly
owned Subsidiary of the Company); (all such payments and other actions set forth
in clauses (i) and (ii) above being collectively referred to as "Restricted
Payments"), unless at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Subsidiaries after the
date of the Indenture, is less than the sum of (X) 50% of the
Consolidated Net Income of the Company subsequent to January 31, 1995
(or, if such Consolidated Net Income for such period is a deficit, minus
100% of such deficit), plus (Y) 100% of the aggregate net cash proceeds
received by the Company from the issue or sale since the date of this
Indenture of Equity Interests of the Company, or of debt securities of
the Company that have been converted into such Equity Interests (other
than Equity Interests (or convertible debt securities) sold to a
Subsidiary of the Company and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock).
Notwithstanding the foregoing, the provisions of this Section 4.07 will
not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would
have complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the
proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of the Company
(other than any Disqualified Stock);
(3) the declaration and payment of any dividend on preferred
stock issued by the Company pursuant to the instrument creating or
evidencing such indebtedness; provided that the preferred stock on which
such dividend shall be paid was issued in compliance with Section 4.08
hereof; and
-18-
<PAGE>
(4) the repurchase, redemption or other acquisition or retirement
for value of any Equity Interests of the Company or any Subsidiary of
the Company held by any member of the Company's (or any of its
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the date of the
Indenture; provided, however, that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $500,000 in any twelve-month period, which amounts shall accrue
yearly if not paid out in any twelve-month period, plus the aggregate
cash proceeds received by the Company during such twelve month period
from any reissuance of Equity Interests by the Company to members of
management of the Company and its Subsidiaries; and no Default or Event
of Default shall have occurred and be continuing immediately after such
transaction.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the above described covenant relating to "Restricted
Payments" were computed, which calculations may be based upon the Company's
latest available financial statements.
SECTION 4.08. LIMITATION ON ADDITIONAL FUNDED INDEBTEDNESS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Funded Indebtedness if the ratio of Total
Funded Indebtedness to Consolidated Total Capitalization exceeds .60 to 1.0 for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Funded Indebtedness is incurred, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom) as if the
additional Funded Indebtedness had occurred at the end of such four-quarter
period.
SECTION 4.09. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
such Affiliate Transaction is on terms that are no less favorable to the Company
or the relevant Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
person; provided that an Affiliate Transaction shall be deemed to be on terms no
less favorable to the Company or such Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Subsidiary with an
unrelated Person if the transaction has been approved by a resolution adopted by
the Board of Directors with the favorable vote of a majority of the Company's
directors who have no financial or other material interest in the transaction;
provided, further, that (i) any employment agreement entered into by the Company
or any of its Subsidiaries in the ordinary course of business; (ii) transactions
between or among the Company and/or its Subsidiaries and (iii) transactions
permitted by Section 4.07 hereof, in each case, shall not be deemed Affiliate
Transactions.
SECTION 4.10. LIMITATION ON LIENS.
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly create, incur, assume or suffer to exist any Lien on
all or any portion of the Collateral which is senior to or pari passu with the
Liens on the Collateral created by the Collateral Documents, other than
Permitted Encumbrances.
-19-
<PAGE>
SECTION 4.11. CHANGE OF CONTROL.
Following the occurrence of any Change of Control, the Company shall
notify the Holders in writing of such occurrence and shall make an offer to
purchase (as the same may be extended in accordance with applicable law, the
"Change of Control Offer") all then outstanding Securities at a price equal to
100% of the aggregate principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of purchase. Within 10 days following any Change of
Control, the Company shall mail a notice to each Holder, with a copy to the
Trustee and the Paying Agent, with the following information: (a) a Change of
Control Offer is being made pursuant to this Section and all Securities properly
tendered pursuant to such Change of Control Offer will be accepted for payment;
(b) the purchase price and the purchase date, which shall be no earlier than 30
days nor later than 40 days from the date such notice is mailed, except as may
be otherwise required by applicable law (the "Change of Control Payment Date");
(c) any Security not properly tendered will remain outstanding and continue to
accrue interest; (d) unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control Payment
Date; (e) Holders electing to have any Securities purchased pursuant to a Change
of Control Offer will be required to surrender the Securities, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Securities
completed, to the Paying Agent at the address specified in the notice prior to
the close of business on the third Business Day preceding the Change of Control
Payment Date; (f) Holders will be entitled to withdraw their tendered Securities
and their election to require the Company to purchase the Securities provided
that the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Securities tendered for purchase, and a statement that
such Holder is withdrawing his tendered Securities and his election to have such
Securities purchased; and (g) that Holders whose Securities are being purchased
only in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
The Company shall comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable, in the event that a Change of Control occurs and the
Company is required to repurchase the Securities pursuant to this Section 4.11.
On the Change of Control Payment Date, the Company will, to the extent
permitted by law, (x) accept for payment all Securities or portions thereof
properly tendered pursuant to the Change of Control Offer, (y) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Securities or portions thereof so tendered and (z) deliver, or
cause to be delivered, to the Trustee for cancellation the Securities so
accepted together with an Officers' Certificate stating that such Securities or
portions thereof have been tendered to and purchased by the Company. The Paying
Agent shall promptly mail to each Holder of Securities so accepted for payment a
check in an amount equal to the aggregate purchase price of the Securities
purchased by the Company from such Holder, and the Trustee shall promptly
authenticate and mail to each Holder a new Security equal in principal amount to
any unpurchased portion of the Securities surrendered, if any; provided,
however, that each such new Security shall be in a principal amount of $1,000 or
an integral multiple thereof. The Company will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
SECTION 4.12. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the
-20-
<PAGE>
Securities unless such consideration is offered to be paid or agreed to be paid
to all holders of the Securities that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.13. MAINTENANCE OF INSURANCE.
Until the Securities have been paid in full, the Company shall, and
shall cause its Subsidiaries, to maintain insurance with responsible carriers
against such risks and in such amounts as is customarily carried by similar
businesses with such deductibles, retentions, self insured amounts and
coinsurance provisions as are customarily carried by similar businesses of
similar size, including, without limitation, property and casualty loss.
Notwithstanding the foregoing, customary insurance coverage for the purposes of
the Indenture shall include the following: (i) casualty insurance on the
Mortgaged Property in an amount at least equal to the principal amount of the
Securities from time to time outstanding and (ii) business interruption
insurance on the Mortgaged Property (so long as such Mortgaged Property is
subject to the Liens created by the Collateral Documents). With respect to the
insurance described in clauses (i) and (ii) of this Section 4.13, the Company
shall provide satisfactory evidence of such insurance to the Trustee prior to
the anniversary or renewal date of each such policy, which certificate shall
expressly state such expiration date for each policy listed. All insurance under
this provision covering Mortgaged Property shall name the Trustee as an
additional insured or mortgagee under a standard mortgagee clause, as
applicable. All such insurance shall be issued by carriers having an A.M. Best &
Company, Inc. rating of A- or higher and a financial size category of not less
than XII, or if such carrier is not rated by A.M. Best & Company, Inc., having
the financial stability and size deemed appropriate by the Company after
consultation with a reputable insurance broker; provided, however, that if the
carrier that issued the insurance required by this Section fails to meet the
requirements of this Section after the issuance of such insurance, the Company
shall have 90 days from the date it becomes aware of such failure to replace
such insurance with insurance issued by a carrier that does meet the
requirements of this Section. The Company will furnish to the Trustee within
thirty days of each anniversary of the date of this Indenture evidence of
compliance with this Section 4.13 from an insurance broker or consultant.
SECTION 4.14. COLLATERAL DOCUMENTS.
Neither the Company nor any Subsidiary of the Company will amend, waive
or modify, or take or refrain from taking any action which has the effect of
amending, waiving or modifying, any provision of the Collateral Documents to the
extent that such amendment, waiver, modification or action would have an adverse
effect on the rights of the Trustee or the Holders of Securities (as provided in
the Collateral Documents); provided, however, that:
(1) Collateral may be released as expressly provided herein and in the
Collateral Documents; and
(2) this Indenture and any of the Collateral Documents may be otherwise
amended, waived or modified pursuant to Article 9 hereof.
SECTION 4.15. ASSIGNMENT OF CONSTRUCTION CONTRACTS; LIEN ON ADDITIONAL
PROPERTY; FURTHER ASSURANCES.
To the extent assignable, the Company hereby assigns to the Trustee for
the equal and ratable benefit of the Holders and grants in favor of the Trustee
for the equal and ratable benefit of the Holders a security interest in all
contracts, now existing or hereinafter entered into by the Company, for the
initial construction of improvements on the Mortgaged property. The Company
agrees that it will use its reasonable efforts to obtain the consent of any
party with whom it enters into a contract for construction of improvements on
the Mortgaged
-21-
<PAGE>
Property to the foregoing assignment and that within ten days after the
execution of any contract by it for the initial construction of improvements on
the Mortgaged Property it will execute and will use its reasonable efforts to
have the contractor under any such contract execute a Conditional Assignment of
Construction Contract in substantially the form attached hereto as Exhibit C.
The Company agrees that, contemporaneously with its acquisition of
title to the real property described on Exhibit D hereto (the "Miller Trust
Property"), it will execute and deliver to the Trustee an amendment or
supplement to the Deed of Trust and such other documents as are necessary to
extend the Lien created by the Deed of Trust to the Miller Trust Property,
insured by Stewart Title Guaranty Company, subject only to exceptions that do
not differ materially from the exceptions contained in the Policy of Title
Insurance delivered by Stewart Title Guaranty Company with respect to the
Mortgaged Property as of the date of this Indenture.
The Company and the Subsidiaries of the Company shall do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates, financing statements
and continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments as may be required
from time to time in order to (i) carry out more effectively the purposes of the
Collateral Documents, (ii) subject to the Liens created by any of the Collateral
Documents any of the properties, rights or interests intended to be covered by
any of the Collateral Documents, (iii) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the Trustee any of the rights granted
or now or hereafter intended to be granted to the Trustee hereunder or under any
other instrument executed in connection therewith or granted to the Company
under the Collateral Documents or under any other instrument executed in
connection therewith.
SECTION 4.16. MAINTENANCE OF PROPERTIES AND CORPORATE EXISTENCE.
The Company shall, and shall cause each of its Subsidiaries to,
maintain its properties and assets in good working order and condition and make
all necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, except as provided in the Collateral Documents and in such
cases where the Board of Directors determines that it would not be in the best
interests of the Company and would not have a material adverse impact on the
Holders.
Subject to Article 5, the Company shall, and shall cause each of its
Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence, rights and franchises, except in
such cases where the Board of Directors determines that it would not have a
material adverse effect on the business, prospects, earnings, properties, assets
or condition, financial or otherwise, of the Company and its Subsidiaries, taken
as a whole, and would not have a materially adverse impact on the Holders.
The Company shall, and shall cause each of its Subsidiaries to, comply
with all statutes, laws, ordinances, or government rules and regulations to
which it is subject, noncompliance with which would materially adversely affect
the business, prospects, earnings, properties, assets or condition, financial or
otherwise, of the Company and its Subsidiaries, taken as a whole.
SECTION 4.17. CONSTRUCTION.
The Company shall cause the development and construction of the
improvements on the Mortgaged Property to be prosecuted with diligence and
continuity in a good workmanlike manner consistent with
-22-
<PAGE>
the description of such properties in the Registration Statement of the Company
used in connection with the offer and sale of the Securities. The Company shall
seek to enforce diligently all construction contracts for the Mortgaged Property
as the same may be in effect from time to time.
ARTICLE 5
SUCCESSORS
SECTION 5.01. WHEN THE COMPANY MAY MERGE, ETC.
The Company may not consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another
corporation, Person or entity unless:
(i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia;
(ii) the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person
to which such sale, assignment, transfer, lease, conveyance or other
disposition will have been made assumes all the obligations of the Company
under the Securities, this Indenture and the Collateral Documents pursuant
to a supplemental indenture and other documents or instruments in a form
reasonably satisfactory to the Trustee;
(iii) immediately after such transaction no Default or Event of
Default exists;
(iv) the Company, or any entity or Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made shall have
Consolidated Net Worth (immediately after the transaction but prior to any
purchase accounting adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of the Company immediately
preceding the transaction; and
(v) the Company shall have delivered to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate and an
Opinion of Counsel to the combined effect that such sale, assignment,
transfer, lease, conveyance or other disposition, and, if applicable, any
supplemental indenture executed in connection therewith, comply with this
Indenture.
The Trustee shall be entitled to conclusively rely upon such Officers'
Certificate and Opinion of Counsel.
SECTION 5.02. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01, the successor formed by such consolidation or into
or with which the Company, as the case may be, is merged or to which such sale,
lease, conveyance or other disposition is made, or formed by such
reorganization, as the case may be, shall succeed to, and be substituted for,
and may exercise every right, power and obligation of, the Company, under this
Indenture, the Securities and the Collateral Documents with the same effect as
if such successor person had been named as the Company, herein or therein.
-23-
<PAGE>
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default under this
Indenture:
(1) default for 15 days in the payment when due of interest on the
Securities;
(2) default in payment when due and payable, upon redemption or
otherwise, of principal on the Securities;
(3) failure by the Company to comply with Sections 4.07, 4.08 or 4.11
of this Indenture or 5.4 of the Deed of Trust;
(4) failure by the Company for 45 days after receipt from the Trustee,
or the Holders of at least 25% in principal amount of the Securities, of
written notice to comply with other agreements or covenants in, or
provisions of, the Securities, this Indenture or the Collateral Documents
(in each case other than a covenant, agreement or provision a default in
whose performance or whose breach is specifically addressed elsewhere in
this Section);
(5) default under any deed of trust, mortgage, indenture or instrument
under which there is issued or by which there is secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries
(or the payment of which is guaranteed by the Company, or any of its
Subsidiaries), whether such Indebtedness or guarantee now exists or is
created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more;
(6) failure by the Company or any Subsidiary of the Company to pay
final judgments aggregating in excess of $250,000, which final judgments
remain unpaid, undischarged and unstayed for a period of more than 60 days;
(7) an event of default under any Collateral Document which continues
for a period of 45 days after receipt from the Trustee, or the Holders of
at least 25% in principal amount of the Securities, of written notice or
the unenforceability of any Collateral Document against the Company for any
reason and such enforceability exists for a period of 90 days after the
date the Company becomes aware of the unenforceability;
(8) any Collateral Document fails to become or ceases to be in full
force and effect (other than in accordance with its terms) or ceases (once
effective) to create in favor of the Trustee a valid and perfected first
priority Lien on the Collateral to be covered thereby (unless a prior or
exclusive Lien is specifically permitted by the Indenture or such
Collateral Documents);
-24-
<PAGE>
(9) failure of the Company or any of its Subsidiaries to continue to
operate the Mortgaged Property, other than the retail store, prior to March
31, 2000;
(10) failure by the Company to complete the construction of the
improvements on the Mortgaged Property in accordance with plans and
specifications in effect on the date of this Indenture (which plans and
specifications may be amended, modified or supplemented from time to time),
by December 31, 1996, unless such failure is due solely to Force Majeure.
Such completion shall be evidenced by an Officers' Certificate containing
the certifications set forth in Section 11.04;
(11) the Company, pursuant to or within the meaning of any Bankruptcy
Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all
or substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
(12) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief in an involuntary case against the Company,
(b) appoints a Custodian of the Company, or for all or
substantially all of the property of the Company,
(c) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 60 consecutive
days.
The term "Bankruptcy Law" means, title 11, U.S. Code or any similar
federal or state law for the relief of debtors, each as amended from time to
time. The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clauses (11) and (12) of Section 6.01) occurs and is continuing, the Trustee by
written notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the then outstanding Securities by written notice to the
Company and the Trustee, may declare all Securities to be due and payable
immediately. Upon the effectiveness of such declaration, all amounts due and
payable on the Securities, as determined in the succeeding paragraphs, shall be
due and payable effective immediately. If an Event of Default specified in
clause (11) or (12) of Section 6.01 occurs, all outstanding Securities shall
ipso facto become and be immediately due and payable immediately without any
declaration or other act on the part of the Trustee or any Holder.
The Holders of a majority in principal amount of the then outstanding
Securities by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with
-25-
<PAGE>
any judgment or decree and if all existing Events of Default (except nonpayment
of principal or interest that has become due solely because of the acceleration)
have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture and, in addition, may pursue any remedy available under any of
the Collateral Documents or otherwise available under applicable law with
respect to any of the Collateral.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Subject to Section 9.02 hereof, Holders of a majority in aggregate
principal amount of the then outstanding Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except a
continuing Default or Event of Default in the payment of the principal of,
premium, if any, or interest on any Security held by a non-consenting Holder.
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 and the Collateral Documents but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the then
outstanding Securities may 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 it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, or that the Trustee determines may be
unduly prejudicial to the rights of other Holders or that may involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction.
SECTION 6.06. LIMITATION ON SUITS.
A Holder may pursue a remedy with respect to this Indenture or the
Securities only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of
the then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
-26-
<PAGE>
(5) during such 60-day period the Holders of a majority in
aggregate principal amount of the then outstanding Securities do not
give the Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates expressed in the Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid on the Securities and interest on
overdue principal and, to the extent lawful, interest and 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.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and 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 any other
amounts due the Trustee under Section 7.07 of this Indenture) and the Holders
allowed in any judicial proceedings relative to the Company (or any other
obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or
securities or other property payable or deliverable upon conversion or exchange
of the Securities or upon 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 to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 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 6.10. PRIORITIES.
