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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): OCTOBER 8, 1997
CELLSTAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-22972 75-2479727
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
1730 BRIERCROFT COURT, CARROLLTON, TEXAS 75006
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 466-5000
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ITEM 5. OTHER EVENTS
On October 8, 1997, CellStar Corporation (the "Company") announced that it
had priced $130,000,000 of 5% Convertible Subordinated Notes due 2002 (the
"Notes") and that the Company granted the initial purchasers of the Notes a
30-day option to purchase up to an additional $20,000,000 of Notes to cover
over-allotments, if any.
On October 14, 1997, the Company announced that it had consummated its
offering of $150,000,000 of Notes.
On October 17, the Company announced that it had completed a new
$135,000,000 multicurrency revolving credit facility that has a term of
approximately five years, replaces the Company's previous $90,000,000 revolving
credit facility and provides the ability to borrow in multiple currencies to
support the Company's working capital requirements and growth plans.
Copies of the Company's press releases have been filed as exhibits to this
report and are incorporated by referenced herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
1.1 Purchase Agreement dated October 7, 1997, by and among the Company and
Bear, Stearns & Co. Inc. and Chase Securities Inc.
4.1 Indenture dated as of October 14, 1997, between the Company and The Bank
of New York, as trustee
4.2 Registration Rights Agreement dated October 14, 1997, by and among the
Company and Bear, Stearns & Co. Inc. and Chase Securities, Inc.
4.3 Form of Definitive Note
4.4 Form of Rule 144A Global Note
4.5 Form of Institutional Accredited Investor Global Note
4.6 Form of Regulation S Global Note
99.1 Press Release dated October 8, 1997
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99.2 Press Release dated October 14, 1997
99.3 Press Release dated October 17, 1997
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Pursuant to a purchase agreement (the "Purchase Agreement") dated October
7, 1997, among the Company and Bear, Stearns & Co. Inc. ("Bear, Stearns") and
Chase Securities Inc. ("Chase" and together with Bear, Stearns, the "Initial
Purchasers"), on October 14, 1997, the Company sold $150,000,000 ($130,000,000
plus $20,000,000 pursuant to the exercise of the over-allotment option granted
to the Initial Purchasers) aggregate principal amount of Notes to the Initial
Purchasers at an initial offering price of 100% of the principal amount thereof,
less 2.825% gross commission.
The Initial Purchasers advised the Company that the Notes were to be resold
at 100% of the principal amount thereof (i) to qualified institutional buyers in
reliance on Rule 144A under the Securities Act of 1933, as amended (the "Act"),
and to institutional "accredited investors" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Act, that agreed in writing to comply with
the transfer restrictions and other conditions set forth in the Purchase
Agreement and (ii) outside the United States to certain persons in reliance on
Regulation S under the Act. The Initial Purchasers advised the Company that
$3,000,000 aggregate principal amount of Notes were sold outside the United
States to certain persons in reliance on Regulations S under the Act.
In connection with sales of the Notes outside the United States, each
Initial Purchaser agreed that, except for sales described above, it would not
offer, sell or deliver the Notes to, or for the account or benefit of, U.S.
persons (as defined in Regulation S under the Act) (i) as part of such Initial
Purchaser's distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering of the Notes and the last closing date
with respect to the Notes, and that it would send to each dealer or distributor
to whom it sold such Notes during such period a confirmation or other notice
setting forth the restrictions on offers and sales of the Notes within the
United States or to, or for the account or benefit of, U.S. persons.
The Notes were issued under an indenture, dated as of October 14, 1997 (the
"Indenture"), between the Company and The Bank of New York, as trustee. The
Notes represent general unsecured subordinated obligations of the Company. The
Notes are convertible into shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), at the option of the holder thereof, at any time
after 60 days following the latest date of original issuance thereof through
October 11, 2002, subject to prior redemption or repurchase, at an initial
conversion price of $55.335 per share. The conversion price is subject to
adjustment (under formulae set forth in the Indenture) upon the occurrence of
certain events, including, but not limited to: (i) the issuance of Common Stock
as a dividend or distribution on the outstanding Common Stock; (ii) the issuance
to all holders of Common Stock of certain rights, options or warrants entitling
them (for a period expiring within 45 days after the date fixed for
determination of stockholders entitled to receive such rights, options or
warrants) to purchase Common Stock at less than the current market price; (iii)
certain
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subdivisions, combinations and reclassifications of Common Stock; (iv)
certain defined distributions to all holders of Common Stock of capital stock
of the Company (other than Common Stock) or evidences of indebtedness of the
Company or assets; (v) certain cash distributions to all holders of Common
Stock; and (vi) the purchase of Common Stock pursuant to a tender offer made
by the Company or any of its subsidiaries in certain defined circumstances.
Pursuant to a registration rights agreement (the "Registration Rights
Agreement") dated October 14, 1997, among the Company and the Initial
Purchasers, the Company has agreed to file with the Securities and Exchange
Commission a registration statement for an offering to be made on a continuous
basis pursuant to Rule 415 under the Act with respect to resales of the Notes
and the Common Stock issuable upon conversion of the Notes. Upon the failure by
the Company to comply with certain of its obligations under the Registration
Rights Agreement, liquidated damages will be payable on certain of the Notes.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CELLSTAR CORPORATION
October 24, 1997 By /s/ Richard M. Gozia
-------------------------------------
Richard M. Gozia
President and Chief Operating Officer
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INDEX TO EXHIBITS
NUMBER DESCRIPTION
- ------ -----------
1.1 Purchase Agreement dated October 7, 1997, by and among the Company and
Bear, Stearns & Co. Inc. and Chase Securities Inc.
4.1 Indenture dated as of October 14, 1997, between the Company and The
Bank of New York, as trustee
4.2 Registration Rights Agreement dated October 14, 1997, by and among the
Company and Bear, Stearns & Co. Inc. and Chase Securities, Inc.
4.3 Form of Definitive Note
4.4 Form of Rule 144A Global Note
4.5 Form of Institutional Accredited Investor Global Note
4.6 Form of Regulation S Global Note
99.1 Press Release dated October 8, 1997
99.2 Press Release dated October 14, 1997
99.3 Press Release dated October 17, 1997
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$130,000,000
5% Convertible Subordinated Notes due 2002
CELLSTAR CORPORATION
PURCHASE AGREEMENT
October 7, 1997
BEAR, STEARNS & CO. INC.
CHASE SECURITIES INC.
as the Initial Purchasers named in
Schedule I hereto
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, NY 10167
Dear Sirs:
CellStar Corporation, a Delaware corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated in this Purchase Agreement
(this "AGREEMENT"), to issue and sell to the several Initial Purchasers named in
Schedule I hereto (the "INITIAL PURCHASERS") an aggregate of $130,000,000
principal amount of its 5% Convertible Subordinated Notes due 2002 (the "FIRM
NOTES"). In addition, the Company proposes to grant to the Initial Purchasers
an option, for the sole purpose of covering over-allotments in connection with
the sale of the Firm Notes, to purchase up to an additional $20,000,000
principal amount of its 5% Convertible Subordinated Notes due 2002 (the
"OPTIONAL NOTES") as provided in Section 2 below. The Firm Notes and any
Optional Notes purchased by the Initial Purchasers are referred to herein as the
"NOTES".
The Notes are to be issued pursuant to an indenture to be dated as of
October 14, 1997 (the "INDENTURE") between the Company and The Bank of New York,
as trustee (the "TRUSTEE"), and, except as otherwise provided in the Indenture,
will be convertible into shares of the Company's common stock, par value $.01
per share (the "COMMON STOCK"), on the terms set forth therein. The holders of
the Notes will be entitled to certain registration rights provided under a
Registration Rights Agreement to be dated October 14, 1997 (the "REGISTRATION
RIGHTS AGREEMENT") between the Company and the Initial Purchasers.
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The Company has prepared a preliminary offering circular dated
September 24, 1997 (the "PRELIMINARY OFFERING CIRCULAR") and a final offering
circular dated October 7, 1997 (as supplemented or amended from time to time
with the written consent of the Company and Bear, Stearns & Co. Inc., as the
representative of the Initial Purchasers, the "REPRESENTATIVE") (the "OFFERING
CIRCULAR"), with respect to the offering of the Notes contemplated by this
Agreement (the "OFFERING"). The terms "Preliminary Offering Circular" and
"Offering Circular" as used herein shall include all documents incorporated by
reference therein.
The Notes have not been registered under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and are being offered and sold in reliance on
exemptions from or in transactions not subject to the registration requirements
of the Securities Act, including sales (i) made in the United States to
"qualified institutional buyers" ("QIBS") as defined in, and in reliance on,
Rule 144A under the Securities Act ("RULE 144A"), (ii) made in the United States
to institutional "accredited investors" ("INSTITUTIONAL ACCREDITED INVESTORS")
as defined in Rule 501(a)(1),(2), (3) and (7) of Regulation D under the
Securities Act ("REGULATION D") and (iii) made outside the United States in
reliance on Regulation S under the Securities Act ("REGULATION S").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Initial Purchasers that, as of
the date hereof, the Closing Date and any Additional Closing Date:
(a) The Preliminary Offering Circular, as of September 24, 1997, and
the Offering Circular, as of the date hereof and as of the Closing Date (as
defined) and as of any Additional Closing Date (as defined), if any, is and will
be accurate in all material respects, does not and will not contain an untrue
statement of a material fact and does not and will not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. No representation and warranty is made in this Section 1(a),
however, with respect to any information contained in or omitted from the
Offering Circular or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the Company by
the Initial Purchasers expressly for use in connection with the preparation of
the Offering Circular or any amendment thereof or supplement thereto, as the
case may be.
(b) KPMG Peat Marwick LLP, who has certified the annual financial
statements included or incorporated by reference in the Offering Circular, are
independent public accountants as required by the Securities Act and the rules
and regulations
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promulgated thereunder (the "REGULATIONS") by the Securities and Exchange
Commission (the "COMMISSION").
(c) The financial statements, including the notes thereto, included
or incorporated by reference in the Offering Circular, comply as to form in all
material respects with the requirements applicable to registration statements on
Form S-1 under the Securities Act and present fairly on the basis stated therein
the consolidated financial position of the Company and its subsidiaries as of
the dates indicated and the consolidated results of operations and changes in
financial position of the Company and its subsidiaries for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods presented.
(d) The Company and its Significant Subsidiaries (as defined)
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that: (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(e) Subsequent to the respective dates as of which information is
given in the Offering Circular and through the Closing Date (or through the
Additional Closing Date, as the case may be), except as set forth in the
Offering Circular, (i) neither the Company nor any of its subsidiaries has
incurred any liabilities or obligations, direct or contingent, which are or are
reasonably likely to be material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, nor entered into any material
transaction not in the ordinary course of business, (ii) there has not been,
singly or in the aggregate, any change or development which could reasonably be
expected to (A) result, individually or in the aggregate, in a material adverse
effect on the properties, business, results of operations, condition (financial
or otherwise), affairs or prospects of the Company and its subsidiaries, taken
as a whole, or (B) adversely affect the validity of the Offering or the
enforceability of this Agreement, the Indenture, the Notes or the Registration
Rights Agreement (collectively, the "TRANSACTION AGREEMENTS") (any of the events
set forth in clauses (A) or (B), a "MATERIAL ADVERSE EFFECT"), and (iii) there
has been no dividend or distribution of any kind declared, paid or made by the
Company or its subsidiaries on any class of its capital stock.
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(f) Each of the Company and its Significant Subsidiaries: (i) has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; (ii) is duly qualified and
in good standing as a foreign corporation, authorized to do business in each
jurisdiction in which the character or location of its properties (owned, leased
or licensed) or the nature or conduct of its business makes such qualification
necessary, except for those failures to be so qualified or in good standing that
have not had and are not in the aggregate reasonably expected to have a Material
Adverse Effect; and, (iii) has all requisite power and authority, and all
necessary consents, approvals, authorizations, orders, registrations,
qualifications, licenses and permits of and from all public, regulatory or
governmental agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Offering
Circular, except for those failures to make or obtain such consents, approvals,
authorizations, orders, registrations, qualifications, licenses and permits that
have not had and are not in the aggregate reasonably expected to have a Material
Adverse Effect.
(g) The Company had, at May 31, 1997, an authorized and outstanding
capitalization as set forth in the Offering Circular. All of the outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued, are fully paid and nonassessable and were not issued in violation of or
subject to any preemptive rights. Except as otherwise disclosed in the Offering
Circular, all of the outstanding shares of capital stock of each Significant
Subsidiary has been duly and validly authorized and issued, are fully paid and
nonassessable, were not issued in violation of or subject to any preemptive
rights and all of the outstanding capital stock of the Company's Significant
Subsidiaries is owned, directly or indirectly, by the Company, free and clear of
any security interest, claim, lien, limitation on voting rights or encumbrance,
security interest, restriction on transfer, shareholders' agreement, voting
trust or other preferential arrangement or defect of title whatsoever. The
capital stock of the Company conforms in all material respects to the
descriptions thereof contained in the Offering Circular.
(h) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than those reflected in Annex A
hereto. Of such entities, only those reflected in Annex B are material to the
Company's operations on a consolidated basis (each, a "SIGNIFICANT SUBSIDIARY"
and together, the "SIGNIFICANT SUBSIDIARIES").
(i) Except with regard to CellStar West, Inc., and ACC-CellStar,
Inc., and except as have been waived and except as has been disclosed in the
Offering Circular and any document incorporated by reference therein, there are
no outstanding subscriptions, rights, warrants, calls, commitments of sale or
options to acquire, or
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instruments convertible into or exchangeable for, any capital stock or other
equity interest of the Company or any of its Subsidiaries.
(j) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Transaction Agreements
and to consummate the transactions contemplated hereby and thereby, including,
without limitation, (i) the issuance, sale and delivery of the Notes hereunder
and (ii) the filing of any registration statement with the Commission pursuant
to the Registration Rights Agreement.
(k) This Agreement and the transactions contemplated hereby have been
duly and validly authorized by the Company. This Agreement has been duly and
validly executed and delivered by the Company and, when accepted by execution
and delivery by the Initial Purchasers, will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforcement may be subject to or limited by
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights and remedies generally, or general equitable principles,
including principles of commercial reasonableness, good faith and fair dealing
(whether considered in a proceeding in equity or at law), and except as the
enforceability of the indemnification provisions thereof may be limited by
considerations of public policy.
(l) The Indenture has been duly and validly authorized by the Company
and, when executed and delivered by the Company and assuming due authorization,
execution and delivery thereof by the Trustee, will have been duly and validly
executed and delivered by the Company and will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforcement may be subject to or limited by
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights and remedies generally, or general equitable principles,
including principles of commercial reasonableness, good faith and fair dealing
(whether considered in a proceeding in equity or at law). The Indenture
conforms in all material respects to the description thereof contained in the
Offering Circular.
(m) The Notes have been duly and validly authorized by the Company
and, when executed by the Company and authenticated by the Trustee and issued,
sold, delivered and paid for in accordance with this Agreement and the
Indenture, will have been duly and validly executed, authenticated, issued and
delivered and will constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms and
entitled to the benefits of the Indenture, except as such
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enforcement may be subject to or limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights and remedies
generally, or general equitable principles, including principles of
commercial reasonableness, good faith and fair dealing (whether considered in
a proceeding in equity or at law). The Notes conform in all material respects
to the description thereof contained in the Offering Circular.
(n) The Registration Rights Agreement and the transactions
contemplated therein have been duly and validly authorized by the Company. The
Registration Rights Agreement, when executed and delivered by the Company and
assuming due authorization, execution and delivery thereof by the Initial
Purchasers, will have been duly and validly executed and delivered by the
Company and will constitute the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforcement may be subject to or limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights and remedies generally,
or general equitable principles, including principles of commercial
reasonableness, good faith and fair dealing (whether considered in a proceeding
in equity or at law), and except as the enforceability of the indemnification
provisions may be limited by federal or state securities laws or considerations
of public policy, and the right of a Holder to receive Liquidated Damages may be
limited to the amount of actual damages suffered by such Holder. The
Registration Rights Agreement conforms in all material respects to the
description thereof contained in the Offering Circular.
(o) None of the Company or its Significant Subsidiaries is or, after
giving effect to the Offering, will be (i) in violation of its charter or bylaws
that would result in a Material Adverse Effect, (ii) in default in the
performance of any agreement or instrument to which it is a party or by which it
is bound or to which any of its properties is subject that would result in a
Material Adverse Effect or (iii) in violation of any local, state, federal or
foreign law, statute (including without limitation the Foreign Corrupt Practices
Act of 1977, as amended), ordinance, rule, regulation, requirement, judgment or
court decree, statutes, ordinances, rules, regulations, judgments or court
decrees) applicable to it or any of its assets or properties (whether owned or
leased) that would result in a Material Adverse Effect. To the knowledge of the
Company, there exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or instrument that
would result in a Material Adverse Effect.
(p) The execution, delivery, and performance of this Agreement and
the other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby do not and will not: (i) conflict with or result
in a breach of any of the
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terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its Significant Subsidiaries
(other than as disclosed in the Offering Circular) pursuant to, any
agreement, instrument, franchise, license or permit to which the Company or
any of its Significant Subsidiaries is a party or by which any of such
corporations or their respective properties or assets is bound, except for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect; (ii) conflict with any provision of
the charter or bylaws of the Company or any of its Significant Subsidiaries
or any judgment, decree, order, statute, rule or regulation of any court or
any public, governmental or regulatory agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their respective
properties or assets, except for such violations or conflicts that would not
have a Material Adverse Effect; or (iii) require any consent, approval,
authorization, order, registration, filing, qualification, license or permit
of or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets, except (in the case of clause (iii)
above) except for the registration of the Notes under the Securities Act and
qualification of the Indenture under the Trust Indenture Act or as disclosed
in the Offering Circular or except for any such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits as have been made or obtained or as may be required under state
securities or Blue Sky laws or the securities laws of any jurisdiction
outside the United States in connection with the purchase and sale of the
Notes by the Initial Purchasers, and except where the failure to obtain or
make any such consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses and permits would not have a Material
Adverse Effect.
(q) Except as described in the Offering Circular, there is not and,
after giving effect to the Offering, will not be (i) any action, suit,
investigation or proceeding before or by any court, arbitrator or governmental
agency, body or official, domestic or foreign, now pending or, to the best
knowledge of the Company, threatened or contemplated to which the Company or its
subsidiaries is or may be a party or to which the business or property of the
Company is or, after giving effect to the Offering, may be subject, (ii) to the
Company's knowledge, any statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been proposed
by any governmental body, or (iii) any injunction, restraining order or order of
any nature by a federal or state court or foreign court of competent
jurisdiction to which the Company or its Significant Subsidiaries is or may be
subject or to which the business, assets, or property of the Company or its
Significant Subsidiaries is or may be subject that, in the case of clauses (i),
(ii) and (iii) above, (1) is required to be disclosed in the Preliminary
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Offering Circular and the Offering Circular and that is not so disclosed or (2)
could reasonably be expected to have a Material Adverse Effect.
(r) No action has been taken or order issued and the Company has no
knowledge of any statute, rule or regulation that has been enacted, adopted or
issued by any governmental agency that prevents the issuance of the Notes or
prevents or suspends the use of the Offering Circular; no injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has been issued that prevents the issuance of the Notes
or prevents or suspends the sale of the Notes in any jurisdiction referred to in
Section 4(b) hereof; and every request of any securities authority or agency of
any jurisdiction for additional information has been complied with in all
material respects.
(s) Except as is not reasonably expected to have a Material Adverse
Effect, there is (i) no significant unfair labor practice complaint pending
against the Company or its subsidiaries nor, to the best knowledge of the
Company, threatened against it, before the National Labor Relations Board, any
state or local labor relations board or any foreign labor relations board, and
no significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the Company or
its subsidiaries or, to the knowledge of the Company, threatened against the
Company or its subsidiaries, (ii) no significant strike, labor dispute, slowdown
or stoppage pending against the Company or its subsidiaries nor, to the best
knowledge of the Company, threatened against the Company or its subsidiaries and
(iii) to the knowledge of the Company, no union representation question existing
with respect to the employees of the Company or its subsidiaries. To the
knowledge of the Company, no collective bargaining organizing activities are
taking place with respect to the Company or its subsidiaries. Except as is not
reasonably expected to have a Material Adverse Effect, the Company has not
violated: (i) any federal, state or local law or foreign law relating to
discrimination in hiring, promotion or pay of employees; (ii) any applicable
wage or hour laws; or, (iii) any provision of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder.
(t) None of the Company or its subsidiaries has violated any foreign,
federal, state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS") which might have a Material
Adverse Effect.
(u) There is no alleged liability, or to the knowledge of the
Company, potential liability (including, without limitation, alleged or
potential liability or investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal injuries or
penalties) of the Company or its subsidiaries arising
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out of, based on or resulting from the presence or release into the
environment of any Hazardous Material (as defined below) at any location,
whether or not owned by the Company or its subsidiaries, which alleged or
potential liability is required to be disclosed in the Offering Circular or
could have a Material Adverse Effect. The term "HAZARDOUS MATERIAL" means
(i) any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and Recovery Act,
as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material, waste or substance regulated under or
within the meaning of any other law relating to protection of human health or
the environment or imposing liability or standards of conduct concerning any
such chemical material, waste or substance.
(v) Except as described in the Offering Circular, the Company and its
subsidiaries have good and marketable title to all of the properties and assets
described in the Offering Circular as owned by them, free and clear of all
liens, charges, encumbrances and restrictions, except for such as do not
materially effect the value of such property or materially interfere with the
Company's use of such property. All leases to which any of the Company or its
subsidiaries is a party are valid and binding with respect to the Company and
its subsidiaries and no material default by the Company or its subsidiaries has
occurred and is continuing thereunder and, to the best knowledge of the Company,
no material default by the landlord is existing under any such lease, except as
could not reasonably be expected to have a Material Adverse Effect.
(w) The properties of the Company and its subsidiaries, are insured
in accordance with industry practice and are suitable for their uses.
(x) Except as is not reasonably expected to have a Material Adverse
Effect, the Company or its subsidiaries own, possess, have the right to employ
or can obtain on reasonable terms all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, software, systems
or procedures), trademarks, service marks and trade names, computer programs,
technical data and information (collectively, the "INTELLECTUAL PROPERTY")
presently employed by them in connection with the businesses now operated by
them and, except as disclosed in the Offering Circular, the Company and its
subsidiaries have not received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing. The use of the
Intellectual Property in connection with the business and operations of the
Company does not infringe on the rights of any person, except as could not
reasonably be expected to have a Material Adverse Effect.
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(y) All material tax returns required to be filed by the Company and
its Significant Subsidiaries in all jurisdictions have been so filed. All
taxes, including withholding taxes, penalties and interest, assessments, fees
and other charges due or claimed to be due from the Company or its Significant
Subsidiaries or that are due and payable have been paid, other than those being
contested in good faith and for which adequate reserves have been provided or
those currently payable without penalty or interest or except where the failure
to so pay would not have a Material Adverse Effect. To the knowledge of the
Company, there are no material proposed additional tax assessments against the
Company or its Significant Subsidiaries or the assets or property of the Company
or its Significant Subsidiaries.
(z) As of the date hereof, no event has occurred nor has any
circumstance arisen which, had the Notes been issued on the date hereof, would
constitute a default or Event of Default (as defined in the Indenture).
(aa) Neither the Company nor any of its affiliates has not taken and
will not take, directly or indirectly, any action designed to cause or result
in, or which constitutes or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Notes to facilitate the sale
or resale of the Notes in contravention of Regulation M under the Securities Act
and the Exchange Act.
(bb) Other than as disclosed in the Offering Circular, there are no
holders of securities of the Company who, by reason of the execution by the
Company of this Agreement or any other Transaction Agreement or the consummation
by the Company of the transactions contemplated hereby and thereby, have the
right to request or demand that the Company register under the Act or analogous
foreign laws and regulations securities held by them that have not been waived.
(cc) When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of Rule
144A of the Securities Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") or that are quoted in a
United States automated inter-dealer quotation system.
(dd) (i) None of the Company or any of its "affiliates" (as such term
is defined in Rule 501(b) under the Securities Act) or any person acting on
behalf of any such person (excluding the Initial Purchasers and their respective
affiliates, as to whom this representation shall not apply) has engaged in any
directed selling efforts (as such term is defined in Regulation S) in the United
States with respect to the Notes, and (ii) each of the
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Company, its affiliates and each person acting on behalf of any of them
(other than the Initial Purchasers and their respective affiliates, as to
which no representation made) has complied with the offering restrictions
requirement of Regulation S.
(ee) None of the Company or any of its affiliates or any person acting
on behalf of any of them (excluding the Initial Purchasers and their respective
affiliates, as to whom this representation shall not apply) has sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of any
security (as such term is defined in the Securities Act) that is or may be
integrated with the sale of the Notes in a manner that would require
registration under the Securities Act.
(ff) The Company is subject to section 13 or 15(d) of the Exchange Act
and is in compliance in all material respects with the provisions of such
section.
(gg) Subject to (i) compliance by the Initial Purchasers with the
procedures set forth in Section 3 hereof, (ii) the accuracy of the
representations and warranties of the Initial Purchasers in Section 3 hereof,
(iii) the accuracy of the representations and warranties made in accordance with
this Agreement and the Offering Circular by purchasers to whom the Initial
Purchasers initially resell Notes, and (iv) receipt by the purchasers to whom
the Initial Purchasers initially resell Notes of a copy of the Offering Circular
prior to such resale, it is not necessary, in connection with the offer, sale
and delivery of the Notes to the Initial Purchasers in the manner contemplated
by this Agreement and the Offering Circular, to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.
(hh) The shares of Common Stock issuable upon conversion of the Notes
have been duly authorized and, when issued in accordance with the terms of the
Notes and the Indenture, will be validly issued, fully paid and nonassessable
and will conform in all material respects to the description thereof contained
in the Offering Circular. The shares of Common Stock issuable on conversion of
the Notes at the initial conversion price set forth in the Indenture have been
reserved for issuance and no further approval or authority of the shareholders
or the Board of Directors of the Company will be required for such issuance of
Common Stock.
(ii) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended.
(jj) The execution and delivery of this Agreement and the other
Transaction Agreements will not result in any prohibited transaction within the
meaning of
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Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended. No employee benefit plan (as defined in Section 3(3) of ERISA) will
be an obligor with respect to the Notes after taking into account the
applicability, if at all, of Labor Regulation Section 2510.3-101.
(kk) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the application of the proceeds
from the issuance and sale of the Notes and the consummation of the transactions
contemplated thereby as set forth in the Offering Circular, will violate
Regulations G, T, U or X promulgated by the Board of Governors of the Federal
Reserve System or analogous foreign laws and regulations.
2. PURCHASE, SALE AND DELIVERY OF THE NOTES.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Initial Purchasers, and the Initial
Purchasers, severally and not jointly, agree to purchase from the Company, the
principal amount of the Firm Notes set forth opposite their respective names in
Schedule I hereto at a purchase price equal to 100% of such principal amount
LESS a discount of 2.825% of such principal amount. Payment of the purchase
price for, and delivery of, the Firm Notes will be made at the offices of Haynes
and Boone, LLP, 3100 NationsBank Plaza, 901 Main Street, Dallas, Texas
75202-3789, at 8:00 a.m. (Dallas time) on October 14, 1997, unless postponed
in accordance with Section 9 hereof, or at such other place, time and date as
may be mutually agreed in writing between the Representative and the Company
(the time and date of such payment and delivery being herein called the
"CLOSING DATE").
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants to the Initial Purchasers
the option to purchase, severally and not jointly, up to $20,000,000 aggregate
principal amount of Optional Notes, for the sole purpose of covering
over-allotments in the sale of Firm Notes by the Initial Purchasers, at the
same purchase price to be paid by the Initial Purchasers to the Company for
the Firm Notes as set forth in Section 2(a). This option may be exercised,
in whole or in part, at any time and from time to time on or before the 30th
day following the date of the Offering Circular, by written notice to the
Company by the Representative on behalf of the Initial Purchasers. Such
notice shall set forth the aggregate principal amount of Optional Notes to be
purchased pursuant to such exercise of the option and the date and time, as
reasonably determined by the Representative, when the Optional Notes are to
be delivered (each such date and time being herein sometimes referred to as
an "ADDITIONAL CLOSING DATE");
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PROVIDED that no additional Closing Date shall be earlier than (i) the
Closing Date or (ii) the second full business day after the date on which the
option shall have been exercised, nor later than the eighth full business day
after the date on which the option shall have been exercised (unless such
date and time are postponed in accordance with Section 9 hereof). The
principal amount of the Optional Notes to be purchased by each Initial
Purchaser upon such exercise shall bear the same ratio to the aggregate
principal amount of Optional Notes being purchased upon such exercise as the
principal amount of Firm Notes set forth opposite the name of such Initial
Purchaser in Schedule I hereto (or such number increased as set forth in
Section 9 hereof) bears to the aggregate principal amount of Firm Notes,
subject to such adjustments to eliminate fractional amounts as the
Representative in its sole discretion may make.
(c) At or prior to the Closing Date and the Additional Closing Date
(if any) hereunder, the Company shall execute and deliver for authentication the
Notes to be purchased and sold on such date and shall deposit such Notes with
The Depositary Trust Company ("DTC") for the account or accounts of participants
in DTC (including Euroclear and CEDEL, as the case may be) purchasing beneficial
interests therein. The Initial Purchasers shall pay or cause the purchase price
for such Notes to be paid to or upon the order of the Company by wire transfer
of same day funds against delivery of such Notes to or for the respective
accounts of the Initial Purchasers. Certificates evidencing the Notes shall be
registered in the name of Cede & Co. as nominee for DTC or such other name or
names and in such authorized denominations as the Representative may request in
writing at least two full business days prior to the Closing Date or the
Additional Closing Date, as the case may be. The Company will permit the
Representative to inspect such certificates at the offices of the Representative
at least one full business day prior to the Closing Date and the Additional
Closing Date, if any.
3. SUBSEQUENT OFFERS AND RESALES OF THE NOTES. The Initial
Purchasers and the Company hereby establish and agree to observe the following
procedures in connection with the offer and sale of the Notes:
(a) Each Initial Purchaser will offer the Notes for resale ("EXEMPT
RESALES") only upon the terms and conditions set forth in this Agreement and the
Offering Circular. Except as contemplated by the Registration Rights Agreement,
the Notes have not been and will not be registered under the Securities Act.
Each Initial Purchaser agrees that neither it nor any of its affiliates nor any
person acting on behalf of it or any such affiliate will take, and acknowledges
that the Company has not taken, any action that would constitute a public
offering of the Notes in any jurisdiction and further agrees that, with respect
to the offer or sale of any Notes or the delivery or distribution of any
Offering
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<PAGE>
Circular, it will comply with applicable laws and regulations in such
jurisdictions or to which it is otherwise subject.
(b) Each Initial Purchaser represents and warrants that (i) it is a
QIB or an Institutional Accredited Investor and (ii) that neither it nor any of
its affiliates nor any person acting on behalf of it or any such affiliate has
engaged or will engage in any general solicitation or general advertising, as
such terms are defined in Rule 502(c) under the Securities Act, in connection
with the offer or sale of the Notes.
(c) In connection with sales outside the United States, each Initial
Purchaser agrees that it will not offer, sell or deliver Notes (i) as part of
the distribution thereof at any time or (ii) otherwise until 40 days (subject to
extension as required by Regulation S in the event that Regulation S is amended
and such amendment is deemed applicable to the Notes) (the "RESTRICTED PERIOD")
after completion of the distribution, as determined by the Representative, to or
for the account or benefit of U.S. Persons (as defined in Regulation S). Each
Initial Purchaser confirms that neither it nor any of its affiliates nor any
person acting on behalf of it or any such affiliate has engaged, and agrees that
neither it nor any of its affiliates will engage, in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to the Notes or
the underlying Common Stock and that it, its affiliates and each such other
person has complied and will comply with the offering restrictions required by
Regulation S with respect to the Notes and the underlying Common Stock.
(d) Each of the Initial Purchasers acknowledges and agrees that it
has not and will not offer, sell or deliver the Notes in the United States or to
or for the account of any U.S. Person other than (i) distributors (as defined in
Regulation S), (ii) institutional buyers that are reasonably believed to be QIBs
and (iii) purchasers that are reasonably believed by the Initial Purchasers to
be Institutional Accredited Investors and that have executed and delivered to
the Representative a letter in the form of Annex A to the Offering Circular.