If the Trustee collects or receives any money or securities or other
property pursuant to this Article, it shall pay out the money or securities or
other property in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
-27-
<PAGE>
Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively;
Third: without duplication, to Holders for any other obligations owing
to the Holders under the Securities, this Indenture or the Collateral Documents;
and
Fourth: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any such payment
to Holders.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in aggregate
principal amount of the then outstanding Securities.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(1) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
the Collateral Documents, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(2) Except during the continuance of an Event of Default:
(a) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Collateral Documents and
the Trustee need perform only those duties that are specifically set
forth in this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture or the Collateral
Documents against the Trustee; and
(b) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture or the Collateral Documents.
(3) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) this paragraph does not limit the effect of paragraph (2) of
this Section;
-28-
<PAGE>
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(4) Whether or not therein expressly so provided, every provision of
this Indenture and the Collateral Documents that in any way relates to the
Trustee is subject to paragraphs (1), (2) and (3) of this Section.
(5) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(6) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
Subject to TIA ss. 315:
(1) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(3) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed and monitored with due care.
(4) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by the Indenture.
(5) Unless otherwise specifically provided in the Indenture or the
Collateral Documents, any demand, request, direction or notice from the Company
shall be sufficient if signed by an Officer of the Company.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
-29-
<PAGE>
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities or any
money paid to the Company or upon the Company's direction under any provision
hereof, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the
Securities or any other document in connection with the sale of the Securities
or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known by a Trust Officer of the Trustee, the Trustee shall mail to Holders a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal or interest
on any Security, the Trustee may withhold the notice if and so long as a Trust
Officer in good faith determines that withholding the notice is in the interests
of Holders. The Trustee shall comply with TIA ss. 315(b).
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15 following
the date hereof, the Trustee shall mail to Holders a brief report dated as of
such reporting date that complies with TIA ss. 313(a) (but if no event described
in TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b). The Trustee shall also transmit by mail all reports as required by TIA
ss. 313(c).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange on which the Securities are listed,
if any. The Company shall promptly notify the Trustee when the Securities are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services and in connection with enforcing its rights under
the Collateral Documents. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with (i)
the acceptance or administration of its duties under this Indenture and (ii)
enforcing its rights under the Collateral Documents, in each case except as set
forth in the next paragraph. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence, bad faith
or wilful misconduct.
-30-
<PAGE>
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture and the Collateral Documents.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Lien securing the Securities on all money
or property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Securities. Such Lien shall survive the
satisfaction and discharge of the Indenture and the Collateral Documents.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(11) or (12) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign at any time by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation. The
Holders of a majority in aggregate principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Trustee and the Company.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a Custodian or public officer takes charge of the Trustee or
its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in aggregate principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Subject to the provision of TIA ss. 315(e), if the Trustee after
written request by any Holder who has been a bona fide holder of a Security or
Securities for at least six months fails to comply with Section 7.10, such
Holder, on behalf of himself and others similarly situated, may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture and the
-31-
<PAGE>
Collateral Documents. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the Lien provided for
in Section 7.07. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 hereof shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any state thereof authorized under such laws to exercise corporate
trustee power, shall be subject to supervision or examination by Federal or
state authority and shall have a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a). The Trustee is subject to TIA ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE AND DEFEASANCE
SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS.
(a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become due and payable and
the Company irrevocably deposits with the Trustee federal (immediately
available) funds sufficient to pay at maturity all outstanding Securities,
including interest thereon (other than Securities replaced pursuant to Section
2.07), and if in either case the Company pays all other sums payable hereunder
by it, then this Indenture shall cease to be of further effect; provided,
however, that the following shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Securities to
receive, solely from the trust fund described in Section 8.02, and as more fully
set forth in such Section, payments in respect of the principal of and interest
on Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 2.04, 2.06, 2.07 and 4.02, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Company's obligations in connection therewith and (d) this Article 8. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on the
Company's demand accompanied by an Officers' Certificate and an Opinion of
Counsel and at the Company's cost and expense.
-32-
<PAGE>
(b) The Company at any time may terminate its obligations under
the Securities and this Indenture ("legal defeasance"). For this purpose, such
legal defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Securities,
which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.03 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 (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Securities to receive,
solely from the trust fund described in Section 8.02, and as more fully set
forth in such Section, payments in respect of the principal of and interest on
Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 2.04, 2.06, 2.07, 2.10 and 4.02, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.01(b) notwithstanding the prior exercise of its option
under Section 8.01(c) with respect to the Securities.
(c) The Company at any time may terminate its obligations under
the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13,
4.15, 4.17 and Article Five with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be deemed not
"outstanding" for accounting purposes or 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 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 or by reason of any
reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 6.01(3), but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected thereby. In addition,
upon the Company's exercise of covenant defeasance, Sections 6.01(4) through
6.01(10) shall not constitute Events of Default.
(d) If the Company exercises its legal defeasance option or its
covenant defeasance option in accordance with Section 8.02 hereof, then upon
request of the Company and after the effective time of such defeasance, the
Trustee shall release all Collateral subject to a Lien held by the Trustee
pursuant to the Collateral Documents other than the defeasance trust (as defined
in Section 8.02).
SECTION 8.02. CONDITIONS TO DEFEASANCE.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(1) the Company irrevocably deposits in trust (the "defeasance
trust") with the Trustee money, U.S. Government Obligations or a
combination thereof sufficient (without any reinvestment of
interest or principal), in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee at or prior to the
time of such deposit, to pay the principal of and interest on the
Securities to redemption, mandatory or otherwise, or maturity, as
the case may be;
(2) in the case of legal defeasance, the Company shall have delivered
to the Trustee an Opinion of Counsel confirming that (a) the
Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (b) since the date of this
Indenture, there has been a change
-33-
<PAGE>
in the applicable federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such legal
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 legal defeasance had not occurred;
(3) in the case of covenant defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel confirming that
the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and
will be subject to such 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;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of
Default pursuant to Sections 6.01(11) or 6.01(12) are concerned,
at any time in any period under any applicable federal or state
law during which time creditors of the Company and its
Subsidiaries may have recourse to such deposited assets;
(5) such legal defeasance or covenant defeasance shall not constitute
a default under any material agreement or instrument (other than
this Indenture) to which the Company is a party or by which the
Company is bound;
(6) the Company shall have paid or duly provided for payment of all
amounts due to the Trustee pursuant to Section 7.07;
(7) the Company shall have delivered to the Trustee one or more
Opinions of Counsel to the effect that as of the date of the
opinion, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally under any applicable
federal or state law and that the Trustee has a perfected
security interest in such trust funds for the ratable benefit of
the holders;
(8) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company
with the intent of preferring the Holders over the other
creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or
others; and
(9) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent or relating to either the legal defeasance
or the covenant defeasance, as the case may be, have been
complied with.
SECTION 8.03. APPLICATION OF TRUST MONEY.
The Trustee or a trustee satisfactory to the Trustee and the Company
shall hold in trust money or U.S. Government Obligations deposited with it
pursuant to Section 8.02. It shall apply the deposited money and the money from
U.S. Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal and interest on the Securities.
SECTION 8.04. REPAYMENT TO COMPANY.
-34-
<PAGE>
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years after the date upon which such payment shall
have become due; provided, however, that the Company shall have caused notice of
such payment to be mailed to each Holder entitled thereto no less than 30 days
prior to such payment. After payment to the Company, Holders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person.
SECTION 8.05. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.03 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 8.03; provided, however,
that if the Company has made any payment of interest on or principal of any
Securities because of 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 or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Trustee, as applicable, may amend or supplement
this Indenture, the Securities and the Collateral Documents without the consent
of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01;
(3) to make any change that would provide any additional rights
or benefits of any Holder or that does not adversely affect the legal
rights hereunder of any Holder;
(4) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; and
(5) to correct or amplify the description of the Collateral or to
assure or convey and confirm better unto the Trustee or the applicable
Collateral Document trustee any property subject or required or intended
to be subjected to the Liens created by the Collateral Documents or to
subject any additional property to the Lien created by Collateral
Documents.
Upon the request of the Company, accompanied by a resolution of the
Board of Directors authorizing the execution of any such supplemental indenture
or supplemental collateral document, and upon receipt by the Trustee of the
documents described in Section 9.06 hereof, the Trustee shall join with the
Company
-35-
<PAGE>
in the execution of any supplemental indenture or supplemental collateral
document authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained,
but the Trustee shall not be obligated to enter into such supplemental indenture
or supplemental collateral document which adversely affects its own rights,
duties or immunities under this Indenture, the Collateral Documents or
otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS.
Except as provided below in this Section 9.02, the Company and the
Trustee together may amend this Indenture, the Securities or the Collateral
Documents with the written consent of the Holders of at least a majority in
aggregate principal amount of the then outstanding Securities (including
consents obtained in connection with a tender offer or exchange offer for
Securities).
Upon the request of the Company, accompanied by a resolution of the
Board of Directors authorizing the execution of any such supplemental indenture
or supplemental collateral document, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as aforesaid,
and upon receipt by the Trustee of the documents described in Section 9.06
hereof, the Trustee shall join with the Company in the execution of such
supplemental indenture or supplemental collateral document unless such
supplemental indenture or supplemental collateral document adversely affects the
Trustee's own rights, duties or immunities under this Indenture, the Collateral
Documents or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture or
supplemental collateral document.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or waiver, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice
briefly describing the amendment or waiver. Any failure of the Company to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture or waiver. Subject to
Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Securities) may waive any
existing default or compliance in a particular instance by the Company with any
provision of this Indenture, the Securities or the Collateral Documents.
However, without the consent of each Holder affected, an amendment or waiver
under this Section may not (with respect to any Securities held by a
non-consenting Holder):
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any
Security or alter the provisions with respect to the redemption of the
Securities (other than the provisions of Section 4.11);
(3) reduce the rate of or change the time for payment of interest
on any Security;
(4) waive a Default or an Event of Default in the payment of
principal of or interest on the Securities (except a rescission of
acceleration of the Securities by the Holders of at least a majority in
aggregate principal amount of the then outstanding Securities and a
waiver of the payment default that resulted from such acceleration);
-36-
<PAGE>
(5) make any Security payable in money other than that stated in
the Security;
(6) make any change in the provisions of this Indenture or the
Collateral Documents relating to waivers of past Defaults or the rights
of Holders of Securities to receive payments of principal of or interest
on the Securities;
(7) waive a redemption payment with respect to any Security
(other than a payment required by Section 4.11);
(8) make any change in this sentence of this Section 9.02; or
(9) terminate the Lien of any Collateral Documents or deprive any
Holder of the security afforded by the Lien of any Collateral Document
(except in each case as is expressly permitted by the applicable
Collateral Document or the Indenture).
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment to this Indenture or the Securities shall be set forth
in an amendment or supplemental indenture that complies with the TIA as then in
effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a 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 or her Security if the Trustee receives written notice of
revocation before the date the waiver or amendment becomes effective. An
amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
The Company may fix a record date for determining which Holders must
consent to such amendment or waiver. If the Company fixes a record date, the
record date shall be fixed at (i) the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders
furnished to the Trustee prior to such solicitation pursuant to Section 2.05, or
(ii) such other date as the Company shall designate.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES.
The Trustee may place an appropriate notation about an amendment or
waiver on any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Security shall
not affect the validity and effect of such amendment or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplemental indenture or
supplemental collateral document authorized pursuant to this Article 9 if the
amendment 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 such amend ment or supplemental indenture or supplemental collateral
document, the Trustee shall be entitled to receive, and,
-37-
<PAGE>
subject to Section 7.01, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or supplemental indenture or supplemental collateral document is authorized or
permitted by this Indenture or the Collateral Documents, that it is not
inconsistent herewith, and that it will be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or supplemental
indenture or supplemental collateral document until the Board of Directors
approves it.
ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. COLLATERAL AND SECURITY.
The due and punctual payment of the principal of and interest on the
Securities when and as the same shall be due and payable, whether on an interest
payment date, at maturity, by acceleration, repurchase, redemption or otherwise,
and interest on the overdue principal of and interest (to the extent permitted
by law), if any, on the Securities and performance of all other Obligations of
the Company to the Holders or the Trustee under this Indenture and the
Securities, according to the terms hereunder or thereunder, shall be secured as
provided herein and in the Collateral Documents. Each Holder, by its acceptance
of a Security, consents and agrees to the terms hereof and of the Collateral
Documents (including, without limitation, the provisions providing for
foreclosure and release of Collateral) as the same may be in effect or may be
amended from time to time in accordance with the terms thereof and hereof and
authorizes and directs the Trustee to enter into each of the Collateral
Documents and to perform its respective obligations and exercise its respective
rights thereunder in accordance therewith. The Company will do or cause to be
done all such acts and things as may be necessary or proper, or as may be
required by the provisions hereof and of the Collateral Documents, to assure and
confirm to the Trustee the security interest in the Collateral contemplated
hereby and by the Collateral Documents, as from time to time constituted, so as
to render the same available for the security and benefit of this Indenture and
of the Securities secured hereby, according to the intent and purposes herein
expressed. The Company shall take any and all actions reasonably required to
cause the Collateral Documents to create and maintain, as security for the
Obligations of the Company under this Indenture and the Securities, valid and
enforceable, perfected Liens in and on all the Collateral, in favor of the
Trustee, superior to and prior to the rights of all third persons, and subject
to no other Liens, other than as provided herein and therein.
SECTION 10.02. RECORDING, ETC.
The Company will cause, at its own expense, the Collateral Documents,
this Indenture and all amendments or supplements thereto, to be registered,
recorded and filed or re-recorded, re-filed and renewed in such manner and in
such place or places, if any, as may be required by law in order fully to
preserve and protect the Liens created hereby and by the Collateral Documents.
(a) The Company shall furnish to the Trustee promptly after the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel, assuming the taking of certain
actions with respect to the recording, registering and filing of this Indenture,
financing statements or other instruments, the Lien intended to be created by
the Collateral Documents will become effective, and reciting the details of such
action, or (ii) stating that, in the opinion of such counsel, no such action is
necessary to make such Lien effective.
(b) The Company shall furnish to the Trustee within 60 days after each
anniversary of the date of this Indenture, an Opinion of Counsel, dated as of
such date, stating either that (i) in the opinion of such
-38-
<PAGE>
counsel, all action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of this Indenture and all
supplemental indentures, financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Lien of the
Collateral Documents and reciting the details of such action or (ii) in the
opinion of such Counsel, no such action is necessary to maintain such Lien.
SECTION 10.03. PROTECTION OF THE TRUST ESTATE.
The Trustee shall have the power to enforce the obligations of the
Company and its Subsidiaries under this Indenture or the Collateral Documents,
to institute and maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral under any of the Collateral Documents
and in the profits, rents, revenues and other income arising therefrom,
including the power to institute and maintain suits or proceedings to restrain
the enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair any Collateral or be prejudicial to the interests of the Holders or the
Trustee, to the extent permitted thereunder.
SECTION 10.04. RELEASE OF LIEN.
(a) Collateral may be released from the Lien and security interest
created by this Indenture and the Collateral Documents at any time or from time
to time in accordance with the provisions of the Collateral Documents and as
provided hereby.
(b) The release of any Collateral from the terms of this Indenture and
the Collateral Documents will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms hereof and thereof. To the extent
applicable, the Company and any other obligor shall cause TIA ss. 314(d)
relating to the release of property from the Lien arising out of the Collateral
Documents to be complied with. Any certificate or opinion required by TIA ss.
314(d) may be made by an Officer of the Company; provided, however, that to the
extent required by TIA ss. 314(d), any such certificate or opinion shall be made
by an independent engineer, appraiser or other expert (as such terms are set
forth in TIA ss. 314(d)), who is not an Affiliate of the Company.
Whenever Collateral is to be released pursuant to this Section 10.04,
the Trustee will execute any reasonable document or termination statement
necessary to release the Lien of this Indenture and Collateral Documents.
SECTION 10.05. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Each Holder, by acceptance of a Security, authorizes and directs the
Trustee to enter into the Collateral Documents. The Trustee may, in its sole
discretion and without the consent of the Holders, on behalf of the Holders,
take all actions it deems necessary or appropriate in order to (a) enforce any
of the terms of the Collateral Documents and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder. The
Trustee shall have power to institute and to maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Collateral by any acts
that may be unlawful or in violation of the Collateral Documents or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the
-39-
<PAGE>
enforcement of, or compliance with, such enactment, rule or order would impair
the security interest hereunder or be prejudicial to the interests of the
Holders or of the Trustee).
SECTION 10.06. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
The Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Collateral Documents, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture.
ARTICLE 11
DISBURSEMENTS OF CASH COLLATERAL
SECTION 11.01. CASH COLLATERAL ACCOUNT AND RESTORATION COLLATERAL ACCOUNT.
The Company shall establish and maintain with the Collateral Agent the
Cash Collateral Account which shall hold the proceeds of the sale of the
Securities (net of underwriting discounts and commissions). If and when required
by the Deed of Trust, the Company shall establish and maintain from time to time
one or more Restoration Collateral Account(s) into which shall be deposited, and
from which shall be withdrawn in accordance with the Deed of Trust, insurance
proceeds relating to a particular casualty or condemnation award or payments
relating to a particular condemnation. The Company hereby grants a valid,
perfected and exclusive security interest in favor of the Trustee for the equal
and ratable benefit of the Holders in the Accounts without preference, priority,
or distinction of any thereof over any other thereof by reason of difference in
time of issuance, sale or otherwise, as security for the prompt and complete
performance and payment in full of the Securities and performance of all other
Obligations of the Company under this Indenture and the Securities and shall
execute and deliver such financing statements and other documents as may be
necessary, from time to time, and will do all such acts and things as may be
necessary or proper, to maintain such security interest. The funds from time to
time on deposit in the Accounts may be disbursed from such account only for the
purposes and in the manner provided for in this Article 11 and the Collateral
Documents.