(e) Each Initial Purchaser agrees that, at or prior to confirmation
of a sale of Notes (other than a sale pursuant to Rule 144A), it will send to
each distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Notes from the Initial Purchasers during the
Restricted Period a confirmation or notice to substantially the following
effect:
"The Notes covered hereby have not been registered
under the United States Securities Act of 1933, as amended
(the "Securities Act") and may not be offered or sold within
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<PAGE>
the United States or to, or for the account or benefit of,
"U.S. persons" (as defined in Regulation S under the
Securities Act ("Regulation S")) (i) as part of their
distribution at any time or (ii) otherwise until 40 days
(subject to extension as required by Regulation S in the
event that Regulation S is amended and such amendment is
deemed applicable to the Notes) after the later of [the
commencement of the offering of the Notes] and the [closing
date], except in either case, for sales made (i) in
accordance with Regulation S; (ii) to institutional buyers
that are reasonably believed to be "qualified institutional
buyers," as defined in, and in accordance with, Rule 144A
under the Securities Act; or (iii) to purchasers that are
reasonably believed to be institutional "accredited
investors" as defined in Rule 501(a)(1), (2), (3) and (7) of
Regulation D under the Securities Act."
(f) Each Initial Purchaser represents, warrants and agrees that (i)
it has not offered or sold and will not offer or sell Notes in the United
Kingdom, other than to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (whether as principal
or agent) for the purposes of their businesses or otherwise in circumstances
that will not result in an offer to the public within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Public Offers of Securities Regulations 1995
and the Financial Services Act of 1986 with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom, and
(iii) it has only issued or passed on, and will only issue or pass on, to any
person in the United Kingdom any documents received by it in connection with the
issue of the Notes if the person is of a kind described in Article 11(c) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1988 or is a person to whom the documents may lawfully be issued or passed on.
Each Initial Purchaser further agrees that it will not offer or sell any Notes
directly or indirectly in Japan or to any resident of Japan except (i) pursuant
to an exemption from the registration requirements of the Securities and
Exchange Law of Japan and (ii) in compliance with any applicable requirements of
Japanese law. Each Initial Purchaser further agrees that it will not offer or
sell any Notes directly or indirectly in any province of Canada except in
compliance with all requirements of applicable securities laws and that it will
not offer or sell any Notes in the Republic of France.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Initial Purchasers that:
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<PAGE>
(a) If at any time prior to the Closing Date or the Additional
Closing Date, if any, any event shall have occurred as a result of which the
Offering Circular as then amended or supplemented would in the reasonable
judgment of the Initial Purchasers or the Company include an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, the Company will notify the
Representative promptly and prepare and deliver to the Representative on behalf
of the Initial Purchasers an amendment or supplement (in form and substance
satisfactory to the Initial Purchasers) which will correct such statement or
omission.
(b) To cooperate with the Initial Purchasers and their counsel for
the Initial Purchaser in connection with the qualification or registration of
the Notes under the securities or Blue Sky laws of such jurisdictions as the
Initial Purchasers may reasonably request and to continue such qualification in
effect so long as required for the Exempt Resales; provided, however, that the
Company shall not be required in connection therewith to register or qualify as
a foreign corporation in any jurisdiction where it is not now so qualified or to
take any action that would subject it to general service of process or taxation,
or to take action, in each case, in any jurisdiction where it is not now so
subject.
(c) The Company will promptly deliver to the Initial Purchasers such
number of copies of the Offering Circular and all amendments thereof and
supplements thereto as the Representative reasonably may request.
(d) The Company will apply the net proceeds from the sale of the
Notes substantially as set forth under "Use of Proceeds" in the Offering
Circular.
(e) The Company will cooperate with the Initial Purchasers in
arranging for the Notes to be designated Private Offerings, Resales and Trading
through Automated Linkage ("PORTAL") Market securities in accordance with the
rules and regulations of the National Association of Securities Dealers, Inc.,
relating to trading in the PORTAL Market.
(f) For a period of 90 days from the date of this Agreement, the
Company will not offer to sell, issue, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exchangeable or exercisable
for Common Stock (other than the Notes and other than pursuant to the exercise
of outstanding options and warrants, grants of options in the ordinary course of
business, and issuances in connection with acquisitions) or any rights to
acquire Common Stock, without the prior written consent of the Representative.
In addition, the Company will obtain and deliver to the Representative
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<PAGE>
a letter from each of its directors and executive officers confirming the
agreement of such person not to engage in any of the aforementioned
transactions on his or her own behalf during such 90-day period; PROVIDED,
HOWEVER, that the foregoing restrictions shall not apply with respect to
approximately 38,500 shares of Common Stock issuable upon the exercise of
employee stock options held by Michael Hedge, Richard White and A.S. Horng.
(g) So long as any of the Notes are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, the Company will provide
to any holder of the Notes or to any prospective purchaser of the Notes
designated by any holder, upon request of such holder or prospective purchaser,
information required to be provided by Rule 144A(d)(4) of the Securities Act if
at the time of such request, the Company is not subject to the reporting
requirements under Section 13 or 15(d) of the Exchange Act.
(h) Except following the effectiveness of the Registration Statement,
None of the Company, its subsidiaries, its affiliates or any person acting on
behalf of any of them (other than the Initial Purchasers and their respective
affiliates, as to whom this undertaking by the Company shall not be deemed to
apply) will solicit any offer to buy or offer or sell the Notes by means of any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of the Securities Act.
(i) None of the Company, its subsidiaries, its affiliates or any
person acting on behalf of any of them (other than the Initial Purchasers and
their respective affiliates, as to whom this undertaking by the Company shall
not be deemed to apply) will offer to sell, sell or solicit offers to buy or
otherwise negotiate in respect of the sale of any security (as defined in the
Securities Act) that would be integrated with the sale of the Notes so as to
require the registration of the Notes under the Securities Act.
(j) During the period of two years from and after the Closing Date,
none of the Company, its subsidiaries or its or their affiliates will resell any
Notes that may have been purchased or otherwise acquired by them, except in a
transaction registered or exempt from registration under the Securities Act.
(k) None of the Company, its subsidiaries, its affiliates or any
person acting on behalf of any of them (other than the Initial Purchasers and
their respective affiliates, as to whom this undertaking shall not be deemed to
apply) will engage in any directed selling efforts (as that term is defined in
Regulation S) with respect to the Notes offered and sold pursuant to Regulation
S, and the Company, its subsidiaries, its affiliates and each person acting on
behalf of any of them (other than the Initial Purchasers and their
17
<PAGE>
respective affiliates, as to whom this undertaking by the Company shall not
be deemed to apply) will comply with the offering restrictions of Regulation
S with respect to those Notes offered and sold pursuant thereto.
(l) The Company will cooperate with the Initial Purchasers in
arranging for the Notes to be accepted for clearance and settlement through
Euroclear, CEDEL and DTC.
(m) Each of the Notes will bear, to the extent applicable, the legend
contained under the heading "Transfer Restrictions" in the Offering Circular for
the time period and upon the other terms stated therein, except after the Notes
are resold in a transaction registered under the Securities Act.
(n) Following the Closing, the Company will use its reasonable
commercial efforts to obtain a rating of the Notes by such rating agencies as
identified by the Representative and will provide to such organization such
information as such rating agencies reasonably shall require in order to issue a
rating of the Notes.
(o) The Company will not voluntarily claim, and will actively resist
any attempts to claim, the benefit of any usury laws against the holders of any
Notes.
(p) The Company will not take, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the Company or to
facilitate the sale or resale of the Notes in contravention of Regulation M
under the Securities Act and the Exchange Act. Except as permitted by the
Securities Act, the Company shall not distribute (i) any preliminary offering
circular, including, without limitation, the Preliminary Offering Circular, (ii)
offering memorandum, including, without limitation, the Offering Circular or
(iii) other offering material in connection with the offering and sale of the
Notes.
(q) Prior to the Closing Date, the Company will furnish to the Initial
Purchasers copies of any unaudited interim financial statements for any period
subsequent to the periods covered by the financial statements appearing in the
Offering Circular, as soon as such financial statements have been prepared in
the ordinary course by the Company.
(r) Subject to receiving official notice of the effectiveness of the
first Registration Statement, the Company will cause such Common Stock
underlying the Notes to be approved for listing on the Nasdaq Stock Market or on
such securities exchange on which the Common Stock is then listed.
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(s) Prior to the Closing Date, the Company will file with the
Commission a current report on Form 10-Q as required under the Exchange Act
with respect to its fiscal quarter ended August 31, 1997 (the "Third Quarter
From 10-Q"), in substantially the same form as provided to the Initial
Purchasers prior to the execution of this Agreement.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is
terminated, the Company agrees to pay all costs, expenses fees and taxes
incident to the performance of its obligations hereunder, including those in
connection with; (i) preparing, printing, duplicating, filing and
distributing the Preliminary Offering Circular and the Offering Circular and
any amendments or supplements thereto (including, without limitation, fees
and expenses of the Company's accountants and counsel), and all other
documents related to the offering of the Notes (including those supplied to
the Initial Purchasers in quantities provided for herein), in each case
excluding any fees of counsel to the Initial Purchasers; (ii) the issuance,
transfer and delivery by the Company of the Notes to the Initial Purchasers,
including any transfer or other taxes payable thereon; (iii) the cost of
printing the Notes; (iv) all expenses and listing fees in connection with the
application for quotation of the Notes in the PORTAL Market; (v) all fees and
expenses (including fees and expenses of counsel) of the Company in
connection with the approval of the Notes by DTC for "book-entry" transfer;
(vi) all fees and expenses in connection with the rating of the Notes by
rating agencies; (vii) the cost and charges of any transfer agent, registrar,
Trustee (or successor trustee) or fiscal paying agent and conversion agent;
(viii) the costs and charges of DTC, Euroclear and CEDEL; and, (ix)
"roadshow" travel and other expenses incurred by the Company in connection
with the marketing and sale of the Notes.
6. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligation
of the Initial Purchasers to purchase and pay for the Firm Notes and the
Optional Notes, as provided herein, shall be subject to the satisfaction of
the following conditions:
(a) All of the representations and warranties of the Company
contained in this Agreement, as of the date hereof and as of the Closing Date
(for purposes of this Section 6 "Closing Date" shall refer to the Closing
Date and the Additional Closing Date, if any) shall be true and correct with
the same force and effect as if made on and as of the date hereof and the
Closing Date, respectively. All certificates, opinions, written statements
or letters furnished to the Initial Purchasers pursuant to this Section 6
shall be free of any material misstatement or omission. The Company shall
have performed or complied with all of the agreements herein contained and
required to be performed or complied with by it at or prior to the Closing
Date.
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(b) At the Closing Date, the Initial Purchasers shall have received
the opinion of Haynes and Boone, LLP, counsel for the Company, dated the
Closing Date, addressed to the Initial Purchasers and in form and scope
reasonably satisfactory to Weil, Gotshal & Manges LLP ("COUNSEL FOR THE
INITIAL PURCHASERS"), to the effect that:
(i) The Company and each Significant Subsidiary, other than
(a) NAC Holdings, Inc., as to which such counsel expresses no opinion and
(b) CellStar, Ltd., a Texas limited partnership (the "Partnership"), has
been duly incorporated and is validly existing and in good standing as a
corporation under the laws of the jurisdiction of its incorporation and has
full corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Offering Circular.
(ii) The Partnership has been duly organized and is validly
existing under the laws of the State of Texas. The Partnership has full
partnership power and authority to own, lease and operate its properties
and conduct its business as described in the Offering Circular.
(iii) The authorized capital stock of the Company conforms as
to legal matters in all material respects to the description thereof
contained in the Offering Circular under the heading "Description of
Capital Stock." The outstanding shares of the Company's Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable. The shares of Common Stock initially issuable upon
conversion of the Notes have been duly authorized and reserved for issuance
upon such conversion and, when issued and delivered upon such conversion in
accordance with the provisions of the Indenture (assuming payment for and
delivery of the Notes in accordance with this Agreement), will be validly
issued, fully paid and nonassessable and no further approval or authority
of the shareholders or the Board of Directors of the Company will be
required for such issuance.
(iv) Except as disclosed in the Offering Circular and any
document incorporated by reference therein, and except for stock options
outstanding under the Company's existing stock option plans, to the
knowledge of such counsel there are no outstanding options, warrants or
other rights calling for the issuance of, and no commitments or obligations
on the part of the Company to issue, any shares of capital stock of the
Company or any security convertible into or exchangeable for capital stock
of the Company.
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(v) Except for those rights which have been waived in
connection with the transactions contemplated by this Agreement, there are
no preemptive rights to subscribe for or purchase shares of the Company's
Common Stock provided in the Company's charter or bylaws or, to the
knowledge of such counsel, in any agreement to which the Company is a
party.
(vi) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and each of the other Transaction Agreements to which it is a
party and to consummate the transactions contemplated thereby, including,
without limitation, the corporate power and authority to issue, sell and
deliver the Notes as provided herein.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(ix) The Notes have been duly authorized, executed and
issued by the Company and, assuming due authentication thereof by the
Trustee, upon payment therefor and delivery thereof in accordance with this
Agreement and the Indenture, will constitute the legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with their terms and will be entitled to the benefits of the Indenture,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding in equity or at law).
(x) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Initial Purchasers,
constitutes the legal, valid
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and binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding in equity or
at law) and except as the enforceability of rights to indemnification
thereunder may be limited by federal or state securities laws or public
policy relating thereto and the right of a Holder to receive Liquidated
Damages may be limited to the amount of actual damages suffered by such
Holder.
(xi) The Notes, the Indenture and the Registration Rights
Agreement conform as to legal matters in all material respects to the
descriptions thereof contained in the Offering Circular.
(xii) The issue and sale of the Notes by the Company and the
compliance by the Company with all of the provisions of this Agreement and
the Registration Rights Agreement will not conflict with, violate the terms
of or result in a default under any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument filed or incorporated by
reference as an exhibit to the Company's Annual Report on Form 10-K for the
year ended November 30, 1996 (the "1996 FORM 10-K"), or its Quarterly
Reports on Form 10-Q for the quarters ended February 28, 1997, May 31, 1997
and August 31, 1997 or any material agreement entered into by the Company
subsequent to August 31, 1997 of which such counsel has knowledge, except
for conflicts, violations or defaults which have been waived, nor will such
action violate the charter or bylaws of the Company or any federal or,
solely with respect to the General Corporation Law of the State of
Delaware, Delaware statute, rule or regulation applicable to the Company or
violate any order known to such counsel issued by any governmental agency
or body or court having jurisdiction over the Company or any of its
subsidiaries or any of its or their respective properties.
(xiii) Except as have been obtained or made, no consent,
approval, authorization, order, registration or qualification of or with
any federal or, solely with respect to the General Corporation Law of the
State of Delaware, Delaware governmental agency or body is required for the
issue and sale of the Notes and the underlying Common Stock by the Company
and compliance by the Company with the provisions of this Agreement and the
Registration Rights Agreement, except for the registration of the Notes
under the Securities Act (as to which no opinion is expressed in this
paragraph) and qualification of the Indenture under the Trust
22
<PAGE>
Indenture Act (as to which no opinion is expressed in this paragraph), and
such consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws or the
securities laws of any jurisdiction outside the United States in connection
with the purchase and resale of the Notes by the Initial Purchasers (as to
which no opinion is expressed).
(xiv) The statements made in the Offering Circular under the
heading "Certain Tax Considerations," insofar as they purport to constitute
summaries of matters of United States federal tax law and regulations or
legal conclusions with respect thereto, constitute accurate summaries of
the matters described therein in all material respects.
(xv) No registration under the Securities Act of the Notes
or the shares of Common Stock issuable upon conversion of the Notes in
accordance with the Indenture, and no qualification of the Indenture under
the Trust Indenture Act of 1939, as amended, is required for the offer and
sale of the Notes by the Company to the Initial Purchasers or the initial
reoffer and resale of the Notes by the Initial Purchasers solely in the
manner contemplated by the Offering Circular and this Agreement.
(xvi) Except as disclosed in the Offering Circular, to the
knowledge of such counsel, no holders of securities of the Company have
rights to require the registration of such securities because of the filing
by the Company of the Shelf Registration Statement (as such term is defined
in the Offering Circular) except such as have been validly waived.
(xvii) When the Notes are issued and delivered pursuant to
this Agreement, no Notes will be of the same class (within the meaning of
Rule 144A under the Act) as securities of the Company that are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or that are quoted in a United States automated inter-dealer quotation
system.
(xviii) Assuming the proceeds from the Offering are applied as
described in the Offering Circular, none of the execution, delivery and
performance of this Agreement, the issuance and sale of the Notes, the
application of the proceeds from the issuance and sale of the Notes and the
consummation of the transactions contemplated thereby as set forth in the
Offering Circular, will violate Regulations G, T, U or X promulgated by the
Board of Governors of the Federal Reserve System.
23
<PAGE>
In addition, such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and Counsel for the Initial
Purchasers at which the contents of the Offering Circular and related matters
were discussed and, although such counsel did not independently verify such
information and is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Offering Circular, on the basis of the foregoing (relying as to the factual
matters upon the statements of officers and other representatives of the
Company and public officials) no facts have come to such counsel's attention
that caused such counsel to believe that the Offering Circular (other than
the financial statements and notes thereto and other financial and accounting
data included or incorporated by reference therein, or omitted therefrom, as
to which such counsel need express no belief) at the date of the Offering
Circular and as of the Closing Date contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (x) as to matters
involving the application of laws other than the laws of the United States
and jurisdictions in which such counsel are admitted, to the extent such
counsel may deem proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably
satisfactory to Counsel for the Initial Purchasers) of other counsel,
reasonably acceptable to Counsel for the Initial Purchasers, familiar with
the applicable laws (it being understood, however, that with respect to the
validity, binding effect and enforceability of the Indenture, the Notes and
the Registration Rights Agreement, counsel may opine as if such instruments
were governed by the laws of the State of Texas) and (y) as to matters of
fact, to the extent they deem proper, on the representations and warranties
of the Company and the Initial Purchasers contained herein, on certificates
of responsible officers of the Company and certificates or other written
statements of officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company and its subsidiaries.
(c) All proceedings taken in connection with the sale of the Notes
as herein contemplated shall be reasonably satisfactory in form and substance
to the Initial Purchasers and to Counsel for the Initial Purchasers, and the
Initial Purchasers shall have received from said Counsel for the Initial
Purchasers a favorable opinion, dated as of the Closing Date with respect to
the issuance and sale of the Notes, the Offering Circular and such other
related matters as the Initial Purchasers may reasonably require, and the
Company shall have furnished to Counsel for the Initial Purchasers such
documents as they reasonably may request for the purpose of enabling them to
pass upon such matters.
24
<PAGE>
(d) At the Closing Date, the Initial Purchasers shall have received
a certificate of the Chief Executive Officer and Chief Financial Officer of
the Company, dated the Closing Date, to the effect that (i) as of the date
hereof and as of the Closing Date, the representations and warranties of the
Company set forth in Section 1 hereof are accurate in all material respects,
(ii) as of the Closing Date, the obligations of the Company to be performed
hereunder on or prior thereto have been duly performed in all material
respects and (iii) subsequent to the respective dates as of which information
is given in the Offering Circular, the Company and its subsidiaries have not
sustained any material loss or interference with their respective businesses
or properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or any legal
or governmental proceeding, and there has not been any material adverse
change, or any development involving a material adverse change in the
business, properties, operations, condition (financial or otherwise), or
results of operations of the Company and its subsidiaries taken as a whole,
except in each case as disclosed in the Offering Circular.
(e) At the time this Agreement is executed and at the Closing Date,
the Initial Purchasers shall have received a letter from KPMG Peat Marwick
LLP, independent accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date and addressed to the
Initial Purchasers, in form, scope and substance as shall have been
previously agreed to by the Representative.
(f) Prior to the Closing Date, the Company shall have furnished to
the Initial Purchasers such further information, certificates and documents
as the Initial Purchasers may reasonably request.
(g) The Company shall have entered into the Indenture and the
Registration Rights Agreement and the Initial Purchasers shall have received
counterparts, conformed and executed, thereof.
(h) The Initial Purchasers shall have received from each person who
is a director or executive officer (as defined in the proxy rules of the
Securities and Exchange Commission) of the Company an agreement to the effect
that during the period of 90 days from the date of the Offering Circular,
such person will not, directly or indirectly, without the prior written
consent of the Representative, offer to sell, sell, contract to sell, grant
any option or rights to acquire or purchase any option to sell, or otherwise
dispose of, any shares of Common Stock; PROVIDED, HOWEVER, that the foregoing
restrictions shall not apply with respect to approximately 38,500 shares of
Common Stock upon the exercise of certain employee stock options held by
Michael Hedge, Richard White and A.S. Horng.
25
<PAGE>
(i) At the Closing Date, the Notes shall have been approved for
quotation in the PORTAL Market.
(j) Prior to the Closing Date, the Company shall have filed the
Third Quarter Form 10-Q in substantially the same form as provided to the
Initial Purchasers prior to the execution of this Agreement.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as required by this
Agreement, or if any of the certificates, opinions, written statements or
letters furnished to the Initial Purchasers or to Counsel for the Initial
Purchasers pursuant to this Section 6 shall not be in all material respects
reasonably satisfactory in form and scope to the Representative and to
Counsel for the Initial Purchasers, all obligations of the Initial Purchasers
hereunder may be canceled by the Representative at, or at any time prior to,
the Closing Date and the obligations of the Initial Purchasers to purchase
the Optional Notes may be canceled by the Representative at, or at any time
prior to, the Additional Closing Date. Notice of such cancellation shall be
given to the Company in writing, or by telephone, telex or telegraph,
confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Initial
Purchaser and each person, if any, who controls any Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any
and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to reasonable attorneys' fees and
expenses whatsoever incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation) (collectively,
"LOSSES"), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
Losses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Offering Circular or any related Preliminary Offering Circular or any
amendment or supplement thereto or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent but only
to the extent that any such Losses arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by
26
<PAGE>
or on behalf of any Initial Purchaser through the Representative expressly
for use therein, and PROVIDED FURTHER, that the foregoing indemnity with
respect to any untrue statement contained in or omission from a Preliminary
Offering Circular or the Offering Circular shall not inure to the benefit of
any Initial Purchaser (or any person controlling such Initial Purchaser) from
whom the person asserting any such loss, liability, claim, damage or expense
purchased any of the Notes if a copy of the Offering Circular (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Initial
Purchaser to such person at or prior to the written confirmation of the sale
of such Notes to such person, and if the Offering Circular (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability. This indemnity agreement will be in addition to any
liability which the Company may otherwise have including under this Agreement.
(b) Each Initial Purchaser severally, and not jointly, agrees to
indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company, and each other person, if any,
who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act, against any Losses whatsoever as
incurred (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), jointly
or severally, to which they or any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Losses (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Offering Circular, or any related Preliminary Offering Circular, or in any
amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that any such Losses arise out of or are
based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of any Initial
Purchaser through the Representative expressly for use therein; PROVIDED,
HOWEVER, that in no case shall any Initial Purchaser be liable or responsible
for any amount in excess of the discount applicable to the Notes purchased by
such Initial Purchaser hereunder. This indemnity will be in addition to any
liability which any Initial Purchaser may otherwise have including under this
Agreement. The Company shall only be permitted to seek indemnity pursuant to
this Section 7(b) or contribution pursuant to Section 8 from the Initial
Purchasers for the statements set forth in the last paragraph of the cover
page prior to the paragraph entitled "Special Cautionary Notice Regarding
Forward Looking Statements" and in the eleventh,
27
<PAGE>
twelfth and fourteenth paragraphs under the caption "Plan of Distribution" in
the Offering Circular.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but
the failure so to notify an indemnifying party shall not relieve it from any
liability which it may have otherwise than under this Section 7 unless and to
the extent that it has been prejudiced by such failure or from the forfeiture
of rights and defenses). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein, and
to the extent it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party
or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense
of such indemnified party or parties unless (i) the employment of such
counsel shall have been authorized in writing by one of the indemnifying
parties in connection with the defense of such action, (ii) the indemnifying
parties shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
or (iii) such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are different from
or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses shall be borne by the indemnifying
parties. In no event shall the indemnifying party be liable for the fees and
expenses of more than one counsel in connection with any one such action or
separate but similar related actions in the same jurisdiction arising out of
the same general allegations or circumstances. Anything in this subsection
to the contrary notwithstanding, an indemnifying party shall not be liable
for any settlement of any claim or action effected without its written
consent; PROVIDED, HOWEVER, that such consent was not unreasonably withheld
or delayed, and the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any Loss by reason of any settlement
of any action effected with the indemnifying party's written consent. The
indemnifying party shall not, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of a judgment
in or otherwise seek to terminate any pending or threatened litigation or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not any indemnified party is a party thereto), unless
such settlement, compromise, consent or
28
<PAGE>
termination includes an unconditional release of each indemnified party from
all liability arising out of such action, claim, litigation or proceeding.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof
is for any reason held to be unavailable from any indemnifying party, or to
any indemnified party, or is insufficient to hold harmless a party
indemnified thereunder, the Company and the Initial Purchasers shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but
after deducting in the case of losses, claims, damages, liabilities and
expenses suffered by the Company any contribution received by the Company
from persons, other than the Initial Purchasers, who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act,
officers and directors of the Company) as incurred to which the Company and
one or more of the Initial Purchasers may be subject, in such proportions as
is appropriate to reflect the relative benefits received by the Company and
the Initial Purchasers from the offering of the Notes or, if such allocation
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to above but also the
relative fault of the Company and the Initial Purchasers in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Initial Purchasers shall be deemed to be in the same proportion as (x) the
total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company and (y)
the underwriting discounts and commissions received by the Initial Purchasers
respectively. The relative fault of the Company and of the Initial
Purchasers shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Initial Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this Section 8, (i) in no case
shall any Initial Purchaser be liable or responsible for any amount in excess
of the discount applicable to the Notes purchased by such Initial Purchaser
hereunder, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
29
<PAGE>
fraudulent misrepresentation and (iii) no Initial Purchaser shall be required
to contribute any amount in excess of the amount by which the total price at
which the Note purchased by it and sold in the Offering were offered to
subsequent purchasers exceeds the amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of
this Section 8, each person, if any, who controls an Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Initial
Purchaser, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer and each director of the Company shall have the same rights
to contribution as the Company, subject in each case to clauses (i) and (ii)
of this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties, notify each party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; PROVIDED, HOWEVER, that such consent was not
unreasonably withheld.
9. DEFAULT BY AN INITIAL PURCHASER. If any of the Initial
Purchasers shall fail at the Closing Date or Additional Closing Date to
purchase the Notes which it is obligated to purchase under this Agreement
(the "DEFAULTED NOTES"), the non-defaulting Initial Purchaser shall have the
right, within 24 hours thereafter, to make arrangements for it to purchase
all, but not less than all, of the Defaulted Notes upon the terms herein set
forth; PROVIDED, HOWEVER, that if the non-defaulting Initial Purchaser shall
not have completed such arrangements within such 24-hour period, then, upon
the expiration of such 24-hour period, this Agreement shall terminate without
liability on the part of the non-defaulting Initial Purchaser.
No action taken pursuant to this Section shall relieve the
defaulting Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Initial Purchaser or
the Company shall have the right to postpone the Closing Date for a period
not exceeding seven days in order to effect any required changes in the
Offering Circular or in any other documents or arrangements.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All
representations and warranties, covenants and agreements of the Initial
Purchasers and the Company
30
<PAGE>
contained in this Agreement, including the agreements contained in Section 5,
the indemnity agreements contained in Section 7 and the contribution
agreements contained in Section 8, shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any
Initial Purchasers or any agent, representative or controlling person thereof
or by or on behalf of the Company, any of its officers and directors or any
controlling person thereof, and shall survive delivery of and payment for the
Notes to and by the Initial Purchasers. The agreements contained in Sections
5, 7, 8 and 11(c) hereof shall survive the termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. TERMINATION.
(a) The Representative shall have the right to terminate this
Agreement at any time prior to the Closing Date or the obligations of the
Initial Purchasers to purchase the Optional Notes at any time prior to the
Additional Closing Date, as the case may be, if (i) any domestic or
international event, act or occurrence shall have materially disrupted, or in
the Representative's reasonable opinion will in the immediate future
materially disrupt, the United States or international securities markets; or
(ii) trading on the New York Stock Exchange shall have been suspended, or
materially limited; or (iii) a banking moratorium shall have been declared by
any United States federal or New York or Texas state authority or if any new
restriction materially adversely affecting the distribution of the Firm Notes
or the Optional Notes, as the case may be, shall have become effective; or
(iv) any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) under the Securities Act) shall have announced
that it is (A) downgrading its rating assigned to any class of the Company's
debt securities or (B) reviewing any such rating with a view to possible
downgrading or with negative implications; or (v) there shall have occurred
any outbreak or escalation of hostilities involving the United States, or a
declaration of war or national emergency by the United States, or any change
in political, financial or economic conditions the effect of which is such,
in the judgment of the Representative, to make it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Firm Notes
or the Optional Notes, as the case may be, on the terms contemplated by the
Offering Circular.
(b) Any notice of termination pursuant to this Section 11 shall be
by telephone, telex, or telegraph, confirmed in writing by letter.
(c) If this Agreement shall be terminated pursuant to any of the
provisions hereof (other than pursuant to Section 9 or 11(a) hereof), or if
the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth herein is
not satisfied or because of any refusal, inability or
31
<PAGE>
failure on the part of the Company to perform any agreement herein or comply
with any provision hereof, the Company will, upon demand by the
Representative, reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including the reasonable fees and expenses of Counsel
for the Initial Purchasers), incurred by the Initial Purchasers solely and
directly in connection with the transactions contemplated by this Agreement,
and thereafter the Company shall have no further liability to the Initial
Purchaser.
12. NOTICE. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and shall be
mailed, delivered, or telexed or telegraphed and confirmed in writing, (i) if
to any of the Initial Purchasers, to such Initial Purchaser in care of Bear,
Stearns & Co. Inc., 300 Crescent Court, Suite 200, Dallas, Texas 75201,
Attention: Sheldon Stein, Senior Managing Director or (ii) if to the
Company, to the Company at 1730 Briercroft Drive, Carrollton, Texas 75006,
Attention: Chief Financial Officer and General Counsel, with a copy to
Haynes and Boone, LLP, 3100 NationsBank Plaza, 901 Main Street, Dallas, Texas
75202-3789, Attention: William R. Hays, III.
13. PARTIES. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Initial Purchasers and the Company and their
respective successors and assigns, and no other person shall have or be
deemed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision hereof. The term
"successors and assigns" shall not include a purchaser, in its capacity as
such, of Notes from any of the Initial Purchasers.
14. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
15. CAPTIONS. The captions included in this Agreement are included
solely for convenience of reference and are not to be considered a part of
this Agreement.
16. COUNTERPARTS. This Agreement may be executed in various
counterparts which together shall constitute one and the same instrument.
32
<PAGE>
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
CELLSTAR CORPORATION
By: /s/ Elaine Flud Rodriguez
-----------------------------------
Name: Elaine Flud Rodriguez
Title: Vice President and Secretary
Accepted as of the date first above written
BEAR, STEARNS & CO. INC.
By: /s/ Stephen Parish
-------------------------------
Name: Stephen Parish
Title: Senior Managing Director
CHASE SECURITIES INC.