In its discretion, the Company may request the Collateral Agent in
writing to, and the Collateral Agent shall, invest any Collateral in the
Accounts, and any interest paid on any Collateral in the Accounts, in Cash
Equivalents; provided that the Trustee shall retain an exclusive, valid and
perfected security interest in the proceeds of the funds so invested. Interest
and proceeds with respect to the Collateral in the Cash Collateral Account or a
Restoration Collateral Account that are not invested or reinvested in Cash
Equivalents as provided in the immediately preceding sentence shall be deposited
and held in the Cash Collateral Account or a Restoration Collateral Account, as
the case may be. The Collateral Agent shall have no liability for investments
made in accordance with the Company's written instructions.
SECTION 11.02 DISBURSEMENTS OF BOND PROCEEDS.
The Company may request that Collateral in the Cash Collateral Account
be disbursed to the Company to reimburse it for expenditures made, or to pay
costs incurred, by the Company to complete the Mortgaged Property (each, a
"Project Disbursement") upon satisfaction of the following conditions:
(a) Such request must be made by delivering written notice to the
Collateral Agent, not later than 12:00 noon (Colorado time) on the first
Business Day prior to the proposed Project Disbursement.
-40-
<PAGE>
(b) Such request shall be executed by an Officer and shall
specify therein (i) the requested date of such disbursement (the
"Project Disbursement Date"), (ii) the aggregate amount of such
disbursement, (iii) the uses of such disbursement and (iv) to what
extent any investments made by the Collateral Agent shall be liquidated
to fund such disbursement.
(c) Such request shall be accompanied by a certificate of an
Officer certifying the following:
(i) The amount of the Project Disbursement does not exceed
the amount payable to the applicable Person(s) and such amount
either has been paid by the Company and/or is justly due to
contractors, subcontractors, materialmen, engineers, architects
or other Persons who have rendered services or furnished
materials in connection with the acquisition, development and
construction of the Mortgaged Property;
(ii) The Project Disbursement shall be used solely for the
purpose of paying the amounts specified in the request or for
reimbursing the Company or third parties for such amounts
previously paid for the same purposes by the Company or third
parties;
(iii) As of the date of such Certificate, there is no
outstanding indebtedness of the Company due (other than
indebtedness for which payment is being requested or indebtedness
that is disputed by the Company in accordance with Section 4.9 of
the Deed of Trust) for the purchase price or construction of such
improvements, or for labor, wages, materials or supplies in
connection with the making thereof, which if unpaid, might become
or result in a vendor's, mechanics', laborers', materialmen's,
statutory or other similar lien upon the Collateral which could
materially impair the Lien created by the Collateral Documents;
(iv) Construction of the improvements on the Mortgaged
Property is progressing substantially in accordance with the
plans and specifications prepared by or on behalf of the Company,
as such plans and specifications have been amended to date;
(v) No Event of Default has occurred and is continuing, or
to the knowledge of the Company, would result from such Project
Disbursement or from the application thereof;
(vi) The representations and warranties of the Company
contained in each Collateral Document are true and correct in all
material respects on and as of the date of such Certificate,
before and immediately after giving effect to such Project
Disbursement and to the application thereof, as though made on an
as of such date, except to the extent that any such
representation or warranty by its terms relates to a specified
prior date;
(vii) To the knowledge of the Company, the amount of the
requested Project Disbursement, together with all amounts on
deposit in the Cash Collateral Account and those funds available
from other sources to the Company for the Project, are sufficient
to finance the completion of the Mortgaged Property;
(viii) No portion of the requested Project Disbursement
will be used by the Company to pay any Person for labor, services
or materials provided by such Person and for which such Person
received payment from the Company from any prior Project
Disbursement from the Cash Collateral Account; and
-41-
<PAGE>
(ix) All materials and property described in the request
for Project Disbursement are free and clear of all Liens, except
those securing indebtedness due to Persons specified in the
request, which encumbrances will be satisfied, waived or
discharged, as the case may be, in accordance with the Collateral
Documents.
(d) With respect to any so-called "hard costs" covered by any
proposed Project Disbursement, receipt by the Collateral Agent of a copy
of the Company's architect's approval of the application for payment
certifying that work for which the Project Disbursement is requested has
progressed to the point indicated and that, to such architect's
knowledge, such work is in accordance with the Company's contracts for
such work.
Upon satisfaction of the conditions set forth in this Section 11.02,
the Collateral Agent shall make each Project Disbursement, no later than 12:00
noon (Colorado time) on each Project Disbursement Date, by deducting the amount
of each Project Disbursement from the Cash Collateral Account and depositing
such amount in accordance with the instructions of the Company. Notwithstanding
the foregoing, if on any Project Disbursement Date the cash on deposit in the
Cash Collateral Account is less than the amount of the Project Disbursement to
be made on such date, the Collateral Agent shall only be required to fund such
Project Disbursement up to the amount of cash on deposit in the Cash Collateral
Account.
SECTION 11.03 DISBURSEMENT OF INSURANCE OR CONDEMNATION PROCEEDS.
The Company may request that Collateral in the applicable Restoration
Collateral Account, if any, be disbursed to the Company to reimburse it for
expenditures made, or to pay costs incurred, by the Company to repair or restore
the Mortgaged Property upon satisfaction of the conditions to such disbursement
set forth in the Deed of Trust.
Upon satisfaction of the conditions set forth in this Section 11.03 and
the Deed of Trust, the Collateral Agent shall disburse the funds requested no
later than 12:00 noon (Colorado time) on the date requested for such
disbursement by deducting the amount of each such disbursement from the
appropriate Restoration Collateral Account and depositing such amount in
accordance with the instructions of the Company. Notwithstanding the foregoing,
if on any such disbursement date the cash on deposit in such Restoration
Collateral Account is less than the amount of the disbursement to be made on
such date, the Collateral Agent shall only be required to fund such disbursement
up to the amount of cash on deposit in such Restoration Collateral Account.
SECTION 11.04 COMPLETION OF THE PROJECT.
Any undisbursed or unreleased amounts remaining on deposit in the Cash
Collateral Account after the completion of the improvements on the Mortgaged
Property shall be disbursed to the Company upon receipt by Trustee from the
Company of the following:
(a) An Officers' Certificate certifying:
(i) a temporary or final certificate of occupancy has been
issued for the Mortgaged Property by the relevant agencies; and
(ii) all vendor's, mechanics', laborers', materialmen's,
statutory or other similar liens attaching to the Mortgaged
Property have been paid or removed in accordance with, and to the
extent required by, the Collateral Documents.
-42-
<PAGE>
(b) A certificate from the general contractor and the architect
engaged with respect to the Mortgaged Property certifying that the
Mortgaged Property has been completed substantially in accordance with
the plans therefor and all applicable building laws, ordinances and
regulations.
SECTION 11.05 COMPLETION OF RESTORATION.
Any undisbursed or unreleased amounts remaining on deposit in a
Restoration Collateral Account after the repair or restoration of the Mortgaged
Property shall be disbursed to the Company upon satisfaction of the conditions
to such disbursement or release set forth in the Deed of Trust.
SECTION 11.06 DUTIES OF THE COLLATERAL AGENT.
For so long as this Indenture shall remain in effect, the Collateral
Agent:
(a) THE ACCOUNTS. Acknowledges notice of, and consents to
the terms and provisions of, the Indenture and the Collateral Documents
and agrees that:
(i) Notwithstanding anything to the contrary in this or
any other agreement relating to the Accounts, each of the
Accounts is and will be subject to the terms and conditions
hereof and of the Collateral Documents, will be held in trust on
behalf of the Trustee for the benefits of the Holders and not
commingled with any ordinary deposit or commercial bank account,
will be maintained with the corporate trust department of the
Collateral Agent solely for the Trustee for the benefit of the
Holders pursuant to the terms hereof and of the Collateral
Documents and will be subject to the written instructions of the
Trustee given in accordance with this Article 11 and related
provisions of the Collateral Documents.
(ii) Unless otherwise instructed in writing by the
Trustee, during the continuance of an Event of Default hereunder
or under the Collateral Documents, the Collateral Agent shall
invest amounts on deposit in the Accounts in accordance with the
written instructions of the Company pursuant to Section 11.01
hereof.
(iii) All disbursements and releases made pursuant to this
Agreement shall be made by the Collateral Agent irrespective of,
and without deduction for, any counterclaim, defense, recoupment
or set-off and shall be final.
(iv) All reasonable service charges and fees with respect
to the Accounts shall be paid by the Company.
(v) The Collateral Agent irrevocably waives and renounces
any pledge, security interest (whether consensual, statutory or
otherwise) or right of offset or compensation that it has or may
ever have for its own benefit with respect to the Accounts.
(b) BOOKS AND RECORDS. Shall maintain appropriate books and
records with respect to the Accounts in which shall be recorded all
transactions related thereto including, without limitation, all
disbursements hereunder and any investments made by the Collateral Agent
and shall permit the Trustee, the Company or any of their respective
agents or representatives to inspect and to make copies of such books
and records, as is reasonable, at the Company's sole cost and expense.
-43-
<PAGE>
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of TIA ss.318(c), the imposed duties shall
control.
SECTION 12.02. NOTICES.
Except to the extent applicable law may require the giving of notice
under the Deed of Trust in a different manner, any notice or communication by
the Company or the Trustee to the other for purposes of this Indenture and the
Collateral Documents is duly given if in writing and delivered in person or
mailed by first-class mail (registered or certified, return receipt requested),
or sent by telex, telecopier or overnight air courier guaranteeing next Business
Day delivery, to the other's address:
If to the Company:
Ultimate Electronics, Inc.
9901 West 50th Avenue
Wheat Ridge, Colorado 80033
Attention: Chief Financial Officer
Telecopier No.: 303-420-5630
With a copy to:
Davis, Graham & Stubbs, L.L.C.
370 17th Street, 47th Floor
Denver, Colorado 80202
Attention: Justyn Sirkin
Telecopier No.: 303-892-7400
If to the Trustee:
Corporate Trust Office Principal Operations Office
Colorado National Bank First Trust
950 17th Street, Suite 2410 180 E. 5th Street
Denver, Colorado 80202 St. Paul, Minnesota 55101
Attention: Corporate Trust
Services
Telecopier No.: (303) 585-6865
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) 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 acknowledged,
if telecopied;
-44-
<PAGE>
and the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder pursuant to this Indenture or
the Collateral Documents shall be mailed by first-class mail to his address
shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holder s.
If a notice or communication is mailed or given in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Securities, and the
Trustee is subject to TIA ss. 312(b). The Company, the Trustee, the Registrar
and anyone else shall have the protection of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements
set forth in Section 12.05) stating that, in the opinion of the signers,
all conditions precedent provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 12.05) stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant, as the case may be, provided for in this Indenture (other than a
certificate provided pursuant to TIA ss. 314(a)(4)) shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
-45-
<PAGE>
(4) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact, an Opinion of Counsel may
rely on an Officers' Certificate or certificate of public officials.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. LEGAL HOLIDAYS.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking
institutions in The City of New York or the city in which the Corporate Trust
Office of the Trustee or the Principal Operations Office of the Trustee is
located are authorized or obligated by law, regulation or executive order to
remain closed. If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on such payment for the intervening
period.
SECTION 12.08. RECOURSE AGAINST OTHERS.
No director, officer, employee or stockholder as such, of the Company
shall have any liability for any obligations of the Company under the Securities
or the Indenture or for any claim based upon, in respect of or by reason of such
obligations or their creation. Each Holder by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Securities. Notwithstanding the foregoing,
nothing in this provision shall be construed as a waiver or release of any
claims under the federal securities laws.
SECTION 12.09. GOVERNING LAW.
The internal law of the State of Colorado shall govern and be used,
without reference to its choice of law principles, to construe this Indenture
and the Securities.
SECTION 12.10. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or its Subsidiaries. No such indenture, loan or
debt agreement may be used to interpret this Indenture.
SECTION 12.11. SUCCESSORS.
All agreements of the Company in this Indenture and the Securities
shall bind its successors and assigns. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.12. SEVERABILITY.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.13. COUNTERPART ORIGINALS; COLORADO COUNTERPART.
-46-
<PAGE>
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; provided that one counterpart shall bear the following legend:
"The counterpart of the Indenture on which this legend
appears is, for purposes of Title 38 of the Colorado Revised Statutes,
the 'original evidence of debt' secured by the Deed of Trust, as defined
herein."
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
-47-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective duly authorized officers as of the date first
written above.
SIGNATURES
ULTIMATE ELECTRONICS, INC.
By: /s/Alan E. Kessock
-------------------------------
Alan E. Kessock
Vice President - Finance and
Administration
Attest:
/s/David J. Workman
- ------------------------------
COLORADO NATIONAL BANK, as Trustee
By: /s/Gretchen L. Middents
--------------------------------
Attest:
[signature illegible]
- ------------------------------
COLORADO NATIONAL BANK, as
Collateral Agent
By: /s/Gretchen L. Middents
-------------------------------
Attest:
[signature illegible]
- ------------------------------
-48-
<PAGE>
EXHIBIT A
<PAGE>
EXHIBIT A
(Face of Security)
10.25% FIRST MORTGAGE BONDS
DUE JANUARY 31, 2005
CUSIP NO. 903849 AA 5
No. $__________
ULTIMATE ELECTRONICS, INC.
promises to pay to ___________________________________________ or its registered
assigns, the principal sum of Dollars on January 31, 2005.
Interest Payment Dates: Last day of each month, commencing April 30, 1995.
Record Dates: 15th of each month (whether or not a Business Day).
ULTIMATE ELECTRONICS, INC.
By:_______________________________
William J. Pearse
Chief Executive Officer
Trustee's Certificate of
Authentication
This is one of the Attested By:_______________________________
First Mortgage Bonds Alan E. Kessock
referred to in the within- Secretary
mentioned Indenture:
COLORADO NATIONAL BANK, as Trustee
By:_____________________________
Authorized Signature
Dated: March 23, 1995
A-1
<PAGE>
(Back of Security)
10.25% FIRST MORTGAGE BONDS
DUE JANUARY 31, 2005
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Ultimate Electronics, Inc., a Delaware corporation
(including any successor thereto, the "Company") promises to pay interest on the
principal amount of this 10.25% First Mortgage Bond due 2005 (the "Security") at
the aforesaid rate and in the manner specified below.
The Company shall pay interest on the principal amount of this Security
in cash at the rate per annum shown above. The Company will pay interest monthly
in arrears on the last day of each month, commencing April 30, 1995, or if any
such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date").
Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months for the actual number of days elapsed. Interest shall
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance of the Security.
To the extent lawful, the Company shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the same rate.
2. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the record date next preceding the
Interest Payment Date, even if such Securities are cancelled after such record
date and on or before such Interest Payment Date. The Holder hereof must
surrender this Security to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts. The
Company, however, may pay principal and interest by check or wire transfer
payable in such money. The Securities will be payable as to both principal and
interest at the office or agency of the Company maintained for that purpose
within the Denver metropolitan area, or at the Principal Operations Office of
the Trustee or, at the option of the Company, payment of interest may be made by
check mailed to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to any Holder. Subject to certain limitations,
the Company and any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture,
dated as of March 23, 1995 (as amended from time to time, the "Indenture"),
between the Company and Colorado National Bank, as Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code ss.ss. 77aaa-77bbbb) ("TIA") as in effect on the date of the Indenture. The
Securities are subject to all such terms, and Holders are referred to the
Indenture and the TIA for a statement of such terms. The terms of the Indenture
shall govern any inconsistencies between the Indenture and the Securities. The
Securities are secured by the Collateral pursuant to the Collateral Documents
referred to in the Indenture.
A-2
<PAGE>
5. OPTIONAL REDEMPTION. At any time from and after March 31, 2000, the
Securities may be redeemed at the option of the Company in whole or in part, at
100% of principal amount, plus accrued interest thereon to the applicable
redemption date.
6. MANDATORY REDEMPTION. The Company will be required to redeem on
January 31 of each year beginning 2002, $3,250,000 of the principal amount of
Securities at a redemption price of 100% of principal amount plus accrued
interest to the redemption date. The Company may reduce the principal amount of
Securities to be redeemed pursuant to this paragraph by subtracting 100% of the
principal amount of a pro rata portion of any Securities (based upon the number
of remaining mandatory redemption dates) that the Company has delivered to the
Trustee for cancellation or redeemed otherwise than pursuant to this Paragraph
6, a Change of Control Offer or pursuant to the terms of the Deed of Trust. The
Company may subtract the principal amount of Securities so applied only once.
7. OFFERS TO PURCHASE. The Company is obligated to make an offer to
purchase Securities in connection with a Change of Control (as described in the
Indenture). Notice of any such offer to purchase will be given as provided in
the Indenture. Holders of Securities that are the subject of an offer to
purchase may elect to have such Securities purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below and taking certain
other actions, all as set forth in the Indenture.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of $1,000
of principal amount. The transfer of Securities may be registered and Securities
may be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Company shall not be required to exchange or register the
Securities during a period beginning at the opening of business 15 days before
the day of any selection of Securities for redemption under Section 3.02 and
ending at the close of business on the day of selection, or to exchange or
register any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part, or to exchange or
register a Security between a record date and the next succeeding Interest
Payment Date.
9. PERSONS DEEMED OWNERS. The registered Holder of a Security shall be
treated as its owner for all purposes. The Trustee, any Agent or the Company
will not be affected by any notice to the contrary.
10. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture or the Securities may be amended with the consent of the Holders of at
least a majority in principal amount of the then outstanding Securities, and any
existing Default or Event of Default (except a payment default) may be waived
with the consent of the Holders of at least a majority in principal amount of
the then outstanding Securities. Without the consent of any Holder, the
Indenture or the Securities may be amended to cure any ambiguity, defect or
inconsistency; to comply with Section 5.01 of the Indenture; to make any change
that would provide any additional rights or benefits of any Holder or that does
not adversely affect the legal rights under the Indenture of any Holder; to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the TIA; or to correct or amplify the
description of the Collateral or to assure or convey and confirm better unto the
Trustee or the applicable Collateral Document trustee any property subject or
required or intended to be subjected to the Liens created by the Collateral
Documents or to subject any additional property to the Liens created by
Collateral Documents.
11. DEFAULTS AND REMEDIES. Events of Default include: default for 15
days in the payment when due of interest on the Securities; default in payment
when due and payable, upon redemption or otherwise, of principal on the
Securities; failure by the Company to comply with Sections 4.07, 4.08 or 4.11 of
the Indenture
A-3
<PAGE>
or Section 5.4 of the Deed of Trust; failure by the Company for 45 days after
notice to it to comply with its other agreements in the Indenture or the
Collateral Documents; default under any deed of trust, mortgage, indenture or
instrument under which there is issued or by which there is secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Subsidiaries or
the payment of which is guaranteed by the Company or any of its Subsidiaries,
whether such Indebtedness or guarantee now exists or is created after the date
of the Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default) (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which a Payment Default then exists or with respect to which the maturity
thereof has been so accelerated, aggregates $5.0 million or more; failure to pay
certain final judgments aggregating in excess of $250,000 million; an event of
default under any Collateral Document which continues for a period of 45 days
after receipt from the Trustee, or the Holders of at least 25% in principal
amount of the Securities, of written notice or the unenforceability of any
Collateral Document against the Company for any reason and such enforceability
exists for a period of 90 days after the date the Company becomes aware of the
unenforceability; any Collateral Document fails to become or ceases to be in
full force and effect (other than in accordance with its terms) or ceases (once
effective) to create in favor of the Trustee a valid and perfected first
priority Lien on the Collateral to be covered thereby (unless a prior or
exclusive Lien is specifically permitted by the Indenture or such Collateral
Documents); failure of the Company or any of its Subsidiaries to continue to
operate the Mortgaged Property other than the retail store, prior to March 31,
2000; failure by the Company to complete the construction of the improvements on
the Mortgaged Property in accordance with plans and specifications in effect on
the date of the Indenture (which plans and specifications may be amended,
modified or supplemented from time to time) by December 31, 1996, unless such
failure is due solely to Force Majeure; and certain events of bankruptcy or
insolvency; in each case as more fully set forth in the Indenture. If an Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Securities may declare all the
Securities to be due and payable effective immediately, except that in the case
of an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Securities become due and payable immediately without further
action or notice. Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may require indemnity satisfactory to
it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Securities may direct the Trustee in its exercise of any trust or power. The
Company must furnish an annual compliance certificate to the Trustee.
12. SECURITY. The Securities will be secured by the Collateral as
provided by the Collateral Documents and the Indenture. From time to time the
Collateral may be released in accordance with the terms of the Indenture and the
Collateral Documents.
13. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee under the Indenture,
in its individual or any other capacity, may become owner or pledgee of
Securities, and may otherwise deal with the Company or the Company's Affiliates,
as if it were not Trustee.
14. RECOURSE AGAINST OTHERS. No director, officer, employee or
stockholder, as such, of the Company, shall have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities. Notwithstanding the foregoing, nothing in this provision
shall be construed as a waiver or release of any claims under the federal
securities laws.
A-4
<PAGE>
15. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
18. GOVERNING LAW. The Securities and the Indenture are governed by and
construed in accordance with the internal laws of the State of Colorado, without
regard to the choice of law rules thereof.
A-5
<PAGE>
The Company will furnish to any Holder upon written request and without
charge a copy of the Inden ture. Request may be made to:
Ultimate Electronics, Inc.
9901 West 50th Avenue
Wheat Ridge, Colorado 80033
Attention: Vice President - Finance and Administration
A-6
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(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 him.
Date:______________________
Your Signature:______________________________________________
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee.*/
- -------------------------------
*/ Your signature must be guaranteed by a member of the Medallion Signature
Program.
A-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Security purchased by
the Company pursuant to Section 4.11 of the Indenture (Change of Control), state
the amount ($1,000 of principal amount or integral multiples of $1,000) you
elect to have purchased (if all, write "ALL"): $___________
Date:________________
Your Signature:______________________________________________
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee.*/
- ---------------------------
*/ Your signature must be guaranteed by a member of the Medallion Signature
Program.
A-8
<PAGE>
EXHIBIT B
<PAGE>
RECORDING REQUESTED BY AND FOR RECORDER'S USE ONLY:
WHEN RECORDED RETURN TO:
DAVIS, GRAHAM & STUBBS, L.L.C.
P.O. Box 185
Denver, CO 80201-0185
Attn: Charles D. Calvin
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(THIS DEED OF TRUST IS A CONSTRUCTION MORTGAGE WITHIN THE MEANING OF
COLORADO REVISED STATUTES ss. 4-9-313(1)(C) AND SERVES AS A FINANCING
STATEMENT PURSUANT TO COLORADO REVISED STATUTES ss. 4-9-402(6))
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT ("Deed
of Trust") is given as of March 23, 1995, by the Grantor named below to the
Trustee named below, for the use and benefit of the Beneficiary named below.
ARTICLE 1
PARTIES, PROPERTY AND DEFINITIONS
The following terms and references shall have the meanings indicated:
1.1 GRANTOR: ULTIMATE ELECTRONICS, INC., a Delaware corporation whose
legal address is 9901 West 50th Avenue, Wheat Ridge, Colorado 80033, together
with any future owner of the Property or any part thereof or interest therein.
1.2 BENEFICIARY: COLORADO NATIONAL BANK, a national banking
association, as Trustee under the Indenture, whose legal address is 950
Seventeenth Street, Suite 2410, Denver, Colorado 80202, together with any
successor as Trustee under the Indenture.
1.3 TRUSTEE: The Public Trustee of Adams County, Colorado.
1.4 BONDS: The $13,000,000 principal amount of Grantor's 10.25% First
Mortgage Bonds due January 31, 2005, subject to earlier redemption or
acceleration as provided in the Indenture.
1.5 INDENTURE: The Indenture of even date herewith between Grantor and
Beneficiary, pursuant to which Grantor has issued the Bonds. Capitalized terms
used but not defined in this Deed of Trust have the meanings given those terms
in the Indenture.
1.6 PROPERTY: The land described in EXHIBIT A attached hereto and
incorporated herein by this reference, together with the following:
<PAGE>
(a) All buildings, structures and improvements now or hereafter
located thereon, as well as all existing and future rights of way,
easements, trackage rights and other appurtenances to such land;
(b) All of Grantor's right, title and interest in any land lying
between the boundaries of the land described on EXHIBIT A and the center
line of any adjacent street, road, avenue or alley, whether opened or
proposed, and in any strips or gores that may separate or purport to
separate any parcel of such land from any other parcel thereof;
(c) All water rights and conditional water rights that are
appurtenant to or that have been used or are intended for use in
connection with such land, including but not limited to (i) ditch, well,
pipeline, spring and reservoir rights, whether or not adjudicated or
evidenced by any well or other permit, (ii) all rights with respect to
nontributary groundwater (and other groundwater that is subject to the
provisions of Colorado Revised Statutes Section 37-90-137(4) or the
corresponding provisions of any successor statute) underlying said land,
(iii) any permit to construct any water well, water from which is intended
to be used in connection with such land, and (iv) all of Grantor's right,
title and interest under any decreed or pending plan of augmentation or
water exchange plan;
(d) All oil, gas and other minerals and all crops, timber, trees,
shrubs, flowers and landscaping features now or hereafter located on,
under or above such land;
(e) All fixtures and trade fixtures (including but not limited to
heating, ventilating and air conditioning equipment, lighting and plumbing
fixtures, power distribution equipment, boilers, furnaces, water heaters,
pipes, pumps, tanks, motors, compressors, ducts, conduits, fire detection
and extinguishing systems, elevators, escalators and partitions) now or
hereafter owned by Grantor, located in, on or under such land or
improvements and used in connection with any present or future operation
thereof, except (i) items that are owned at any time by tenants and that
such tenants are entitled, under the terms of applicable lease agreements,
to remove from the leased premises at or before the expiration or
termination of such leases, and (ii) machinery, storage racks, conveyors
and other equipment, inventory and movable personal property;
(f) All development rights associated with such land, whether
previously or subsequently transferred to such land from other real
property or now or hereafter susceptible of transfer from such land to
other real property;
(g) Subject to the provisions of Section 4.8 below, all awards and
payments, including interest thereon, resulting from the exercise of any
right of eminent domain or any other public or private taking of, injury
to, or decrease in the value of, any of such property;
(h) All other or greater rights and interests of every nature in any
of the above-described property and in the possession or use thereof and
income therefrom, whether now owned or subsequently acquired by Grantor;
and
(i) Any other interest, estates or other claims in law and equity
that Grantor has or may hereafter acquire in or relating to any of the
foregoing, including proceeds of the foregoing.
1.7 CHATTELS: All fixtures (including but not limited to heating,
ventilating and air conditioning equipment, lighting and plumbing fixtures,
power distribution equipment, boilers, furnaces,
-2-
<PAGE>
water heaters, pipes, pumps, tanks, motors, compressors, ducts, conduits, fire
detection and extinguishing systems, elevators, escalators and partitions),
trade fixtures and building and other materials now owned or hereafter acquired
by Grantor and used or intended for use in the construction, development or
operation of the Property (as opposed to the conduct of any business on the
Property), together with all accessions thereto, replacements and substitutions
therefor and proceeds thereof; provided, that the term "Chattels" does not
include personal property used in the conduct of any business conducted on the
Property, such as but not limited to machinery, storage racks, conveyors and
other equipment, inventory and movable personal property.
1.8 INTANGIBLE PERSONALTY: All accounts and all plans, specifications,
licenses, permits and other general intangibles (whether now owned or hereafter
acquired, and including proceeds thereof) relating to or arising from Grantor's
ownership, use, operation, leasing or sale of all or any part of the Property,
specifically including but in no way limited to any right that Grantor may have
or acquire to transfer any development rights from the Property to other real
property, and any development rights that may be so transferred.
1.9 LEASES: The leases described in EXHIBIT B attached hereto and
incorporated herein by this reference, all extensions and renewals of such
leases, and all other leases or occupancy agreements, in whatever form, that now
or in the future affect all or any part of the Property.
1.10 BOND DOCUMENTS: The Indenture, the Bonds, this Deed of Trust and
any financing statements executed in connection herewith, and each other
Collateral Document. The term "Bond Documents" also includes all modifications,
extensions, renewals and replacements of each document referred to above.
1.11 DEFAULT: Any event that is or with the passage of time or the
giving of notice, or both, would be an Event of Default.
1.12 EVENT OF DEFAULT: Any of the events enumerated in Article 7 of
this Deed of Trust.
1.13 ENVIRONMENTAL LAW: Any federal, state or local enactment relating
to protection of public health or the environment, including (by way of
illustration rather than limitation) the Clean Water Act, 33 U.S.C. ss. 1251, et
seq., the Clean Air Act, 42 U.S.C. ss. 7401, et seq., the Resource Conservation
and Recovery Act, 42 U.S.C. ss. 6901, et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. ss. 9601, et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et seq., and the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ss. 135, et seq., as well
as applicable state counterparts to such federal legislation and any
regulations, guidelines, directives or other interpretations of any such
enactment, all as amended from time to time.
1.14 REGULATED SUBSTANCE: Any substance, the manufacture, storage,
transport, generation, use, treatment, recycling, disposal or other disposition
of which is prohibited or regulated (including, without limitation, being
subjected to notice, reporting, record-keeping or clean-up requirements) by any
Environmental Law.
1.15 PERSON: An individual, corporation, association, partnership,
limited liability company, trust or other legal entity.
1.16 SECURED OBLIGATIONS: All present and future obligations of Grantor
to Beneficiary evidenced by or contained in the Bond Documents, whether stated
in the form of promises, covenants, representations, warranties, conditions or
prohibitions or in any other form, including but not limited to
-3-
<PAGE>
payment of the Bonds and all costs, attorneys' fees and expenses under any Bond
Documents. Notwithstanding the scope of such definition, however, for purposes
of any provision of Title 38 of the Colorado Revised Statutes, the only
"original evidence of debt" secured by this Deed of Trust is the single
counterpart of the Indenture which bears a legend in the following form:
The counterpart of the Indenture on which this legend appears is,
for purposes of Title 38 of the Colorado Revised Statutes, the
"original evidence of debt" secured by the Deed of Trust, as
defined herein.
In no event shall Trustee require Beneficiary to produce any or all of the Bonds
or other Bond Documents, other than the single counterpart of the Indenture
referred to above, to support Beneficiary's written request for full or partial
release of this Deed of Trust or for the sale of the Property by Trustee.
1.17 RESTORATION COLLATERAL ACCOUNT: The bank account or accounts so
identified, to be created by Beneficiary pursuant to Section 11.01 of the
Indenture under the circumstances provided for in Section 4.4(c) and Section 4.8
of this Deed of Trust.
ARTICLE 2
GRANTING CLAUSE
2.1 GRANT TO TRUSTEE. As security for the payment and performance of
the Secured Obligations, Grantor grants, bargains, sells and conveys the
Property to Trustee, in trust for the use and benefit of Beneficiary and subject
to all provisions of this Deed of Trust.
2.2 SECURITY INTEREST TO BENEFICIARY. As additional security for the
Secured Obligations, Grantor hereby grants to Beneficiary a security interest in
the Chattels and in the Intangible Personalty. To the extent any of the Chattels
or the Intangible Personalty may be or have been acquired with funds advanced by
Beneficiary under the Bond Documents, this security interest is a purchase money
security interest. The security interest granted in this section shall survive
any judicial or nonjudicial foreclosure of this Deed of Trust as against the
Property and, notwithstanding any purported cancellation of this Deed of Trust
in connection with any such foreclosure, shall continue in force as against the
Chattels and the Intangible Personalty until all of the Secured Obligations have
been satisfied and discharged in full. Any complete release of this Deed of
Trust shall, however, unless otherwise expressly provided in the release
document, constitute a release of such security interest as well. Grantor agrees
that a carbon, photographic or other reproduction of this Deed of Trust, or of
any financing statement signed in connection with this Deed of Trust, may be
filed or recorded to perfect the security interests granted in this section.
ARTICLE 3
GRANTOR'S WARRANTIES AND REPRESENTATIONS
3.1 WARRANTY OF TITLE. Grantor represents and warrants to Beneficiary
that Grantor has good and marketable title to the Property in fee simple,
subject only to Permitted Encumbrances, including Liens permitted by this Deed
of Trust as listed on EXHIBIT C attached hereto and incorporated herein by this
reference. Grantor further represents and warrants to Beneficiary that Grantor
is the absolute owner of the Chattels and the Intangible Personalty, free of any
liens, encumbrances, security interests and other claims whatever, except
insofar as the Chattels or the Intangible Personalty, or both, may be
-4-
<PAGE>
encumbered by a junior security interest in favor of Norwest Bank Colorado,
National Association, or by any encumbrance that is a Permitted Encumbrance.
3.2 OWNERSHIP AND STATUS OF LEASES. Grantor represents and warrants to
Beneficiary that (a) Grantor now is (or with respect to Leases not yet in
existence, will be immediately upon the execution thereof) the absolute owner of
the Leases, with full right and title to assign such Leases and the rents,
income and profits due or to become due thereunder, and (b) there is no
outstanding assignment or pledge of any such Lease or of any deposit (for
security or otherwise), rent, income or profit due or to become due under any
such Lease.
3.3 GRANTOR'S POWER AND AUTHORITY. Grantor represents and warrants to
Beneficiary that Grantor has full power and authority under applicable laws and
under Grantor's certificate of incorporation to execute and deliver this Deed of
Trust and to grant the liens and security interests created hereby in favor of
Beneficiary.
3.4 NO REGULATED SUBSTANCES. Grantor represents and warrants to
Beneficiary that:
(a) No Regulated Substance is currently being generated, used,
treated, stored or disposed of on, in or under the Property;
(b) Neither Grantor nor, to the best of Grantor's knowledge, any
other Person has ever caused or permitted any Regulated Substance to be
generated, placed, held, located or disposed of on, under or in the
Property;
(c) Neither Grantor nor, to the best of Grantor's knowledge, any
other Person has ever used the Property as a dump site, permanent or
temporary storage site or transfer station for any Regulated Substance;
(d) Grantor has received no notice of, and is not aware of, any
actual or alleged violation of any Environmental Law affecting the
Property or any activity conducted on the Property; and
(e) To the best of Grantor's knowledge, no action or proceeding is
pending before or appealable from any court, quasi-judicial body or
administrative agency relating to the enforcement of any Environmental Law
affecting the Property or any activity conducted on the Property.
Grantor will indemnify Beneficiary against and hold Beneficiary harmless from
any loss, claim, damage or expense, including attorneys' fees and other
litigation expenses, incurred by Beneficiary in connection with any claim that
any of the matters represented and warranted by Grantor in this section are
inaccurate or untrue. The indemnity provided for in the preceding sentence is a
part of the Secured Obligations but will survive payment or performance of the
other Secured Obligations and the release, foreclosure or other discharge of
this Deed of Trust.