By: /s/ Lawrence S. Landry
----------------------------
Name: Lawrence S. Landry
Title: Managing Director
33
<PAGE>
SCHEDULE I
Principal Amount of Firm
Name of Initial Purchaser Notes to be Purchased
- ------------------------- ------------------------
Bear, Stearns & Co. Inc. $110,500,000
Chase Securities Inc. $ 19,500,000
------------
Total $130,000,000
------------
------------
<PAGE>
ANNEX A
LIST OF SUBSIDIARIES OF CELLSTAR CORPORATION
NAME OF SUBSIDIARY INCORPORATION
- ------------------ -------------
National Auto Center, Inc. Texas
CellStar Financo, Inc. Delaware
CellStar Air Services, Inc. Delaware
A&S Air Services, Inc. Delaware
CellStar Fulfillment, Inc. Delaware
NAC Holdings, Inc. Nevada
CellStar West, Inc.(1) Delaware
CellStar, Ltd. Texas Limited Partnership
CellStar Fulfillment, Ltd. Texas Limited Partnership
CellStar International Corporation/SA Delaware
CellStar, S.A. Argentina
CellStar International Telefonia
Celular Ltda. Brazil
Cellular Industria da Telefonia
da Amazonia Ltda. Brazil
CellStar Celular Chile, S.A. Chile
CellStar de Colombia, S.A. Colombia
- ----------------------------
1. 80% owned
<PAGE>
CellStar Ecuador, S.A. Ecuador
CellStar (UK) Ltd. United Kingdom
CellStar Europe Ltd. United Kingdom
CellStar Celular, S.A. Venezuela
ACC-CellStar, Inc.(2) Delaware
Audiomex Export Corp. Texas
Celular Express S.A. de C.V. Mexico
Celular Express Management
S.A. de C.V. Mexico
CellStar International Corporation/Asia Delaware
CellStar Pacific Pte. Ltd. Singapore
CellStar Amtel Sdn Bhd(3) Malaysia
CellStar Philippines, Inc. Philippines
CellStar Telecommunication
Taiwan Co. Ltd. Taiwan
CellStar (Asia) Corporation Limited Hong Kong
Shanghai CellStar International
Trading Co. Ltd. PRC
- ----------------------------
2. 80% owned
3. 30% directly owned and 19% beneficially owned
<PAGE>
CellStar Telecommunications
Service (Asia) Limited(4) Hong Hong
CellStar Singapore Pte Ltd. Singapore
HCL-CellStar Ltd.(5) India
- ----------------------------
4. 60% owned
5. 50% owned
<PAGE>
ANNEX B
LIST OF SIGNIFICANT SUBSIDIARIES
NAME JURISDICTION
- ---- ------------
CellStar Corporation Delaware
National Auto Center, Inc. Texas
NAC Holdings, Inc. Nevada
CellStar Ltd. Texas
CellStar International Corporation/SA Delaware
AudioMex Export Corp. Texas
CellStar International Corporation/Asia Delaware
CellStar International Telefonia
Cellular Ltda. Brazil
Celular Express S.A. de C.V. Mexico
CellStar Pacific Pte. Ltd. Singapore
CellStar (Asia) Corporation Limited Hong Kong
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
CELLSTAR CORPORATION
ISSUER
AND
THE BANK OF NEW YORK,
TRUSTEE
INDENTURE
DATED AS OF OCTOBER 14, 1997
5% CONVERTIBLE SUBORDINATED NOTES DUE 2002
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
I
DEFINITIONS
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . . . . . . . . . 9
1.3 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . 10
II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
2.1 DESIGNATION, AMOUNT AND ISSUE OF NOTES. . . . . . . . . . . . . . . . 10
2.2 FORM OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. . . . . . . . . 12
2.4 EXECUTION OF NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES; RESTRICTIONS ON
TRANSFER; DEPOSITARY. . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. . . . . . . . . . . . . . 28
2.7 TEMPORARY NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.8 CANCELLATION OF NOTES PAID, ETC . . . . . . . . . . . . . . . . . . . 30
2.9 CUSIP NUMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
III
REDEMPTION OF NOTES
3.1 REDEMPTION PRICES . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 NOTICE OF REDEMPTION; SELECTION OF NOTES. . . . . . . . . . . . . . . 31
3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. . . . . . . . . . . . . . . . 32
3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION . . . . . . . . . . . . 33
3.5 PURCHASE OF NOTES UPON A CHANGE OF CONTROL. . . . . . . . . . . . . . 34
IV
PARTICULAR COVENANTS OF THE COMPANY
4.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. . . . . . . . . . . . . . 37
<PAGE>
4.2 MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . . . 37
4.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. . . . . . . . . . 38
4.4 PROVISIONS AS TO PAYING AGENT . . . . . . . . . . . . . . . . . . . . 38
4.5 CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.6 RULE 144A INFORMATION REQUIREMENT . . . . . . . . . . . . . . . . . . 39
4.7 STAY, EXTENSION AND USURY LAWS. . . . . . . . . . . . . . . . . . . . 40
4.8 COMPLIANCE STATEMENT; NOTICE OF DEFAULTS. . . . . . . . . . . . . . . 40
4.9 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.10 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
V
HOLDERS' LISTS AND REPORTS BY
THE COMPANY
5.1 HOLDERS' LISTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.2 REPORTS BY COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 41
VI
DEFAULTS AND REMEDIES
6.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR . . . . . . . . . . . . . 45
6.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. . . . . . . . . . . . . . 47
6.4 PROCEEDINGS BY HOLDER . . . . . . . . . . . . . . . . . . . . . . . . 48
6.5 PROCEEDINGS BY TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 48
6.6 REMEDIES CUMULATIVE AND CONTINUING. . . . . . . . . . . . . . . . . . 49
6.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF
HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.8 NOTICE OF DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.9 UNDERTAKING TO PAY COSTS. . . . . . . . . . . . . . . . . . . . . . . 50
VII
CONCERNING THE TRUSTEE
7.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE. . . . . . . . . . . . . . . . 50
7.2 REPORTS BY TRUSTEE TO HOLDERS . . . . . . . . . . . . . . . . . . . . 51
7.3 RELIANCE ON DOCUMENTS, OPINIONS, ETC. . . . . . . . . . . . . . . . . 52
7.4 NO RESPONSIBILITY FOR RECITALS, ETC . . . . . . . . . . . . . . . . . 53
7.5 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN
NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
<PAGE>
7.6 MONIES TO BE HELD IN TRUST. . . . . . . . . . . . . . . . . . . . . . 54
7.7 COMPENSATION AND EXPENSES OF TRUSTEE. . . . . . . . . . . . . . . . . 54
7.8 OFFICERS' CERTIFICATE AS EVIDENCE . . . . . . . . . . . . . . . . . . 55
7.9 CONFLICTING INTERESTS OF TRUSTEE. . . . . . . . . . . . . . . . . . . 55
7.10 ELIGIBILITY OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 55
7.11 RESIGNATION OR REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . . . . 55
7.12 ACCEPTANCE BY SUCCESSOR TRUSTEE . . . . . . . . . . . . . . . . . . . 57
7.13 SUCCESSOR, BY MERGER, ETC . . . . . . . . . . . . . . . . . . . . . . 57
7.14 LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR . . . . . . . . . . . . . 58
VIII
CONCERNING THE HOLDERS
8.1 ACTION BY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.2 PROOF OF EXECUTION BY HOLDERS . . . . . . . . . . . . . . . . . . . . 58
8.3 WHO ARE DEEMED ABSOLUTE OWNERS. . . . . . . . . . . . . . . . . . . . 58
8.4 COMPANY-OWNED NOTES DISREGARDED . . . . . . . . . . . . . . . . . . . 59
8.5 REVOCATION OF CONSENTS, FUTURE HOLDERS BOUND. . . . . . . . . . . . . 60
IX
HOLDERS' MEETINGS
9.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED . . . . . . . . . . . . . . 60
9.2 MANNER OF CALLING MEETINGS; RECORD DATE . . . . . . . . . . . . . . . 60
9.3 CALL OF MEETING BY COMPANY OR HOLDERS . . . . . . . . . . . . . . . . 61
9.4 WHO MAY ATTEND AND VOTE AT MEETINGS . . . . . . . . . . . . . . . . . 61
9.5 MANNER OF VOTING AT MEETINGS AND RECORD TO BE KEPT. . . . . . . . . . 61
9.6 EXERCISE OF RIGHTS OF TRUSTEE AND HOLDERS NOT TO BE HINDERED OR
DELAYED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
X
SUPPLEMENTAL INDENTURES
10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. . . . . . . . . . 62
10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS . . . . . . . . . . . 64
10.3 EFFECT OF SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . 65
10.4 NOTATION ON NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE FURNISHED
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
<PAGE>
XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
11.1 COMPANY MAY CONSOLIDATE, ETC. . . . . . . . . . . . . . . . . . . . . 65
11.2 SUCCESSOR COMPANY TO BE SUBSTITUTED . . . . . . . . . . . . . . . . . 66
11.3 OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE . . . . . . . . . . . . . . 66
XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
12.1 LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF THE NOTES . . . . . . . . 66
12.2 TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE NOTES . . . . . . 69
12.3 SURVIVAL OF CERTAIN OBLIGATIONS . . . . . . . . . . . . . . . . . . . 69
12.4 ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE. . . . . . . . . . . . . . . . 70
12.5 APPLICATION OF TRUST ASSETS . . . . . . . . . . . . . . . . . . . . . 70
12.6 REPAYMENT TO THE COMPANY; UNCLAIMED MONEY . . . . . . . . . . . . . . 70
12.7 REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
13.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. . . . . . . . . . . 71
XIV
CONVERSION OF NOTES
14.1 RIGHT TO CONVERT. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
14.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS . . . . . . . . . 72
14.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. . . . . . . . . . . . . . 74
14.4 CONVERSION PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.5 ADJUSTMENT OF CONVERSION PRICE. . . . . . . . . . . . . . . . . . . . 74
14.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE . . . . . . 84
14.7 TAXES ON SHARES ISSUED. . . . . . . . . . . . . . . . . . . . . . . . 85
14.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON
STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
<PAGE>
14.9 RESPONSIBILITY OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 86
14.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. . . . . . . . . . . . . . 87
XV
SUBORDINATION
15.1 AGREEMENT TO SUBORDINATE. . . . . . . . . . . . . . . . . . . . . . . 87
15.2 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 88
15.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. . . . . . . . . . . . . . . . . 89
15.4 DEFAULT ON SENIOR INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . 90
15.5 WHEN DISTRIBUTION MUST BE PAID OVER . . . . . . . . . . . . . . . . . 91
15.6 NOTICE BY COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.7 SUBROGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.8 RELATIVE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.9 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. . . . . . . . . . . . . 92
15.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. . . . . . . . . . . . . . . 92
15.11 RIGHTS OF TRUSTEE AND PAYING AGENT. . . . . . . . . . . . . . . . . . 93
15.12 AUTHORIZATION TO EFFECT SUBORDINATION . . . . . . . . . . . . . . . . 93
15.13 CONVERSIONS NOT DEEMED PAYMENT. . . . . . . . . . . . . . . . . . . . 94
15.14 AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
XVI
MISCELLANEOUS PROVISIONS
16.1 POOLING OF INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . 94
16.2 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. . . . . . . . . . . . . . 94
16.3 OFFICIAL ACTS BY SUCCESSOR COMPANY. . . . . . . . . . . . . . . . . . 94
16.4 ADDRESSES FOR NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . 95
16.5 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. . . . . . . . . . . . . 95
16.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
16.7 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT; CERTIFICATES TO
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
16.8 LEGAL HOLIDAYS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
16.9 NO SECURITY INTEREST CREATED. . . . . . . . . . . . . . . . . . . . . 96
16.10 TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . 97
16.11 TRUST INDENTURE ACT CONTROLS. . . . . . . . . . . . . . . . . . . . . 97
16.12 BENEFITS OF INDENTURE . . . . . . . . . . . . . . . . . . . . . . . . 97
16.13 TABLE OF CONTENTS, HEADINGS ETC . . . . . . . . . . . . . . . . . . . 97
16.14 AUTHENTICATING AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 97
16.15 EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 98
<PAGE>
INDENTURE, dated as of October 14, 1997, by and between CELLSTAR
CORPORATION, a Delaware corporation (the "Company"), and The Bank of New York, a
New York banking corporation (the "Trustee").
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its 5% Convertible Subordinated Notes Due 2002 (the
"Notes"), in an aggregate principal amount of up to $150,000,000.00, and, to
provide the terms and conditions upon which the Notes are to be authenticated,
issued and delivered, the Company has duly authorized the execution and delivery
of this Indenture; and
WHEREAS, the Notes, the certificate of authentication to be borne by
the Notes, a form of assignment, a form of option to require repurchase by the
Company upon a Change of Control (as hereinafter defined), a form of conversion
notice and a certificate of transfer to be borne by the Notes are to be
substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issuance hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below) as follows:
I
DEFINITIONS
1.1 DEFINITIONS. The terms defined in this Section 1.1 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this
1
<PAGE>
Section 1.1. The words "herein," "hereof," "hereunder" and words of similar
import refer to this Indenture as a whole and not to any particular Article
or Section.
ACQUISITION PRICE: The term "Acquisition Price" shall mean the weighted
average price paid by the person or group in acquiring the Voting Stock.
AFFILIATE: An "Affiliate" of any specified person shall mean an
"affiliate" as defined in Rule 144(a) as promulgated under the Securities Act.
BANK REPRESENTATIVE: The term "Bank Representative" shall have the meaning
specified in Section 15.2.
BOARD OF DIRECTORS: The term "Board of Directors" shall mean the Board of
Directors of the Company or a committee of such Board of Directors duly
authorized to act for it hereunder.
BOARD RESOLUTION: The term "Board Resolution" shall mean a copy of a
resolution certified by the Secretary or an Assistant Secretary of the Company
to have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
BUSINESS DAY: The term "Business Day" shall mean a day, other than a
Saturday, a Sunday or a day on which the banking institutions in the City of New
York are authorized or obligated by law or executive order to close.
CAPITAL STOCK: The term "Capital Stock" of any person shall mean any and
all shares, interests, participations or other equivalents (however designated)
of such person's corporate stock or any and all equivalent ownership interests
in a person (other than a corporation) whether now outstanding or issued after
the date hereof.
CEDEL: The term "Cedel" shall mean Cedel Bank Societe Anonyme.
CHANGE OF CONTROL: The term "Change of Control" shall have the meaning
specified in Section 3.5(d).
CLOSING DATE: The term "Closing Date" shall mean October 14, 1997.
COMMISSION: The term "Commission" shall mean the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act or,
if at any time
2
<PAGE>
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, the
body performing such duties at such time.
COMMON STOCK: The term "Common Stock" shall mean any stock of any class of
the Company that does not have a preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and that is not subject to redemption
by the Company. Subject to the provisions of Section 14.6, however, shares
issuable on conversion of Notes shall include only shares of the class
designated as common stock of the Company at the date of this Indenture or
shares of any class or classes resulting from any reclassification or
reclassifications thereof and that do not have a preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company and that are not subject
to redemption by the Company; provided that if at any time there shall be more
than one such resulting class, the shares of each such class then so issuable
shall be substantially in the proportion that the total number of shares of such
class resulting from all such reclassification bears to the total number of
shares of all such classes resulting from all such reclassifications.
COMPANY: The term "Company" shall mean CellStar Corporation, a Delaware
corporation, and subject to the provisions of Article XI, shall include its
successors and assigns.
CONVERSION PRICE: The term "Conversion Price" shall have the meaning
specified in Section 14.4.
CORPORATE TRUST OFFICE OF THE TRUSTEE: The term "Corporate Trust Office of
the Trustee," or other similar term, shall mean the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date as of which this Indenture is dated,
located at The Bank of New York, 101 Barclay Street, 21st Floor West, New York,
New York 10286, Attention: Corporate Trust Administration.
CUSTODIAN: The term "Custodian" shall mean The Bank of New York or such
other designated custodian, as custodian with respect to the Notes in global
form, or any successor entity thereto.
DEFAULT: The term "default" shall mean any event that is, or after notice
or passage of time, or both, would be, an Event of Default.
DEFAULTED INTEREST: The term "Defaulted Interest" shall have the meaning
specified in Section 2.3.
3
<PAGE>
DEFINITIVE NOTES; IN DEFINITIVE FORM: The term "definitive Notes" shall
have the meaning specified in Section 2.2. Any reference to Notes "in
definitive form" shall mean definitive Notes, and any reference to securities
"in definitive form" shall mean definitive Notes or Common Stock as the context
requires.
DEFINITIVE NOTE EXCHANGE CERTIFICATE: The term "Definitive Note Exchange
Certificate shall have the meaning specified in Section 2.5(b) hereof.
DEPOSITARY: The term "Depositary" shall mean, with respect to the Notes
issuable or issued in whole or in part in global form, the person specified in
Section 2.5(d) as the Depositary with respect to the Notes, until a successor
shall have been appointed and become such pursuant to the applicable provisions
of this Indenture, and thereafter, "Depositary" shall mean or include such
successor.
DESIGNATED SENIOR INDEBTEDNESS: The term "Designated Senior Indebtedness"
shall have the meaning specified in Section 15.2.
DWAC: The term "DWAC" shall mean Deposit and Withdrawal at Custodian
Service.
EUROCLEAR: The term "Euroclear" shall mean Morgan Guaranty Trust Company
of New York, Brussels office, as operator of the Euroclear System.
EVENT OF DEFAULT: The term "Event of Default" shall mean any event
specified in Section 6.1(a) through (g).
EXCHANGE ACT: The term "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
EXCLUDED PERSON: The term "Excluded Person" shall have the meaning
specified in Section 3.5(d).
GLOBAL NOTE: The term "global Note" shall mean any and all notes in global
form.
HOLDER: The terms "Holder" or "holder" as applied to any Note, or other
similar terms (but excluding the term "beneficial holder"), shall mean any
person in whose name at the time a particular Note is registered on the Note
registrar's books.
INDENTURE: The term "Indenture" shall mean this instrument as originally
executed or, if amended or supplemented as herein provided, as so amended or
supplemented.
4
<PAGE>
INSTITUTIONAL ACCREDITED INVESTOR: The term "Institutional Accredited
Investor" means an institution that is an "accredited investor" as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
INSTITUTIONAL ACCREDITED INVESTOR GLOBAL NOTE: The term "Institutional
Accredited Investor Global Note" shall have the meaning specified in Section
2.2.
INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE: The term "Institutional
Accredited Investor Certificate" shall have the meaning specified in Section
2.5(c).
NON-U.S. PERSON: The term "Non-U.S. Person" shall have the meaning
specified in Section 2.2.
NOTE OR NOTES: The terms "Note" or "Notes" shall mean any Note or Notes,
as the case may be, authenticated and delivered under this Indenture.
NOTE REGISTER: The term "Note register" shall have the meaning specified
in Section 2.5(a).
NOTE REGISTRAR: The term "Note registrar" shall have the meaning specified
in Section 2.5(a).
OBLIGATIONS: The term "Obligations" shall have the meaning specified in
Section 15.2.
OFFICERS' CERTIFICATE: The term "Officers' Certificate," when used with
respect to the Company, shall mean a certificate signed by the President, the
Chief Executive Officer, the Chief Operating Officer or the Chief Financial
Officer and any Treasurer or Secretary or any Assistant Secretary of the
Company, that is delivered to the Trustee. Each such certificate shall include
the statements provided for in Section 16.7 if and to the extent required by the
provisions of such Section.
OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an opinion in
writing signed by legal counsel, who may be an employee of or counsel to the
Company or other counsel reasonably acceptable to the Trustee, that is delivered
to the Trustee. Each such opinion shall include the statements provided for in
Section 16.7 if and to the extent required by the provisions of such Section.
5
<PAGE>
OUTSTANDING: The term "outstanding" with reference to Notes as of any
particular time shall mean, subject to the provisions of Section 8.4, all Notes
authenticated and delivered by the Trustee under this Indenture, except
(a) Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Notes, or portions thereof, for which monies in the
necessary amount shall have been deposited in trust with the Trustee
for payment or redemption; provided that if such Notes are to be
redeemed prior to the maturity thereof, notice of such redemption
shall have been given pursuant to Article III or provision
satisfactory to the Trustee shall have been made for giving such
notice;
(c) Notes paid pursuant to Section 2.6 hereof or Notes in lieu
of or in substitution for which other Notes shall have been
authenticated and delivered pursuant to the terms of Section 2.6
unless proof satisfactory to the Trustee is presented that any such
Notes are held by BONA FIDE holders in due course; and
(d) Notes converted into Common Stock pursuant to Article XIV
and Notes not deemed outstanding pursuant to Section 3.2.
PAYMENT DEFAULT: The term "Payment Default" shall have the meaning
specified in Section 6.1(d).
PERSON: The term "person" shall mean a corporation, an association, a
partnership, an individual, a joint venture, a joint stock company, a trust, an
unincorporated organization or a government or an agency or a political
subdivision thereof.
PORTAL MARKET: The term "PORTAL Market" shall mean the Private Offerings,
Resales and Trading through Automated Linkages Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
PREDECESSOR NOTE: The term "Predecessor Note" of any particular Note shall
mean every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purposes of this definition, any
Note authenticated and delivered under Section 2.6 in lieu of a lost, destroyed
or stolen Note shall be deemed to evidence the same debt as the lost, destroyed
or stolen Note.
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QIB: The term "QIB" shall mean a "qualified institutional buyer" as
defined in Rule 144A.
REGULATION S: The term "Regulation S" shall mean Regulation S under the
Securities Act and any successor regulation thereto.
REGULATION S GLOBAL NOTE: The term "Regulation S Global Note" shall have
the meaning specified in Section 2.2.
REGULATION S CERTIFICATE: The term "Regulation S Certificate" shall have
the meaning specified in Section 2.5(c).
REPRESENTATIVE: The term "Representative" shall have the meaning specified
in Section 15.2.
RESPONSIBLE OFFICER: The term "Responsible Officer" with respect to the
Trustee, shall mean an officer of the Trustee assigned and duly authorized by
the Trustee to administer its corporate trust matters.
RESTRICTED GLOBAL NOTES: The term "Restricted Global Notes" shall have the
meaning specified in Section 2.2.
RESTRICTED PERIOD: The term "Restricted Period" shall have the meaning
specified in Section 2.2.
RESTRICTED SECURITIES: The term "Restricted Securities" shall have the
meaning specified in Section 2.5(d).
RULE 144A: The term "Rule 144A" shall mean Rule 144A as promulgated under
the Securities Act.
RULE 144A GLOBAL NOTE: The term "Rule 144A Global Note" shall have the
meaning specified in Section 2.2.
RULE 144A CERTIFICATE: The term "Rule 144A Certificate" shall have the
meaning specified in Section 2.5(c).
SECURITIES ACT: The term "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
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SENIOR INDEBTEDNESS: The term "Senior Indebtedness" shall have the meaning
specified in Section 15.2.
SIGNIFICANT SUBSIDIARY: The term "Significant Subsidiary" shall have the
meaning specified in Section 6.1(f).
SUBSIDIARY: The term "subsidiary" of any specified person shall mean (i) a
corporation a majority of whose capital stock with voting power under ordinary
circumstances to elect directors is at the time directly or indirectly owned by
such person or (ii) any other person (other than a corporation) in which such
person or such person and a subsidiary or subsidiaries of such person or a
subsidiary or subsidiaries of such person directly or indirectly, at the date of
determination thereof, has at least majority ownership or voting power.
SUCCESSOR COMPANY: The term "Successor Company" shall have the meaning
specified in Section 11.1.
TRUST INDENTURE ACT: The term "Trust Indenture Act" shall mean the Trust
Indenture Act of 1939, as amended, as it was in force at the date of execution
of this Indenture, except as provided in Sections 10.3 and 14.6; PROVIDED, that
in the event said Trust Indenture Act of 1939 is amended after the date hereof,
the term "Trust Indenture Act" shall mean, to the extent required by such
amendment, said Trust Indenture Act of 1939 as so amended.
TRUSTEE: The term "Trustee" shall mean The Bank of New York, its
successors and any corporation resulting from or surviving any consolidation or
merger to which it or its successors may be a party and any successor trustee at
the time serving as successor trustee hereunder.
U.S. GOVERNMENT OBLIGATIONS: The term "U.S. Government Obligations" shall
mean securities that are (i) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by, and acting as an agency or
instrumentality of, the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian
with respect to any such U.S. Government Obligation or a specific payment of
principal or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by such custodian in respect of the U.S.
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Government Obligation or the specific payment of principal of or interest on
the U.S. Government Obligation evidenced by such depository receipt.
VOTING STOCK: The term "Voting Stock" of any person shall mean stock of
the class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees of such person (irrespective of whether
or not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
The definitions of certain other terms are as specified in Sections 2.3,
2.5, 3.5, 12.1, 14.5, 14.6, 15.2 and 15.4.
1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture Act,
the provision is incorporated by reference in and made a part of this Indenture.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of Notes;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company and any successor obligor upon the
Trust Indenture Act.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by Trust Indenture Act reference to another statute or
defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them.
1.3 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
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(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 generally accepted accounting principles;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
II
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION
AND EXCHANGE OF NOTES
2.1 DESIGNATION, AMOUNT AND ISSUE OF NOTES. The Notes shall be designated
as "5% Convertible Subordinated Notes Due 2002." Notes not to exceed the
aggregate principal amount of $150,000,000 upon the execution of this Indenture,
or from time to time thereafter, may be executed by the Company and delivered to
the Trustee for authentication, and the Trustee shall thereupon authenticate and
make available for delivery said Notes upon the written order of the Company,
signed by its (a) Chief Executive Officer, President, Chief Operating Officer or
Chief Financial Officer, and (b) any Treasurer or Secretary or any Assistant
Secretary, without any further action by the Company hereunder.
2.2 FORM OF NOTES. The Notes in definitive form ("definitive Notes")
shall be substantially in the form of Exhibit A hereto, with the legends in
substantially the form indicated in Exhibit A hereto and such other legends as
may be applicable thereto, which definitive Notes shall be registered in the
name of the holders thereof, duly executed by the Company and authenticated by
the Trustee or the authenticating agent as provided herein.
Unless issued in definitive form, Notes initially offered and sold to QIBs
in reliance on Rule 144A shall be issued in the form of one or more permanent
global Notes (the "Rule 144A Global Note"), substantially in the form of Exhibit
B hereto, with the legends in substantially the form set forth in Exhibit B
hereto and such other legends as may be applicable thereto, which Rule 144A
Global Note shall be deposited on behalf of the holders of the Notes represented
thereby with the Trustee, as custodian for the Depositary, and registered in the
name of a nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee or the authenticating agent as provided herein.
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Unless issued in definitive form, Notes initially offered and sold to
Institutional Accredited Investors shall be issued in the form of one or more
permanent global Notes (the "Institutional Accredited Investor Global Note" and,
together with the Rule 144A Global Note, the "Restricted Global Notes"),
substantially in the form of Exhibit B hereto, with the legends in substantially
the form set forth in Exhibit B hereto and such other legends as may be
applicable thereto, which Institutional Accredited Investor Global Note shall be
deposited on behalf of the holders of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of a
nominee of the Depositary, duly executed by the Company and authenticated by the
Trustee or the authenticating agent as provided herein.
Notes offered and sold to persons outside the United States in reliance on
Regulation S (each a "Non-U.S. Person") may be evidenced in the form of one or
more permanent global Notes (the "Regulation S Global Note"), substantially in
the form of Exhibit C hereto, with the legends in substantially the form set
forth in Exhibit C hereto and such other legends as may be applicable thereto,
which Regulation S Global Note shall be deposited on behalf of the holders of
the Notes represented thereby with the Trustee, as custodian for the Depositary,
and registered in the name of a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee or an authenticating agent as provided
herein, for credit to the accounts of the respective depositaries for Euroclear
and Cedel (or such other accounts as they may direct). Prior to or on the 40th
day after the later of the commencement of the offering of the Notes and the
Closing Date (the "Restricted Period"), beneficial interests in the Regulation S
Global Note may only be held through Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel or another agent member of
Euroclear and Cedel acting for and on behalf of them, unless delivery is made in
the form of an interest in the Restricted Global Notes in accordance with the
certification requirements hereof. During the Restricted Period, interests in
the Regulation S Global Note may be exchanged for interests in the Restricted
Global Notes or for definitive Notes only in accordance with the requirements
described in Section 2.5 below.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Notes may be listed, or to conform to usage.
Any global Note shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate amount
of outstanding Notes from time to time endorsed thereon and that the aggregate
amount of outstanding Notes represented
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thereby may from time to time be increased or reduced to reflect transfers or
exchanges permitted hereby. Any endorsement of a global Note to reflect the
amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Custodian, at the
direction of the Trustee, in such manner and upon instructions given by the
holder of such Notes in accordance with this Indenture. Payment of principal
of and interest and premium, if any, on any global Note shall be made to the
holder of such Note.
The terms and provisions contained in the forms of Notes attached as
Exhibits A, B and C hereto shall constitute, and are hereby expressly made, a
part of this Indenture and to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
2.3 DATE AND DENOMINATION OF NOTES; PAYMENTS OF INTEREST. The Notes shall
be issuable in registered form without coupons in denominations of $1,000
principal amount and integral multiples thereof. Every Note shall be dated the
date of its authentication, shall bear interest from October 14, 1997 and shall
be payable semiannually on each April 15 and October 15, commencing April 15,
1998, except as otherwise specified on the faces of the forms of Notes, attached
as Exhibits A, B and C hereto.
The person in whose name any Note (or its Predecessor Note) is registered
at the close of business on any record date with respect to any interest payment
date (including any Note that is converted after the record date and on or
before the interest payment date) shall be entitled to receive the interest
payable on such interest payment date notwithstanding the cancellation of such
Note upon any transfer, exchange or conversion subsequent to the record date and
prior to such interest payment date. Interest may, at the option of the
Company, be paid by check mailed to the address of such person as it appears on
the Note register; PROVIDED that, with respect to any holder of an interest in
any global Note, interest on such holder's Notes shall be paid by wire transfer
in immediately available funds to Cede, the nominee of the Depositary, as
registered owner of the Restricted Global Notes and the Regulation S Global
Note. The term "record date" with respect to any interest payment date shall
mean the April 1 or October 1 preceding said April 15 or October 15 interest
payment dates, respectively.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
Any interest on any Note that is payable, but is not paid or duly provided
for, on any said April 15 or October 15 (herein called "Defaulted Interest")
shall forthwith cease to be payable to the Holder on the relevant record date by
virtue of his, her or its having been such Holder; and
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such Defaulted Interest shall be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Notes (or their respective Predecessor
Notes) are registered at the close of business on a special record date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest to be paid on each Note and the date of the
payment (which shall be not less than 25 days after the receipt by the
Trustee of such notice, unless the Trustee shall consent to an earlier
date), and at the same time, the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the Trustee
shall fix a special record date for the payment of such Defaulted Interest,
which shall be not more than 15 days and not less than 10 days prior to the
date of the payment and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Company of such special record date and, in the name and at the
expense of the Company, shall cause notice of the payment of such Defaulted
Interest and the special record date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the Note
register, not less than 10 days prior to such special record date. Notice
of the proposed payment of such Defaulted Interest and the special record
date therefor having been so mailed, such Defaulted Interest shall be paid
to the persons in whose names the Notes (or their respective Predecessor
Notes) were registered at the close of business on such special record date
and shall no longer be payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee of the proposed payment pursuant to this clause, such manner
of payment shall be deemed practicable by the Trustee.
2.4 EXECUTION OF NOTES. The Notes shall be signed in the name and on
behalf of the Company by the signature of its Chief Executive Officer,
President, Chief Operating Officer or Chief Financial Officer and attested by
the signature of its Treasurer, Secretary or any of its Assistant Secretaries
(any of which signatures may be printed, engraved or otherwise reproduced
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thereon, by facsimile or otherwise). Only such Notes as shall bear thereon a
certificate of authentication substantially in the form set forth on forms of
Notes attached as Exhibits A, B and C hereto, manually executed by the Trustee
(or an authenticating agent appointed by the Trustee as provided by Section
16.14), shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
2.5 EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES; RESTRICTIONS ON
TRANSFER; DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency of the Company designated pursuant to Section 4.2 being
herein sometimes collectively referred to as the "Note register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Notes and of transfers of Notes. Such Note
register shall be in written form or in any form capable of being converted into
written form within a reasonable period of time. The Trustee is hereby
appointed "Note registrar" for the purpose of registering Notes and transfers of
Notes as herein provided. The Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar and satisfaction of the requirements for such
transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denominations and of a like aggregate principal amount and bearing such
restrictive legends as may be required by Section 2.5(d).
Notes may be exchanged for other Notes of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such
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office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and make available
for delivery, the Notes that the Holder making the exchange is entitled to
receive.
All Notes presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company, the Trustee, the Note registrar
or any co-registrar) be duly endorsed, or be accompanied by a written instrument
of transfer in form satisfactory to the Trustee and the Company, executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be charged to the Holder for any exchange or
registration of transfer of Notes, but the Company may require payment of a sum
sufficient to cover any tax, assessments or other governmental charges that may
be imposed in connection therewith.
None of the Company, the Trustee, the Note registrar or any
co-registrar shall be required to exchange or register a transfer of (a) any
Notes for a period of 15 days next preceding the mailing of a notice of
redemption, (b) any Notes called for redemption or, if a portion of any Note
is selected or called for redemption, such portion thereof selected or called
for redemption, (c) any Notes surrendered for conversion or, if a portion of
any Note is surrendered for conversion, such portion thereof surrendered for
conversion or (d) any Notes surrendered for repurchase pursuant to Section
3.5 or, if a portion of any Note is surrendered for repurchase pursuant to
Section 3.5, such portion thereof surrendered for repurchase pursuant to
Section 3.5.
All Notes issued upon any transfer or exchange of Notes shall be the
valid obligations of the Company, evidencing the same debt and entitled to the
same benefits under this Indenture as the Notes surrendered upon such
registration of transfer or exchange.