ARTICLE 4
GRANTOR'S AFFIRMATIVE COVENANTS
4.1 PAYMENTS UNDER INDENTURE. Grantor will pay the principal of and
interest on the Bonds, and all charges, fees and other sums payable under the
Bond Documents, on the date when each such payment is due, without notice or
demand.
-5-
<PAGE>
4.2 PERFORMANCE OF OTHER OBLIGATIONS. Grantor will promptly and
strictly perform and comply with all other covenants, conditions and
prohibitions required of Grantor by the terms of the Bond Documents.
4.3 PAYMENT OF TAXES.
(a) Property Taxes. Grantor will pay, before delinquency, all taxes
and assessments, general or special, that may be levied or imposed at any
time against the Property, the Chattels or the Intangible Personalty.
Within 30 days after each payment of any such tax or assessment, Grantor
will deliver to Beneficiary, if so requested by Beneficiary, a copy of an
official receipt for such payment.
(b) Intangible Taxes. If any tax, assessment or similar charge
(other than customary taxes on net income) is imposed against the
Indenture, against Beneficiary or against any interest of Beneficiary in
any real or personal property encumbered hereby, Grantor will pay such
tax, assessment or other charge before delinquency.
(c) Right to Contest. Notwithstanding any other provision of this
section, Grantor will not be deemed to be in default solely by reason of
Grantor's failure to pay any tax, assessment or similar governmental
charge so long as, in Beneficiary's reasonable judgment, each of the
following conditions is satisfied:
(i) Grantor is engaged in and diligently pursuing in good faith
administrative or judicial proceedings appropriate to contest the
validity or amount of such tax, assess ment or charge, and has made
such reservation as GAAP may require with regard to the disputed
amount; and
(ii) Grantor's payment of such tax, assessment or charge would
necessarily and materially prejudice Grantor's prospects for success
in such proceedings; and
(iii) Nonpayment of such tax, assessment or charge will not
result in the loss or forfeiture of any property encumbered hereby or
any interest of Beneficiary therein; and
(iv) Before the tax, assessment or charge becomes delinquent,
Grantor notifies Beneficiary that Grantor intends to allow such
delinquency to occur.
If Beneficiary determines that any one or more of such conditions is not
satisfied or is no longer satisfied, Grantor will pay the tax, assessment
or charge in question, together with any interest and penalties thereon,
within 30 days after Beneficiary gives notice of such determination.
4.4 MAINTENANCE OF INSURANCE.
(a) Coverages Required. Grantor will maintain in force such
insurance as is required by the terms of the Indenture and will provide
Beneficiary such evidence of such insurance as is required by the terms of
the Indenture. In particular, Grantor will keep the Property and Chattels
insured with casualty insurance in an amount at least equal to the
principal amount of Bonds from time to time outstanding, as well as
business interruption insurance in such amount as is customarily carried
by similar businesses of similar size. All insurance maintained pursuant
to this section shall name Beneficiary as an additional insured or
mortgagee under a standard mortgagee
-6-
<PAGE>
clause, as applicable, and shall be issued by a carrier or carriers
meeting the financial stability and size requirements of the Indenture.
(b) Renewal Policies. Within 30 days after each anniversary of the
date of the Indenture, Grantor will deliver to Beneficiary evidence of
Grantor's compliance with the requirements of paragraph (a) above from an
insurance broker or consultant.
(c) Hazard Insurance Proceeds. As promptly after the occurrence of
any insured casualty to the Property as is reasonably possible, Grantor's
board of directors shall in good faith determine the amount of damage to
the Property, and shall notify Beneficiary of the amount (the "Casualty
Damage Amount") so determined. If the Casualty Damage Amount is less than
$1,000,000, then any insurance proceeds received by Beneficiary with
respect to the casualty shall be paid over forthwith to Grantor to pay for
repairs or replacements necessitated by the casualty. If the Casualty
Damage Amount is $1,000,000 or more, Beneficiary shall create a
Restoration Collateral Account with respect to such casualty in accordance
with Section 11.01 of the Indenture and deposit such proceeds in such
Restoration Collateral Account. Within 90 days after the occurrence of any
casualty such that the Casualty Damage Amount is $1,000,000 or more,
Grantor will notify Beneficiary either that Grantor will restore the
Property as nearly as possible to the condition and value it had before
the casualty, or that Grantor's board of directors has determined in good
faith that it would not be economically feasible for Grantor to restore
the Property to such prior condition and value.
(i) If Grantor notifies Beneficiary that Grantor will restore the
Property, then Grantor shall proceed with reasonable diligence and in
a workmanlike manner to do so, and the funds deposited by Beneficiary
in the Restoration Collateral Account shall be made available by
Beneficiary to Grantor to pay the cost of such restoration in
accordance with the provisions of subsection (d) below.
(ii) If Grantor notifies Beneficiary that Grantor has determined
not to restore the Property, then Grantor will, not later than 60 days
after giving such notice to Beneficiary, redeem Bonds in such
principal amount, if any, as is necessary to cause the ratio of the
aggregate principal amount of Bonds outstanding after such redemption
to Appraisal Value (as of a date after the occurrence of the casualty
in question) to be at least 80%. Such Bonds shall be redeemed at a
redemption price equal to 100% of their principal amount plus accrued
interest to the date of redemption in accordance with Sections 3.01
through 3.06 of the Indenture. The funds deposited by Beneficiary in
the Restoration Collateral Account shall be made available by
Beneficiary to Grantor to pay the costs and expenses of such
redemption, including but not limited to the payment of the principal
of and interest on the Bonds to be redeemed.
(d) Restoration Disbursements. Grantor may request that funds in the
Restoration Collateral Account created with respect to a particular
casualty be disbursed (each such disbursement being referred to as a
"Restoration Disbursement") to Grantor upon satisfaction of the following
conditions:
(i) Any such request must be in writing and must be delivered to
Beneficiary not later than 12:00 noon (Colorado time) on the first
Business Day preceding the date of the requested disbursement.
-7-
<PAGE>
(ii) Any such request shall be executed by an Officer and shall
specify the requested date of disbursement, the aggregate amount of
the disbursement and the proposed uses of the disbursement.
(iii) Any such request shall be accompanied by a certificate of
an Officer certifying that (A) the amount of the requested Restoration
Disbursement does not exceed the amount payable to the specified
Person(s) and such amount has either been advanced by Grantor or is
justly due to contractors, subcontractors, materialmen, engineers,
architects or other Persons who have rendered services or provided
materials in connection with the restoration of the Property; (B) the
Restoration Disbursement will be used solely for the purpose of paying
the amounts specified in the request or for reimbursing Grantor or
third parties for amounts previously paid for the same purposes by
Grantor or by such third parties; (C) to Grantor's knowledge as of the
date of such certificate, no payment is currently due (except for
payments covered by such request and payments as to which Grantor is
engaged or intends to engage in a good faith dispute pursuant to
Section 4.9) from Grantor to any Person who, if not paid, could assert
a mechanic's or materialman's lien against the Property that would
have priority over the lien of this Deed of Trust; (D) no Event of
Default has occurred and is continuing, or, to Grantor's knowledge,
would result from the making of the requested Restoration
Disbursement; and (E) Grantor's representations and warranties in
Article 3 above are true and correct in all material respects as of
the date of such certificate, except to the extent any such
representation or warranty by its terms relates to a specified prior
date.
Upon satisfaction of the conditions set forth in this subsection (d),
Beneficiary shall make each requested Restoration Disbursement not later
than 12:00 noon (Colorado time) on the Business Day specified in Grantor's
request.
(e) Successor's Rights. Any Person who acquires title to the
Property or the Chattels through foreclosure of this Deed of Trust will
succeed to all of Grantor's rights under all policies of insurance
maintained pursuant to this section.
(f) Exception after Event of Default. Notwithstanding any other
provision of this Section 4.4, if an Event of Default has occurred and is
continuing, and if progress toward restoration of the Property has
substantially ceased for a period of 30 days or more, then (i) Grantor
shall return to Beneficiary any insurance proceeds previously paid to
Grantor and not applied toward repair, replacement or restoration of the
Property, and (ii) Beneficiary shall apply any such amount, together with
any amount remaining in any Restoration Collateral Account created
pursuant to Section 4.4(c), toward the Secured Obligations in such manner
(consistent with the requirements of the Indenture) as Beneficiary may
elect.
4.5 PAYMENT OF UTILITIES. Grantor will pay when due all charges for
water, sewer, electricity, natural gas and other utilities serving the Property.
4.6 MAINTENANCE AND REPAIR OF PROPERTY AND CHATTELS. Grantor will at
all times maintain the Property and the Chattels in good condition and repair,
will diligently prosecute the completion of any building or other improvement
that is at any time in the process of construction on the Property, and, to the
extent provided in Sections 4.4(c) and 4.8 of this Deed of Trust, will promptly
repair, restore, replace or rebuild any part of the Property or the Chattels
that may be affected by any casualty or any public or private taking of or
injury to the Property or the Chattels. Beneficiary and any Person authorized by
-8-
<PAGE>
Beneficiary may enter and inspect the Property at all reasonable times, and may
inspect the Chattels, wherever located, at all reasonable times.
4.7 COMPLIANCE WITH LAWS. Grantor will comply in all material respects
with all statutes, ordinances and other governmental or quasi-governmental
requirements and private covenants relating to the ownership, construction, use
or operation of the Property, including but not limited to all Environmental
Laws; provided, that so long as Grantor is not otherwise in default hereunder,
Grantor may proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, requirement or covenant.
4.8 EMINENT DOMAIN OR PRIVATE DAMAGE. If all or any part of or interest
in any property encumbered by this Deed of Trust is taken or damaged by eminent
domain or any other public or private action, or is sold under threat of
condemnation (any of which events is referred to as a "Condemnation"), Grantor
will notify Beneficiary promptly of the time and place of all meetings,
hearings, trials and other proceedings relating to such Condemnation.
Beneficiary may participate in all negotiations and appear and participate in
all judicial or arbitration proceedings concerning any award or payment that may
be due as a result of such Condemnation. As promptly after the occurrence of any
such Condemnation as is reasonably possible, Grantor's board of directors shall
in good faith determine the amount of damage resulting to the Property, and
shall notify Beneficiary of the amount (the "Condemnation Damage Amount") so
determined. If the Condemnation Damage Amount is less than $1,000,000, Grantor
shall be entitled to receive the entire amount of any award or payment with
respect to the Condemnation, and shall proceed with reasonable diligence and in
a workmanlike manner to restore, repair or rebuild affected portions of the
Property so that the Property has, as nearly as possible, the same condition and
value it had before the Condemnation. If the Condemnation Damage Amount is
$1,000,000 or more, such award or payment shall be collected by Beneficiary, who
shall create a Restoration Collateral Account with respect to such Condemnation
and shall deposit the award or payment in such Restoration Collateral Account.
Within 60 days after the funding of such Restoration Collateral Account, Grantor
will apply the entire amount deposited in such Restoration Collateral Account to
redeem Bonds at a redemption price equal to 100% of principal amount plus
accrued interest to the date of redemption in accordance with Sections 3.01
through 3.06 of the Indenture. The funds deposited by Beneficiary in the
Restoration Collateral Account shall be made available by Beneficiary to Grantor
to pay the costs and expenses of such redemption, including but not limited to
the payment of the principal of and interest on the Bonds to be redeemed.
4.9 MECHANICS' LIENS. Grantor will keep the Property free and clear of
all liens and claims of liens by contractors, subcontractors, mechanics,
laborers, materialmen and other such Persons, and will cause any recorded
statement of any such lien to be released of record within 30 days after
learning of the recording thereof. Notwithstanding the preceding sentence,
however, Grantor will not be deemed to be in default under this section if and
so long as Grantor contests in good faith the validity or amount of any asserted
lien and diligently prosecutes or defends an action (on its own behalf and, if
Beneficiary is made a party to any such action, on behalf of Beneficiary as
well) appropriate to obtain a binding determination of the disputed matter;
provided, that (a) Grantor shall notify Beneficiary of the pendency of any such
dispute, (b) Grantor shall make such reservation as GAAP may require with regard
to the disputed amount, and (c) if any such asserted lien is finally determined
to be valid and enforceable, Grantor will, not less than 15 days before all or
any part of the Property would be sold to enforce such lien, cause such lien to
be discharged and any proceedings for the sale of the Property to be terminated.
Grantor will indemnify Beneficiary against and hold Beneficiary harmless from
any loss, damage or expense, including attorneys' fees and other litigation
expenses, incurred by Beneficiary as a result of any default by Grantor under
this section, and Grantor's obligations under this sentence shall survive
foreclosure of this Deed of Trust.
-9-
<PAGE>
4.10 ENVIRONMENTAL CLAIMS. Grantor will indemnify Beneficiary against
and hold Beneficiary harmless from any loss, damage or expense, including
attorneys' fees and other expenses, incurred by Beneficiary in connection with
the investigation, defense or settlement of any claim, whether or not valid and
whether asserted by a governmental agency or a private party, that (a) any part
of the Property is contaminated or otherwise affected by the presence of any
Regulated Substance, or (b) the Property or any activity conducted at any time
on the Property is wholly or partly responsible for the presence elsewhere of
any Regulated Substance, or in connection with any cleanup or other remediation
actions that may be imposed on or agreed to by Beneficiary in connection with
any such claim. The indemnity provided for in this section is a part of the
Secured Obligations but will survive payment or performance of the other Secured
Obligations and the release, foreclosure or other discharge of this Deed of
Trust.
4.11 DEFENSE OF ACTIONS. Grantor will defend, at Grantor's expense, any
action, proceeding or claim that (a) affects any property encumbered hereby or
any interest of Beneficiary in such property or in the Secured Obligations, or
(b) arises under, grows out of or is in any way connected with any Lease or the
rights or obligations of Grantor or Beneficiary under any Lease.
4.12 FURTHER ASSURANCES. Grantor will execute and deliver to
Beneficiary on demand, and pay the costs of preparation and recording thereof,
any further documents that Beneficiary may request to confirm or perfect the
liens and security interests created or intended to be created hereby, or to
confirm or perfect any evidence of the Secured Obligations, including but not
limited to financing statements in connection herewith.
ARTICLE 5
GRANTOR'S NEGATIVE COVENANTS
5.1 WASTE. Grantor will not commit or permit any waste with respect to
the Property or the Chattels; provided, that no demolition, excavation or other
work needed to prepare the Property for Grantor's construction, alteration,
expansion or reconstruction of Grantor's proposed integrated warehouse, office,
retail store and training facility shall be deemed to constitute waste.
5.2 ADDITIONAL TAX BURDEN. Except with the prior written consent of
Beneficiary (which consent shall not be withheld unreasonably), Grantor will not
initiate, join in or consent to any action or proposal to include all or any
part of the Property in any special improvement district or other special
district or taxing authority that does not include the Property on the date of
this Deed of Trust.
5.3 USE OF REGULATED SUBSTANCES. Except in the ordinary course of
business and as permitted by applicable law, Grantor will not cause or permit
all or any part of the Property to be used to manufacture, generate, store,
transfer, treat, recycle or dispose of any Regulated Substance. Grantor will
indemnify Beneficiary against, and hold Beneficiary harmless from, any loss,
claim, damage or expense, including attorneys' fees and other litigation
expenses, incurred by Beneficiary in connection with any actual or alleged
violation of the preceding sentence. Such indemnity is a part of the Secured
Obligations but will survive payment or performance of the other Secured
Obligations and the release, foreclosure or other discharge of this Deed of
Trust.
5.4 TRANSFER OF PROPERTY. Except as permitted by Article 5 of the
Indenture and Section 9.2 of this Deed of Trust, Grantor will not, without the
prior written consent of Beneficiary, (a) transfer fee title to the Property,
(b) lease all or substantially all of the Property under a lease that has a
primary term of 50 years or more, or (c) enter into any lease or other
arrangement before March 31,
-10-
<PAGE>
2000, that would result in the occurrence of an Event of Default under Section
6.01(9) of the Indenture. In the event Grantor leases all or substantially all
of the Property, Grantor will not, except with the prior written consent of
Beneficiary, collect rent under such lease more than one month in advance.
5.5 TRANSFER OR REMOVAL OF CHATTELS. Grantor will not sell, transfer or
remove from the Property all or any part of the Chattels, unless the items sold,
transferred or removed are simultaneously replaced with similar items of equal
or greater value.
5.6 CHANGE OF NAME. Grantor will not change the name under which
Grantor does business, or adopt or begin doing business under any other name or
assumed or trade name, without first notifying Beneficiary of Grantor's
intention to do so and delivering to Beneficiary such executed modifications or
supplements to this Deed of Trust (and to any financing statement that may be
filed in connection herewith) as Beneficiary may require to maintain the
perfected status of the security interests granted in this Deed of Trust.
5.7 IMPROPER USE OF PROPERTY OR CHATTELS. Grantor will not use the
Property or the Chattels for any purpose or in any manner that violates any
applicable law, ordinance or other governmental requirement, the requirements or
conditions of any insurance policy, or any private covenant that is recorded in
the real property records of Adams County, Colorado, and runs with title to the
Property.
ARTICLE 6
ASSIGNMENT OF LEASES AND RENTS
6.1 ASSIGNMENT OF LEASES. Grantor assigns and transfers to Beneficiary
all of Grantor's right, title and interest in and to the Leases.
6.2 ASSIGNMENT OF RENTS AND OTHER INCOME. As a partial source of
payment of the Secured Obligations, and as additional security for the payment
and performance of all of the Secured Obligations, Grantor assigns and transfers
to Beneficiary all of Grantor's right, title, and interest in and to all
deposits (whether for security or otherwise), rents, issues, profits, revenues,
royalties and benefits of every nature arising from the occupancy or other use
of all or any part of the Property.
6.3 BENEFICIARY'S RIGHT OF POSSESSION. At any time after the execution
of this Deed of Trust, Beneficiary may, at Beneficiary's option, enter and take
possession of the premises affected by any Lease and perform all acts necessary
for the operation and maintenance of such premises in the same manner and to the
same extent as Grantor could do the same things. Without limiting the effect of
the preceding sentence, Beneficiary is empowered, but shall have no obligation,
to collect the rents, income, and profits accruing under the Leases or any of
them, to enforce payment and performance of the lessee's obligations under any
Lease, to exercise all of the rights and privileges of Grantor under any Lease,
including the right to fix or modify rents, to demand and sue for possession of
the premises covered by any Lease, and to relet such premises and collect the
rents, income, and profits resulting from such reletting. Beneficiary will from
time to time apply the net income derived under the Leases, after payment of all
proper costs and charges, to the Secured Obligations in such order as
Beneficiary may elect, but Beneficiary will in no event be accountable for any
amount not actually received by Beneficiary pursuant to this Article 6.
6.4 REVOCABLE WAIVER OF BENEFICIARY'S RIGHTS. By accepting this Deed of
Trust, Beneficiary waives the right to exercise the rights and powers granted to
Beneficiary in Section 6.3 above, and covenants and agrees not to revoke such
waiver until and unless an Event of Default has occurred. If
-11-
<PAGE>
any such Event of Default occurs, Beneficiary may at any time (including the
time covered by any foreclosure proceeding and the period provided for
redemption, if any) during the continuation of such Event of Default revoke such
waiver without notice, and upon such revocation may proceed to exercise any or
all of the rights and powers conferred on Beneficiary in Section 6.3.
6.5 DIRECTION TO LESSEES. Grantor hereby irrevocably agrees and directs
that the lessee under each Lease shall, upon demand and notice from Beneficiary
that Beneficiary has revoked the waiver contained in Section 6.4 above, pay all
rents, income, and profits under such Lease to Beneficiary, without liability on
the part of such lessee for determining the validity or propriety of
Beneficiary's revocation of such waiver, and notwithstanding any claim by
Grantor that Beneficiary's revocation of such waiver is invalid or improper.
Grantor will have no claim against any such lessee for any rents or other sums
paid by such lessee to Beneficiary.
6.6 LIMITATION ON BENEFICIARY'S DUTIES; INDEMNIFICATION. Until
Beneficiary actually enters and takes possession of the premises immediately
affected by any Lease, nothing in this Deed of Trust shall make Beneficiary
responsible for the condition, safety, control, care, management or repair of
such premises. Nothing in this Deed of Trust or any other Bond Document shall be
construed to bind Beneficiary at any time to the performance of any of the terms
or provisions contained in any Lease, or otherwise to impose any obligation on
Beneficiary, including, without limitation, any liability under any covenant of
quiet enjoyment contained in any Lease if any Lease is terminated or any lessee
dispossessed upon foreclosure of any of the Bond Documents.
6.7 REASSIGNMENT BY BENEFICIARY. Beneficiary may assign all of
Grantor's right, title and interest in any or all Leases (to the extent of the
interests in such Leases conferred upon Beneficiary by the terms of this Article
6) to any subsequent owner of the Secured Obligations, or to any Person who
acquires title to the Property through foreclosure or otherwise. No Person who
acquires title to the Property through or in lieu of foreclosure shall have any
obligation to account to Grantor for any rents, income or profits that accrue
after such Person acquires title to the Property.
ARTICLE 7
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under this
Deed of Trust:
7.1 INDENTURE EVENT OF DEFAULT. The occurrence of any of the events
enumerated in Section 6.01 of the Indenture.
ARTICLE 8
BENEFICIARY'S REMEDIES
If an Event of Default has occurred and is continuing, Beneficiary may
exercise any remedy available at law or in equity, including but not limited to
those listed below and those listed in the other Bond Documents, in such
sequence or combination as Beneficiary may determine in Beneficiary's sole
discretion, and without being required to demonstrate any actual impairment of
its security:
8.1 PERFORMANCE OF DEFAULTED OBLIGATIONS. Beneficiary may make any
payment or perform any other obligation under the Bond Documents that Grantor
has failed to make or perform, and Grantor hereby irrevocably appoints
Beneficiary as the true and lawful attorney-in-fact for Grantor to make
-12-
<PAGE>
any such payment and perform any such obligation in the name of Grantor. All
payments made and expenses (including attorneys' fees) incurred by Beneficiary
in this connection, together with interest thereon at the rate borne by the
Bonds from the date paid or incurred until repaid, will be part of the Secured
Obligations and will be immediately due and payable by Grantor to Beneficiary.
In lieu of advancing Beneficiary's own funds for such purposes, Beneficiary may
use any funds of Grantor that may be in Beneficiary's possession, including but
not limited to insurance or condemnation proceeds.
8.2 SPECIFIC PERFORMANCE AND INJUNCTIVE RELIEF. Notwithstanding the
availability of legal remedies, Beneficiary will be entitled to obtain specific
performance, mandatory or prohibitory injunctive relief or other equitable
relief requiring Grantor to cure or refrain from repeating any Default.
8.3 ACCELERATION OF SECURED OBLIGATIONS. Beneficiary may, without
notice or demand, declare all of the Secured Obligations immediately due and
payable in full.
8.4 SUIT FOR MONETARY RELIEF. With or without accelerating the maturity
of the Secured Obligations, Beneficiary may sue from time to time for any
payment due under any of the Bond Documents, or for money damages, including
attorneys' fees and costs. resulting from Grantor's Default under any of the
Bond Documents.
8.5 POSSESSION OF PROPERTY. To the extent permitted by law, Beneficiary
may enter and take possession of the Property without seeking or obtaining the
appointment of a receiver, may employ a managing agent for the Property and may
lease or rent all or any part of the Property, either in Beneficiary's name or
in the name of Grantor, and may collect the rents, issues and profits of the
Property. Any revenues collected by Beneficiary under this section will be
applied first toward payment of all expenses (including attorneys' fees)
incurred by Beneficiary, together with interest thereon at the rate borne by the
Bonds from the date incurred until repaid, and the balance, if any, will be
applied against the Secured Obligations.
8.6 ENFORCEMENT OF SECURITY INTERESTS. Beneficiary may exercise all
rights of a secured party under the Colorado Uniform Commercial Code with
respect to the Chattels and the Intangible Personalty, including but not limited
to taking possession of, holding and selling the Chattels and enforcing or
otherwise realizing on any accounts and general intangibles. Any requirement for
reasonable notice of the time and place of any public sale, or of the time after
which any private sale or other disposition is to be made, will be satisfied by
Beneficiary's giving of such notice to Grantor at least 15 days prior to the
time of any public sale or the time after which any private sale or other
intended disposition is to be made. To the extent permitted by applicable law,
Beneficiary may, at Beneficiary's option, cause Trustee to sell any or all of
the Chattels, the Intangible Personalty or other personal property as part of
the sale of the Property, without making any distinction between real and
personal property.
8.7 FORECLOSURE AGAINST PROPERTY. Beneficiary may foreclose this Deed
of Trust, insofar as it encumbers the Property, either by judicial action or
through Trustee. Foreclosure through Trustee will be initiated by Beneficiary's
filing of its notice of election and demand for sale with Trustee. Upon the
filing of such notice of election and demand for sale, Trustee shall promptly
comply with all notice and other requirements of the laws of Colorado then in
force with respect to such sales, and shall give four weeks' public notice of
the time and place of such sale by advertisement weekly in some newspaper of
general circulation then published in the County or City and County in which the
Property is located. Any sale conducted by Trustee pursuant to this section
shall be held at the front door of the county courthouse for such County or City
and County, or on the Property, or at such other place as similar sales are then
customarily held in such County or City and County, provided that the actual
place of sale shall be specified in the notice of sale. Beneficiary may bid at
any such sale, and (except insofar as
-13-
<PAGE>
Trustee's fees and other expenses of sale are required by law to be paid in
cash) may pay any such bid in whole or in part by credit against the Secured
Obligations rather than in cash. The proceeds of any sale under this section
shall be applied first to the fees and expenses of the officer conducting the
sale, and then to the reduction or discharge of the Secured Obligations in such
order as Beneficiary may elect; any surplus remaining shall be paid over to
Grantor or to such other Person or Persons as may be lawfully entitled to such
surplus. At the conclusion of any foreclosure sale, the officer conducting the
sale shall execute and deliver to the purchaser at the sale a certificate of
purchase, which shall describe the property sold to such purchaser and shall
state that upon the expiration of the applicable periods for redemption, the
holder of such certificate will be entitled to a deed to the property described
in the certificate. After the expiration of all applicable periods of
redemption, unless the property sold has been redeemed by Grantor, the officer
who conducted such sale shall, upon request, execute and deliver an appropriate
deed to the holder of the certificate of purchase or the last certificate of
redemption, as the case may be. Nothing in this section dealing with foreclosure
procedures or specifying particular actions to be taken by Beneficiary or by
Trustee or any similar officer shall be deemed to contradict or add to the
requirements and procedures now or hereafter specified by Colorado law, and any
such inconsistency shall be resolved in favor of Colorado law applicable at the
time of foreclosure.
8.8 APPOINTMENT OF RECEIVER. Beneficiary shall be entitled, as a matter
of absolute right and without regard to the value of any security for the
Secured Obligations or the solvency of any Person liable therefor, to the
appointment of a receiver for the Property on ex parte application to any court
of competent jurisdiction. To the extent permitted by law, Grantor waives any
right to any hearing or notice of hearing prior to the appointment of a
receiver. Such receiver and his agents shall be empowered (a) to take possession
of the Property, (b) to exclude Grantor and Grantor's agents, servants and
employees from the Property, or, at the option of the receiver, in lieu of such
exclusion, to collect a fair market rental from any such Persons occupying any
part of the Property, (c) to collect the rents, issues, profits and income
therefrom, (d) to complete any construction that may be in progress, (e) to do
such maintenance and make such repairs and alterations as the receiver deems
necessary, (f) to use all stores of materials, supplies and maintenance
equipment on the Property and replace such items at the expense of the
receivership estate, (g) to pay all taxes and assessments against the Property
and the Chattels, all premiums for insurance thereon, all utility and other
operating expenses, and all sums due under any prior or subsequent encumbrance,
(h) to borrow from Beneficiary such funds as may reasonably be necessary to the
effective exercise of the receiver's powers, on such terms as may be agreed upon
by the receiver and Beneficiary, and (i) generally to do anything that Grantor
could legally do if Grantor were in possession of the Property. All expenses
incurred by the receiver or his agents, including obligations to repay funds
borrowed by the receiver, shall constitute a part of the Secured Obligations.
Any revenues collected by the receiver shall be applied first to the expenses of
the receivership, including attorneys' fees incurred by the receiver and by
Beneficiary, together with interest thereon at the rate borne by the Bonds from
the date incurred until repaid, and the balance shall be applied toward the
Secured Obligations or in such other manner as the court may direct. Unless
sooner terminated with the express consent of Beneficiary, any such receivership
will continue until the Secured Obligations have been discharged in full, or
until title to the Property has passed after foreclosure sale and all applicable
periods of redemption have expired.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1 REPLACEMENT OF TRUSTEE. Beneficiary may at any time, with or
without cause, elect to replace the Trustee named at the beginning of this Deed
of Trust. Beneficiary may exercise such election by notifying Trustee of such
replacement, signing and acknowledging an instrument appointing a successor
Trustee and recording such instrument in the real property records of the County
or City and
-14-
<PAGE>
County in which the Property is located. Any such successor Trustee may be
replaced by Beneficiary in the same manner. If (and only if) Beneficiary
exercises the right to replace the Trustee originally named, the following
provisions shall become applicable:
(a) Trustee will not be liable for any error in judgment or for any
act done in good faith by Trustee, nor will Trustee be otherwise
accountable or responsible, except for Trustee's own bad faith or willful
misconduct, under any circumstances whatever. Trustee will not be
personally liable, in the event Trustee or any other Person acting under
the powers granted Trustee under this Deed of Trust enters or takes
possession of the Property, for debts contracted or for liability or
damages incurred in the management or operation of the Property. Trustee
may rely absolutely on any document, instrument or signature purporting to
authorize or support any action by Trustee under this Deed of Trust which
Trustee believes in good faith to be genuine. Grantor will from time to
time pay Trustee all compensation due Trustee under this Deed of Trust,
will reimburse Trustee for all expenses, including attorneys' fees,
incurred by Trustee in the performance of Trustee's duties under this Deed
of Trust, and will indemnify Trustee and hold Trustee harmless against any
loss, claim, damage or expense incurred by Trustee in connection with the
performance of such duties.
(b) Any funds received by Trustee shall, until used or applied as
provided in this Deed of Trust, be held in trust for the purposes for
which they were received. Except to the extent required by law, such funds
need not be segregated from other funds held in trust by Trustee. In no
event shall Trustee or Beneficiary be liable to pay interest on any funds
held by Trustee.
(c) Trustee may resign by giving 30 days' notice of resignation in
writing to Beneficiary.
(d) Any successor Trustee appointed pursuant to this section will,
without further act, deed or conveyance, automatically become vested with
all of the rights, powers, interests and trusts which had been held by
such successor Trustee's predecessor, with the same effect as though the
successor Trustee had originally been named Trustee in this Deed of Trust.
Nevertheless, at the request of Beneficiary or of the successor Trustee,
the former Trustee shall execute and deliver to the successor Trustee an
instrument in recordable form, transferring to the successor Trustee all
of the former Trustee's rights, powers, interests and trusts under this
Deed of Trust, and shall also transfer and deliver to the successor
Trustee any property or funds held by the former Trustee in the former
Trustee's capacity as trustee under this Deed of Trust.
(e) Trustee may authorize one or more Persons to act on Trustee's
behalf in the performance of ministerial acts under this Deed of Trust,
including but not limited to the transmittal and posting of notices.
9.2 COOPERATION WITH DEVELOPMENT AND LEASING. By accepting this Deed of
Trust, Beneficiary acknowledges that Grantor is in the process of developing the
Property, that final decisions have yet to be made by Grantor and governmental
or quasi-governmental authorities, as well as utility companies and other
private parties, regarding the location and configuration of roadways that may
abut the Property and the exact scope and location of various other public and
private improvements associated with the development of the Property, and that
such authorities and other parties are likely to require, as part of normal
development processes, the execution of various documents (including but not
limited to a resubdivision plat, subordination of the lien of this Deed of Trust
to easements or similar interests, and lien releases as to any land dedicated to
public use) by the holder of any lien or monetary encumbrance on
-15-
<PAGE>
the Property. Beneficiary also acknowledges that Grantor intends to lease
certain unimproved portions of the Property to third parties who will incur the
cost of constructing improvements and who may be expected to require assurance
that their right to possession in accordance with the terms of their leases will
not be disturbed in the event of any foreclosure of this Deed of Trust.
Accordingly, Beneficiary agrees to execute and deliver such documents as Grantor
may request from time to time, provided that each of the following conditions is
satisfied:
(a) Each such request shall be in writing, shall describe with
particularity the document or documents Beneficiary is asked to execute,
shall specify the time within which such execution is necessary (which
shall not be less than 20 days after the date of Beneficiary's receipt of
the request), and shall confirm Grantor's agreement to reimburse
Beneficiary upon request for any out-of-pocket expense reasonably incurred
by Beneficiary in complying with such request;
(b) At the time of Beneficiary's receipt of any such request, no
Event of Default shall have occurred and be continuing;
(c) Any such request shall be accompanied by the certificate of an
Officer, stating that the requested action by Beneficiary is of material
importance to the development of the Property and will have no material
adverse effect on the value of the Property or the rights of Beneficiary
with respect to the Property, and by an Opinion of Counsel to the effect
that Beneficiary's execution and delivery of the requested documents are
(i) consistent with any applicable provision of the TIA and any applicable
subdivision law or ordinance, and (ii) required by the terms of this
section; and
(d) If any document to be executed would have the effect of
releasing the lien of this Deed of Trust as to any portion of the
Property, the request shall also be accompanied by (i) a certificate or
opinion of National Valuation Consultants, Inc., or of another appraiser
who is a Member of the Appraisal Institute reasonably acceptable to
Beneficiary, to the effect that the fair value of such portion of the
Property, together with the fair value of any other portions of the
Property previously released, is not more than $500,000, determined on a
basis consistent with the basis of the appraisal dated January 20, 1995
and prepared by National Valuation Consultants, Inc., (ii) any other
certificate, opinion or other document required by the provisions of
subsection 314(d) of the TIA, and (iii) the written commitment of the
issuer of the title insurance policy that insures in Beneficiary the lien
of this Deed of Trust that such title insurer will, upon recording of the
instrument of partial release to be executed by Beneficiary, issue an
endorsement to the such title insurance policy, insuring the continued
validity and priority of the lien of this Deed of Trust as to all portions
of the Property not expressly released from such lien.
Nothing in this section will obligate Beneficiary to execute any document giving
assurance to a tenant or prospective tenant unless such document confirms that
such tenant's lease is subordinate to the lien of this Deed of Trust, requires
the tenant to attorn to and recognize as successor landlord any Person who
acquires title to the Property through or in lieu of foreclosure of this Deed of
Trust, and absolves Beneficiary (and any other Person who may acquire title to
the Property through or in lieu of foreclosure of this Deed of Trust) of any
liability or responsibility for any act or omission of Grantor.
9.3 TIME OF THE ESSENCE. Time is of the essence with respect to all
provisions of the Bond Documents.