(b) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, all Notes to be traded on
the PORTAL Market shall be represented by the Restricted Global Notes registered
in the name of the Depositary or the nominee of the Depositary. The transfer
and exchange of beneficial interests in any global Note that does not involve
the issuance of a definitive Note or the transfer of interests to another global
Note shall be effected through the Depositary (but not the Trustee or the
Custodian) in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
Neither the Trustee nor the Custodian (in such respective capacities) shall have
any responsibility for the transfer and exchange of beneficial interests in such
global Note that does not involve the issuance of a definitive Note or the
transfer of interests to another global Note.
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At any time at the request of the beneficial holder of an interest in
a global Note, such beneficial holder shall be entitled to obtain a definitive
Note upon written request to the Trustee and the Custodian in accordance with
the standing instructions and procedures existing between the Depositary and the
Custodian for the issuance thereof. Upon receipt of any such request and a
certificate in a form agreed upon by the Company and Trustee (a "Definitive Note
Exchange Certificate"), the Trustee or the Custodian, at the direction of the
Trustee, shall cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian, the aggregate
principal amount of the global Note to be reduced and, following such reduction,
the Company shall execute and the Trustee shall authenticate and make available
for delivery to such beneficial holder (or its nominee) a Note or Notes in the
appropriate aggregate principal amount in the name of such beneficial holder (or
its nominee) and bearing such restrictive legends as may be required by this
Indenture.
Any transfer of a beneficial interest in a global Note that cannot be
effected through book-entry settlement must be effected by the delivery to the
transferee (or its nominee) of a definitive Note or Notes registered in the name
of the transferee (or its nominee) on the books maintained by the Trustee. With
respect to any such transfer and upon receipt of a Definitive Note Exchange
Certificate, the Trustee or the Custodian, at the direction of the Trustee,
shall cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Custodian, the aggregate principal
amount of the global Note to be reduced and, following such reduction, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the transferee (or such transferee's nominee, as the case may be), a
definitive Note or Notes in the appropriate aggregate principal amount in the
name of such transferee (or its nominee) and bearing such restrictive legends as
may be required by this Indenture.
Any transfer of a definitive Note or Notes must be effected by the
delivery to the transferee (or its nominee) of a definitive Note or Notes
registered in the name of the transferee (or its nominee) on the books
maintained by the Trustee. With respect to any such transfer and upon receipt
of a certificate in a form agreed upon by the Company and Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the transferee (or such transferee's nominee, as the case may be), a
definitive Note or Notes in the appropriate aggregate principal amount in the
name of such transferee (or its nominee) and bearing such restrictive legends as
may be required by this Indenture.
(c) So long as the Notes are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Note to a
QIB in accordance with Rule 144A, unless otherwise requested by the transferor,
and upon receipt of the definitive Note or Notes being so transferred, together
with a certificate in a form agreed upon by the Company
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and Trustee from the transferor that the transferor reasonably believes the
transferee is a QIB and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and any applicable
securities laws of any state of the United States or any other jurisdiction
(or other evidence satisfactory to the Trustee) (a "Rule 144A Certificate"),
the Trustee shall cancel such definitive Note or Notes and cause, or direct
the Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian, the aggregate
principal amount of Notes represented by the Rule 144A Global Note to be
increased accordingly. For any Holder that desires to exchange a definitive
Note for a beneficial interest in Notes represented by the Rule 144A Global
Note, the Trustee shall, upon receipt of the definitive Note or Notes being
so exchanged, together with a Rule 144A Certificate, cancel such definitive
Note or Notes, cause, or direct the Custodian to cause, in accordance with
the standing instructions and procedures existing between the Depositary and
the Custodian, the aggregate principal amount of Notes represented by the
Rule 144A Global Note to be increased accordingly, and to credit or cause to
be credited to the account of such Holder a beneficial interest in the Rule
144A Global Note equal to the aggregate principal amount at maturity of the
canceled definitive Note or Notes.
So long as the Notes are eligible for book-entry settlement, or unless
otherwise required by law, upon any transfer of a definitive Note to an
Institutional Accredited Investor, unless otherwise requested by the transferor,
and upon receipt of the definitive Note or Notes being so transferred, together
with a certificate in a form agreed upon by the Company and Trustee from the
transferee stating that such transfer is being made to a person who is
purchasing for its own account or accounts as to which it exercises sole
investment discretion and that such person and each such account is an
Institutional Accredited Investor within the meaning of Regulation D under the
Securities Act and in accordance with any applicable securities laws of any
state of the United States or any other jurisdiction (or other evidence
satisfactory to the Trustee) (an "Institutional Accredited Investor
Certificate"), the Trustee shall cancel such definitive Note or Notes and cause,
or direct the Custodian to cause, in accordance with the standing instructions
and procedures existing between the Depositary and the Custodian, the aggregate
principal amount of Notes represented by the Institutional Accredited Investor
Global Note to be increased accordingly. For any Holder that desires to
exchange a definitive Note for a beneficial interest in Notes represented by the
Institutional Accredited Investor Global Note, the Trustee shall, upon receipt
of the definitive Note or Notes being so exchanged, together with an
Institutional Accredited Investor Certificate, cancel such definitive Note or
Notes, cause, or direct the Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Custodian,
the aggregate principal amount of Notes represented by the Institutional
Accredited Investor Global Note to be increased accordingly, and to credit or
cause to be credited to the account of such Holder a beneficial interest in the
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Institutional Accredited Investor Global Note equal to the aggregate principal
amount at maturity of the canceled definitive Note or Notes.
So long as the Notes are eligible for book-entry settlement, or unless
otherwise required by law, upon any transfer of a definitive Note in accordance
with Regulation S, if requested by the transferor, and upon receipt of the
definitive Note or Notes being so transferred, together with a certificate in a
form agreed upon by the Company and the Trustee from the transferor that the
transfer was made pursuant to and in accordance with Rule 903 or 904 of
Regulation S under the Securities Act (or other evidence satisfactory to the
Trustee) (a "Regulation S Certificate"), the Trustee shall cancel such
definitive Note or Notes and cause, or direct the Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Custodian, the aggregate principal amount of Notes
represented by the Regulation S Global Note to be increased accordingly. For
any Holder that desires to exchange a definitive Note for a beneficial interest
in Notes represented by the Regulation S Global Note, the Trustee shall, upon
receipt of the definitive Note or Notes being so exchanged, together with a
Regulation S Certificate, cancel such definitive Note or Notes, cause, or direct
the Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Custodian, the aggregate
principal amount of Notes represented by the Regulation S Global Note to be
increased accordingly, and to credit or cause to be credited to the account of
the Holder a beneficial interest in the Regulation S Global Note equal to the
aggregate principal amount at maturity of the canceled definitive Note or Notes.
If a holder of a beneficial interest in the Rule 144A Global Note
wishes at any time to exchange its interest in the Rule 144A Global Note for an
interest in the Institutional Accredited Investor Global Note, or to transfer
its interest in the Rule 144A Global Note to a person who wishes to take
delivery thereof in the form of an interest in the Institutional Accredited
Investor Global Note, such holder may, subject to the requirements set forth in
the following sentence, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent beneficial interest in such
Institutional Accredited Investor Global Note. Upon receipt by the Trustee of
(1) instructions given in accordance with the applicable procedures of the
Depositary, from the Depositary directing the Trustee to credit or cause to be
credited a beneficial interest in the Institutional Accredited Investor Global
Note in an amount equal to the beneficial interest in the 144A Global Note to be
exchanged, and (2) an Institutional Accredited Investor Certificate, then the
Trustee, as Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of the applicable 144A Global
Note and to increase or cause to be increased the aggregate principal amount at
maturity of the applicable Institutional Accredited Investor Global Note by the
principal amount at maturity of the beneficial interest in the 144A Global Note
to be exchanged or transferred, to
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credit or cause to be credited to the account of the Person specified in such
instructions, a beneficial interest in the Accredited Investor Global Note
equal to the reduction in the aggregate principal amount at maturity of the
144A Global Note, and to debit, or cause to be debited, from the account of
the Person making such exchange or transfer the beneficial interest in the
144A Global Note that is being exchanged or transferred.
If a holder of a beneficial interest in the Institutional Accredited
Investor Global Note wishes at any time to exchange its interest in the
Institutional Accredited Investor Global Note for an interest in the Rule 144A
Global Note, or to transfer its interest in the Institutional Accredited
Investor Global Note to a person who wishes to take delivery thereof in the form
of an interest in the Rule 144A Global Note, such holder may, subject to the
requirements set forth in the following sentence, exchange or cause the exchange
or transfer or cause the transfer of such interest for an equivalent beneficial
interest in such Institutional Accredited Investor Global Note. Upon receipt by
the Trustee of (1) instructions from the Depositary directing the Trustee, as
Registrar, to credit or cause to be credited a beneficial interest in the 144A
Global Note equal to the beneficial interest in the Institutional Accredited
Investor Global Note to be exchanged and (2) a Rule 144A Certificate, then the
Trustee, as Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of such Institutional
Accredited Investor Global Note and to increase or cause to be increased the
aggregate principal amount at maturity of the applicable 144A Global Note by the
principal amount at maturity of the beneficial interest in the Institutional
Accredited Investor Global Note to be exchanged or transferred, and the Trustee,
as Registrar, shall instruct the Depositary, concurrently with such reduction,
to credit or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the applicable 144A Global Note equal to
the reduction in the aggregate principal amount at maturity of such Accredited
Investor Global Note and to debit or cause to be debited from the account of the
Person making such transfer the beneficial interest in the Accredited Investor
Global Note that is being exchanged or transferred.
If a Holder of a beneficial interest in either of the Restricted
Global Notes wishes at any time to exchange its interest in such Restricted
Global Notes for an interest in the Regulation S Global Note, whether before
or after the expiration of the Restricted Period, or to transfer its interest
in the Restricted Global Notes to a person who wishes to take delivery
thereof in the form of an interest in the Regulation S Global Note, such
holder may, subject to the rules and procedures of the Depositary and to the
requirements set forth in the following sentence, exchange or cause the
exchange or transfer or cause the transfer of such interest for an equivalent
beneficial interest in the Regulation S Global Note. Upon receipt by the
Trustee, as transfer agent, of (1) instructions given in accordance with the
Depositary's procedures from or on behalf of a holder of a beneficial
interest in the Restricted Global Notes, directing the Trustee (via DWAC), as
transfer agent, to credit or cause to be credited a beneficial interest in the
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Regulation S Global Note in an amount equal to the beneficial interest in
the Restricted Global Notes to be exchanged or transferred, (2) a written
order given in accordance with the Depositary's procedures containing
information regarding the Euroclear or Cedel account to be credited with such
increase and the name of such account, and (3) a Regulation S Certificate,
the Trustee, as transfer agent, shall promptly deliver appropriate
instructions to the Depositary (via DWAC), its nominee, or the custodian for
the Depositary, as the case may be, to reduce or reflect on its records a
reduction of the relevant Restricted Global Notes by the aggregate principal
amount of the beneficial interest in such Restricted Global Notes to be so
exchanged or transferred from the relevant participant, and the Trustee, as
transfer agent, shall promptly deliver appropriate instructions (via DWAC) to
the Depositary, its nominee, or the custodian for the Depositary, as the case
may be, concurrently with such reduction, to increase or reflect on its
records an increase of the principal amount of such Regulation S Global Note
by the aggregate principal amount of the beneficial interest in such
Restricted Global Notes to be so exchanged or transferred, and to credit or
cause to be credited to the account of the person specified in such
instructions (who shall be Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear or Cedel or another agent member of
Euroclear or Cedel, or both, as the case may be, acting for and on behalf of
them) a beneficial interest in such Regulation S Global Note equal to the
reduction in the principal amount of such Restricted Global Notes.
If a holder of a beneficial interest in the Regulation S Global Note
wishes at any time to exchange its interest in the Regulation S Global Note
for an interest in the Restricted Global Notes, or to transfer its interest
in the Regulation S Global Note to a person who wishes to take delivery
thereof in the form of an interest in the Restricted Global Notes, such
holder may, subject to the rules and procedures of Euroclear or Cedel and the
Depositary, as the case may be, and to the requirements set forth in the
following sentence, exchange or cause the exchange or transfer or cause the
transfer of such interest for an equivalent beneficial interest in such
Restricted Global Notes. Upon receipt by the Trustee, as transfer agent, of
(1) instructions given in accordance with the procedures of Euroclear or
Cedel and the Depositary, as the case may be, from or on behalf of a
beneficial owner of an interest in the Regulation S Global Note directing the
Trustee, as transfer agent, to credit or cause to be credited a beneficial
interest in the Restricted Global Notes in an amount equal to the beneficial
interest in the Regulation S Global Note to be exchanged or transferred, (2)
a written order given in accordance with the procedures of Euroclear or Cedel
and the Depositary, as the case may be, containing information regarding the
account with the Depositary to be credited with such increase and the name of
such account, and (3) on or prior to the expiration of the Restricted Period
and as applicable, either (i) a Rule 144A Certificate, or (ii) an
Institutional Accredited Investor Certificate, as applicable, the Trustee, as
transfer agent, shall promptly deliver (via DWAC) appropriate instructions to
the Depositary, its nominee, or the custodian for the Depositary, as the case
may be, to reduce or reflect on its records a reduction of the Regulation S
Global Note by the aggregate principal
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<PAGE>
amount of the beneficial interest in such Regulation S Global Note to be
exchanged or transferred, and the Trustee, as transfer agent, shall promptly
deliver (via DWAC) appropriate instructions to the Depositary, its nominee,
or the custodian for the Depositary, as the case may be, concurrently with
such reduction, to increase or reflect on its records an increase of the
principal amount of the Restricted Global Notes by the aggregate principal
amount of the beneficial interest in the Regulation S Global Note to be so
exchanged or transferred, and to credit or cause to be credited to the
account of the person specified in such instructions a beneficial interest in
the Restricted Global Notes equal to the reduction in the principal amount of
the Regulation S Global Note.
Any beneficial interest in one of the global Notes that is
transferred to a person who takes delivery in the form of an interest in
another global Note shall, upon transfer, cease to be an interest in the
former global Note and become an interest in the latter global Note and,
accordingly, shall thereafter be subject to all transfer restrictions and
other procedures applicable to beneficial interests in such latter global
Note for as long as it remains such an interest.
Any global Note may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the
Depositary or by the National Association of Securities Dealers, Inc. in
order for the Notes to be tradeable on the PORTAL Market or as may be
required for the Notes to be tradeable on any market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable
law or any regulation thereunder or with Regulation S or with the rules and
regulations of any securities exchange upon which the Notes may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Notes are subject.
(d) Every Note that bears or is required under this Section 2.5(d)
to bear the legend set forth in this Section 2.5(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend set
forth in Section 2.5(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.5(d),
unless such restrictions on transfer shall have been waived by the written
consent of the Company or removed in accordance with the provisions of
Section 2.5(f), and the holder of each such Restricted Security, by such
holder's acceptance thereof, agrees to be bound by such restrictions on
transfer. As used in this Section 2.5(d), the term "transfer" encompasses
any sale, pledge, transfer or other disposition of any Restricted Security.
Until two years after the later of the original issuance date of any
Note and the last date on which the Company or an Affiliate of the Company
was the owner of such Note, any certificate evidencing such Note (and all
securities issued in exchange therefor or substitution
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thereof, other than Common Stock, if any, issued upon conversion thereof,
which shall bear the legend set forth in Section 2.5(e), if applicable) shall
bear a legend in substantially the following form, unless otherwise agreed by
the Company (with notice thereof to the Trustee):
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT
IT WILL NOT PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH CELLSTAR CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE
OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE, A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
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EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE
THE RESTRICTION TERMINATION DATE, THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER
OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK,
AS TRUSTEE. IF THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (B), (C),
(D) OR (E) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE BANK OF NEW YORK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THE COMPANY OR TRUSTEE MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON
THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any Note (or security issued in exchange or substitution therefor)
as to which such restrictions on transfer shall have expired in accordance
with their terms may, upon satisfaction of the requirements of Section 2.5(f)
and surrender of such Note for exchange to the Note registrar in accordance
with the provisions of this Section 2.5, be exchanged for a new Note or
Notes, of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in this Section 2.5(d)), a global Note may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the global Notes. Initially, the global
Notes shall be issued to the Depositary,
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registered in the name of Cede & Co., as the nominee of the Depositary, and
deposited with the Trustee as Custodian for Cede & Co.
If at any time the Depositary for the global Notes notifies the
Company that it is unwilling or unable to continue as Depositary for such
Notes, the Company may appoint a successor Depositary with respect to such
Notes. If a successor Depositary for the Notes is not appointed by the
Company within 90 days after the Company receives such notice, the Company
shall execute, and the Trustee, upon receipt of an Officers' Certificate for
the authentication and delivery of Notes, shall authenticate and make
available for delivery, Notes in definitive form, in an aggregate principal
amount equal to the principal amount of the global Notes in exchange for such
global Notes.
Definitive Notes issued in exchange for all or a part of a global
Note pursuant to this Section 2.5(d) shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall make available
for delivery such definitive Notes to the persons in whose names such
definitive Notes are so registered.
At such time as all interests in global Notes have been redeemed,
converted, repurchased or canceled, such global Notes shall be, upon receipt
thereof, canceled by the Trustee in accordance with standing procedures and
instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a global Note is exchanged for
definitive Notes, redeemed, converted, canceled or transferred to a
transferee who receives definitive Notes therefor or any definitive Note is
exchanged or transferred for part of a global Note, the principal amount of
such global Note shall, in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian, be reduced or
increased, as the case may be, and an endorsement shall be made on such
global Note by the Trustee or the Custodian, at the direction of the Trustee,
to reflect such reduction or increase.
The Company and the Trustee may for all purposes, including the
making of payments due on the Notes, deal with the Depositary as the
authorized representative of the Holders for the purposes of exercising the
rights of Holders hereunder. The rights of the owner of any beneficial
interest in a global Note shall be limited to those established by law and
agreements between such owners and depository participants or Euroclear and
Cedel; provided that no such agreement shall give any rights to any person
against the Company or the Trustee without the written consent of the parties
so affected. Multiple requests and directions from and votes of, the
Depositary as holder of notes in book entry form with respect to any
particular
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matter shall not be deemed inconsistent to the extent they do not represent
an amount of notes in excess of those held in the name of the Depositary or
its nominee.
(e) Until two years after the later of the original issuance date
of any Note (other than any Note represented by the Regulation S Global Note)
and the last date on which the Company or an Affiliate of the Company was the
owner of such Note, any stock certificate representing Common Stock issued
upon conversion of such Note shall bear a legend in substantially the
following form, unless otherwise agreed by the Company (with written notice
thereof to the Trustee and any transfer agent for the Common Stock):
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF
AGREES THAT PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE UPON THE CONVERSION OF WHICH THE COMMON
STOCK EVIDENCED HEREBY WAS ISSUED AND THE LAST DATE ON WHICH CELLSTAR
CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144
OF THE SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE UPON
THE CONVERSION OF WHICH THE COMMON STOCK EVIDENCED HEREBY WAS ISSUED
OR THE COMMON STOCK EVIDENCED HEREBY (THE "RESTRICTION TERMINATION
DATE"), (1) IT WILL NOT RESELL OR OTHERWISE TRANSFER THE COMMON STOCK
EVIDENCED HEREBY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) TO A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER,
FURNISHES TO CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS TRANSFER
AGENT, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON
STOCK EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
SUCH TRANSFER AGENT), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH
RULE 904
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UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (2) PRIOR TO ANY SUCH
TRANSFER PURSUANT TO CLAUSE (B), (C), (D) OR (E) ABOVE, IT WILL
FURNISH TO CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS TRANSFER
AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT
WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION TERMINATION DATE. AS
USED HEREIN, THE TERMS "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer
shall have expired in accordance with their terms may, upon satisfaction of
the requirements of Section 2.5(f) and surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like aggregate number of shares of Common
Stock, which shall not bear the restrictive legend required by this Section
2.5(e).
(f) Upon any sale or transfer of any Restricted Security (including
any interest in a global Note) (i) that is effected pursuant to an effective
registration statement under the Securities Act, (ii) that is effected
pursuant to Rule 144 as promulgated under the Securities Act as determined by
counsel to the Company or the Trustee or (iii) in connection with which the
Trustee (or transfer agent for the Common Stock, in the case of shares of
Common Stock) receives certificates and other information (including an
opinion of counsel, if requested) reasonably acceptable to the Company and
the Trustee (or such transfer agent, as the case may be) to the effect that
such security shall no longer be subject to the resale restrictions under
federal and state securities laws, then (A) in the case of a Restricted
Security in definitive form, the Note registrar or co-registrar (or transfer
agent, in the case of Common Stock) shall permit the holder thereof to
exchange such Restricted Security for a security that does not bear the
legends set forth in Section 2.5(d) or 2.5(e), as applicable, and shall
rescind any such restrictions
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on transfer and (B) in the case of Restricted Securities represented by a
global Note, such Note shall no longer be subject to the restrictions
contained in the legend set forth in Section 2.5(d) (but still subject to the
other provisions hereof). In addition, any Note (or security issued in
exchange or substitution therefor) or shares of Common Stock issued upon
conversion of any Note, in either case, as to which the restrictions on
transfer described in the legends set forth in Section 2.5(d) and 2.5(e),
respectively, have expired by their terms, may, upon surrender thereof (in
accordance with the terms of this Indenture in the case of Notes) together
with such certifications and other information (including an opinion of
counsel having substantial experience in practice under the Securities Act
and otherwise reasonably acceptable to the Company, addressed to the Company
and the Trustee and in a form acceptable to the Company, to the effect that
the transfer of such Restricted Security has been made in compliance with
Rule 144 or such successor provision) acceptable to the Company and the
Trustee (or transfer agent, as the case may be) as either of them may
reasonably require, be exchanged for a new Note or Notes of like tenor and
aggregate principal amount (in the case of Notes), or a new certificate or
certificates for a like aggregate number of shares of Common Stock (in the
case of Common Stock), or a new certificate or other instrument of like tenor
and amount (in the case of securities issued in exchange or substitution for
Notes), which shall not bear the restrictive legends set forth in Sections
2.5(d) and 2.5(e).
(g) Each holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such holder's Note in violation of any provision of this
Indenture and/or applicable U.S. federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine
or inquire as to compliance with any restrictions on transfer imposed under
this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Depositary
Participants or beneficial owners of interests in any Global Note) other than
to require delivery of such certificates and other documentation or evidence
as are expressly required by, and to do so if and when expressly required by
the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
2.6 MUTILATED, DESTROYED, LOST OR STOLEN NOTES. In case any Note shall
become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its request, the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery a new Note bearing a number not contemporaneously
outstanding in exchange and substitution for the mutilated Note or in lieu of
and in substitution for the Note so destroyed, lost or stolen. The Company
may charge such applicant for the expenses of the
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Company in replacing a Note. In every case the applicant for a substituted
Note shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless from any loss, liability, cost or expense caused
by or connected with such substitution, and in every case of destruction,
loss or theft, the applicant shall also furnish to the Company, to the
Trustee and, if applicable, to such authenticating agent evidence to their
satisfaction of the destruction, loss or theft of such Note and of the
ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Note that has matured or is about
to mature or has been called for redemption or is about to be converted into
Common Stock shall become mutilated or be destroyed, lost or stolen, the
Company may, instead of issuing a substitute Note, pay or authorize the
payment of or convert or authorize the conversion of the same (without
surrender thereof, except in the case of a mutilated Note), as the case may
be, if the applicant for such payment or conversion shall furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent such
security or indemnity as may be required by them to save each of them
harmless from any loss, liability, cost or expense caused by or connected
with such substitution, and in case of destruction, loss or theft, evidence
satisfactory to the Company, the Trustee and, if applicable, any paying agent
or conversion agent of the destruction, loss or theft of such Note and of the
ownership thereof.
Every substitute Note issued pursuant to the provisions of this Section
2.6 in lieu of any Note that is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Note shall be enforceable by anyone, and shall be
entitled to all the benefits of (but shall be subject to all the limitations
set forth in) this Indenture equally and proportionately with any and all
other Notes duly issued hereunder. To the extent permitted by law, all Notes
shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or payment or
conversion of mutilated, destroyed, lost or stolen Notes and shall preclude
any and all other rights or remedies notwithstanding any law or statute
existing or hereafter enacted to the contrary with respect to the replacement
or payment or conversion of negotiable instruments or other securities
without their surrender.
2.7 TEMPORARY NOTES. Pending the preparation of definitive Notes, the
Company may execute and the Trustee or an authenticating agent appointed by
the Trustee shall, upon
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written request of the Company, authenticate and make available for delivery
temporary Notes (printed or lithographed). Temporary Notes shall be issuable
in any authorized denomination and shall be substantially in the form of the
definitive Notes but with such omissions, insertions and variations as may be
appropriate for temporary Notes, all as may be determined by the Company.
Every such temporary Note shall be executed by the Company and authenticated
by the Trustee or such authenticating agent upon the same conditions and in
substantially the same manner, and with the same effect, as the definitive
Notes. Without unreasonable delay the Company shall execute and deliver to
the Trustee or such authenticating agent definitive Notes (other than in the
case of Notes in global form) and thereupon any or all temporary Notes (other
than any such global Note) may be surrendered in exchange therefor, at each
office or agency maintained by the Company pursuant to Section 4.2 and the
Trustee or such authenticating agent shall authenticate and make available
for delivery in exchange for such temporary Notes an equal aggregate
principal amount of definitive Notes. Such exchange shall be made by the
Company at its own expense and without any charge therefor. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and subject to the same limitations under this Indenture as
definitive Notes authenticated and delivered hereunder.
2.8 CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for the
purpose of payment, redemption, conversion, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it or, if surrendered to the Trustee, shall be promptly canceled
by it and no Notes shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. If required by the
Company, the Trustee shall return canceled Notes to the Company. If the
Company shall acquire any of the Notes, such acquisition shall not operate as
a redemption or satisfaction of the indebtedness represented by such Notes
unless and until the same are delivered to the Trustee for cancellation.
2.9 CUSIP NUMBERS. The Company in issuing the Notes may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall use CUSIP
numbers in notices of redemption as a convenience to holders; provided that
any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company
shall promptly notify the Trustee of any change in the CUSIP numbers.
III
REDEMPTION OF NOTES
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3.1 REDEMPTION PRICES. The Notes are not redeemable at the option of
the Company prior to October 18, 2000. At any time on or after that date,
the Notes may be redeemed at the Company's option, upon notice as set forth
in Section 3.2, in whole at any time or in part from time to time, at the
optional redemption prices set forth below plus accrued and unpaid interest
thereon to the applicable redemption date if redeemed after:
Redemption
Date Price
- ---- -----
October 18, 2000 102%
October 15, 2001 101%
3.2 NOTICE OF REDEMPTION; SELECTION OF NOTES. In case the Company shall
desire to exercise the right to redeem all or, as the case may be, any part
of the Notes pursuant to Section 3.1, it shall fix a date for redemption and,
in the case of any redemption pursuant to Section 3.1, it or, at its request
accompanied by the proposed form of notice of redemption (which must be
received by the Trustee at least ten days prior to the date the Trustee is
requested to give notice as described below, unless a shorter period is
agreed to by the Trustee), the Trustee in the name of and at the expense of
the Company, shall publish a notice in THE WALL STREET JOURNAL and mail or
cause to be mailed a notice of such redemption at least 30 and not more than
60 days prior to the date fixed for redemption to the holders of Notes so to
be redeemed as a whole or in part at their last addresses as the same appear
on the Note register, provided that if the Company shall give such notice, it
shall also give such notice, and notice of the Notes to be redeemed, to the
Trustee. Such mailing shall be by first class mail. The notice, if mailed
in the manner herein provided, shall be conclusively presumed to have been
duly given, whether or not the holder receives such notice. In any case,
failure to give such notice by mail or any defect in the notice to the holder
of any Note designated for redemption as a whole or in part shall not affect
the validity of the proceedings for the redemption of any other Note.
Each such notice of redemption shall identify the Notes to be redeemed
(including CUSIP numbers), specify the aggregate principal amount of Notes to
be redeemed, the date fixed for redemption, the redemption price at which
Notes are to be redeemed, the place or places of payment, that payment shall
be made upon presentation and surrender of such Notes, that interest accrued
to the date fixed for redemption shall be paid as specified in said notice
and that on and after said date, interest thereon or on the portion thereof
to be redeemed shall cease to accrue. Such notice shall also state the
current Conversion Price and the date on which the right to convert such
Notes or portions thereof into Common Stock shall expire. If fewer than all
the Notes are to be redeemed, the notice of redemption shall identify the
Notes to be redeemed. In case any Note is to be redeemed in part only, the
notice of redemption shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the date fixed for
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redemption, upon surrender of such Note, a new Note or Notes in principal
amount equal to the unredeemed portion thereof shall be issued.
On or prior to the Business Day prior to the redemption date specified in
the notice of redemption given as provided in this Section 3.2, the Company
shall deposit with the Trustee or with one or more paying agents (or, if the
Company is acting as its own paying agent, set aside, segregate and hold in
trust as provided in Section 4.4) an amount of money sufficient to redeem on
the redemption date all the Notes so called for redemption (other than those
theretofore surrendered for conversion into Common Stock) at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If any Note called for redemption is converted pursuant hereto,
any money deposited with the Trustee or any paying agent or so segregated and
held in trust for the redemption of such Note shall be paid to the Company
upon its request or, if then held by the Company, shall be discharged from
such trust. If fewer than all the Notes are to be redeemed, the Company shall
give the Trustee written notice in the form of an Officers' Certificate not
fewer than 45 days (or such shorter period of time as may be acceptable to
the Trustee) prior to the redemption date as to the aggregate principal
amount of Notes to be redeemed.
If fewer than all the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed (in principal amounts of $1,000
or integral multiples thereof), by lot or, in its discretion, on a PRO RATA
basis. If any Note selected for partial redemption is converted in part after
such selection, the converted portion of such Note shall be deemed (so far as
may be) to be the portion to be selected for redemption. The Notes (or
portions thereof) so selected shall be deemed duly selected for redemption
for all purposes hereof, notwithstanding that any such Note is converted as a
whole or in part before the mailing of the notice of redemption.
Upon any redemption of less than all Notes, the Company and the Trustee
may treat as outstanding any Notes surrendered for conversion during the
period of 15 days next preceding the mailing of a notice of redemption and
need not treat as outstanding any Note authenticated and delivered during
such period in exchange for the unconverted portion of any Note converted in
part during such period.
3.3 PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of redemption has
been given as above provided, the Notes or portion of Notes with respect to
which such notice has been given shall, unless converted into Common Stock
pursuant to the terms hereof, become due and payable on the date and at the
place or places stated in such notice at the applicable redemption price,
together with interest thereon accrued to the date fixed for redemption, and
on and after said date (unless the Company shall default in the payment of
such Notes at the
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redemption price, together with interest thereon accrued to said date),
interest on the Notes or portion of Notes so called for redemption shall
cease to accrue, and such Notes shall cease after the close of business on
the Business Day next preceding the date fixed for redemption to be
convertible into Common Stock and, except as provided in Sections 7.6 and
12.5, to be entitled to any benefit or security under this Indenture, and the
holders thereof shall have no right in respect of such Notes except the right
to receive the redemption price thereof and unpaid interest thereon to the
date fixed for redemption. On presentation and surrender of such Notes at a
place of payment in said notice specified, the said Notes or the specified
portions thereof shall be paid and redeemed by the Company at the applicable
redemption price, together with interest accrued thereon to the date fixed
for redemption; provided that any semi-annual payment of interest becoming
due on the date fixed for redemption shall be payable to the holders of such
Notes registered as such on the relevant record date subject to the terms and
provisions of Section 2.3 hereof.
Upon presentation of any Note redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion
of the Notes so presented.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid
or duly provided for, bear interest from the date fixed for redemption at the
rate borne by the Note and such Note shall remain convertible into Common
Stock until the principal and premium, if any, shall have been paid or duly
provided for.
3.4 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection with
any redemption of Notes, the Company may arrange for the purchase and
conversion of any Notes by an agreement with one or more investment bankers
or other purchasers to purchase such Notes by such investment bankers or
other purchasers paying to the Trustee in trust for the Holders, on or prior
to the last Business Day prior to the date fixed for redemption, an amount
not less than the applicable redemption price, together with interest accrued
to the date fixed for redemption, of such Notes. Notwithstanding anything to
the contrary contained in this Article III, the obligation of the Company to
pay the redemption price of such Notes, together with interest accrued to the
date fixed for redemption, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by such purchasers. If such an agreement
is entered into, a copy of which shall be filed with the Trustee prior to the
date fixed for redemption, any Notes not duly surrendered for conversion by
the holders thereof may, at the option of the Company, be deemed, to the
fullest extent permitted by law, acquired by such purchasers from such
holders and (notwithstanding anything to the contrary contained in Article
XIV) surrendered by such
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purchasers for conversion, all as of the time immediately prior to the close
of business on the date fixed for redemption (and the right to convert any
such Notes shall be deemed to have been extended through such time), subject
to payment of the above amount as aforesaid. At the direction of the
Company, the Trustee shall hold and dispose of any such amount paid to it in
the same manner as it would monies deposited with it by the Company for the
redemption of Notes. Without the Trustee's prior written consent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Notes shall increase or otherwise affect any of the powers,
duties, responsibilities or obligations of the Trustee as set forth in this
Indenture, and the Company agrees to indemnify the Trustee from, and hold it
harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Notes between the Company and such purchasers including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of
its powers, duties, responsibilities or obligations under this Indenture.
3.5 PURCHASE OF NOTES UPON A CHANGE OF CONTROL.
(a) If a Change of Control shall occur at any time, then each
holder of Notes shall have the right to require that the Company repurchase
such holder's Notes in whole or in part in integral multiples of $1,000 at a
purchase price (the "Change of Control Purchase Price") in cash in an amount
equal to 101% of the principal amount of such Notes, plus accrued and unpaid
interest thereon, if any, to the purchase date (the "Change of Control
Purchase Date") pursuant to the offer described below (the "Change of Control
Offer") and in accordance with the other procedures set forth in this
Indenture.
(b) Within 30 days following any Change of Control, unless the
Company has given the Holders notice of its intention to redeem the Notes
pursuant to Section 3.1, the Company shall notify the Trustee and give
written notice of such Change of Control to each Holder of Notes, by
first-class mail, postage prepaid, at the Holder's address appearing in the
Note register, stating, among other things, (i) that a Change of Control has
occurred, (ii) the Change of Control Purchase Price, (iii) the Change of
Control Purchase Date (which shall be a Business Day no earlier than 30 days
nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act),
(iv) that any Note not tendered shall continue to accrue interest and to have
all of the benefits of this Indenture, (v) that, unless the Company defaults
in the payment of the Change of Control Purchase Price, any Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date, (vi) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer
shall be required to surrender the Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the
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Notes completed, to the Company at the address specified in the notice prior
to the close of business on the third Business Day preceding the Change of
Control Purchase Date, (vii) that Holders shall be entitled to withdraw their
election if the Company receives, not later than the close of business on the
second Business Day preceding the Change of Control Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Notes
purchased, and (viii) that Holders whose Notes are being purchased only in
part shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. Prior to being
required to purchase any Notes pursuant to this Section 3.5 and prior to the
mailing of the notice of the Change of Control to the Holders, but in any
event within 30 days following any Change of Control, the Company shall
either (i) repay in full all of the Designated Senior Indebtedness and
terminate all commitments thereunder or offer to do so and repay the
Designated Senior Indebtedness and terminate all commitments of each lender
thereunder who accepted such offer or (ii) obtain the requisite consent under
the Designated Senior Indebtedness to permit the repurchase of the Notes
pursuant to this Section 3.5. The Company shall comply with the requirements
of Rule 13e-4 and 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes in connection with
a Change of Control.
(c) On the Change of Control Purchase Date, the Company shall, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Trustee an
amount equal to the Change of Control Purchase Price in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate
stating the Notes or portions thereof tendered to the Company. The Trustee
shall promptly mail to each Holder of Notes so accepted payment in an amount
equal to the purchase price of such Notes, and the Trustee shall promptly
authenticate and mail to each Holder a new Note equal in principal amount to
any unpurchased portion of the Notes surrendered, if any; provided that each
such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(d) The term "Change in Control" shall mean an event or series of
events as a result of which (i) any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), other than an Excluded
Person (as defined below), acquires "beneficial ownership" (as determined in
accordance with Rule 13d-3 under the Exchange Act), directly or indirectly,
of more than fifty percent (50%) of the combined voting power of the then
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outstanding securities entitled to vote generally in elections of directors
of the Company (the "Voting Stock") or (ii) the Company consolidates or
merges with any other corporation or business entity, or conveys, transfers
or leases all or substantially all of its assets to any person, unless the
shareholders of the Company immediately before such transaction own, directly
or indirectly, at least fifty-one percent (51%) of the combined voting power
of the outstanding voting securities of the corporation resulting from such
transaction in substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction; PROVIDED, that a Change of
Control shall not be deemed to have occurred if either (i) the closing price
per share of the Common Stock for any 5 trading days within the period of 10
consecutive trading days ending immediately after the announcement of the
Change in Control transaction shall equal or exceed 105% of the conversion
price of the Notes in effect on the trading day on which such announcement is
made or (ii) at least 90% of the consideration (determined on the date on
which the Change of Control is triggered and excluding cash payments for
fractional shares) in the Change of Control transaction consists of shares of
common stock traded on a national securities exchange or quoted on the Nasdaq
Stock Market and as a result of such transaction or transactions, the Notes
become convertible solely into such common stock; PROVIDED, FURTHER, that no
Change of Control shall be deemed to have occurred from a transfer of the
Company's voting securities by Mr. Alan H. Goldfield ("Goldfield") to (v) a
member of Goldfield's immediate family (determined in accordance with Rule
16a-1(e) of the Exchange Act) either during Goldfield's lifetime or by will
or the laws of descent and distribution; (w) any trust as to which Goldfield
or a member of (or members) of his immediate family is the beneficiary; (x)
any trust as to which Goldfield is the settlor with sole power to revoke; (y)
any entity over which Goldfield has the power, directly or indirectly, to
direct or cause the direction of the management and policies of the entity,
whether through the ownership of voting securities, by contract or otherwise;
or (z) any charitable trust, foundation or corporation under Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, that is funded by
Goldfield.
For purposes of this Section 3.5, "Excluded Person" means (a) Alan H.
Goldfield, (b) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company and acting in such capacity, and (c) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of voting securities
of the Company.
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IV
PARTICULAR COVENANTS OF THE COMPANY
4.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company covenants
and agrees that it shall duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of interest on the Notes due on any semi-annual
interest payment date may be paid by (i) wire transfer in immediately
available funds to the Depositary or its nominee, as registered owner of the
Global Notes, or (ii) mailing checks for the interest payable to or upon the
written order of the holders of definitive Notes entitled thereto as they
shall appear on the Note register. An installment of principal or interest
shall be considered paid on the date due if the Trustee or paying agent
(other than the Company, a subsidiary of the Company or any Affiliate of any
of them) holds on that date money designated for and sufficient to pay the
installment of principal or interest and is not prohibited from paying such
money to the holders of the Notes pursuant to the terms of this Indenture.
4.2 MAINTENANCE OF OFFICE OR AGENCY. The Company shall maintain in the
Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices
and demands to or upon the Company in respect of the Notes and this Indenture
may be served. The Company shall give prompt written notice to the Trustee
of the location, and any change in the location, of such office or agency.
If at any time the Company shall fail to maintain any such office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided that no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency in the Borough
of Manhattan, The City of New York, for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the Trustee as paying agent, Note
registrar and conversion agent and each of the Corporate Trust Office of the
Trustee and the office of The Bank of New York in the Borough of Manhattan,
The City of New York, as one such office or agency of the Company for the
purposes set forth in the first paragraph of this Section 4.2.
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So long as the Trustee is the Note registrar, the Trustee agrees to mail,
or cause to be mailed, the notices set forth in Section 7.11(a) and the third
paragraph of Section 7.12.
4.3 APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The Company,
whenever necessary to avoid or fill a vacancy in the office of Trustee, shall
appoint, in the manner provided in Section 7.11, a Trustee, so that there
shall at all times be a Trustee hereunder.
4.4 PROVISIONS AS TO PAYING AGENT.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company or
the Trustee, as the case may be, shall cause such paying agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 4.4:
(1) that it shall hold all sums held by it as such agent for the
payment of the principal of, premium, if any, or interest on the Notes
(whether such sums have been paid to it by the Company or by any other
obligor on the Notes) in trust for the benefit of the holders of the Notes;
(2) that it shall give the Trustee notice of any failure by the
Company (or by any other obligor on the Notes) to make any payment of the
principal of, premium, if any, or interest on the Notes when the same shall
be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it shall forthwith pay to the Trustee
all sums so held in trust.
The Company shall, before each due date of the principal of, premium, if
any, or interest on the Notes, deposit with the paying agent a sum sufficient
to pay such principal, premium, if any, or interest, and (unless such paying
agent is the Trustee) the Company shall promptly notify the Trustee of any
failure to take such action.
(b) If the Company shall act as its own paying agent, it shall, on
or before each due date of the principal of, premium, if any, or interest on
the Notes, set aside, segregate and hold in trust for the benefit of the
holders of the Notes a sum sufficient to pay such principal, premium, if any,
or interest so becoming due and shall notify the Trustee of any failure to
take such action and of any failure by the Company (or any other obligor
under the Notes) to make any payment of the principal of, premium, if any, or
interest on the Notes when the same shall become due and payable.
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(c) Anything in this Section 4.4 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by the Company or any paying agent
hereunder as required by this Section 4.4, such sums to be held by the
Trustee upon the trusts herein contained and upon such payment by the Company
or any paying agent to the Trustee, the Company or such paying agent shall be
released from all further liability with respect to such sums.
(d) Anything in this Section 4.4 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 4.4 is
subject to Sections 12.3 and 12.4.
4.5 CORPORATE EXISTENCE. Subject to Article XI, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of any subsidiary of the Company, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
the Company or any such subsidiary and (ii) the material rights (charter and
statutory), licenses and franchises of the Company and its subsidiaries;
provided that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any
of its subsidiaries if the Company shall determine in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its subsidiaries, taken as a whole, and that the loss thereof
is not materially adverse to the Holders of the Notes.
4.6 RULE 144A INFORMATION REQUIREMENT. During the two-year period
following the original issuance date of any Note and during the two-year
period following the last date on which the Company or an Affiliate of the
Company was the owner of any Note (or shares of Common Stock issued upon
conversion of any Note), if the Company is subject neither to Section 13 nor
Section 15(d) of the Exchange Act, the Company shall at the written request
of any holder or beneficial holder of such Note (or shares of Common Stock
issued upon conversion of Notes) provide to such holder or beneficial holder
of such Note (or shares of Common Stock issued upon conversion of Notes) and
any prospective transferee designated by such holder or beneficial holder of
such Note (or shares of Common Stock issued upon conversion of Notes) such
information, if any, required by Rule 144A(d)(4) under the Securities Act (so
long as such information is required to permit such transfer under Rule 144A).
4.7 STAY, EXTENSION AND USURY LAWS. The Company covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law that
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would prohibit or forgive the Company from paying all or any portion of the
principal of, premium, if any, or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or that may
affect the covenants or the performance of this Indenture; and the Company
(to the extent it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but shall suffer and permit the execution of every such power
as though no such law has been enacted.
4.8 COMPLIANCE STATEMENT; NOTICE OF DEFAULTS.
(a) The Company shall deliver to the Trustee within 90 days after
the end of each fiscal year of the Company an Officer's Certificate stating
whether or not to the best knowledge of the signers thereof the Company is in
compliance (without regard to periods of grace or notice requirements) with
all conditions and covenants under this Indenture, and if the Company shall
not be in compliance, specifying such non-compliance and the nature and
status thereof of which such signer may have knowledge.
(b) The Company shall file with the Trustee written notice of the
occurrence of any default or Event of Default within ten days of its becoming
aware of any such default or Event of Default.
4.9 TAXES. Except with respect to immaterial items, the Company shall
pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all taxes, assessments and governmental charges
(including withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon the Company or its subsidiaries or upon the
income, profits or property of the Company or any such subsidiary and (ii)
all lawful claims for labor, materials and supplies that, if unpaid, might by
law become a lien upon the property of the Company or any such subsidiary;
provided that the Company shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been made.
4.10 INSURANCE. The Company shall provide, or cause to be provided, for
itself and its subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds customarily insured against by
corporations similarly situated and owning like properties, including, but
not limited to, products liability insurance and public liability insurance,
with reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts with such
deductibles and by such methods as shall be determined in good faith by the
Company to be appropriate.
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V
HOLDERS' LISTS AND REPORTS BY
THE COMPANY
5.1 HOLDERS' LISTS. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of holders of Notes and shall otherwise comply with Trust Indenture
Act Section 312(a). If the Trustee is not the Notes registrar, the Company
shall furnish to the Trustee on or before at least seven Business Days preceding
each interest payment date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee reasonably may
require of the names and addresses of holders of Notes, and the Company shall
otherwise comply with Trust Indenture Act Section 312(a).
5.2 REPORTS BY COMPANY. The Company shall deliver to the Trustee within
15 days after it files the same with the Commission, copies of all reports and
information (or copies of such portions of any of the foregoing as the
Commission may by its rules and regulations prescribe), if any, which the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act or pursuant to the immediately following sentence. So long
as at least $5,000,000 aggregate principal amount of Notes remain outstanding,
the Company shall file with the Commission such reports as may be required
pursuant to Section 13 of the Exchange Act in respect of a security registered
pursuant to Section 12 of the Exchange Act, regardless of whether the Company is
otherwise required to file such reports. If the Company is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act (or otherwise
required to file reports pursuant to the immediately preceding sentence), the
Company shall deliver to the Trustee, within 15 days after it would have been
required to file such information with the Commission were it required to do so,
annual and quarterly financial statements, including any notes thereto (and, in
the case of a fiscal year end, an auditors' report by an independent certified
public accounting firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," in
each case substantially equivalent to that which it would have been required to
include in such quarterly or annual reports, information, documents or other
reports if it had been subject to the requirements of Section 13 or 15(d) of the
Exchange Act. The Company shall provide copies of the foregoing materials to
the Holders to the extent required by the Trust Indenture Act once this
Indenture has been qualified. The Company shall also comply with the other
provisions of the Trust Indenture Act Section 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the
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Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
VI
DEFAULTS AND REMEDIES
6.1 EVENTS OF DEFAULT. In case one or more of the following Events of
Default (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body) shall have occurred and be continuing:
(a) any default in the payment of the principal of or premium, if
any, on the Notes when due at maturity, upon redemption or otherwise,
including failure by the Company to purchase the Notes when required under
Section 3.5 (whether or not such payment shall be prohibited by Article XV
of this Indenture); or
(b) any default in the payment of any installment of interest on the
Notes as and when the same shall become due and payable (whether or not
such payment shall be prohibited by Article XV of this Indenture), and
continuance of such default for a period of 30 days; or
(c) a failure on the part of the Company duly to observe or perform
any other covenants or agreements on the part of the Company in this
Indenture (other than a default in the performance or breach of a covenant
or agreement that is specifically dealt with elsewhere in this Section 6.1)
that continues for a period of 60 days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall
have been given to the Company by the Trustee, or to the Company and a
Responsible Officer of the Trustee, by the holders of at least 25% in
aggregate principal amount of the Notes at the time outstanding determined
in accordance with Section 8.4; or
(d) an event of default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the 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 shall be created after the date hereof, which default (i) is caused by a
failure to pay principal or interest on such indebtedness (a "Payment
Default") at final maturity or (ii) results in the acceleration of such
indebtedness prior to its expressed maturity and, in each case, the
principal amount of
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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 $10 million or more and such
Payment Default shall not have been cured or such acceleration rescinded
within a 10 day period;
(e) any final judgments or decrees shall be entered by a court of
competent jurisdiction against the Company or any subsidiary involving
liabilities of $20 million or more (singly or in the aggregate) (after
deducting the portion of such liabilities accepted by a reputable insurance
company) and such final judgments or decrees shall not have been vacated,
discharged, satisfied or stayed pending appeal within 60 days from the
entry thereof;
(f) the Company or any "Significant Subsidiary" (as such term is
defined in Rule 1-02 of Regulation S-X under the Securities Act) of the
Company shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it or shall make a general
assignment for the benefit of creditors or shall fail generally to pay its
debts as they become due; or
(g) an involuntary case or other proceeding shall be commenced
against the Company or any Significant Subsidiary of the Company seeking
liquidation, reorganization or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 6.1(f) or (g)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding hereunder
determined in accordance with Section 8.4, by notice in writing to the Company
(and to the Trustee if given by Holders), may declare the principal of, premium,
if any, on the Notes and the interest accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default
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specified in Section 6.1(f) or (g) occurs and is continuing, the principal
of, premium, if any, all the Notes and the interest accrued thereon shall be
immediately due and payable. The foregoing provisions are subject to the
conditions that if, at any time after the principal of the Notes shall have
been so declared or become due and payable, and before any judgment or decree
for the payment of the monies due shall have been obtained or entered as
hereinafter provided, the Company shall pay or shall deposit with the Trustee
a sum sufficient to pay all matured installments of interest upon all Notes
and the principal of and premium, if any, on any and all Notes that shall
have become due otherwise than by acceleration (with interest on overdue
installments of interest (to the extent that payment of such interest is
enforceable under applicable law) and on such principal and premium, if any,
at the rate borne by the Notes, to the date of such payment or deposit) and
amounts due to the Trustee pursuant to Section 7.7, and if any and all
defaults under this Indenture, other than the nonpayment of principal of,
premium, if any, and accrued interest on Notes that shall have become due by
acceleration, shall have been cured or waived pursuant to Section 6.7, then
and in every such case the holders of a majority in aggregate principal
amount of the Notes then outstanding, by written notice to the Company and to
the Trustee, may waive all defaults or Events of Default and rescind and
annul such declaration and its consequences; but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or Event
of Default, or shall impair any right consequent thereto. The Company shall
notify a Responsible Officer of the Trustee, promptly upon becoming aware
thereof, of any Event of Default.
In the event the payment of the Notes is accelerated pursuant to this
Section 6.1, the Company or the Trustee shall promptly notify the holders of the
Designated Senior Indebtedness or the Bank Representative. The Company may not
pay the Notes upon such acceleration until at least five (5) business days
following receipt of notice of such acceleration by the Bank Representative or
any holder of Designated Senior Indebtedness and, thereafter, the Company may
pay the Notes only if so permitted by the provisions of Article XV hereof.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the holders of Notes and the Trustee shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Company, the holders of Notes and the Trustee shall continue as
though no such proceeding had been taken.
6.2 PAYMENTS OF NOTES ON DEFAULT; SUIT THEREFOR. The Company covenants
that (a) in case default shall be made in the payment of any installment of
interest upon any of the Notes as and when the same shall become due and
payable, and such default shall have continued for a
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period of 45 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Notes as and when the same
shall have become due and payable, whether at maturity of the Notes or in
connection with any redemption, by declaration or otherwise, then, upon
demand of the Trustee, the Company shall pay to the Trustee, for the benefit
of the holders of the Notes, the whole amount that then shall have become due
and payable on all such Notes for principal, premium, if any, or interest, or
both, as the case may be, with interest upon the overdue principal, premium,
if any, and (to the extent that payment of such interest is enforceable under
applicable law) upon the overdue installments of interest at the rate borne
by the Notes; and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel,
and any expenses or liabilities incurred by the Trustee hereunder other than
through its negligence or bad faith. Until such demand by the Trustee, the
Company may pay the principal of and premium, if any, and interest on the
Notes to the registered holders, whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor on the Notes
and collect in the manner provided by law out of the property of the Company or
any other obligor on the Notes wherever situated the monies adjudged or decreed
to be payable.
In the case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under Title
11 of the United States Code or any other applicable law, or in case a receiver,
assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or
similar official shall have been appointed for or taken possession of the
Company or such other obligor, the property of the Company or such other
obligor, or in the case of any other judicial proceedings relative to the
Company or such other obligor upon the Notes, or to the creditors or property of
the Company or such other obligor, the Trustee, irrespective of whether the
principal of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand pursuant to the provisions of this Section 6.2, shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a
claim or claims for the whole amount of principal, premium, if any, and interest
owing and unpaid in respect of the Notes and, in case of any judicial
proceedings, 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 and of the
Holders allowed in such judicial proceedings relative to the Company or any
other obligor on the Notes, its or their creditors, or its or their property and
to
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collect and receive any monies or other property payable or deliverable on
any such claims and to distribute the same after the deduction of any amounts
due the Trustee under Section 7.7; and any receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, custodian or similar official is
hereby authorized by each of the Holders to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
reasonable compensation, expenses, advances and disbursements, including
counsel fees incurred by it up to the date of such distribution. To the
extent that such payment of reasonable compensation, expenses, advances and
disbursements out of the estate in any such proceedings shall be denied for
any reason, payment of the same shall be secured by a lien on, and shall be
paid out of, any and all distributions, dividends, monies, securities and
other property that the holders of the Notes may be entitled to receive in
such proceedings, whether in liquidation or under any plan of reorganization
or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or adopt on behalf of any Holder any plan of
reorganization or arrangement affecting the Notes or the rights of any Holder,
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
All rights of action and of asserting claims under this Indenture, or under
any of the Notes, may be enforced by the Trustee without the possession of any
of the Notes or the production thereof on any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings involving
the interpretation of any provision of this Indenture to which the Trustee shall
be a party), the Trustee shall be held to represent all the holders of the
Notes, and it shall not be necessary to make any holders of the Notes parties to
any such proceedings.
6.3 APPLICATION OF MONIES COLLECTED BY TRUSTEE. Any monies collected by
the Trustee pursuant to this Article VI shall be applied in the order following,
at the date or dates fixed by the Trustee for the distribution of such monies,
upon presentation of the several Notes and stamping thereon the payment, if only
partially paid, and upon surrender thereof, if fully paid:
First: To the payment of all amounts due the Trustee under Section
7.7;
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Second: Subject to the provisions of Article XV, in case the
principal of the outstanding Notes shall not have become due and be unpaid,
to the payment of interest on the Notes in default in the order of the
maturity of the installments of such interest, with interest (to the extent
that such interest has been collected by the Trustee) upon the overdue
installments of interest at the rate borne by the Notes, such payments to
be made ratably to the persons entitled thereto; and
Third: Subject to the provisions of Article XV, in case the principal
of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid, to the payment of the whole amount then holding
and unpaid upon the Notes for principal, premium, if any, and interest,
with interest on the overdue principal and premium, if any, and (to the
extent that such interest has been collected by the Trustee) upon overdue
installments of interest at the rate borne by the Notes; and in case such
monies shall be insufficient to pay in full the whole amounts so due and
unpaid upon the Notes, then to the payment of such principal, premium, if
any, and interest without preference or priority of principal and premium,
if any, over interest, or of interest over principal and premium, if any,
or of any installment of interest over any other installment of interest,
or of any Note over any other Note, ratably to the aggregate of such
principal and premium, if any, and accrued and unpaid interest.
6.4 PROCEEDINGS BY HOLDER. No holder of any Note shall have any right by
virtue of or by availing of any provision of this Indenture to institute any
suit, action or proceeding in equity or at law upon or under or with respect to
this Indenture, or for the appointment of a receiver, trustee, liquidator,
custodian or other similar official, or for any other remedy hereunder, unless
such holder previously shall have given to the Trustee written notice of an
Event of Default and of the continuance thereof, as hereinbefore provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Notes then outstanding shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding, and no direction inconsistent with such written
request shall have been given to the Trustee pursuant to Section 6.7; it being
understood and intended, and being expressly covenanted by the taker and holder
of every Note with every other taker and holder and the Trustee, that no one or
more holders of Notes shall have any right in any manner whatever by virtue of
or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Notes, to obtain or seek to obtain
priority over or preference to any other such holder or to enforce any right
under this Indenture, except in the manner herein provided and for the equal,
ratable and common benefit
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of all holders of Notes (except as otherwise provided herein). For the
protection and enforcement of this Section 6.4, each and every Holder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any holder of any Note to receive payment of the
principal of, premium, if any, and interest on such Note, on or after the
respective due dates expressed in such Note, or to institute suit for the
enforcement of any such payment on or after such respective dates against the
Company shall not be impaired or affected without the consent of such holder
except as otherwise set forth herein.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in his own behalf and for his own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, his rights of
conversion as provided herein.
6.5 PROCEEDINGS BY TRUSTEE. In case of an Event of Default, the Trustee
may in its discretion proceed to protect and enforce the rights vested in it by
this Indenture by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
6.6 REMEDIES CUMULATIVE AND CONTINUING. Except as provided in Section
2.6, all powers and remedies given by this Article VI to the Trustee or to the
Holders shall, to the extent permitted by law, be deemed cumulative and not
exclusive of such powers and remedies or of any other powers and remedies
available to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a waiver of any such
default or any acquiescence therein; and, subject to the provisions of Section
6.4, every power and remedy given by this Article VI or by law to the Trustee or
to the Holders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Holders.
6.7 DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF
HOLDERS. The holders of a majority in aggregate principal amount of the Notes
at the time outstanding
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(determined in accordance with Section 8.4) shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee; provided that (a) such direction shall not be in conflict with any
rule of law or with this Indenture and (b) the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding (determined in accordance with Section 8.4) may
on behalf of the holders of all of the Notes waive any past default or Event
of Default hereunder and its consequences except (i) a default in the payment
of interest or premium, if any, on, or the principal of, the Notes, (ii) a
failure by the Company to convert any Notes into Common Stock or (iii) a
default in respect of a covenant or provision hereof that under Article X
cannot be modified or amended without the consent of the holders of all Notes
then outstanding. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 6.7, said default or Event of
Default shall for all purposes of the Notes and this Indenture be deemed to
have been cured and to be not continuing and the Company, the Trustee and the
holders of the Notes shall be restored to their former positions and rights
hereunder; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.
6.8 NOTICE OF DEFAULTS. The Trustee shall, within 90 days after the
occurrence of a default, mail to all Holders, as the names and addresses of such
holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived before
the giving of such notice; provided that, except in the case of default in the
payment of the principal of, premium, if any, or interest on any of the Notes,
the Trustee shall be protected in withholding such notice if and so long as a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Holders.
6.9 UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and
each holder of any Note by his acceptance thereof shall be deemed to have
agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided that the provisions of this Section 6.9
shall not apply to any suit instituted by the Trustee, to any suit instituted by
any Holder or group of Holders holding in the aggregate more than 10% in
principal amount of the Notes at the time outstanding determined in accordance
with Section 8.4 or to any suit instituted by any Holder for the enforcement of
the payment of the principal of, premium, if any, or interest on any Note on
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or after the due date expressed in such Note or to any suit for the
enforcement of the right to convert any Note in accordance with the
provisions of Article XIV.
VII
CONCERNING THE TRUSTEE
7.1 DUTIES AND RESPONSIBILITIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; provided that in the case of any such certificates
or opinions that by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph
(b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by an officer of the Trustee unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
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(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.7.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) The Trustee may refuse to perform any duty or exercise any right
or power or extend or risk its own funds or otherwise incur any financial
liability unless it receives indemnity satisfactory to it against any loss,
liability or expense.
7.2 REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15
commencing with the May 15 following the date of this Indenture, the Trustee
shall, if required by the Trust Indenture Act, mail to each Holder a brief
report dated as of such May 15 that complies with Trust Indenture Act Section
313(a). The Trustee also shall comply with Trust Indenture Act Sections 313(b)
and 313(c).
The Company shall promptly notify the Trustee in writing if the Notes
become listed or delisted on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Holders shall be mailed
to the Company and, to the extent required by Section 5.2 hereof and of the
Trust Indenture Act Section 313(d), filed with the Commission and each stock
exchange, if any, on which the Notes are listed.
7.3 RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise provided in
Section 7.1:
(a) The Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed or
required by the Trust Indenture Act); and any resolution of the Board of
Directors may be evidenced to the Trustee by a copy thereof certified by
the Secretary or an Assistant Secretary of the Company;
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(c) The Trustee may consult with counsel of its selection and
reasonably acceptable to the Company and any advice or opinion of counsel
shall be full and complete authorization and protection in respect of any
action taken or omitted by it hereunder in good faith and in accordance
with such advice or opinion of counsel;
(d) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due
care hereunder; no Depositary, Custodian or paying agent who is not the
Trustee shall be deemed an agent of the Trustee, and the Trustee (in its
capacity as Trustee) shall not be responsible for any act or omission by
any such Depositary, Custodian or paying agent;
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by the Indenture at the request or direction
of any of the holders pursuant to this Indenture unless such holders have
offered the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that would be incurred by it in compliance with
such request or direction.
(f) Subject to the provisions of Section 7.1(c), the Trustee shall
not be liable for any action it takes or omits to take in good faith that
it believes to be authorized or within its rights or powers;
(g) In connection with any request to transfer or exchange any Note,
the Trustee may request a direction (in the form of an Officers'
Certificate) from the Company and an Opinion of Counsel with respect to
compliance with any restrictions on transfer or exchange imposed by this
Indenture, the Securities Act, other applicable law or the rules and
regulations of any exchange on which the Notes or the capital stock may be
traded, and the Trustee may rely and shall be protected in acting upon such
direction and in accordance with such Officers' Certificate and Opinion of
Counsel;
(h) The Trustee may rely and shall be fully protected in acting upon
the determination and notice by the Company of the Conversion Price; and
(i) The Trustee shall not be deemed to have knowledge of any Event of
Default or other fact or event upon the occurrence of which it may be
required to take action hereunder unless one of its Responsible Officers
has actual knowledge thereof.
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(j) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the
Company, personally or by agent or attorney at the sole cost of the Company
and shall incur no liability or additional liability of any kind by reason
of such inquiry or investigation.
7.4 NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained herein
and in the Notes (except in the Trustee's certificate of authentication) shall
be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
7.5 TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN NOTES.
The Trustee, any paying agent, any conversion agent or any Note registrar, in
its individual or any other capacity, may become the owner or pledgee of Notes
with the same rights it would have if it were not Trustee, paying agent,
conversion agent or Note registrar.
7.6 MONIES TO BE HELD IN TRUST. Subject to the provisions of Section
12.4, all monies received by the Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received. Money
held by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law. The Trustee shall be under no liability
for interest on any money received by it hereunder except as may be agreed to in
writing from time to time by the Company and the Trustee.
7.7 COMPENSATION AND EXPENSES OF TRUSTEE. The Company covenants and
agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation as the Company and the Trustee shall from time to
time agree in writing, for all services rendered by it hereunder in any capacity
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Company shall pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from
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its negligence or bad faith. The Company also covenants to indemnify each of
the Trustee or any predecessor Trustee in any capacity under this Indenture
and its agents and any authenticating agent for, and to hold them harmless
against, any and all loss, liability, damage, claim or expense, including
taxes (other than taxes based on the income of the Trustee) incurred without
negligence or bad faith on the part of the Trustee or such agent or
authenticating agent, as the case may be, and arising out of or in connection
with the acceptance or administration of this trust or in any other capacity
hereunder, including the costs and expenses of defending themselves against
any claim of liability in the premises. The obligations of the Company under
this Section 7.7 to compensate or indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and advances shall be
secured by a lien prior to that of the Notes upon all property and funds held
or collected by the Trustee as such, except funds held in trust for the
benefit of the holders of particular Notes. When the Trustee incurs expenses
or renders services in connection with an Event of Default specified in
Section 6.1(f) or Section 6.1(g), the expenses (including the reasonable
charges and expenses of its counsel) and the compensation for the services
are intended to constitute expenses of administration under any applicable
Federal or state bankruptcy, insolvency or other similar law. The obligation
of the Company under this Section shall survive the satisfaction and
discharge of this Indenture.
7.8 OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise provided in
Section 7.1, whenever in the administration of the provisions of this Indenture
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of negligence or bad faith on the part of the Trustee, be
deemed to be conclusively proved and established by an Officers' Certificate
delivered to the Trustee, and such Officers' Certificate, in the absence of
negligence or bad faith on the part of the Trustee, shall be full warrant to the
Trustee for any action taken or omitted by it under the provisions of this
Indenture upon the faith thereof.
7.9 CONFLICTING INTERESTS OF TRUSTEE. In the event that the Trust
Indenture Act is applicable hereto, and if the Trustee has or shall acquire a
conflicting interest within the meaning of Trust Indenture Act Section 310(b)
and there exists an Event of Default hereunder (exclusive of any period of grace
or requirement of notice), the Trustee shall either eliminate such interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Indenture.
7.10 ELIGIBILITY OF TRUSTEE. There shall at all times be a Trustee
hereunder that shall be a person that satisfies the requirements of Trust
Indenture Act Section 310(a)(1) and Section 310(a)(5) and that has a combined
capital and surplus of at least $50,000,000. If such person publishes reports
of condition at least annually, pursuant to law or to the requirements of any
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supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article VII.