-16-
<PAGE>
9.4 FORBEARANCE NOT A WAIVER; RIGHTS AND REMEDIES CUMULATIVE.
Beneficiary's rights and remedies under each of the Bond Documents are
cumulative of the rights and remedies available to Beneficiary under each of the
other Bond Documents and those otherwise available to Beneficiary at law or in
equity. No delay by Trustee or Beneficiary in exercising any right or remedy
provided herein or otherwise afforded by law or equity shall be deemed a waiver
of or preclude the exercise of such right or remedy, and no act of Beneficiary
shall be construed as an election to proceed under any particular provision of
any Bond Document to the exclusion of any other provision in the same or any
other Bond Document, or as an election of remedies to the exclusion of any other
remedy that may then or thereafter be available to Beneficiary. All such rights
and remedies may be exercised concurrently, independently or successively in any
order whatsoever and as often as the occasion therefor arises. Neither
Beneficiary's taking action pursuant to Section 8.1 nor Beneficiary's receipt of
proceeds, awards, damages, rents or other payments pursuant to Sections 4.4(c),
4.8, 6.4, 8.5 or 8.8 shall be deemed to cure any Default or impair any right or
remedy available to Beneficiary under Article 8 hereof.
9.5 NO IMPLIED WAIVERS. Beneficiary shall not be deemed to have waived
any provision of any Bond Document unless such waiver is in writing and is
signed by Beneficiary. Without limiting the generality of the preceding
sentence, Beneficiary's acceptance of any payment with knowledge of a Default
shall not be deemed a waiver of such Default, and no waiver by Beneficiary of
any particular Default on the part of Grantor shall be deemed a waiver of any
other Default or of any similar Default in the future. No Event of Default may
be waived except in the manner provided in Section 6.04 of the Indenture.
9.6 DEALINGS WITH SUCCESSOR OWNERS. If the Property or any interest in
the Property is transferred to any Person other than Grantor, whether
voluntarily or involuntarily and whether or not Beneficiary has consented to
such transfer, then Beneficiary may deal with such successor owner in all
matters relating to the Secured Obligations, and except as provided in Section
5.02 of the Indenture, no such dealings, including but not limited to any change
in the terms of the Secured Obligations, will be deemed to discharge or impair
the obligations of Grantor to Beneficiary under the Bond Documents.
9.7 NO THIRD PARTY RIGHTS. No Person shall be a third party beneficiary
of any provision of any of the Bond Documents. All provisions of the Bond
Documents favoring Beneficiary are intended solely for the benefit of
Beneficiary, and no third party shall be entitled to assume or expect that
Beneficiary will not waive or consent to modification of any such provision in
Beneficiary's sole discretion.
9.8 PRESERVATION OF LIABILITY AND PRIORITY. Without affecting the
liability of Grantor or of any other Person (except a Person expressly released
in writing) for payment and performance of all of the Secured Obligations, and
without affecting the rights of Beneficiary with respect to any security not
expressly released in writing, and without impairing in any way the priority of
this Deed of Trust over the interests of any Person acquired or first evidenced
by recording subsequent to the recording hereof, Beneficiary may, either before
or after the maturity of the Bonds, and without notice or consent: (a) release
any Person liable for payment or performance of all or any part of the Secured
Obligations; (b) make any agreement altering the terms of payment or performance
of all or any of the Secured Obligations; (c) exercise or refrain from
exercising, or waive, any right or remedy that Beneficiary may have under any of
the Bond Documents; (d) accept additional security of any kind for any of the
Secured Obligations; or (e) release or otherwise deal with any real or personal
property securing the Secured Obligations. Any Person acquiring or recording
evidence of any interest of any nature in the Property, the Chattels or the
Intangible Personalty shall be deemed, by acquiring such interest or recording
any evidence thereof, to have agreed and consented to any or all such actions by
Beneficiary. Grantor and, to the extent permitted by law, any Person who
consents to this Deed of Trust or who has or acquires an interest in the
Property, each
-17-
<PAGE>
waive any right to require any marshalling of assets in connection with
Beneficiary's exercise of any remedy provided for in this Deed of Trust or
otherwise available to Beneficiary.
9.9 SUBROGATION OF BENEFICIARY. Beneficiary shall be subrogated to the
lien of any previous encumbrance discharged with funds advanced by Beneficiary
under the Bond Documents, regardless of whether such previous encumbrance has
been released of record.
9.10 NOTICES. Any notice required or permitted to be given by Grantor
or Beneficiary under any of the Bond Documents must be in writing and will be
deemed given on personal delivery or on the third business day after the mailing
thereof, by registered or certified United States mail, postage prepaid, to the
appropriate party at its address shown on the first page of this Deed of Trust.
Either party may change such party's address for notices by giving notice to the
other party in accordance with this section, but no such change of address will
be effective as against any Person without actual knowledge of the change.
-18-
<PAGE>
9.11 FIXTURE FILING. This Deed of Trust is intended to serve as a
financing statement under the Colorado Uniform Commercial Code with respect to
any fixtures that may at any time be part of the Property or the Chattels, and
the recording of this Deed of Trust is intended to constitute a "fixture filing"
for purposes of such Uniform Commercial Code. In this context, Grantor is to be
regarded as a "debtor" and Beneficiary is to be regarded as a "secured party",
and the addresses of the debtor and the secured party are deemed to be those
given for Grantor and Beneficiary in Sections 1.1 and 1.2, respectively.
9.12 DEFEASANCE. Upon payment and performance in full of all of the
Secured Obligations, Beneficiary will execute and deliver to Grantor such
documents as may be required to release this Deed of Trust of record.
9.13 SEVERABILITY. Wherever possible, each provision of the Bond
Documents is to be interpreted so as to be effective and valid under applicable
law. If any provision of any Bond Document is, for any reason and to any extent,
invalid or unenforceable, then neither the remainder of the Bond Document in
which such provision appears, nor any other Bond Document, nor the application
of the provision to other Persons or in other circumstances, shall be affected
by such invalidity or unenforceability.
Signed and delivered as of the date first mentioned above.
ATTEST: ULTIMATE ELECTRONICS, INC., a Delaware
corporation
_____________________________ By_______________________________________
Secretary Vice President - Finance and
Administration
-19-
<PAGE>
STATE OF COLORADO )
CITY AND) ss.
COUNTY OF DENVER )
The foregoing instrument was acknowledged before me this day of March,
1995, by Alan E. Kessock as Vice President - Finance and Administration of
Ultimate Electronics, Inc., a Delaware corporation.
My commission expires:_____________________________________________
Witness my hand and official seal.
____________________________________________
Notary Public
-20-
<PAGE>
EXHIBIT A
TO
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(Legal Description)
PARCEL 1:
Commencing at the Southeast corner of the SE1/4 of the NW1/4 of Section 27,
Township 2 South, Range 68 West of the 6th P.M., thence North 1320 feet, thence
West 165 feet, thence South 1320 feet, thence East 165 feet, to place of
beginning,
EXCEPT those portions conveyed to The Department of Highways, State of Colorado
by deeds recorded August 2, 1956 in Book 621, at Page 426 and August 27, 1959 in
Book 797, at Page 283,
AND EXCEPT that portion conveyed to Albert G. Storatz and Mildred R. Storatz by
deeds recorded January 5, 1971 in Book 1656, at Page 270 and August 31, 1979 in
Book 2382, at Page 339,
AND EXCEPT that portion conveyed to The City of Thornton by deed recorded
October 19, 1978 in Book 2285, at Page 16,
County of Adams,
State of Colorado.
PARCEL 2:
That part of the Southwest quarter of the Northeast quarter (SW1/4NE1/4) of
Section 27, Township 2 South, Range 68 West of the 6th P.M. lying west of the
West right of way of the Valley Highway and North of the North right of way line
of 84th Avenue,
EXCEPT that portion conveyed to Albert G. Storatz and Mildred R. Storatz by
deeds recorded January 5, 1971, in Book 1656 at Page 270 and August 31, 1979 in
Book 2382 at Page 339,
County of Adams,
State of Colorado.
A-1
<PAGE>
PARCEL 3:
A parcel of land in the SE1/4 of the NW1/4 of Section 27, Township 2 South,
Range 68 West of the 6th P.M., in Adams County, Colorado, described as follows:
Beginning 165 feet West and 300 feet North of the Southeast corner of said SE1/4
of the NW1/4; thence North parallel with the East line of said SE1/4 of the
NW1/4 a distance of 1024.38 feet to the North line of said SE1/4 of the NW1/4;
thence West along the North line of said SE1/4 of the NW1/4 a distance of
1152.27 feet to the Northwest corner of said SE1/4 of the NW1/4; thence South
along the West line of said SE1/4 of the NW1/4 a distance of 773.6 feet; thence
East parallel with the South line of said SE1/4 of the NW1/4 a distance of 3.16
feet; thence South a distance of 501.0 feet to a point which is 5.2 feet East
and 50.0 feet North of the Southwest corner of said SE1/4 of the NW1/4; thence
East parallel with the South line of said SE1/4 of the NW1/4 a distance of 249.8
feet; thence North parallel with the West line of said SE1/4 of the NW1/4 a
distance of 250.0 feet; thence East parallel with the South line of said SE1/4
of the NW1/4 a distance of 894.89 feet to the Point of Beginning.
PARCEL 4:
A parcel of land in the Southeast quarter of the Northwest quarter of Section
27, Township 2 South, Range 68 West of the 6th P.M., more particularly described
as follows:
From the Southeast corner of the Northwest quarter of Section 27, Township 2
South, Range 68 West of the 6th P.M., Westerly along the South line of said
Northwest quarter a distance of 510.50 feet; thence Northerly parallel to the
East line of said Northwest l/4 a distance of 32.07 feet to the True Point of
Beginning; thence continuing Northerly parallel to said East line a distance of
267.93 feet; thence Westerly parallel to the South line of the said Northwest
quarter a distance of 100.00 feet; thence Southerly parallel to said East line a
distance of 270.00 feet to the North right of way line of West 84th Avenue and
30.00 feet from the said South line; thence Easterly along said right of way
line and parallel to said South line a distance of 89.65 feet; thence continuing
along said right of way line at an angle of 11 degrees 18 minutes 30 seconds to
the left a distance of 10.57 feet to the True Point of Beginning,
EXCEPT that portion conveyed to the County of Adams in Book 1278 at Page 346,
more particularly described as follows:
Beginning at the Southeast corner of the Northwest quarter of said Section
27; thence Westerly along the South line of said Northwest quarter a
distance of 510.50 feet; thence Northerly parallel to the East line of said
Northwest l/4 a distance of 32.07 feet to the True Point of Beginning;
continuing Northerly parallel to said East line a distance of 17.93 feet;
thence Westerly parallel to the said South line of the said Northwest
quarter a distance of 100.00 feet;
A-2
<PAGE>
thence Southerly parallel to said East line a distance of 20.00 feet to the
North right of way line of West 84th Avenue and 30.00 feet North of the
South line of said Northwest quarter; thence Easterly along said right of
way line and parallel to said South line a distance of 89.66 feet; thence
continuing along said right of way line at an angle of 11 degrees 18
minutes 30 seconds to the left a distance of 10.57 feet to the True Point
of Beginning,
County of Adams,
State of Colorado.
PARCEL 5:
A parcel of land in the Southeast quarter of the Northwest quarter of Section
27, Township 2 South, Range 68 West of the 6th P.M., more particularly described
as follows:
From the Southeast corner of said Northwest quarter of Section 27 Westerly along
the South line of said Northwest quarter, a distance of 610.50 feet; thence
Northerly and parallel to the East line of said Northwest quarter, a distance of
30.00 feet to the True Point of Beginning; thence continuing along the preceding
course, a distance of 270.00 feet; thence Westerly and parallel to the South
line of said Northwest quarter, a distance of 199.50 feet; thence Southerly and
parallel to the East line of said Northwest quarter, a distance of 145.00 feet;
thence Easterly and parallel to the South line of said Northwest quarter, a
distance of 100.00 feet; thence Southerly and parallel to the East line of said
Northwest quarter, a distance of 125.00 feet; thence Easterly parallel to the
South line of said Northeast quarter, a distance of 99.50 feet to the True Point
of Beginning;
EXCEPT the Southerly 20 feet thereof as conveyed to the County of Adams by deed
recorded March 2, 1967 in Book 1348 at Page 396.
BUT TOGETHER WITH an easement for ingress and egress and for parking and other
purposes on and over the North 12 feet of said excepted South 20 feet.
County of Adams,
State of Colorado.
PARCEL 6:
Lot 2,
STRIDER SUBDIVISION,
County of Adams,
State of Colorado.
A-3
<PAGE>
PARCEL 7:
Lot 1,
STRIDER SUBDIVISION,
County of Adams,
State of Colorado.
A-4
<PAGE>
EXHIBIT B
TO
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(Existing Leases)
1. Lease dated December 18, 1972, from Gladys Kamm, as lessor, to
Burger King Corporation, as lessee.
2. Lease dated August 12, 1993, from DiAnnie Properties, Inc., as
lessor, to Billie Rynnig, as lessee.
B-1
<PAGE>
EXHIBIT C
TO
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(Liens Expressly Permitted by this Deed of Trust)
[NOTE: EXCEPT AS OTHERWISE INDICATED, ALL REFERENCES TO RECORDING INFORMATION
RELATE TO THE RECORDS OF THE CLERK AND RECORDER OF ADAMS COUNTY, COLORADO.]
1. General taxes and assessments for 1995, payable in 1996.
2. Patent reservations contained in United States Patent recorded March
7, 1892 in Patent Volume 12, Page 388-399, in the records of the Bureau of Land
Management of the United States Department of the Interior.
3. Mineral reservations created by instrument recorded March 12, 1883
in Book A7 at Page 305.
4. Easements and notes shown on the recorded subdivision plat for
Strider Subdivision, and easements created by instruments recorded June 3, 1963
in Book 1070 at Page 464; April 28, 1972 in Book 1793 at Page 352; June 28, 1972
in Book 1804 at Page 308; August 20, 1974 in Book 1948 at Page 898; July 18,
1980 in Book 2473 at Page 886; August 14, 1981 in Book 2579 at Pages 319, 324,
329, 334, 339, 344, 349, 354, 359, 364, 369, 374, 379, 384, 389 and 394; April
15, 1988 in Book 3436 at Page 462; March 10, 1993 in Book 4036 at Page 950; and
October 18, 1994 in Book 4408 at Page 889.
5. Agreement recorded May 30, 1979 in Book 2351 at Page 4.
6. Possible right-of-way in favor of the City of Thornton, Colorado, as
evidenced by the dirt road shown on the survey prepared by Robinson/Dalton
Consulting, Inc. dated March 16, 1995, Job No. A2685ALT1.
7. Rights, if any, of third parties with respect to the existing flood
channel across the northerly portion of the Property, as shown on the survey
prepared by Robinson/Dalton Consulting, Inc. dated March 16, 1995, Job No.
A2685ALT1.
8. The leases and tenancies listed in EXHIBIT B preceding this EXHIBIT
C.
C-1
<PAGE>
RECORDING REQUESTED BY AND FOR RECORDER'S USE ONLY:
WHEN RECORDED RETURN TO:
DAVIS, GRAHAM & STUBBS, L.L.C.
P.O. Box 185
Denver, CO 80201-0185
Attn: Charles D. Calvin
- ------------------------------------------------------------------------------
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
FROM
ULTIMATE ELECTRONICS, INC.
TO THE PUBLIC TRUSTEE FOR THE USE AND BENEFIT OF
COLORADO NATIONAL BANK, AS TRUSTEE
MARCH 23, 1995
- ------------------------------------------------------------------------------
-2-
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- --------------------------------------------------------------------------------
ARTICLE 1
PARTIES, PROPERTY AND DEFINITIONS.................. 1
1.1 Grantor.............................................................. 1
1.2 Beneficiary.......................................................... 1
1.3 Trustee.............................................................. 1
1.4 Bonds................................................................ 1
1.5 Indenture............................................................ 1
1.6 Property............................................................. 2
1.7 Chattels............................................................. 3
1.8 Intangible Personalty................................................ 3
1.9 Leases............................................................... 3
1.10 Bond Documents....................................................... 3
1.11 Default.............................................................. 3
1.12 Event of Default..................................................... 3
1.13 Environmental Law.................................................... 3
1.14 Regulated Substance.................................................. 4
1.15 Person............................................................... 4
1.16 Secured Obligations.................................................. 4
1.17 Restoration Collateral Account....................................... 4
ARTICLE 2
GRANTING CLAUSE ............................ 4
2.1 Grant to Trustee..................................................... 4
2.2 Security Interest to Beneficiary..................................... 4
ARTICLE 3
GRANTOR'S WARRANTIES AND REPRESENTATIONS................ 5
3.1 Warranty of Title.................................................... 5
3.2 Ownership and Status of Leases....................................... 5
3.3 Grantor's Power and Authority........................................ 5
3.4 No Regulated Substances.............................................. 5
(i)
<PAGE>
SECTION PAGE
- --------------------------------------------------------------------------------
ARTICLE 4
GRANTOR'S AFFIRMATIVE COVENANTS.................... 6
4.1 Payments under Indenture............................................. 6
4.2 Performance of Other Obligations..................................... 6
4.3 Payment of Taxes..................................................... 6
4.4 Maintenance of Insurance............................................. 7
4.5 Payment of Utilities................................................. 9
4.6 Maintenance and Repair of Property and Chattels...................... 9
4.7 Compliance with Laws................................................. 9
4.8 Eminent Domain or Private Damage..................................... 9
4.9 Mechanics' Liens..................................................... 10
4.10 Environmental Claims................................................. 10
4.11 Defense of Actions................................................... 10
4.12 Further Assurances................................................... 11
ARTICLE 5
GRANTOR'S NEGATIVE COVENANTS...................... 11
5.1 Waste................................................................ 11
5.2 Additional Tax Burden................................................ 11
5.3 Use of Regulated Substances.......................................... 11
5.4 Transfer of Property................................................. 11
5.5 Transfer or Removal of Chattels...................................... 11
5.6 Change of Name....................................................... 11
5.7 Improper Use of Property or Chattels................................. 12
ARTICLE 6
ASSIGNMENT OF LEASES AND RENTS..................... 12
6.1 Assignment of Leases................................................. 12
6.2 Assignment of Rents and Other Income................................. 12
6.3 Beneficiary's Right of Possession.................................... 12
6.4 Revocable Waiver of Beneficiary's Rights............................. 12
6.5 Direction to Lessees................................................. 13
6.6 Limitation on Beneficiary's Duties; Indemnification.................. 13
6.7 Reassignment by Beneficiary.......................................... 13
(ii)
<PAGE>
SECTION PAGE
- --------------------------------------------------------------------------------
ARTICLE 7
EVENTS OF DEFAULT.......................... 13
7.1 Indenture Event of Default........................................... 13
ARTICLE 8
BENEFICIARY'S REMEDIES......................... 13
8.1 Performance of Defaulted Obligations................................. 13
8.2 Specific Performance and Injunctive Relief........................... 14
8.3 Acceleration of Secured Obligations.................................. 14
8.4 Suit for Monetary Relief............................................. 14
8.5 Possession of Property............................................... 14
8.6 Enforcement of Security Interests.................................... 14
8.7 Foreclosure Against Property......................................... 14
8.8 Appointment of Receiver.............................................. 15
ARTICLE 9
MISCELLANEOUS PROVISIONS........................ 16
9.1 Replacement of Trustee............................................... 16
9.2 Cooperation with Development and Leasing............................. 17
9.3 Time of the Essence.................................................. 18
9.4 Forbearance Not a Waiver; Rights and Remedies Cumulative............. 18
9.5 No Implied Waivers................................................... 18
9.6 Dealings with Successor Owners....................................... 19
9.7 No Third Party Rights................................................ 19
9.8 Preservation of Liability and Priority............................... 19
9.9 Subrogation of Beneficiary........................................... 19
9.10 Notices.............................................................. 19
9.11 Fixture Filing....................................................... 20
9.12 Defeasance........................................................... 20
9.13 Severability......................................................... 20
(iii)
<PAGE>
EXHIBIT C
<PAGE>
CONDITIONAL ASSIGNMENT OF CONSTRUCTION CONTRACT
This Assignment is made this day of , 1995, by and between ULTIMATE
ELECTRONICS, INC., a Delaware corporation ("Borrower"), and COLORADO NATIONAL
BANK, a national banking association, as Trustee under the Indenture, as defined
below ("Lender").
Recitals
Borrower and Lender have entered into an Indenture dated as of
March 23, 1995 (the "Indenture"), pursuant to which Borrower has issued 10.25%
First Mortgage Bonds in the principal amount of $13,000,000 (the "Bonds").
Capitalized terms used but not defined in this Assignment have the meanings
given those terms in the Indenture. A portion of the proceeds of the Bonds is to
be used to finance construction of certain improvements (the "Project") on real
estate located in Adams County, Colorado and owned by Borrower.
To secure payment of Borrower's obligations under the Indenture and
the Bonds, Borrower has executed and delivered to Lender a Deed of Trust,
Assignment of Rents and Security Agreement dated as of March 23, 1995 (as
amended, the "Deed of Trust") covering certain property which, among other
things, includes the real estate upon which the Project is to be constructed
(the "Real Estate") and the buildings, improvements, fixtures and certain
personal property now or hereafter located thereon.
Lender has required the execution hereof as additional security for
the Bonds and related obligations of Borrower to Lender.
ACCORDINGLY, in consideration of the foregoing, Borrower hereby
assigns to Lender all of Borrower's right, title and interest in and to that
certain design-build agreement dated as of , 1995 between Borrower and Saunders
Construction, Inc. ("Contractor") for the design and construction of the Project
(referred to, as it may be amended from time to time, as the "Contract").
Borrower agrees that Lender does not assume any of the obligations
or duties of Borrower under or with respect to the Contract as a result of this
assignment.
Borrower represents and warrants that Borrower has made no prior
assignment of the Contract, that the Contract is a valid contract between
Borrower and Contractor and that Borrower is not aware of any material default
under the Contract by either party thereto. Borrower agrees not to assign, sell,
pledge, mortgage
<PAGE>
or otherwise transfer or encumber its interest in the Contract so long as this
Assignment is in effect.
This is a present assignment, provided that Lender shall have no
right under this Assignment to enforce any provision of the Contract unless and
until an Event of Default has occurred under the Indenture and Lender has either
taken possession of the Real Estate or caused a receiver to be appointed for the
Real Estate or the Project by a court of competent jurisdiction. Upon the
occurrence of such conditions and during the continuance of any such Event of
Default, Lender may, without affecting any of its rights or remedies against
Borrower under any other instrument, document or agreement, exercise its rights
under this Assignment in any manner permitted by law, and in addition, Lender
shall have the right to exercise and enforce any or all rights and remedies
available after default to a secured party under the Uniform Commercial Code, as
adopted in the State of Colorado. If notice to Borrower of any intended
disposition of the collateral or any other intended action is required by law in
a particular instance, such notice shall be deemed commercially reasonable if
given at least ten days prior to the date of intended disposition or other
action.
Borrower agrees to pay all costs and expenses (including without
limitation reasonable attorneys' fees) that Lender may reasonably incur in
exercising any of its rights under this Assignment.
Subject to the aforesaid limitation on further assignment by
Borrower, this Assignment shall be binding upon Borrower, its assigns and
successors, and shall inure to the benefit of Lender and Lender's successors in
trust under the Indenture.
This Agreement can be waived, modified, amended, terminated or
discharged only explicitly in a writing signed by Lender. A waiver signed by
Lender shall be effective only in a specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any of Lender's rights or remedies hereunder. All rights and
remedies of Lender shall be cumulative and may be exercised singularly or
concurrently, at Lender's option, and the exercise or enforcement of any one
such right or remedy shall neither be a condition to nor bar the exercise or
enforcement of any other.
IN WITNESS WHEREOF, Borrower has executed this Assignment as of the
day and year first above written.
ULTIMATE ELECTRONICS, INC., a
Delaware corporation
By:
------------------------------------
Its:
-2-
<PAGE>
-3-
<PAGE>
CONTRACTOR'S ACKNOWLEDGMENT AND CONSENT
The undersigned Contractor hereby consents to the above Assignment and
acknowledges and agrees with Lender as follows:
1. The Contract is in full force and effect and has not been modified;
Contractor has not assigned any interest in the Contract or consented to any
prior assignment by Borrower; and to Contractor's knowledge no event has
occurred or failed to occur that is a default thereunder or, but for the passage
of time and/or the giving of notice, would be a default thereunder.
2. Upon the occurrence of an Event of Default under the Indenture,
Contractor shall, at the request of Lender or any receiver appointed for the
Real Estate or the Project, continue performance of the Contract on behalf of
the receiver or Lender, as applicable, under the Contract in accordance with the
terms thereof, provided that Contractor shall be reimbursed in accordance with
the Contract for all work, labor and materials rendered pursuant to the terms of
the Contract.
3. Contractor will give Lender prompt written notice of any default by
Borrower under the Contract and will not terminate the Contract on account of
any default of Borrower without providing Lender written notice of such default
and thirty days to cure the default. In the event that Lender elects to complete
the Project under the Contract, Contractor agrees not to terminate the Contract
so long as all monetary defaults of Borrower are cured by Lender within said
30-day period. However, unless Lender elects to enforce the Contract against
Contractor, nothing herein shall require Lender to cure any default of Borrower
under the Contract.
Dated as of the ____ day of ______________, 1995.
SAUNDERS CONSTRUCTION, INC.
By:
-------------------------------------
Its:
-4-
<PAGE>
EXHIBIT D
<PAGE>
EXHIBIT D
LEGAL DESCRIPTION OF "MILLER TRUST" PROPERTY
A tract of land located in the Northwest 1/4 of Section 27, Township 2 South,
Range 68 West of the 6th P.M., described as follows:
Beginning 810.00 feet West and 30.00 feet North of the Southeast corner of the
Northwest 1/4 of Section 27, Township 2 South, Range 68 West of the 6th P.M.;
thence North a distance of 125.00 feet; thence East a distance of 100.00 feet;
thence South a distance of 125.00 feet; thence West a distance of 100.00 feet to
the point of beginning, EXCEPT the South 20.00 feet thereof, and
EXCEPT any portion thereof lying within the East 84th Avenue Right of Way,
County of Adams,
State of Colorado.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ULTIMATE ELECTRONICS, INC.
Issuer
$13,000,000
10.25% First Mortgage Bonds
due January 31, 2005
-----------------------------------------------
INDENTURE
Dated as of March 23, 1995
-----------------------------------------------
-----------------------------------------------
COLORADO NATIONAL BANK
-----------------------------------------------
Trustee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-12-
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1)................................................... 7.10
(a)(2)................................................... 7.10
(a)(3)................................................... N.A.
(a)(4)................................................... N.A.
(a)(5)................................................... 7.10
(b)......................................................2.13;7.08;7.10
(c)...................................................... N.A.
311(a)...................................................... 7.11
(b)...................................................... 7.11
(c)...................................................... N.A.
312(a)...................................................... 2.05
(b)...................................................... 12.03
(c)...................................................... 12.03
313(a)...................................................... 7.06
(b)(1)................................................... 7.06
(b)(2)................................................... 7.06
(c)......................................................7.06;12.02
(d)...................................................... 7.06
314(a)......................................................4.03;12.02
(a)(4)...................................................4.03;12.05
(b)...................................................... 10.02
(c)(1)................................................... 12.04
(c)(2)................................................... 12.04
(c)(3)................................................... N.A.
(d)...................................................... 10.04
(e)...................................................... 12.05
(f)...................................................... N.A.
315(a)...................................................... 7.01(2)
(b)......................................................7.05;12.02
(c)...................................................... 7.01
(d)...................................................... 7.01(3)
(e)......................................................6.11;7.08
316(a)(last sentence).......................................2.09;2.13
(a)(1)(A)................................................ 6.05
(a)(1)(B)................................................ 6.04
(a)(2)................................................... N.A.
(b)...................................................... 6.07
(c)...................................................... 9.04
317(a)(1)................................................... 6.08
(a)(2)................................................... 6.09
(b)...................................................... 2.04
318(a)...................................................... 12.01
(b)...................................................... N.A.
(c)...................................................... 12.01
N.A. means not applicable.
-13-
<PAGE>
*This Cross-Reference Table is not part of the Indenture.
-14-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C> <C>
Section 1.01 Definitions.............................................................. 1
Section 1.02. Other Definitions........................................................ 7
Section 1.03. Incorporation by Reference of Trust Indenture Act........................ 8
Section 1.04. Rules of Construction.................................................... 8
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.......................................................... 9
Section 2.02. Execution and Authentication............................................. 9
Section 2.03. Registrar and Paying Agent............................................... 10
Section 2.04. Paying Agent to Hold Money in Trust...................................... 10
Section 2.05. Holder Lists............................................................. 10
Section 2.06. Transfer and Exchange.................................................... 10
Section 2.07. Replacement Securities................................................... 11
Section 2.08. Outstanding Securities................................................... 11
Section 2.09. Treasury Securities...................................................... 12
Section 2.10. Temporary Securities..................................................... 12
Section 2.11. Cancellation............................................................. 12
Section 2.12. Defaulted Interest....................................................... 12
Section 2.13. Record Date.............................................................. 13
ARTICLE 3
REDEMPTIONS AND OFFERS TO PURCHASE
Section 3.01. Notices to Trustee....................................................... 13
Section 3.02. Selection of Securities to Be Redeemed or Purchased...................... 13
Section 3.03. Notice of Redemption..................................................... 14
Section 3.04. Effect of Notice of Redemption........................................... 14
Section 3.05. Deposit of Redemption Price.............................................. 15
Section 3.06. Securities Redeemed in Part.............................................. 15
Section 3.07. Optional Redemption...................................................... 15
Section 3.08. Mandatory Redemption..................................................... 15
ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.................................................... 16
Section 4.02. Maintenance of Office or Agency.......................................... 16
Section 4.03. Reports.................................................................. 17
Section 4.04. Compliance Certificate................................................... 17
Section 4.05. Taxes.................................................................... 18
-i-
<PAGE>
PAGE
Section 4.06. [Intentionally Deleted].................................................. 18
Section 4.07. Limitation on Restricted Payments........................................ 18
Section 4.08. Limitation on Additional Funded Indebtedness............................. 20
Section 4.09. Limitation on Transactions With Affiliates............................... 20
Section 4.10. Limitation on Liens...................................................... 20
Section 4.11. Change of Control........................................................ 20
Section 4.12. Payments for Consent..................................................... 21
Section 4.13. Maintenance of Insurance................................................. 21
Section 4.14. Collateral Documents..................................................... 22
Section 4.15. Assignment of Construction Contracts; Lien on Additional Property; Further
Assurances............................................................... 22
Section 4.16. Maintenance of Properties and Corporate Existence........................ 23
Section 4.17. Construction............................................................. 23
ARTICLE 5
SUCCESSORS
Section 5.01. When the Company May Merge, etc.......................................... 24
Section 5.02. Successor Substituted.................................................... 24
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default........................................................ 25
Section 6.02. Acceleration............................................................. 26
Section 6.03. Other Remedies........................................................... 27
Section 6.04. Waiver of Past Defaults.................................................. 27
Section 6.05. Control by Majority...................................................... 27
Section 6.06. Limitation on Suits...................................................... 27
Section 6.07. Rights of Holders to Receive Payment..................................... 28
Section 6.08. Collection Suit by Trustee............................................... 28
Section 6.09. Trustee May File Proofs of Claim......................................... 28
Section 6.10. Priorities............................................................... 29
Section 6.11. Undertaking for Costs.................................................... 29
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee........................................................ 29
Section 7.02. Rights of Trustee........................................................ 30
Section 7.03. Individual Rights of Trustee............................................. 31
Section 7.04. Trustee's Disclaimer..................................................... 31
Section 7.05. Notice of Defaults....................................................... 31
Section 7.06. Reports by Trustee to Holders............................................ 31
Section 7.07. Compensation and Indemnity............................................... 31
Section 7.08. Replacement of Trustee................................................... 32
Section 7.09. Successor Trustee by Merger, etc......................................... 33
Section 7.10. Eligibility; Disqualification............................................ 33
Section 7.11. Preferential Collection of Claims Against the Company.................... 33
-ii-
<PAGE>
PAGE
ARTICLE 8
DISCHARGE OF INDENTURE AND DEFEASANCE
Section 8.01. Termination of Company's Obligations..................................... 34
Section 8.02. Conditions to Defeasance................................................. 35
Section 8.03. Application of Trust Money............................................... 36
Section 8.04. Repayment to Company..................................................... 36
Section 8.05. Reinstatement............................................................ 36
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders............................................... 37
Section 9.02. With Consent of Holders.................................................. 37
Section 9.03. Compliance with Trust Indenture Act...................................... 38
Section 9.04. Revocation and Effect of Consents........................................ 39
Section 9.05. Notation on or Exchange of Securities.................................... 39
Section 9.06. Trustee to Sign Amendments, etc.......................................... 39
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Collateral and Security.................................................. 39
Section 10.02. Recording, Etc. ......................................................... 40
Section 10.03. Protection of the Trust Estate........................................... 40
Section 10.04. Release of Lien.......................................................... 41
Section 10.05. Authorization of Actions to Be Taken by the Trustee Under the Collateral
Documents. .............................................................. 41
Section 10.06. Authorization of Receipt of Funds by the Trustee Under the Collateral
Documents. .............................................................. 41
ARTICLE 11
DISBURSEMENTS OF CASH COLLATERAL
Section 11.01. Cash Collateral Account and Restoration Collateral Account............... 42
Section 11.02 Disbursements of Bond Proceeds........................................... 42
Section 11.03 Disbursement of Insurance or Condemnation Proceeds....................... 44
Section 11.04 Completion of the Project................................................ 44
Section 11.05 Completion of Restoration................................................ 45
Section 11.06 Duties of the Collateral Agent........................................... 45
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls............................................. 46
Section 12.02. Notices.................................................................. 46
Section 12.03. Communication by Holders with Other Holders.............................. 47
Section 12.04. Certificate and Opinion as to Conditions Precedent....................... 47
Section 12.05. Statements Required in Certificate or Opinion............................ 47
-iii-
<PAGE>
PAGE
Section 12.06. Rules by Trustee and Agents.............................................. 48
Section 12.07. Legal Holidays........................................................... 48
Section 12.08. Recourse Against Others.................................................. 48
Section 12.09. Governing Law............................................................ 48
Section 12.10. No Adverse Interpretation of Other Agreements............................ 48
Section 12.11. Successors............................................................... 48
Section 12.12. Severability............................................................. 48
Section 12.13. Counterpart Originals; Colorado Counterpart.............................. 49
Section 12.14. Table of Contents, Headings, etc......................................... 49
SIGNATURES............................................................................... 50
</TABLE>
EXHIBITS
Exhibit A Form of First Mortgage Bond
Exhibit B Form of Deed of Trust
Exhibit C Form of Conditional Assignment of Construction Contract
Exhibit D Description of Miller Trust Property
-iv-