7.11 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving written notice of
such resignation to the Company; and the Company shall mail, or cause to be
mailed, notice thereof to the holders of Notes at their addresses as they shall
appear on the Note register. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 7.9 after written
request therefor by the Company or by any Holder who has been a BONA FIDE
holder of a Note or Notes for at least six months; or
(2) the Trustee shall cease to be eligible in accordance with the
provisions of Section 7.10 and shall fail to resign after written request
therefor by the Company or by any such Holder; or
(3) the Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee or any Holder who has
been a BONA FIDE holder of a Note or Notes for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
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(c) The holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time remove the Trustee and nominate a
successor trustee, which shall be deemed appointed as successor trustee unless
within ten days after notice to the Company of such nomination the Company
objects thereto, in which case the Trustee so removed or any Holder, upon the
terms and conditions and otherwise as provided in the next paragraph, may
petition any court of competent jurisdiction for an appointment of a successor
trustee.
If no successor trustee shall have been so appointed and have accepted
appointment within 60 days after removal or the mailing of such notice of
resignation to the Holders, the Trustee resigning or being removed may petition
any court of competent jurisdiction for the appointment of a successor trustee,
or, in the case of either resignation or removal, any Holder who has been a BONA
FIDE holder of a Note or Notes for at least six months may, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any, as
it may deem proper and prescribe, appoint a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 7.11 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.12.
7.12 ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor trustee appointed as
provided in Section 7.11 shall execute, acknowledge and deliver to the Company
and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon, the resignation or removal of the predecessor trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as trustee herein; but on the written request of the Company or of the
successor trustee, the Trustee ceasing to act shall, upon payment of any amounts
then due it pursuant to the provisions of Section 7.7, execute and deliver an
instrument transferring to such successor trustee all the rights and powers of
the Trustee so ceasing to act. Upon request of any such successor trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon
all property and funds held or collected by such trustee as such, except for
funds held in trust for the benefit of holders of particular Notes, to secure
any amounts then due it pursuant to the provisions of Section 7.7.
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No successor trustee shall accept appointment as provided in this Section
7.12 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 7.9 and eligible under the provisions
of Section 7.10.
Upon acceptance of appointment by a successor trustee as provided in this
Section 7.12, the Company shall mail or cause to be mailed notice of the
succession of such Trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. If the Company fails to mail such
notice within ten days after acceptance of appointment by the successor trustee,
the successor trustee shall cause such notice to be mailed at the expense of the
Company.
7.13 SUCCESSOR, BY MERGER, ETC. Any corporation into which the Trustee may
be merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee, shall be the successor to the
Trustee hereunder, provided such corporation shall be qualified under the
provisions of Section 7.9 and eligible under the provisions of Section 7.10
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
7.14 LIMITATION ON RIGHTS OF TRUSTEE AS CREDITOR. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Notes) and the Trust Indenture Act is applicable hereto, the Trustee shall be
subject to the provisions of Trust Indenture Act Section 311(a) or, if
applicable, Trust Indenture Act Section 311(b) regarding the collection of the
claims against the Company (or any such other obligor).
VIII
CONCERNING THE HOLDERS
8.1 ACTION BY HOLDERS. Whenever in this Indenture it is provided that the
holders of a specified percentage in aggregate principal amount of the Notes may
take any action (including the making of any demand or request, the giving of
any notice, consent or waiver or the taking of any other action), the fact that
at the time of taking any such action, the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by Holders in person or by agent or proxy
appointed in writing, (b) by the record of the holders of Notes voting in favor
thereof at any meeting of Holders duly called and held in accordance with the
provisions of Article IX or (c) by a combination of such instrument or
instruments and any such record of such a meeting of Holders. Whenever the
Company or the Trustee solicits the taking of any action by the holders of the
Notes, the Company or the Trustee may fix in advance of such solicitation, a
date as the
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record date for determining holders entitled to take such action. The record
date shall be not more than 15 days prior to the date of commencement of
solicitation of such action.
8.2 PROOF OF EXECUTION BY HOLDERS. Subject to the provisions of Sections
7.1, 7.2 and 9.5, proof of the execution of any instrument by a Holder or by
agent or proxy shall be sufficient if made in accordance with such reasonable
rules and regulations as may be prescribed by the Trustee or in such manner as
shall be satisfactory to the Trustee. The holding of Notes shall be proved by
the Note register or by a certificate of the Note registrar.
The record of any Holders' meeting shall be proved in the manner provided
in Section 9.5.
8.3 WHO ARE DEEMED ABSOLUTE OWNERS. The Company, the Trustee, any paying
agent, any conversion agent and any Note registrar may deem the person in whose
name such Note shall be registered upon the books of the Company to be, and may
treat such person as, the absolute owner of such Note (whether or not such Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of, premium, if any, and interest on such Note, for conversion of such Note and
for all other purposes; and neither the Company nor the Trustee nor any paying
agent nor any conversion agent nor any Note registrar shall be affected by any
notice to the contrary. All such payments so made to any holder for the time
being, or upon order of such holder, shall be valid and, to the extent of the
sum or sums so paid, effectual to satisfy and discharge the liability for monies
payable upon any such Note.
The Depositary shall be deemed to be the owner of any global Note for all
purposes, including receipt of notices to Holders and payment of principal of,
premium, if any, and interest on the Notes. None of the Company, the Trustee
(in its capacity as Trustee), any paying agent or the Note registrar (or
co-registrar) shall have any responsibility for any aspect of the records
relating to or payments made on account of beneficial interests of a global
Note or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests; provided that the foregoing shall not
apply to the Trustee or any other person acting in its capacity as Custodian.
8.4 COMPANY-OWNED NOTES DISREGARDED. In determining whether the holders
of the requisite aggregate principal amount of Notes have concurred in any
direction, consent, waiver or other action under this Indenture, Notes that are
owned by the Company or any other obligor on the Notes or by any person directly
or indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Notes shall be disregarded
and deemed not to be outstanding for the purpose of any such determination;
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provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action,
only Notes that a Responsible Officer actually knows are so owned shall be so
disregarded. Notes so owned that have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 8.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledger's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or a person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any such other obligor.
In the case of a dispute as to such right, any decision by the Trustee taken
upon the advice of counsel shall be full protection to the Trustee. Upon
request of the Trustee, the Company shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Notes, if any, known by the
Company to be owned or held by or for the account of any of the above described
persons; and subject to Section 7.1, the Trustee shall be entitled to accept
such Officers' Certificate as conclusive evidence of the facts therein set forth
and of the fact that all Notes not listed therein are outstanding for the
purpose of any such determination.
8.5 REVOCATION OF CONSENTS, FUTURE HOLDERS BOUND. At any time prior to
(but not after) the evidencing to the Trustee, as provided in Section 8.1, of
the taking of any action by the holders of the percentage in aggregate principal
amount of the Notes specified in this Indenture in connection with such action,
any holder of a Note that is shown by the evidence to be included in the Notes
the holders of which have consented to such action may, by filing written notice
with the Trustee at its Corporate Trust Office and upon proof of holding as
provided in Section 8.2, revoke such action so far as concerns such Note.
Except as aforesaid, any such action taken by the holder of any Note shall be
conclusive and binding upon such holder and upon all future holders and owners
of such Note and of any Notes issued in exchange or substitution therefor,
irrespective of whether any notation in regard thereto is made upon such Note or
any Note issued in exchange or substitution therefor.
IX
HOLDERS' MEETINGS
9.1 PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Holders may
be called at any time and from time to time pursuant to the provisions of this
Article IX for any of the following purposes:
(i) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any
default hereunder and its consequences, or to take any other action
authorized to be taken by Holders pursuant to any of the provisions of
Article VI;
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(ii) to remove the Trustee and appoint a successor trustee
pursuant to the provisions of Article VII;
(iii) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.2; or
(iv) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of the
Notes under any other provisions of this Indenture or under applicable law.
9.2 MANNER OF CALLING MEETINGS; RECORD DATE. The Trustee may at any time
call a meeting of Holders to take any action specified in Section 9.1, to be
held at such time and at such place in the City of New York, State of New York,
as the Trustee shall determine. Notice of every meeting of the Holders, setting
forth the time and the place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be mailed not less than 30 nor more
than 60 days prior to the date fixed for the meeting to such Holders at their
addresses as such addresses appear in the Note register. For the purpose of
determining Holders entitled to notice of any meeting of Holders, the Trustee
shall fix in advance a date as the record date for such determination, such date
to be a business day not more than ten days prior to the date of the mailing of
such notice as hereinabove provided. Only persons in whose name any Note shall
be registered in the Note register at the close of business on a record date
fixed by the Trustee as aforesaid, or by the Company or the Holders as provided
in Section 9.3, shall be entitled to notice of the meeting of Holders with
respect to which such record date was so fixed.
9.3 CALL OF MEETING BY COMPANY OR HOLDERS. In case at any time the
Company, pursuant to a resolution of its Board of Directors or the holders of at
least 10% in aggregate principal amount of the Notes then outstanding shall have
requested the Trustee to call a meeting of Holders to take any action authorized
in Section 9.1 by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed
notice of such meeting within 20 days after receipt of such request, then the
Company or the holders of Notes in the amount above specified, as the case may
be, may fix the record date with respect to, and determine the time and the
place for, such meeting and may call such meeting to take any action authorized
in Section 9.1, by mailing notice thereof as provided in Section 9.2. The
record date fixed as provided in the preceding sentence shall be set forth in a
written notice to the Trustee and shall be a business day not less than 15 nor
more than 20 days after the date on which the original request is sent to the
Trustee.
9.4 WHO MAY ATTEND AND VOTE AT MEETINGS. Only persons entitled to receive
notice of a meeting of Holders and their respective proxies duly appointed by an
instrument in writing
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shall be entitled to vote at such meeting. The only persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel. When a determination of Holders entitled to vote at
any meeting of Holders has been made as provided in this Section, such
determination shall apply to any adjournments thereof.
9.5 MANNER OF VOTING AT MEETINGS AND RECORD TO BE KEPT. The vote upon any
resolution submitted to any meeting of Holders shall be by written ballots on
each of which shall be subscribed the signature of the Holder or proxy casting
such ballot and the identifying number or numbers of the Notes held or
represented in respect of which such ballot is cast. The chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Holders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was mailed as provided in Section 9.2. The record
shall show the identifying numbers of the Notes voting in favor of or against
any resolution. Each counterpart of such record shall be signed and verified by
the affidavits of the chairman and secretary of the meeting and one of the
counterparts shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee.
Any counterpart record so signed and verified shall be conclusive evidence
of the matters therein stated and shall be the record referred to in clause (b)
of Section 8.1.
9.6 EXERCISE OF RIGHTS OF TRUSTEE AND HOLDERS NOT TO BE HINDERED OR
DELAYED. Nothing in this Article IX contained shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Holders or any rights
expressly or impliedly conferred hereunder to make such call, any hinderance or
delay in the exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders under any of the provisions of this Indenture or of
the Notes.
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X
SUPPLEMENTAL INDENTURES
10.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. The Company, when
authorized by a Board Resolution, and the Trustee may from time to time and at
any time enter into an indenture or indentures supplemental hereto for one or
more of the following purposes:
(a) to make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 14.6;
(b) subject to Article XV, to convey, transfer, assign, mortgage or
pledge to the Trustee as security for the Notes, any property or assets;
(c) to evidence the succession of another person to the Company, or
successive successions, and the assumption by the Successor Company of the
covenants, agreements and obligations of the Company pursuant to Article
XI;
(d) to add to the covenants of the Company such further covenants,
restrictions or conditions as the Board of Directors and the Trustee shall
consider to be for the benefit of the holders of Notes and to make the
occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions or conditions a default or an Event of
Default permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided that in respect of
any such additional covenant, restriction or condition, such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such default or
may limit the remedies available to the Trustee upon such default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to
provide for exchangeability of such Notes with the Notes issued hereunder
in fully registered form and to make all appropriate changes for such
purpose;
(f) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture that may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to
matters or questions arising under this Indenture that shall not adversely
affect the interests of the holders of the Notes;
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(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this Indenture
to such extent necessary to effect the qualification of this Indenture
under the Trust Indenture Act (if applicable), or under any similar federal
statute hereafter enacted (if applicable).
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations that may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.1 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 10.2.
10.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent
(evidenced as provided in Article VIII) of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company, when authorized by a Board Resolution and the Trustee may from time to
time and at any time enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or any supplemental
indenture or of modifying in any manner the rights of the holders of the Notes;
provided that, without the consent of the holders of all Notes then outstanding,
no such supplemental indenture shall (i) extend the fixed maturity of any Note,
or reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or premium, if any, thereon or reduce any amount
payable on redemption thereof, alter the obligation of the Company to redeem the
Notes at the option of the holder upon the occurrence of a Change of Control or
impair or affect the right of any Holder to institute suit for the payment
thereof or make the principal thereof or interest or premium, if any, thereon
payable in any coin or currency other than that provided in the Notes, modify
the subordination provisions in a manner adverse to the holders of the Notes, or
impair the right to convert the Notes into Common Stock subject to the terms set
forth herein without the consent of the holder of each Note so affected or (ii)
reduce the aforesaid percentage of Notes, the holders of which are required to
consent to any such supplemental indenture.
Upon the request of the Company, accompanied by a copy of a Board
Resolution certified by its Secretary or Assistant Secretary authorizing the
execution of any such
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supplemental indenture, and upon the filing with the Trustee of evidence of
the consent of Holders as aforesaid, the Trustee shall join with the Company
in the execution of such supplemental indenture unless such supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this Section
10.2 to approve the particular form of any proposed supplemental indenture, but
it shall be sufficient if such consent shall approve the substance thereof.
10.3 EFFECT OF SUPPLEMENTAL INDENTURES. Any supplemental indenture
executed pursuant to the provisions of this Article X shall comply with the
Trust Indenture Act, as then in effect, if such supplemental indenture is then
required to so comply. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article X, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitation of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Notes shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
10.4 NOTATION ON NOTES. Notes authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article X may bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture, but they need not do so. If the
Company or the Trustee shall determine to add such a notation, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any modification of this Indenture contained in any such
supplemental indenture may, at the Company's expense, be prepared and executed
by the Company, authenticated by the Trustee (or an authenticating agent duly
appointed by the Trustee pursuant to Section 16.14) and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
10.5 EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE FURNISHED
TRUSTEE. The Trustee shall be furnished with and, subject to the provisions of
Sections 7.1 and 7.2, may rely upon an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that any supplemental indenture executed pursuant
hereto complies with the requirements of this Article X.
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XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE,
TRANSFER AND LEASE
11.1 COMPANY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS. The Company shall not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all of its assets (determined on a consolidated basis) whether in
a single transaction or a series related transactions, to any person unless: (i)
either the Company is the resulting or surviving person or the person to whom
such assets are transferred (in each case, the "Successor Company") or the
Successor Company is a person organized and existing under the laws of the
United States or any State thereof or the District of Columbia, and the
Successor Company (if not the Company) expressly assumes by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under this Indenture and the Notes,
including the rights pursuant to Article XIV hereof, (ii) immediately after
giving effect to such transaction, no Event of Default has happened and is
continuing and (iii) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with this
Indenture.
11.2 SUCCESSOR COMPANY TO BE SUBSTITUTED. In case of any such
consolidation, merger, sale, conveyance, transfer or lease and upon the
assumption by the Successor Company, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of, premium, if any, and interest on all of
the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, such Successor
Company shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as the party hereto. When a Surviving
Person duly assumes all the obligations of the Company pursuant to their
Indenture and the Notes, the predecessor shall be released from all such
obligation.
11.3 OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE. The Trustee subject to
Sections 7.1 and 7.2, shall receive an Officers' Certificate and an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance, transfer or lease and any such assumption complies with the
provisions of this Article XI.
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XII
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
12.1 LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF THE NOTES.
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Notes, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Notes upon compliance with the conditions
set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"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 Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of the Sections of and matters under this
Indenture referred to in clauses (i) and (ii) below and to have satisfied all
its other obligations under such Notes and this Indenture insofar as such Notes
are concerned, except for the following, which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of holders of outstanding
Notes to receive solely from the trust fund described in paragraph (d) below and
as more fully set forth in such paragraph, payments in respect of the principal
of, premium, if any, and interest on such Notes when such payments are due and
(ii) obligations listed in Section 12.3.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article XI and Section 3.5
with respect to the outstanding Notes on and after the date the conditions set
forth in paragraph (d) are satisfied (hereinafter, "covenant defeasance"), and
the Notes shall thereafter be deemed to be not "outstanding" for the purpose 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
Notes, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document, and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.1, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby.
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(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Notes:
(i) The Company shall have irrevocably deposited in trust with
the Trustee, pursuant to an irrevocable trust and security agreement in
form and substance satisfactory to the Trustee, cash or U.S. Government
Obligations maturing as to principal and interest at such times, or a
combination thereof, in such amounts as are sufficient, without
consideration of the reinvestment of such interest and after payment of all
federal, state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof (in form and substance reasonably satisfactory to the Trustee)
delivered to the Trustee, to pay the principal of, premium, if any, and
interest on the outstanding Notes on the dates on which any such payments
are due and payable in accordance with the terms of this Indenture and of
the Notes;
(ii) (A) No Event of Default shall have occurred or be
continuing on the date of such deposit, and (B) no Default or Event of
Default under Section 6.1(f) or 6.1(g) shall occur on or before the 123rd
day after the date of such deposit;
(iii) Such deposit shall not result in a Default under this
Indenture or a breach or violation of, or constitute a default under, any
other instrument or agreement to which the Company is a party or by which
it or its property is bound;
(iv) In the case of a legal defeasance under paragraph (b) above,
the Company has delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this Indenture,
there has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion shall confirm that,
the holders of the Notes shall not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and shall be subject to federal income tax on the same amounts
and in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge had not occurred; and, in the case
of a covenant defeasance under paragraph (c) above, the Company shall
deliver to the Trustee an Officers' Certificate and an Opinion of Counsel,
in form and substance reasonably satisfactory to the Trustee, to the effect
that holders of the Notes shall not recognize income, gain or loss for
federal income tax purposes as a result of such deposit and defeasance and
shall be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such deposit
and defeasance had not occurred;
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(v) The holders shall have a perfected security interest under
applicable law in the cash or U.S. Government Obligations deposited
pursuant to Section 12.1(d)(i) above;
(vi) The Company shall have delivered to the Trustee an Opinion
of Counsel, in form and substance reasonably satisfactory to the Trustee,
to the effect that, after the passage of 123 days following the deposit,
the trust funds shall not be subject to any applicable bankruptcy,
insolvency, reorganization or similar law affecting creditors' rights
generally;
(vii) Such defeasance shall not cause the Trustee to have a
conflicting interest with respect to any securities of the Company; and
(viii) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by this
Section 12.1 have been complied with;
provided, that no deposit under clause (i) shall be effective to terminate the
obligations of the Company under the Notes or this Indenture prior to the
passage of 123 days following such deposit.
12.2 TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE NOTES. In
addition to the Company's rights under Section 12.1, the Company may terminate
all of its obligations under this Indenture (subject to Section 12.3) when:
(a) (i) all Notes theretofore authenticated and delivered (other than
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.6) have been delivered to the Trustee for
cancellation; and
(ii) the Company has paid or caused to be paid all other sums
payable hereunder and under the Notes by the Company; or
(b) (i) the Notes not previously delivered to the Trustee for
cancellation shall have become due and payable or are by their terms to
become due and payable within one year or are to be called for redemption
under arrangements satisfactory to the Trustee upon delivery of notice,
(ii) the Company shall have irrevocably deposited with the Trustee, as
trust funds, cash, in an amount sufficient to pay principal of and interest
on the outstanding Notes, to maturity or redemption, as the case may be,
(iii) such deposit shall not result in a breach or violation of, or
constitute a default under, any agreement or instrument pursuant to which
the Company is a party or by which it or its property is
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bound and (iv) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
related to such defeasance have been complied with.
12.3 SURVIVAL OF CERTAIN OBLIGATIONS. Notwithstanding the satisfaction and
discharge of this Indenture and of the Notes referred to in Section 12.1 or
12.2, the respective obligations of the Company and the Trustee under Sections
2.3, 2.4, 2.5, 2.6, 3.1, 4.2, 5.1, 6.4, 6.9, 7.6, 7.11, 12.5, 12.6, 12.7,
Articles XIV and XV shall survive until the Notes are no longer outstanding, and
thereafter, the obligations of the Company and the Trustee under Sections 6.9,
7.6, 12.5, 12.6 and 12.7 shall survive. Nothing contained in this Article XII
shall abrogate any of the rights, obligations or duties of the Trustee under
this Indenture.
12.4 ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE. Subject to Section 12.7,
after (i) the conditions of Section 12.1 or 12.2 have been satisfied, (ii) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company and (iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon written
request shall acknowledge in writing the discharge of the Company's obligations
under this Indenture except for those surviving obligations specified in Section
12.3.
12.5 APPLICATION OF TRUST ASSETS. The Trustee shall hold any cash or U.S.
Government Obligations deposited with it in the irrevocable trust established
pursuant to Section 12.1 or 12.2, as the case may be. The Trustee shall apply
the deposited cash or the U.S. Government Obligations, together with earnings
thereon in accordance with this Indenture and the terms of the irrevocable trust
agreement established pursuant to Section 12.1 or 12.2, as the case may be, to
the payment of principal of, premium, if any, and interest on the Notes. The
cash or U.S. Government Obligations so held in trust and deposited with the
Trustee in compliance with Section 12.1 or 12.2, as the case may be, shall not
be part of the trust estate under this Indenture, but shall constitute a
separate trust fund for the benefit of all holders entitled thereto. Except as
specifically provided herein, the Trustee shall not be requested to invest any
amounts held by it for the benefit of the holders or pay interest on uninvested
amounts to any holder.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 12.1 hereof or Section 12.2 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the holders of outstanding
Notes.
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12.6 REPAYMENT TO THE COMPANY; UNCLAIMED MONEY. Subject to applicable laws
governing escheat of such property, and upon termination of the trust
established pursuant to Section 12.1 hereof or 12.2 hereof, as the case may be,
the Trustee shall promptly pay to the Company upon written request any excess
cash or U.S. Government Obligations held by them. Additionally, if amounts for
the payment of principal, premium, if any, or interest remains unclaimed for two
years, the Trustee shall, upon written request, pay such amounts back to the
Company forthwith. Thereafter, all liability of the Trustee with respect to
such amounts shall cease. After payment to the Company, holders entitled to
such payment must look to the Company for such payment as general creditors
unless an applicable abandoned property law designates another person.
12.7 REINSTATEMENT. If the Trustee is unable to apply any cash or U.S.
Government Obligations in accordance with Section 12.1 or 12.2 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 Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
12.1 or 12.2 until such time as the Trustee is permitted to apply all such cash
or U.S. Government Obligations in accordance with Section 12.1 or 12.2, as the
case may be; provided that if the Company makes any payment of principal of,
premium, if any, or interest on any Notes following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the holders of
such Notes to receive such payment from the amounts held by the Trustee.
XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
13.1 INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No recourse for the
payment of the principal of, or premium, if any, or interest on any Note, or for
any claim based thereon or otherwise in respect thereof, and no recourse under
or upon any obligation, covenant or agreement of the Company in this Indenture
or in any supplemental indenture or in any Note, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor entity, either directly or through the Company or
any successor entity, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issuance of the Notes.
XIV
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CONVERSION OF NOTES
14.1 RIGHT TO CONVERT. Subject to and upon compliance with the provisions
of this Indenture, the holder of any Note shall have the right, at the option of
such holder, at any time after 60 days following the latest date of original
issuance of the Notes and prior to the close of business on October 11, 2002
(except that, with respect to any Note or portion of a Note that shall be called
for redemption or delivered for repurchase, such right shall terminate, except
as provided in the fourth paragraph of Section 14.2, immediately prior to the
close of business on the last Business Day prior to the date fixed for
redemption of such Note or portion of a Note unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any such
Note, or any portion of such principal amount that is $1,000 or an integral
multiple thereof, into that number of fully paid and nonassessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
aggregate principal amount of the Notes or portion thereof surrendered for
conversion by the Conversion Price in effect at such time rounded to the nearest
1/100th of a share (with .005 being rolled upward), by surrender of the Note so
to be converted in whole or in part in the manner provided in Section 14.2. A
Note (or portion thereof) in respect of which a Holder is exercising its option
to require repurchase upon a Change of Control pursuant to Section 3.5 of this
Indenture may only be converted if such Holder withdraws its election to
exercise such redemption option in accordance with the terms of this Indenture.
A holder of Notes is not entitled to any rights of a holder of Common Stock
until such holder has converted such holder's Notes to Common Stock and only to
the extent such Notes are deemed to have been converted to Common Stock under
this Article XIV.
14.2 EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS. In order to exercise the
conversion privilege with respect to any Note in definitive form, the holder of
any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 4.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 14.2, and shall give written notice of conversion in
the form provided on the form of Note (or such other notice that is acceptable
to the Company) to the office or agency that the holder elects to convert such
Note or the portion thereof specified in said notice. Such notice shall also
state the name or names (with address) in which the certificate or certificates
for shares of Common Stock that shall be issuable on such conversion shall be
issued and shall be accompanied by transfer taxes, if required pursuant to
Section 14.7. Each such Note surrendered for conversion shall, unless the
shares issuable on conversion are to be issued in the name of the holder of such
Note as it appears on the Note register, be duly endorsed by, or be accompanied
by instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
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In order to exercise the conversion privilege with respect to any
interest in a global Note, the beneficial holder must complete the
appropriate instruction form for conversion pursuant to the Depositary's
book-entry conversion program and follow the other procedures set forth in
such program.
As promptly as practicable after satisfaction of the requirements for
conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other
than that of the Holder (as if such transfer were a transfer of the Note or
Notes (or portion thereof) so converted), the Company shall issue and shall
deliver to such holder at the office or agency maintained by the Company for
such purpose pursuant to Section 4.2, a certificate or certificates for the
number of full shares issuable upon the conversion of such Note or portion
thereof in accordance with the provisions of this Article XIV and a check or
cash in respect of any fractional interest in respect of a share of Common
Stock arising upon such conversion, as provided in Section 14.3. In case any
Note of a denomination greater than $1,000 shall be surrendered for partial
conversion, and subject to Section 2.3, the Company shall execute and the
Trustee shall authenticate and make available for delivery to the holder of
the Note so surrendered, without charge to him, a new Note or Notes in
authorized denominations in an aggregate principal amount equal to the
unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any such Note
(or portion thereof) on the date on which the requirements set forth above in
this Section 14.2 have been satisfied as to such Note (or portion thereof),
and the person in whose name any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder of record of the shares represented thereby;
provided that any such surrender on any date when the stock transfer books of
the Company shall be closed shall constitute the person in whose name the
certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but
such conversion shall be at the Conversion Price in effect on the date upon
which such Note shall have been surrendered.
Any Note or portion thereof surrendered for conversion during the period
from the close of business on the record date for any interest payment date
through the opening of business on the next succeeding interest payment date
shall (unless such Note or portion thereof being converted shall have been
called for redemption on a date during the period from the close of business
on or after any record date to the close of business on the business day
following the corresponding payment date) be accompanied by payment, in funds
acceptable to the Company, of an amount equal to the interest otherwise
payable on such interest payment date on the principal amount being
converted; provided that no such payment need be made if there shall exist at
the time of conversion a default in the payment of interest on the Notes. An
amount
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equal to such payment shall be paid by the Company on such interest payment
date to the holder of such Note at the close of business on such record date;
provided that if the Company shall default in the payment of interest on such
interest payment date, such amount shall be paid to the person who made such
required payment. The interest payment with respect to a Note called for
redemption on a date during the period from the close of business on or after
the record date and before the close of business on the business day
following the corresponding interest payment date shall be payable on the
corresponding interest payment date to the registered Holder at the close of
business on that record date (notwithstanding the conversion of such Note
after the close of business on the record date and before the close of
business on the corresponding interest payment date) and a Holder who elects
to convert need not include funds equal to the interest paid. Except as
provided above in this Section 14.2, no adjustment shall be made for interest
accrued on any Note converted or for dividends on any shares issued upon the
conversion of such Note as provided in this Article XIV.
Upon the conversion of an interest in a global Note, the Trustee, or the
Custodian at the direction of the Trustee, shall make a notation on such
global Note as to the reduction in the principal amount represented thereby.
14.3 CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES. No fractional shares of
Common Stock or scrip representing fractional shares shall be issued upon
conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of fully paid and
non-assessable shares of Common Stock issuable upon conversion of a Note
shall be determined by dividing the aggregate principal amount of the Note or
portion thereof surrendered for conversion by the Conversion Price in effect
at such time. The aggregate number of shares of Common Stock issuable upon
conversion shall be rounded to the nearest 1/100th of a share (with .005
being rolled upward). If any fractional share of stock would be issuable
upon the conversion of any Note or Notes, the Company shall make an
adjustment therefor in cash at the current market value thereof. The current
market value of a share of Common Stock shall be determined by multiplying
the fractional share by the Closing Price on the Trading Day immediately
preceding the date on which the Notes (or specified portions thereof) are
deemed to have been converted.
14.4 CONVERSION PRICE. The Conversion Price shall be as specified in the
forms of Notes (herein called the "Conversion Price") attached as Exhibits A,
B and C hereto, subject to adjustment as provided in this Article XIV.
14.5 ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be
adjusted from time to time by the Company as follows:
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(a) In case the Company shall (i) pay a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (ii)
subdivide or split its outstanding Common Stock into a greater number of
shares, (iii) combine its outstanding Common Stock into a smaller number
of shares or (iv) issue any shares of capital stock by reclassification
of its Common Stock, the conversion price in effect immediately prior
thereto shall be adjusted so that the Holder of any Notes thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock of the Company which such Holder would have owned
or have been entitled to receive after the occurrence of any of the
events described above had such Notes been surrendered for conversion
immediately prior to the occurrence of such event or the record date
therefor, which is earlier. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the close of
business on the record date for determination of stockholders entitled
to receive such dividend or distribution in the case of a dividend or
distribution (except as provided in Section 14.5(c)) and shall become
effective immediately after the close of business on the effective date
in the case of a subdivision, split, combination or reclassification.
Any shares of Common Stock issuable in payment of a dividend shall be
deemed to have been issued immediately prior to the close of business on
the record date for such dividend for purposes of calculating the number
of outstanding shares of Common Stock under this Section 14.5(a) and
Section 14.5(b).
(b) In case the Company shall issue rights, options or warrants to
all holders of its outstanding shares of Common Stock entitling them
(for a period expiring within 45 days after the date fixed for
determination of stockholders entitled to receive such rights, options
or warrants) to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price (as defined in
Section 14.5(f)) on the Record Date fixed for determination of
stockholders entitled to receive such rights, options or warrants, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect at the
opening of business on the date after the Record Date by a fraction the
numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date plus the number
of shares that the aggregate offering price of the total number of
shares so offered would purchase at such Current Market Price, and the
denominator of which shall be the number of shares of Common Stock
outstanding on the close of business on the Record Date plus the total
number of additional shares of Common Stock so offered for subscription
or purchase. Such adjustment shall become effective immediately after
the opening of business on the day following the Record Date fixed for
determination of stockholders entitled to receive such rights, options
or warrants. To the extent that shares of Common Stock are not
delivered after the expiration or termination of such rights, options or
warrants, the Conversion Price shall
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be readjusted to the Conversion Price that would then be in effect had the
adjustments made upon the issuance of such rights, options or warrants been
made on the basis of delivery of only the number of shares of Common Stock
actually delivered. In the event that such rights, options or warrants are
not so issued, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect if such date fixed for the
determination of stockholders entitled to receive such rights, options
or warrants had not been fixed. In determining whether any rights,
options or warrants entitle the holders to subscribe for or purchase
shares of Common Stock at less than such Current Market Price, and in
determining the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received for such
rights, options or warrants, the value of such consideration, if other
than cash, to be determined by the Board of Directors.
(c) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions
to which Section 14.5(a) applies) or evidences of its indebtedness or
assets (including securities, but excluding any rights, options or
warrants referred to in Section 14.5(b), and excluding any dividend or
distribution (x) in connection with the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary, (y)
exclusively in cash or (z) referred to in Section 14.5(a) (any of the
foregoing hereinafter in this Section 14.5(c) called the "Securities")),
then, in each such case, the Conversion Price shall be reduced so that
the same shall be equal to the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on
the Record Date (as defined in Section 14.5(f)) with respect to such
distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in Section 14.5(f)) on such date
less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution) on such date of the portion of the Securities so distributed
applicable to one share of Common Stock and the denominator shall be
such Current Market Price, such reduction to become effective
immediately prior to the opening of business on the day following the
Record Date; provided that in the event the then fair market value (as
so determined) of the portion of the Securities so distributed
applicable to one share of Common Stock is equal to or greater than the
Current Market Price on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall
have the right to receive upon conversion the amount of Securities such
holder would have received had such holder converted each Note on such
date. In the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the Conversion
Price that would then be in effect if such dividend or distribution had
not been declared. If the Board of Directors
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determines the fair market value of any distribution for purposes of this
Section 14.5(c) by reference to the actual or when issued trading market
for any securities comprising all or part of such distribution, it must in
doing so consider the prices in such market over the same period used in
computing the Current Market Price pursuant to Section 14.5(f) to the
extent possible.
Notwithstanding the foregoing provisions of this Section 14.5(c),
no adjustment shall be made hereunder for any distribution of Securities
if the Company makes proper provision so that each Holder who converts a
Note (or any portion thereof) after the date fixed for determination of
stockholders entitled to receive such distribution shall be entitled to
receive upon such conversion, in addition to the shares of Common Stock
issuable upon such conversion, the amount and kind of Securities that
such holder would have been entitled to receive if such holder had,
immediately prior to such determination date, converted such Note into
Common Stock; provided that, with respect to any Securities that are
convertible, exchangeable or exercisable, the foregoing provision shall
only apply to the extent (and so long as) the Securities receivable upon
conversion of such Note would be convertible, exchangeable or
exercisable, as applicable, without any loss of rights or privileges for
a period of at least 60 days following conversion of such Note.
Rights, options or warrants distributed by the Company to all
holders of Common Stock entitling the holders thereof to subscribe for
or purchase shares of the Company's capital stock (either initially or
under certain circumstances), which rights, options or warrants, until
the occurrence of a specified event or events (the "Trigger Event") (i)
are deemed to be transferred with such shares of Common Stock, (ii) are
not exercisable and (iii) are also issued in respect of future issuances
of Common Stock, shall not be deemed distributed for purposes of this
Section 14.5(c) (and no adjustment to the Conversion Price under Section
14.5(c) shall be required) until the occurrence of the earliest Trigger
Event. In addition, in the event of any distribution of rights, options
or warrants, or any Trigger Event with respect thereto, that shall have
resulted in an adjustment to the Conversion Price under this Section
14.5(c), (1) in the case of any such rights, options or warrants that
shall all have been redeemed or repurchased without exercise by any
holders thereof, the Conversion Price shall be readjusted upon such
final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price
received by a holder of Common Stock with respect to such rights,
options or warrants (assuming such holder had retained such rights,
options or warrants), made to all holders of Common Stock as of the date
of such redemption or repurchase, and (2) in the case of such rights,
options or warrants all of which shall have expired or
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been terminated without exercise by any holder thereof, the Conversion
Price shall be readjusted as if such issuance had not occurred.
For purposes of this Section 14.5(c) and Sections 14.5(a) and (b),
any dividend or distribution to which this Section 14.5(c) is applicable
that also includes shares of Common Stock, or rights, options or
warrants to subscribe for or purchase shares of Common Stock (or both),
shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, assets or shares of capital stock other than
such shares of Common Stock or rights, options or warrants (and any
Conversion Price reduction required by this Section 14.5(c) with respect
to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common
Stock or such rights, options or warrants (and any further Conversion
Price reduction required by Sections 14.5(a) and (b) with respect to
such dividend or distribution shall then be made) except (A) the Record
Date of such dividend or distribution shall be substituted as "the
record date fixed for determination of stockholders entitled to receive
such dividend or distribution" and "the record date fixed for
determination" within the meaning of Sections 14.5(a) and (b) and (B)
any shares of Common Stock included in such dividend or distribution
shall not be deemed outstanding shares of Common Stock within the
meaning of the last sentence of Section 14.5(a).
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash
that is distributed upon a merger or consolidation to which Section 14.6
applies or as part of a distribution referred to in Section 14.5(c) for
which an adjustment to the Conversion Price is provided therein) in an
aggregate amount that, combined together with (1) the aggregate amount
of any other such distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the date of payment
of such distribution, and in respect of which no adjustment pursuant to
this Section 14.5(d) has been made, and (2) the aggregate of any cash
plus the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer, by
the Company or any of its subsidiaries for all or any portion of the
Common Stock concluded within the 12 months preceding the date of
payment of such distribution, and in respect of which no adjustment
pursuant to Section 14.5(e) has been made, exceeds 20.0% of the product
of the Current Market Price (determined as provided in Section 14.5(f))
on the Record Date with respect to such distribution times the number of
shares of Common Stock outstanding on such Record Date, then, and in
each such case, immediately after the close of business on such Record
Date, unless the Company elects to reserve such cash for distribution to
the holders of the Notes upon the conversion of the Notes so that any
such holder converting Notes shall
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receive upon such conversion, in addition to the shares of Common Stock
to which such holder is entitled, the amount of cash which such holder
would have received if such holder had, immediately prior to the Record
Date for such distribution of cash, converted its Notes into Common
Stock, the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on such Record Date by a
fraction (i) the numerator of which shall be equal to the Current Market
Price on the Record Date less an amount equal to the quotient of (x) the
excess of such combined amount over such 20.0% and (y) the number of
shares of Common Stock outstanding on the Record Date and (ii) the
denominator of which shall be equal to the Current Market Price on such
date; provided that in the event the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than the
Current Market Price of the Common Stock on the Record Date, in lieu of
the foregoing adjustment, adequate provision shall be made so that each
Holder shall have the right to receive upon conversion the amount of
cash such holder would have received had such holder converted each Note
on the Record Date. In the event that such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted to be
the Conversion Price that would then be in effect if such dividend or
distribution had not been declared.
(e) In case a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock shall expire and
such tender offer (as amended upon the expiration thereof) shall require
the payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration having a fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that combined together
with (1) the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of
such tender offer, of consideration payable in respect of any other
tender offer, by the Company or any of its subsidiaries for all or any
portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer, and in respect of which no adjustment
pursuant to Section 14.5(e) has been made, and (2) the aggregate amount
of any distributions to all holders of the Company's Common Stock made
exclusively in cash within 12 months preceding the expiration of such
tender offer, and in respect of which no adjustment pursuant to Section
14.5 (d) has been made, exceeds 20.0% of the product of the Current
Market Price (determined as provided in Section 14.5(f)) as of the last
time (the "Expiration Time") tenders could have been made pursuant to
such tender offer (as it may be amended) times the number of shares of
Common Stock outstanding (including any tendered shares) on the
Expiration Time,
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then, and in each such case, immediately prior to the opening of business
on the day after the date of the Expiration Time, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to close of
business on the date of the Expiration Time by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time multiplied by the
Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered
and not withdrawn as of the Expiration Time (the shares deemed so accepted,
up to any such maximum, being referred to as the "Purchased Shares") and
(y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares) on the Expiration Time and the Current Market Price
of the Common Stock on the Trading Day next succeeding the Expiration Time,
such reduction to become effective immediately prior to the opening of
business on the day following the Expiration Time. In the event that the
Company is obligated to purchase shares pursuant to any such tender offer,
but the Company is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price that would then
be in effect if such tender offer had not been made.
(f) For purposes of this Section 14.5, the following terms shall
have the meaning indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case
no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New
York Stock Exchange, or, if such security is not listed or admitted to
trading on such Exchange, on the principal national security exchange
or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the
average of the closing bid and asked prices of such security on the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors for that purpose, or a price
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution.
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(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten consecutive
Trading Days immediately prior to the date in question; provided that
(1) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution or Change of Control requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 14.5(a), (b), (c), (d) or (e) occurs during such
ten consecutive Trading Days, the Closing Price for each Trading Day
prior to the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such
other event, (2) if the "ex" date for any event (other than the
issuance, distribution or Change of Control requiring such
computation) that requires an adjustment to the Conversion Price
pursuant to Section 14.5(a), (b), (c), (d) or (e) occurs on or after
the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for
each Trading Day on and after the "ex" date for such other event shall
be adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Conversion Price is so required to be adjusted
as a result of such other event and (3) if the "ex" date for the
issuance, distribution or Change of Control requiring such computation
is prior to the day in question, after taking into account any
adjustment required pursuant to clause (1) or (2) of this proviso, the
Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors in a manner consistent
with any determination of such value for purposes of Section 14.5(d)
or (e), whose determination shall be conclusive and described in a
Board Resolution) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common
Stock as of the close of business on the day before such "ex" date.
For purposes of any computation under Section 14.5(e), the Current
Market Price of the Common Stock on any date shall be deemed to be the
average of the daily Closing Prices per share of Common Stock for such
day and the next two succeeding Trading Days; provided that if the
"ex" date for any event (other than the tender or exchange offer
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 14.5(a), (b), (c), (d) or (e)
occurs on or after the Expiration Time for the tender or exchange
offer requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such
other event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes
of this
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paragraph, the term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common
Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to
receive such issuance or distribution, (2) when used with respect to
any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective and (3) when used with respect to any
tender or exchange offer means the first date on which the Common
Stock trades regular way on such exchange or in such market after the
expiration of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant
to this Section 14.5, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the
intent of this Section 14.5 and to avoid unjust or inequitable results
as determined in good faith by the Board of Directors.
(3) "fair market value" shall mean the amount that a willing
buyer would pay a willing seller in an arm's-length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other
property or in which the Common Stock (or other applicable security)
is exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of stockholders
entitled to receive such cash, securities or other property (whether
such date is fixed by the Board of Directors or by statute, contract
or otherwise).
(5) "Trading Day" shall mean (x) if the applicable security is
listed or admitted for trading on the New York Stock Exchange or
another national security exchange, a day on which the New York Stock
Exchange or such other national security exchange is open for business
or (y) if the applicable security is quoted on the Nasdaq National
Market, a day on which trades may be made thereon or (z) if the
applicable security is not so listed, admitted for trading or quoted,
any day other than a Saturday or Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by
law or executive order to close.
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(g) The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 14.5(a), (b), (c), (d) and
(e), as the Board of Directors considers to be advisable to avoid or
diminish any income tax to holders of Common Stock or rights to purchase
Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income
tax purposes. To the extent permitted by applicable law, the Company
from time to time may reduce the Conversion Price by any amount for any
period of time if the period is at least 20 days, the reduction is
irrevocable during the period and the Board of Directors shall have made
a determination that such reduction would be in the best interests of
the Company, which determination shall be conclusive and described in a
Board Resolution. Whenever the Conversion Price is reduced pursuant to
the preceding sentence, the Company shall mail to all holders of record
of the Notes a notice of the reduction at least 15 days prior to the
date the reduced Conversion Price takes effect, and such notice shall
state the reduced Conversion Price and the period it shall be in effect.
(h) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in
such price; provided that any adjustments that by reason of this Section
14.5(h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Article XIV shall be made by the Company and shall be made to the
nearest 1/100 (with 0.005 being rolled upward).
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value, or to or
from no par value, of the Common Stock.
To the extent the Notes become convertible into cash, assets,
property or securities (other than Common Stock of the Company), no
adjustment need be made thereafter as to the cash, assets, property or
such securities (except as such securities may otherwise by their terms
provide), and interest shall not accrue on such cash.
(i) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an Officers' Certificate setting forth the
Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the date on which each
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adjustment becomes effective and shall mail such notice of such adjustment
of the Conversion Price to the holder of each Note at his last address
appearing on the Note register provided for in Section 2.5, within 20 days
after execution thereof. Failure to deliver such notice shall not effect
the legality or validity of any such adjustment.
(j) In any case in which this Section 14.5 provides that an
adjustment shall become effective immediately after a Record Date for an
event, the Company may defer until the occurrence of such event (i)
issuing to the holder of any Note converted after such Record Date and
before the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Stock issuable upon such
conversion before giving effect to such adjustment and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to
Section 14.3.
14.6 EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any
of the following events occur, namely (i) any reclassification or change of
outstanding shares of Common Stock (other than a change in par value, or to
or from no par value, as a result of a subdivision or combination), (ii) any
consolidation, merger or combination of the Company with another corporation
as a result of which holders of Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) with respect
to or in exchange for such Common Stock or (iii) any sale or conveyance of
the properties and assets of the Company as, or substantially as, an entirety
(determined on a consolidated basis) to any other corporation as a result of
which holders of Common Stock shall be entitled to receive stock, securities
or other property or assets (including cash) with respect to or in exchange
for such Common Stock, then the Company or the successor or purchasing
corporation, as the case may be, shall execute with the Trustee a
supplemental indenture (which shall comply with the Trust Indenture Act as in
force at the date of execution of such supplemental indenture if such
supplemental indenture is then required to so comply) providing that the
Notes shall be convertible into the kind and amount of shares of stock and
other securities or property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
conversion of such Notes (assuming, for such purposes, a sufficient number of
authorized shares of Common Stock available to convert all such Notes)
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance, assuming such holder of Common Stock did not
exercise his rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance (provided
that, if the kind or amount of securities, cash or other property receivable
upon such reclassification, change, consolidation, merger, combination, sale
or conveyance is not the same for each share of Common Stock in respect of
which such rights
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of election shall not have been exercised ("non-electing share"), then for
the purposes of this Section 14.6 the kind and amount of securities, cash or
other property receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance for each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of
the non-electing shares). Such supplemental indenture shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article XIV.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each holder of Notes, at his address appearing on
the Note register provided for in Section 2.5, within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 14.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
14.7 TAXES ON SHARES ISSUED. The issuance of stock certificates on
conversions of Notes shall be made without charge to the converting Holder
for any transfer or similar tax in respect of the issue thereof. The Company
shall not, however, be required to pay any tax that may be payable in respect
of any transfer involved in the issue and delivery of stock in any name other
than that of the holder of any Note converted, and the Company shall not be
required to issue or deliver any such stock certificate unless and until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
14.8 RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON
STOCK. The Company shall provide, free from preemptive rights, out of its
authorized but unissued shares or shares held in treasury, sufficient shares
to provide for the conversion of the Notes from time to time as such Notes
are presented for conversion.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Notes, the Company shall take all
corporate action that may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue shares of such Common
Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock that may be issued
upon conversion of Notes shall, upon issuance, be fully paid and
nonassessable by the Company and free from all taxes, liens and charges with
respect to the issuance thereof.
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The Company further covenants that it shall, if permitted by the rules of
each securities exchange upon which the Common Stock is listed, list and keep
listed, so long as the Common Stock shall be so listed on such exchanges, all
Common Stock issuable upon conversion of the Notes.
14.9 RESPONSIBILITY OF TRUSTEE. The Trustee and any other conversion
agent shall not at any time be under any duty or responsibility to any holder
of Notes to determine whether any facts exist that may require any adjustment
of the Conversion Price, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed,
in making the same. The Trustee and any other conversion agent shall not be
accountable with respect to the validity or value (or the kind or amount) of
any shares of Common Stock, or of any securities or property, that may at any
time be issued or delivered upon the conversion of any Note; and the Trustee
and any other conversion agent make no representations with respect thereto.
Subject to the provisions of Section 7.1, neither the Trustee nor any
conversion agent shall be responsible for any failure of the Company to
issue, transfer or deliver any shares of Common Stock or stock certificates
or other securities or property or cash upon the surrender of any debenture
for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article XIV.
Without limiting the generality of the foregoing, neither the Trustee nor any
conversion agent shall be under any responsibility to determine whether a
supplemental indenture under Section 14.6 hereof need to be entered into or
the correctness of any provisions contained in any supplemental indenture
entered into pursuant to Section 14.6 relating either to the kind or amount
of shares of stock or securities or property (including cash) receivable by
Holders upon the conversion of their Notes after any event referred to in
such Section 14.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 7.1, may accept as conclusive evidence
of the correctness of any such provisions, and shall be protected in relying
upon, the Officers' Certificate (which the Company shall be obligated to file
with the Trustee prior to the execution of any such supplemental indenture)
with respect thereto.
14.10 NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS. In case:
(a) the Company makes any distribution or dividend that would require
an adjustment in the Conversion Price pursuant to Section 14.5; or
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 14.6; or
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(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register, as promptly as
possible but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record date
is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined or (y) the
date on which such reclassification, change, consolidation, merger, sale,
conveyance, transfer, dissolution, liquidation or winding-up is expected to
become effective or occur and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up. Neither the failure to give such
notice nor any defect therein shall affect the legality or validity of the
proceedings referenced in clauses (a) through (c) of this Section 14.10.
XV
SUBORDINATION
15.1 AGREEMENT TO SUBORDINATE. The Company agrees, and each Holder by
accepting a Note agrees, that the indebtedness evidenced by the Notes is
subordinated in right of payment, to the extent and in the manner provided in
this Article XV, to the prior payment in full of all Senior Indebtedness and
that the subordination is for the benefit of the holders of Senior
Indebtedness.
15.2 CERTAIN DEFINITIONS. For purposes of this Article XV, the following
terms shall have the meaning indicated:
(1) "Bank Representative" shall mean the agent or representative in
respect of the Designated Senior Indebtedness; PROVIDED, that if, and for
so long as, the Designated Senior Indebtedness lacks such a representative,
then the Bank Representative for the Designated Senior Indebtedness shall
at all times constitute the holders of a majority in outstanding principal
amount of the Designated Senior Indebtedness.
(2) "Designated Senior Indebtedness" shall mean Senior Indebtedness
under or in respect of the Company's revolving credit facility currently
provided pursuant to that certain Amended and Restated Loan Agreement dated
as of July 20, 1995, among
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National Auto Center, Inc., the Company, the lenders party thereto, and
Texas Commerce Bank National Association as Agent for the lenders
thereunder, as the same and related documents have been or may be amended,
modified, renewed, extended, supplemented or restated from time to time, in
whole or in part (and without limitation as to amount, terms, conditions,
covenants and other provisions) and any agreements hereafter entered into
in renewal, extension, supplement, restatement, replacement or other
modification thereof, whether the Company is a borrower or guarantor
thereunder and whether with any other agent, lender or group of lenders
(including the facility entered into contemporaneously with this
Indenture).
(3) "Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, expenses,
damages and other liabilities payable under, or with respect to, the Notes
or this Indenture, or both.
(4) "Representative" shall mean the indenture trustee or other
trustee, agent or representative for any Senior Indebtedness.
(5) "Senior Indebtedness" means the principal of, premium, if any,
interest (including post-petition interest) on, and any other obligation or
liability in respect of, and any fees, costs, expenses and any other
amounts (including indemnity payments) related to the following, whether
outstanding on the date hereof or hereafter incurred, assumed, arising,
guaranteed, issued or created: (a) indebtedness, matured or unmatured,
whether or not contingent, of the Company for money borrowed evidenced by
notes or other written obligations, (b) any foreign exchange contract,
option, hedge, interest rate contract, interest rate swap agreement or
other similar agreement or arrangement designed to protect the Company or
any of its subsidiaries against fluctuations in currency or interest rates,
(c) indebtedness, matured or unmatured, whether or not contingent, of the
Company evidenced by notes, debentures, bonds or similar instruments or
letters of credit (or bankers' acceptances in respect thereof), (d)
obligations of the Company as lessee under capitalized leases and under
leases of property made as part of any sale and leaseback transactions, (e)
the Designated Senior Indebtedness; (f) indebtedness of others of any of
the kinds described in the preceding clauses (a) through (e) assumed or
guaranteed by the Company and (g) renewals, extensions, modifications,
amendments, replacement, substitutions and refinancings of, and
indebtedness and obligations of a successor person issued in exchange for
or in replacement of, indebtedness or obligations of the kinds described in
the preceding clauses (a) through (g), unless the agreement pursuant to
which any such indebtedness described in clauses (a) through (g) is
created, issued, assumed or guaranteed expressly provides that such
indebtedness is not senior or superior in right of payment to the Notes;
PROVIDED,
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HOWEVER, that the following shall not constitute Senior Indebtedness:
(i) any indebtedness or obligation of the Company in respect of the Notes,
(ii) any indebtedness of the Company to any of its subsidiaries or other
Affiliates; (iii) any indebtedness that is subordinated or junior in any
respect to any other indebtedness of the Company other than indebtedness
described in clauses (a) through (g) above; and (iv) any indebtedness
incurred for the purchase of goods or materials in the ordinary course of
business.
For the purposes of this Indenture, Senior Indebtedness shall not be
deemed to have been paid in full until the holders of the Senior Indebtedness
shall have indefeasibly received payment in full in cash or cash equivalents
of all Senior Indebtedness; provided that if any holder of Senior
Indebtedness agrees to accept payment in full of such Senior Indebtedness for
consideration other than cash, such holder shall be deemed to have
indefeasibly received payment in full of such Senior Indebtedness. The
provisions of this Article XV shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Senior Indebtedness is rescinded or must otherwise be returned by any holder
of Senior Indebtedness upon the insolvency, bankruptcy or organization of the
Company or otherwise, all as though such payment had not been made.
A distribution may consist of cash, cash equivalents, securities or other
property, by set-off or otherwise.
15.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to
creditors of the Company in a liquidation or dissolution of the Company or in
a bankruptcy, reorganization, insolvency, receivership or similar proceeding
related to the Company or its property, in an assignment for the benefit of
creditors or any marshalling of the Company's assets and liabilities, (a)
holders of Senior Indebtedness shall first be entitled to receive payment in
full, in cash or cash equivalents, of all amounts due or to become due
thereon before Holders shall be entitled to receive any payment or
distribution of any kind or character, whether in cash, cash equivalent,
property or securities, on or in respect of the Obligations, or for the
acquisition of any of the Notes for cash, cash equivalents, property or
securities; and (b) until all Senior Indebtedness (as provided in clause (a)
above) is paid in full, in cash or cash equivalents, any payment or
distribution to which Holders would be entitled but for this Article shall be
made to holders of Senior Indebtedness, as their interests may appear.
15.4 DEFAULT ON SENIOR INDEBTEDNESS. The Company may not make any
payment upon or in respect of the Notes and may not acquire from the Trustee
or any Holder any Note for cash, cash equivalents, property, securities or
otherwise until all Senior Indebtedness has been paid in full, in cash or
cash equivalents, if:
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(a) a Payment Default with respect to any Senior Indebtedness
occurs and is continuing beyond any applicable period of grace; or
(b) a default occurs and is continuing with respect to any
Senior Indebtedness resulting in the acceleration of maturity of all
or any portion of such Senior Indebtedness. No payment on any of the
Obligations shall be made if, and the Company shall not acquire any
Notes while, any other default (a "nonpayment default") occurs and is
continuing (or would occur upon any payment or distribution with
respect to the Obligations) with respect to Senior Indebtedness that
permits holders of the Senior Indebtedness as to which such default
relates to accelerate its maturity and the Trustee receives a notice
of such default (a "Payment Blockage Notice") from the Bank
Representative or Representative or Representatives of holders of at
least a majority in principal amount of Senior Indebtedness then
outstanding.
The Company may and shall resume payments on and distributions in respect
of the Notes and may acquire them upon the earlier of:
(a) in the case of a Payment Default, upon the date on which the
default is cured or waived, or
(b) in the case of a nonpayment default, 179 days after the date on
which the applicable Payment Blockage Notice is received (or sooner, if
such default is cured or waived), unless the maturity of such Senior
Indebtedness has been accelerated. No new period of payment blockage may
be commenced by a creditor within 360 days after the receipt by the Trustee
of any prior Payment Blockage Notice by or on behalf of such creditor. No
non-payment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice, unless such non-payment
default shall have been cured or waived for a period of not less than 90
consecutive days,
if this Article XV otherwise permits the payment, distribution or acquisition
at the time of such payment or acquisition.
15.5 WHEN DISTRIBUTION MUST BE PAID OVER. In the event that the Trustee
(or paying agent if other than the Trustee) or any Holder receives any
payment of principal or interest with respect to the Obligations at a time
when such payment is prohibited by Section 15.3 or 15.4 hereof,
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such payment shall be held by the Trustee (or paying agent if other than the
Trustee) or such Holder, in trust for the benefit of, and immediately shall
be paid over and delivered, upon written request, to, the holders of Senior
Indebtedness as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Indebtedness
may have been issued, as their respective interests may appear, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full, in cash or cash
equivalents, in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior
Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article XV, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or
on behalf of Holders or the Company or any other person money or assets to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article XV, except if such payment is made as a result of the willful
misconduct or gross negligence of the Trustee.
15.6 NOTICE BY COMPANY. The Company shall promptly notify the Trustee
and the paying agent of any facts known to the Company that would cause a
payment of any principal or interest with respect to the Notes to violate
this Article XV, but failure to give such notice shall not affect the
subordination of the Obligations to the Senior Indebtedness as provided in
this Article XV.
15.7 SUBROGATION. After all Senior Indebtedness is paid in full and
until the Notes are paid in full, Holders shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Indebtedness. A
distribution made under this Article XV to holders of Senior Indebtedness
that otherwise would have been made to Holders is not, as between the Company
and Holders, a payment by the Company on the Notes.
15.8 RELATIVE RIGHTS. This Article XV defines the relative rights of
Holders and holders of Senior Indebtedness. Nothing in this Indenture shall:
(a) impair, as between the Company and the Holders, the obligation of
the Company, which is absolute and unconditional, to pay principal of,
premium, if any, and interest on the Notes in accordance with their terms;
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(b) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior
Indebtedness; or
(c) prevent the Trustee or any Holder from exercising its available
remedies upon a default or Event of Default, subject to the rights of
holders and owners of Senior Indebtedness to receive distributions and
payments otherwise payable to Holders.
If the Company fails because of this Article XV to pay principal of,
premium, if any, or interest on a Note on the due date, the failure is still
a default or Event of Default.
15.9 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY. No right of any
holder of Senior Indebtedness to enforce the subordination of the Obligations
shall be impaired by any act or failure to act by the Company or any holder
of Notes or by the failure of the Company or any holder of Notes to comply
with this Indenture.
15.10 DISTRIBUTION OR NOTICE TO REPRESENTATIVE. Whenever a
distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article XV, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Indebtedness and other indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article XV.
15.11 RIGHTS OF TRUSTEE AND PAYING AGENT. Notwithstanding the
provisions of this Article XV or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment or distribution by the Trustee,
and the Trustee and the paying agent may continue to make payments on the
Notes, unless the Trustee shall have received at its Corporate Trust Office
at least three Business Days prior to the date of such payment written notice
of facts that would cause the payment of any principal, premium, if any, and
interest with respect to the Notes to violate this Article XV. Only the
Company or a Representative may give the notice. Nothing in this Article XV
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.7 hereof.
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The Trustee shall be entitled to rely on the delivery to it of a written
notice by a person representing such person to be a holder of Senior
Indebtedness (or a trustee or agent on behalf of such holder) to establish
that such notice has been given by a holder of Senior Indebtedness (or a
trustee or agent on behalf of any such holder). In the event that the
Trustee determines in good faith that further evidence is required with
respect to the right of any person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XV, the
Trustee may request such person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such person, the extent to which such person is entitled to participate in
such payment or distribution and any other facts pertinent to the rights of
such person under this Article XV, and if such evidence is not furnished, the
Trustee may defer any payment which it may be required to make for the
benefit of such person pursuant to the terms of this Indenture pending
judicial determination as to the rights of such person to receive such
payment.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
paying agent, any authenticating agent, any conversion agent, any Note
registrar and their successors may do the same with like rights.
15.12 AUTHORIZATION TO EFFECT SUBORDINATION. Each holder of a Note
by the holder's acceptance thereof authorizes and directs the Trustee on the
holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article XV and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such
purposes. Without limiting the foregoing, each Representative is hereby
irrevocably authorized and empowered (in its own name or in the name of the
Holders or the Trustee or otherwise), but shall have no obligation, to
demand, sue for, collect and receive every payment or distribution referred
to in Section 15.3 above and give acquittance therefor and to file claims and
proofs of claim and take such other action as it may deem necessary or
advisable for the exercise or enforcement of any of the rights or interests
of the holders or owners of the Senior Indebtedness hereunder; provided that
for purposes of this Section 15.12 holders or owners of Senior Indebtedness
may act only through such Representative.
15.13 CONVERSIONS NOT DEEMED PAYMENT. For the purposes of this
Article XV only, the issuance and delivery of Common Stock upon conversion of
the Notes in accordance with Article XIV shall not be deemed to constitute a
payment or distribution on account of the principal of or interest on the
Notes or on account of the purchase or other acquisition of Notes. Nothing
contained in this Article or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the holders, the right, which is absolute
and unconditional, of the holder of any Note to convert such Note in
accordance with Article XIV.
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15.14 AMENDMENTS. The provisions of this Article XV shall not be
amended or modified without the written consent of the holders of Senior
Indebtedness.
XVI
MISCELLANEOUS PROVISIONS
16.1 POOLING OF INTERESTS. The Company desires to preserve its ability
to account for acquisition and other business combination transactions using
the pooling-of-interests method where appropriate, and the provisions of this
Indenture shall be interpreted accordingly.
16.2 PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the covenants,
stipulations, promises and agreements in this Indenture made by the Company
shall bind its successors and assigns whether so expressed or not.
16.3 OFFICIAL ACTS BY SUCCESSOR COMPANY. Any act or proceeding by any
provision of this Indenture authorized or required to be done or performed by
any board (including the Board of Directors), committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
16.4 ADDRESSES FOR NOTICES, ETC. Any notice or demand that by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes if given or served by being
sent by prepaid overnight delivery or being deposited postage prepaid by
registered or certified mail in a post office letter box addressed (until
another address is filed by the Company with the Trustee) to CellStar
Corporation, 1730 Briercroft Drive, Carrollton, Texas 75006, Attention:
Chief Financial Officer with copies to CellStar Corporation, 1730 Briercroft
Drive, Carrollton, Texas 75006, Attention: General Counsel and Haynes and
Boone, LLP, 901 Main Street, Suite 3100, Dallas, Texas 75202, Attention:
William R. Hays. Any notice, direction, request or demand hereunder to or
upon the Trustee shall be deemed to have been sufficiently given or made, for
all purposes, if given or served by being sent by prepaid overnight delivery
or being deposited postage prepaid by registered or certified mail in a post
office letter box addressed to the Corporate Trust Office of the Trustee,
which office is, at the date as of which this Indenture is dated, located at
The Bank of New York, 101 Barclay Street, 21st Floor, New York, New York
10286, Attention: Corporate Trust Administration.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
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Any notice or communication mailed to a Holder shall be mailed to him by
first class mail, postage prepaid, at the address of such Holder as it
appears on the Note register and shall be sufficiently given to such Holder
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
16.5 COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Holders may
communicate pursuant to Trust Indenture Act Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Note registrar and any other person shall have the
protection of Trust Indenture Act Section 312(c).
16.6 GOVERNING LAW. This Indenture and each Note shall be deemed to be a
contract made under the substantive laws of New York and for all purposes
shall be construed in accordance with the substantive laws of New York
without regard to conflicts of laws principles thereof.
16.7 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT; CERTIFICATES TO
TRUSTEE. Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, including
those actions set forth in Trust Indenture Act Section 314(c), the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating
that, in the Opinion of such Counsel, all such conditions precedent have been
complied with.
Each certificate or opinion provided for in this Indenture and delivered
to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (1) a statement that the
person making such certificate or opinion has read such covenant or
condition, (2) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinion contained in
such certificate or opinion is 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 (4) a statement as to whether or not,
in the opinion of such person, such condition or covenant has been complied
with.
16.8 LEGAL HOLIDAYS. In any case where any interest payment date, date
fixed for redemption, stated maturity or Change of Control Purchase Date of
any Note or the last date on which a Holder has the right to convert his
Notes shall not be a Business Day, then
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(notwithstanding any other provision of this Indenture or of the Notes)
payment of interest or principal (and premium, if any) or conversion of the
Notes need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest
Payment Date, date fixed for redemption, Change of Control Purchase Date, or
at the stated maturity, or on such last day for conversion, provided that no
interest shall accrue for the period from and after such interest payment
date, date fixed for redemption, Change of Control Purchase Date or stated
maturity, as the case may be.
16.9 NO SECURITY INTEREST CREATED. Nothing in this Indenture or in the
Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction where property of the
Company or its subsidiaries is located.
16.10 TRUST INDENTURE ACT. This Indenture is hereby made subject to,
and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture
Act.
16.11 TRUST INDENTURE ACT CONTROLS. If any provision of this
Indenture limits, qualifies, or conflicts with the duties imposed by
operation of the Trust Indenture Act, the imposed duties, upon qualification
of this Indenture under the Trust Indenture Act, shall control.
16.12 BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any person, other than the parties
hereto, any paying agent, any authenticating agent, any conversion agent, any
Note registrar and their successors hereunder and the holders of Notes, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
16.13 TABLE OF CONTENTS, HEADINGS ETC. The table of contents and the
titles 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.
16.14 AUTHENTICATING AGENT. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf and
subject to its direction in the authentication and delivery of Notes in
connection with the original issuance thereof and transfers and exchanges of
Notes hereunder, including under Sections 2.4, 2.5, 2.6, 2.7 and 3.3, as
fully to all intents and purposes as though the authenticating agent had been
expressly authorized by this Indenture and those Sections to authenticate and
deliver Notes. For all purposes of this Indenture, the authentication and
delivery of Notes by the authenticating agent shall be deemed to be
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authentication and delivery of such Notes "by the Trustee" and a certificate
of authentication executed on behalf of the Trustee by an authenticating
agent shall be deemed to satisfy any requirement hereunder or in the Notes
for the Trustee's certificate of authentication. Such authenticating agent
shall at all times be a person eligible to serve as Trustee hereunder
pursuant to Section 7.10.
Any corporation into which any authenticating agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating
agent shall be a party, or any corporation succeeding to the corporate trust
business of any authenticating agent, shall be the successor of the
authenticating agent hereunder, if such successor company is otherwise
eligible under this Section, without the execution or filing of any paper or
any further act on the part of the parties hereto or the authenticating agent
or such successor company.
Any authenticating agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written
notice of termination to such authenticating agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time any authenticating agent shall cease to be eligible under this
Section, the Trustee shall promptly appoint a successor authenticating agent
(which may be the Trustee), shall give written notice of such appointment to
the Company and shall mail notice of such appointment to all holders of Notes
as the names and addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time to time
reasonable compensation for its services.
The provisions of Sections 7.3, 7.4, 7.5, 8.3 and this Section 16.14
shall be applicable to any authenticating agent.
16.15 EXECUTION IN COUNTERPARTS. This Indenture may be executed in
any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
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The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly signed and attested, all as of the date first written above.
CELLSTAR CORPORATION
By: /s/ Alan H. Goldfield
-----------------------------------------
Name: Alan H. Goldfield
Title: Chairman of the Board and
Chief Executive Officer
Attest: /s/ Elain Flud Rodriguez
THE BANK OF NEW YORK, as Trustee
By: /s/ Walter N. Gitlin
-----------------------------------------
Name: Walter N. Gitlin
Title: Vice President
Attest: /s/ Denise Leonard
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CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.9
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.14
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.14
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(a); 5.1
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.5
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.7
(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . N.A.
1
<PAGE>
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
N.A. means Not applicable.
- ------------
* This Cross-Reference Table is not part of the Indenture.
2
<PAGE>
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of October 14, 1997
by and among
CELLSTAR CORPORATION
and
BEAR, STEARNS & CO. INC.
and
CHASE SECURITIES INC.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. SHELF REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. REGISTRATION PROCEDURES. . . . . . . . . . . . . . . . . . . . . . . . 8
5. REGISTRATION EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . 13
6. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. RULE 144A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) NO INCONSISTENT AGREEMENTS. . . . . . . . . . . . . . . . . . . . 17
(c) AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . 17
(d) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . . 18
(f) COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 19
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of October 14, 1997 by and among CellStar Corporation, a Delaware
corporation (the "COMPANY"), and Bear, Stearns & Co. Inc. and Chase Securities
Inc. (collectively, the "INITIAL PURCHASERS"), which Initial Purchasers have
agreed to purchase from the Company up to $130,000,000 principal amount of the
Company's 5% Convertible Subordinated Notes Due 2002 (the "NOTES"), with an
option, for the sole purpose of covering over-allotments in connection with the
sale of the Notes, to purchase up to an additional $20,000,000 aggregate
principal amount of Notes, pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated October 7,
1997 (the "PURCHASE AGREEMENT"), by and among the Company and the Initial
Purchasers. In order to induce the Initial Purchasers listed in Schedule I
thereto to purchase the Notes, and for the benefit of the Holders from time to
time of the Transfer Restricted Securities (as defined below), the Company has
agreed to provide the registration rights set forth in this Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
"ACT": As defined in the final paragraph of this Section 1.
"AGREEMENT": As defined in the preamble hereto.
"BUSINESS DAY": A day other than a Saturday, a Sunday, a day on which the
banking institutions in the State and City of New York are authorized or
obligated by law or executive order to close or a day that is declared a
national or New York state holiday.
"CLOSING DATE": October 14, 1997.
"COMMISSION": Securities and Exchange Commission.
"COMMON STOCK": Common Stock of the Company, par value $.01 per share, or
other securities issuable upon conversion of the Notes pursuant to the
Indenture.
"COMPANY": As defined in the preamble hereto.
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"COMPANY COUNSEL": As defined in Section 2(a) hereof.
"CONTROLLING PERSON": As defined in Section 6(a) hereof.
"DAMAGES PAYMENT DATE": Each of the semi-annual interest payment dates
provided in the Indenture, to be determined as if Notes are outstanding even if
all Notes have been converted to shares of Common Stock or are otherwise not
outstanding.
"EFFECTIVENESS PERIOD": As defined in Section 2(a)(ii) hereof.
"EFFECTIVENESS TARGET DATE": The 120th day after the Closing Date.
"EXCHANGE ACT": Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
"HOLDER": Each registered owner of any Transfer Restricted Security.
"INDEMNIFIED HOLDER": As defined in Section 6(a) hereof.
"INDENTURE": The Indenture, dated as of October 14, 1997, by and between
the Company and The Bank of New York, as trustee (the "TRUSTEE"), pursuant to
which the Notes are to be issued, as such Indenture is amended, modified or
supplemented from time to time in accordance with the terms thereof.
"INITIAL PURCHASERS": As defined in the preamble hereto.
"LIQUIDATED DAMAGES": As defined in Section 3(a) hereof.
"LOSSES": As defined in Section 6(a) hereof.
"NOTES": As defined in the preamble hereto.
"OFFERING CIRCULAR" The Offering Circular dated as of October 7, 1997,
relating to the Notes, as such Offering Circular may be amended or supplemented.
"PERSON": A corporation, an association, a partnership, an individual, a
joint venture, a joint stock company, a trust, an unincorporated organization or
a government or an agency or political subdivision thereof.
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"PROSPECTUS": The prospectus included in the Shelf Registration Statement,
as amended or supplemented including, without limitation, by any post-effective
amendments thereto, and all material incorporated by reference into such
prospectus.
"PURCHASE AGREEMENT": As defined in the preamble hereto.
"RECORD HOLDER": (i) with respect to any Damages Payment Date relating to
any Note that is a Transfer Restricted Security as to which any Liquidated
Damages have accrued, the registered Holder of such Note on the record date with
respect to the interest payment date under the Indenture on which such Damages
Payment Date shall occur and (ii) with respect to any Damages Payment Date
relating to any Common Stock that is a Transfer Restricted Security as to which
any such Liquidated Damages have accrued, the registered holder of such Common
Stock 15 days prior to such scheduled Damages Payment Date.
"REGISTRATION DEFAULT": As defined in Section 3(a) hereof.
"REQUISITE INFORMATION": As defined in Section 2(b) hereof.
"SECURITIES ACT": Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"SHELF REGISTRATION STATEMENT": As defined in Section 2(a) hereof.
"TARGETED FILING DATE": The 60th day after the Closing Date.
"TIA": The Trust Indenture Act of 1939, as amended, as in effect on the
date of the Indenture.
"TRANSFER RESTRICTED SECURITIES": Each Note, and any Common Stock issued
upon conversion of any Note, until the earliest to occur of (i) the date on
which such Note or Common Stock, as the case may be, has been effectively
registered under the Securities Act and sold in a manner contemplated by the
Shelf Registration Statement, (ii) the date on which such Note or Common Stock,
as the case may be, has been sold to the public in compliance with Rule 144
under the Securities Act (or any successor provision thereto), or is
transferable to the public pursuant to paragraph (k) of such Rule 144 (or any
successor provision thereto) or (iii) has otherwise been transferred and a new
Note or share of Common Stock not subject to transfer restrictions under the
Securities Act has been delivered by or on behalf of the Company in accordance
with the Indenture.
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"UNDERWRITTEN OFFERING": A registration in which securities of the Company
are sold to an underwriter for reoffering to the public.
References herein to the term "Holders of a majority in aggregate principal
amount of Transfer Restricted Securities" or words to a similar effect shall
mean, with respect to any request, notice, demand, objection or other action by
the holders of Transfer Restricted Securities hereunder or pursuant hereto
(each, an "ACT"), registered holders of a number of shares of then outstanding
Common Stock constituting Transfer Restricted Securities and an aggregate
principal amount of then outstanding Notes constituting Transfer Restricted
Securities, such that the sum of such shares of Common Stock and the shares of
Common Stock issuable upon conversion of such Notes constitute in excess of 50%
of the sum of all of the then outstanding shares of Common Stock constituting
Transfer Restricted Securities and the number of shares of Common Stock issuable
upon conversion of then outstanding Notes constituting Transfer Restricted
Securities. For purposes of the immediately preceding sentence, any Holder may
elect to take any Act with respect to all or any portion of the Transfer
Restricted Securities held by it and only the portion as to which such Act is
taken shall be included in the numerator of the fraction described in the
preceding sentence.
2. SHELF REGISTRATION
(a) The Company hereby agrees to use all reasonable efforts to:
(i) file with the Commission no later than the Targeted Filing Date,
a registration statement for an offering to be made on a continuous basis
pursuant to Rule 415 under the Securities Act (or any successor provision
thereto) covering all of the Transfer Restricted Securities (the "SHELF
REGISTRATION STATEMENT"); and
(ii) cause the Shelf Registration Statement to be declared effective
pursuant to the Securities Act by the Effectiveness Target Date, and use
all reasonable efforts to keep the Shelf Registration Statement
continuously effective and available for resale of the Transfer Restricted
Securities under the Securities Act for the period (the "EFFECTIVENESS
PERIOD") ending on the earlier of (A) the date that is two years after the
date on which all the Notes are issued (including those issued pursuant to
the over-allotment option granted to the Initial Purchasers in the Purchase
Agreement) to the Initial Purchasers, (B) the date on which there ceases to
be outstanding any Transfer Restricted Securities, and (C) the date on
which the Company receives an opinion from its legal counsel ("COMPANY
COUNSEL") to the effect that all Transfer Restricted Securities can be
freely traded without the continued effectiveness of the Shelf Registration
Statement.
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(b) The Company may require each Holder of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company, within
20 Business Days after written request therefor has been made by the Company,
such information regarding the distribution of such Holder's Transfer Restricted
Securities as is required by law to be disclosed in the Shelf Registration
Statement (the "REQUISITE INFORMATION"), such information to be solicited
substantially in the form of the questionnaire attached to the Offering Circular
as Annex B.
The Company shall file prospectus supplements pursuant to Rule 424
under the Securities Act (or any successor provision thereto) to amend or
supplement the Shelf Registration Statement to include in the Shelf Registration
Statement the Requisite Information as to each Holder (and the Transfer
Restricted Securities held by such Holder) that provides notice to the Company
of the Requisite Information. The Company shall file such a prospectus
supplement with the Commission no less than once every twenty Business Days if
during such period the Company receives notice from any Holder which includes
the Requisite Information with respect to any such Holder; provided, however,
that in the event the Company receives notice from any Holders which includes
the Requisite Information with respect to such Holders and such Requisite
Information pertains to at least $1,000,000 principal amount of Notes and/or a
comparable amount of underlying Common Stock, the Company shall file such a
prospectus supplement with the Commission within ten Business Days of the
receipt of such notice. The Company shall provide each Holder a copy of such
Prospectus as so amended or supplemented containing the Requisite Information
within three Business Days of filing such Prospectus with the Commission in
order to permit such Holder to comply with the prospectus delivery requirements
of the Securities Act in a timely manner with respect to any proposed
disposition of such Holder's Transfer Restricted Securities.
No Holder shall be entitled to use the Prospectus unless and until
such Holder shall have furnished the information required by this Section 2(b)
in accordance with the first or second paragraph hereof and such information
with respect to such Holder shall have been included in the Prospectus. If any
information furnished to the Company by a Holder for inclusion in the Shelf
Registration Statement or the Prospectus becomes materially misleading, such
Holder agrees (i) to furnish promptly to the Company all information required to
be disclosed in such Shelf Registration Statement in order to make the
information previously furnished to the Company not materially misleading and
(ii) to stop selling or offering for sale Transfer Restricted Securities
pursuant to the Shelf Registration Statement until such Holder's receipt of the
copies of a supplemented or amended Prospectus as contemplated by Section
4(b)(xi) hereof.
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3. LIQUIDATED DAMAGES
(a) The Company and the Initial Purchasers agree that the Holders of
Transfer Restricted Securities will suffer damages if the Company fails to
fulfill its obligations pursuant to Section 2 hereof and that it would not be
possible to ascertain the extent of such damages. Accordingly, the Company
hereby agrees to pay liquidated damages ("LIQUIDATED DAMAGES") to each Holder of
Transfer Restricted Securities under the circumstances and to the extent set
forth below:
(i) if the Shelf Registration Statement has not been filed with the
Commission on or prior to the Targeted Filing Date; or
(ii) if the Shelf Registration Statement is not declared effective by
the Commission on or prior to the Effectiveness Target Date; or
(iii) if, at any time during the Effectiveness Period for a period
of time which shall exceed 60 days in the aggregate in any 360-day period,
the Shelf Registration Statement has been declared effective by the
Commission and such Shelf Registration Statement ceases to be effective
(without being succeeded on the same day by a post-effective amendment to
such Shelf Registration Statement that cures such failure and that is
immediately declared effective) or use of the Prospectus is suspended
pursuant to Section 4(c);
(any of the foregoing, a "REGISTRATION DEFAULT"). In the event of any such
Registration Default, the Company shall pay as the sole remedy Liquidated
Damages to each Holder of Transfer Restricted Securities accruing at a rate
equal to 25 basis points (0.25%) per annum on (A) where such Transfer Restricted
Securities are Notes, the aggregate principal amount of such Notes held by such
Holder and (B) where such Transfer Restricted Securities are shares of Common
Stock issued upon conversion of Notes, the aggregate principal amount of Notes
that were converted into such shares, which rate shall in any case increase by
an additional 25 basis points (0.25%) per annum on the first day of any
subsequent 90-day period that the Registration Default remains uncured up to a
maximum rate equal to 100 basis points (1.0%) per annum. Following the cure of
all Registration Defaults relating to any Transfer Restricted Securities, the
accrual of Liquidated Damages with respect to such Transfer Restricted
Securities will cease (without in any way limiting the effect of any subsequent
Registration Default). A Registration Default under clause (i) above shall be
cured on the date that the Shelf Registration Statement is filed with the
Commission; a Registration Default under clause (ii) above shall be cured on the
date that the Shelf Registration Statement is declared effective by the
Commission; and a Registration Default under clause (iii) above shall be cured
on the date a post-effective amendment to the Shelf
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Registration Statement is declared effective or suspension of the use of the
Prospectus is withdrawn.
(b) The Company shall notify the Trustee of a Registration Default within
one Business Day after each and every date on which such a Registration Default
occurs. Liquidated Damages shall be paid by the Company to the Record Holders
on each Damages Payment Date in accordance with the procedures required by the
Indenture for the payment of interest to the various Holders of the Notes, in
the case of the Notes, or by mailing checks to their registered addresses as
they appear in the register of the Company for the Common Stock, in the case of
the Common Stock; PROVIDED, HOWEVER, that any Liquidated Damages accrued with
respect to any Note or portion thereof called for redemption on a redemption
date, repurchased in connection with a Change of Control Offer (as defined in
the Indenture) on a repurchase date, or converted into Common Stock on a
conversion date after which the Record Holders have been determined and prior to
the Damages Payment Date, shall, in any such event, be paid instead to the
holder who submitted such Note or portion thereof for redemption, repurchase or
conversion. Each obligation to pay Liquidated Damages shall be deemed to
commence accruing on the date of the applicable Registration Default and to
cease accruing when all Registration Defaults have been cured.
(c) All of the Company's obligations set forth in this Section 3 which are
outstanding with respect to any Transfer Restricted Securities at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security have been satisfied
in full.
(d) Any payments due and payable pursuant to this Section 3 shall be
subject to the provisions of Article XV of the Indenture as if such payments
were additional interest on the Notes.
4. REGISTRATION PROCEDURES
(a) The parties hereto agree that the Transfer Restricted Securities shall
not be sold in any Underwritten Offering and the Company shall in no event be
required to cooperate with or pay for any Underwritten Offering.
(b) In connection with the Shelf Registration Statement and any Prospectus
required by this Agreement, during the Effectiveness Period the Company shall:
(i) use all reasonable efforts to keep the Shelf Registration
Statement continuously effective for the Effectiveness Period; upon the
occurrence of any event that would cause the Shelf Registration Statement
or the Prospectus contained therein (A) to
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contain a material misstatement or omission or (B) to not be effective or
to not be usable for resales of Transfer Restricted Securities during the
Effectiveness Period, the Company shall in the case of clause (A) file
promptly an appropriate amendment to the Shelf Registration Statement or a
supplement to the Prospectus correcting any such misstatement or omission,
and, in the case of either clause (A) or (B), use all reasonable efforts to
cause such amendment, if applicable, to be declared effective or the Shelf
Registration Statement and the related Prospectus to become usable for their
intended purposes as soon as practicable thereafter;
(ii) furnish to each of the Initial Purchasers and to counsel for the
Initial Purchasers, before filing with the Commission, copies of the Shelf
Registration Statement and the Prospectus included therein, and any
pre-effective amendments thereof, which documents shall be subject to the
review of the Initial Purchasers and such counsel for a period of at least
five Business Days; and shall consider any requests for additions to or
modifications of the Shelf Registration Statement and the Prospectus,
included therein and any pre-effective amendments thereto reasonably made
by any Initial Purchaser or counsel for the Initial Purchasers;
(iii) use all reasonable efforts to prepare and file with the
Commission such amendments and post-effective amendments to the Shelf
Registration Statement as may be necessary to keep the Shelf Registration
Statement effective during the Effectiveness Period; use all reasonable
efforts to cause the Prospectus to be supplemented by any required
Prospectus supplement within the time period specified in Section 2(b)
hereof, and as so supplemented, cause the Prospectus to be filed pursuant
to Rule 424 under the Securities Act and to comply fully with the
applicable provisions of Rule 424 under the Securities Act in a timely
manner; and use all reasonable efforts to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
the Shelf Registration Statement during the Effectiveness Period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in the Shelf Registration Statement or supplement
to the Prospectus;
(iv) use all reasonable efforts to notify the selling Holders promptly
and, if requested by such Persons, to confirm such advice in writing, (A)
when the Prospectus, any Prospectus supplement or any post-effective
amendment to the Shelf Registration Statement applicable to such Holder has
been filed, and, with respect to the Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B)
of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any
stop order
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suspending the effectiveness of the Shelf Registration Statement under
the Securities Act or of the suspension by any state securities commission
of the qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction or of the initiation of any proceeding for any of
the preceding purposes or (D) of the existence of any fact or of the
happening of any event (but not the substance or details of any such fact
or event) that makes untrue any statement of a material fact made in the
Shelf Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein, or that requires
the making of any additions to or changes in the Shelf Registration
Statement or the Prospectus in order to make the statements therein not
misleading;
(v) if at any time the Commission shall issue any stop order
suspending the effectiveness of the Shelf Registration Statement, or any
state securities commission shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, use all reasonable
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(vi) if requested by any selling Holder, within the time period
specified in Section 2(b) hereof, use all reasonable efforts to incorporate
in the Shelf Registration Statement or Prospectus, pursuant to a supplement
or post-effective amendment, if necessary, such Requisite Information as
such selling Holders request to have included therein, and use all
reasonable efforts to make all required filings of any such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; PROVIDED, HOWEVER, that the Company
shall not be required to take any action pursuant to this Section 4(b)(vi)
that would, in the opinion of Company Counsel, violate applicable law or to
include information to which the Company reasonably objects;
(vii) deliver to each selling Holder, without charge, as many
copies of the Shelf Registration Statement and the Prospectus (including
each preliminary prospectus intended for public distribution) (including
documents incorporated by reference therein and exhibits thereto) and any
amendment or supplement thereto as such selling Holder reasonably may
request; subject to Section 4(c) below, the Company hereby consents to the
use of the Prospectus and any amendment or supplement thereto by each of
the selling Holders in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto in conformity with the Plan of Distribution set forth
in the Prospectus and in compliance with all applicable laws and this
Agreement;
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(viii) take all such other actions in connection therewith as are
reasonable and customary in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to the Shelf Registration
Statement contemplated by this Agreement, all to such extent as may be
reasonably requested by any Initial Purchaser or by any Holder of Transfer
Restricted Securities in connection with any sale or resale pursuant to the
Shelf Registration Statement contemplated by this Agreement;
(ix) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, and their respective counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
domestic jurisdictions as the selling Holders may reasonably request; and
do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the Shelf Registration Statement; PROVIDED, HOWEVER,
that in no event shall the Company be obligated to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it is
not now so qualified, (ii) file any general consent to service of process
in any jurisdiction where it is not as of the date hereof so subject or
(iii) subject itself to taxation in any jurisdiction if it is not so
subject;
(x) cooperate with the selling Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the selling Holders may request, provided that
such request is made at least two Business Days prior to any sale of
Transfer Restricted Securities;
(xi) as soon as reasonably practicable after the occurrence of any
fact or event of the kind described in Section 4(b)(iv)(D) above, use all
reasonable efforts to prepare a supplement or post-effective amendment to
the Shelf Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus shall not contain an untrue statement of a
material fact or omit to state any material fact necessary, to make the
statements made therein not misleading in the light of the circumstances in
which they were made; PROVIDED, HOWEVER, that notwithstanding anything to
the contrary herein, the Company shall not be required to prepare and file
such a supplement or post-effective amendment or document if the fact no
longer exists;
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(xii) provide a CUSIP number for all Notes (which shall be a
separate number for any Notes that are not Transfer Restricted Securities)
not later than the effective date of the Shelf Registration Statement and
provide the Trustee under the Indenture with printed certificates for the
Notes that are in a form eligible for deposit with The Depository Trust
Company;
(xiii) make generally available to its security holders, in a
regular filing on Form 10-Q or Form 10-K, a consolidated earnings statement
meeting the requirements of Rule 158 under the Securities Act (which need
not be audited) for the twelve-month period commencing after the effective
date of the Shelf Registration Statement;
(xiv) cause the Indenture to be qualified under the TIA not later
than the effective date of the Shelf Registration Statement and, in
connection therewith, cooperate with the Trustee and the Holders to effect
such changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA, and execute, and use
all reasonable efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner;
(xv) cause the Common Stock covered by the Shelf Registration
Statement to be listed on the Nasdaq Stock Market or such other national
securities exchange or automated quotation system on which the Common Stock
is then listed or quoted; and
(xvi) provide promptly to each Holder upon request any document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
(c) Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
or event of the kind described in Section 4(b)(iv)(D) hereof, such Holder shall:
(i) keep the fact of such notice confidential and (ii) stop selling or offering
for sale Transfer Restricted Securities pursuant to the Shelf Registration
Statement until such Holder's receipt of the copies of a supplemented or amended
Prospectus as contemplated by Section 4(b)(xi) hereof, or until it receives
advice in writing from the Company that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus. If so directed by the Company,
each Holder shall deliver to the Company (at the expense of the Company) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of such notice.
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(d) Notwithstanding any provision of this Agreement to the contrary, it
shall not be a breach or violation of any obligation of the Company hereunder if
the Company fails to take any action otherwise required hereunder because, in
its reasonable determination, such action would require the Company to disclose
material, non-public information that the Company has a BONA FIDE business or
legal reason for not disclosing regardless of whether the Company caused such
material, non-public information to exist; PROVIDED, that any suspension of the
use of the Prospectus included in the Shelf Registration Statement as a result
of this Section 4(d) shall not effect the Company's obligation to pay Liquidated
Damages pursuant to Section 3.
(e) The Company shall have no obligation to keep a Prospectus usable or to
give notice that a Prospectus is not usable by a particular Holder to the extent
such Prospectus is not usable by such Holder because current Requisite
Information with respect to such Holder is not included therein because such
Holder has not provided such information to the Company in accordance with
Section 2(b).
5. REGISTRATION EXPENSES
The following expenses incident to the Company's performance of or
compliance with this Agreement shall be borne by the Company regardless of
whether the Shelf Registration Statement becomes effective: (i) all registration
and filing fees and expenses; (ii) all fees and expenses associated with
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing of copying (including printing of any certificates
evidencing the Notes and copying of Prospectuses), messenger and delivery
services and telephone; (iv) all fees and disbursements of Company Counsel; (v)
all application and filing fees in connection with listing any securities on a
national securities exchange or automated quotation system; and (vi) all fees
and disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company shall, in any event, bear its own internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.
6. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each Holder
and (ii) each person, if any, who controls (within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act) any Holder (any of the
persons referred to in this clause (ii) being hereinafter referred to as a
"CONTROLLING PERSON") and (iii) the respective officers, directors,
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partners, employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "INDEMNIFIED HOLDER"), to the fullest extent
lawful, from and against any and all losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to reasonable
attorneys' fees and expenses whatsoever incurred in investigating, preparing
or defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation) (collectively, "LOSSES"), joint or several, to which they or any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Losses (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement or Prospectus or
any amendment or supplement thereto or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent but only
to the extent that any such Losses arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by any Holder for use therein; and provided further,
however, that the foregoing indemnity shall not inure to the benefit of any
Indemnified Holder if the person asserting such Loss (A) purchased a Transfer
Restricted Security and the Indemnified Holder, or someone acting on the
Indemnified Holder's behalf, did not deliver to such person at or prior to
the written confirmation of the sale of such Transfer Restricted Security a
Prospectus (as then amended or supplemented, if the company furnishes any
amendments or supplements thereto) and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss,
liability, claim, damage or expense; or (B) received a Prospectus or an
amendment or supplement thereto in violation of Section 4(c) of this
Agreement if such violation caused such Loss. The Company shall notify the
Holders promptly of the institution, threat or assertion of any claim,
proceeding (including any governmental investigation) or litigation in
connection with the matters addressed by this Agreement that involves the
company or any Indemnified Holder.
(b) In case any action or proceeding (including, without limitation,
any governmental or regulatory investigation or proceeding) shall be brought or
asserted against any of the Indemnified Holders with respect to which indemnity
may be sought against the Company, such Indemnified Holder (or the Indemnified
Holder controlled by such controlling person) shall promptly notify the Company
in writing (PROVIDED that the failure to give such notice shall not relieve the
Company of its obligations pursuant to this Agreement except to the extent the
Company is prejudiced by such failure). In case any such action is brought
against an Indemnified Holder, and it notifies the Company of the commencement
thereof, the Company will be entitled to participate therein, and to the extent
it elects by written notice delivered to the Indemnified Holder
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promptly after receiving the aforesaid notice from such Indemnified Holder,
to assume and control the defense thereof with counsel reasonably
satisfactory to such Indemnified Holder. Notwithstanding the foregoing, the
Indemnified Holder shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Holder, PROVIDED
that the fees and expenses of such counsel shall be at the expense of the
Company if (i) the Company has failed to assume the defense and employ
counsel reasonably satisfactory to the Holders or (ii) the named parties to
any such action (including any impleaded parties) include such Indemnified
Holder and the Company and such Indemnified Holder shall have reasonably
concluded that there may be one or more legal defenses available to it that
are different from or in addition to those available to the Company;
PROVIDED, FURTHER, that the Company shall not in such event be responsible
hereunder for the fees and expenses of more than one firm of separate
counsel, which firm shall be designated by the Holders and shall be subject
to the Company's approval, not to be unreasonably withheld, in connection
with any action or separate but related actions in the same jurisdiction, in
addition to any local counsel. The Company shall not be liable for any
settlement of any such action or proceeding effected without the Company's
prior written consent, which consent shall not be unreasonably withheld or
delayed, and the Company agrees to indemnify and hold harmless any
Indemnified Holder from and against any Loss by reason of any settlement of
any action effected with the Company's written consent. The Company shall
not, without the prior written consent of each Indemnified Holder, settle or
compromise or consent to the entry of a judgment in or otherwise seek to
terminate any pending or threatened litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement,
compromise, consent or termination includes an unconditional release of each
Indemnified Holder from all liability arising out of such action, claim,
litigation or proceeding.
(c) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company, its directors, its
officers, and any person controlling (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Company, and the
respective officers, directors, partners, employees, representatives and agents
of each such person, to the same extent as the foregoing indemnity from the
Company to each of the Indemnified Holders, but only with respect to claims and
actions based on information relating to such Holder furnished in writing by
such Holder for use in the Shelf Registration Statement or Prospectus. In case
any action or proceeding shall be brought against any of Company or its
directors or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities, such
Holder shall have the rights and duties given the Company, and each of the
Company or its directors or officers of such controlling person shall have the
rights and duties given to each Holder by the preceding paragraph. In no event
shall the liability of any selling Holder hereunder be greater in amount than
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the dollar amount of the proceeds received by such Holder upon the sale of the
securities registered pursuant to provisions hereof giving rise to such
indemnification obligation.
7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is unavailable to a
party entitled to indemnification in respect of any Losses referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such Losses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Holders on the
other hand from their sale of Transfer Restricted Securities or (ii) if such
allocation is not permitted by applicable law, the relative fault of the Company
on the one hand and of the Indemnified Holder on the other in connection with
the statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of the Company on the one
hand of the Indemnified Holder on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The indemnity and contribution
obligations of each indemnifying party set forth herein shall be in addition to
any liability or obligation such indemnifying party may otherwise have to any
indemnified party, including under this Agreement.
8. RULE 144A
The Company hereby agrees with each Holder, during the Effectiveness
Period, to make available to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof and any prospective
purchase of such Transfer Restricted Securities from such Holder or beneficial
owner, any information required to be supplied to a Holder by Rule 144A(d)(4)
under the Securities Act (so long as such information is required to permit such
transfer under Rule 144A) in order to permit and sales of such Transfer
Restricted Securities pursuant to Rule 144A.
9. MISCELLANEOUS
(a) REMEDIES. Each party agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by such party
of the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate;
PROVIDED; HOWEVER, that the parties hereto acknowledge and
16
<PAGE>
agree that the sole remedy for a Registration Default shall be a right to
Liquidated Damages as provided in Section 3 hereto.
(b) NO INCONSISTENT AGREEMENTS. The Company shall not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder are not inconsistent with the rights granted to the holders of
the Company's securities under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of a majority in aggregate principal amount of
Transfer Restricted Securities.
(d) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return-receipt requested), or courier guaranteeing
overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Note registrar under the Indenture or the stock register of the Company, as
the case may be, with a copy to the Note registrar under the Indenture or
the transfer agent, as applicable; and
(ii) if to the Company:
CellStar Corporation
1730 Briercroft Drive
Carrollton, Texas 75006
Attention:
with a copy to:
Haynes and Boone, LLP
3100 NationsBank Plaza
901 Main Street
Dallas, Texas 75202-3789
Attention: William R. Hays, III
All such notices and communications shall be deemed to have been duly
given; at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail,
17
<PAGE>
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on
the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; PROVIDED that this Agreement shall
not inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Transfer Restricted
Securities from such Holder.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(i) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and the remaining provisions contained
herein shall not be affected or impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement, together with the other Transaction
Agreements (as defined in the Purchase Agreement), is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
CELLSTAR CORPORATION
By: /s/ Elaine Flud Rodriguez
-----------------------------------
Name: Elaine Flud Rodriguez
Title: Vice President and Secretary
BEAR, STEARNS & CO. INC.
By: /s/ Stephen Parish
---------------------------------
Name: Stephen Parish
Title: Senior Managing Director
CHASE SECURITIES INC.
By: /s/ Joseph C. Purcell
---------------------------------
Name: Joseph C. Purcell
Title: Vice President
<PAGE>
EXHIBIT A - FORM OF DEFINITIVE NOTE
[FORM OF FACE OF NOTE]
No. A-1
$
----------------
CUSIP
------------
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT
IT WILL NOT PRIOR TO THE DATE THAT IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE NOTE EVIDENCED HEREBY AND THE LAST DATE ON
WHICH CELLSTAR CORPORATION (THE "COMPANY") OR ANY "AFFILIATE" (AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY WAS THE
OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE") RESELL OR
OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
A-1
<PAGE>
(C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE, A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION
TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER
AND SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE. IF
THE PROPOSED TRANSFER IS PURSUANT TO CLAUSE (B), (C), (D) OR (E)
ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK
OF NEW YORK, AS TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS THE COMPANY OR TRUSTEE MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
UPON THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
CELLSTAR CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company"), which term
A-2
<PAGE>
includes any successor Company under the Indenture referred to on the reverse
hereof, for value received hereby promises to pay to ___________
________________, or registered assigns, the principal sum of
______________________________________ Dollars on October 15, 2002, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or, at the option of the holder of this Note,
at the Corporate Trust Office of the Trustee, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on April
15 and October 15 of each year, commencing April 15, 1998, on said principal sum
at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Note, from the April 15 or October 15 as the case
may be, next preceding the date of this Note to which interest has been paid or
duly provided for, unless the date hereof is a date to which interest has been
paid or duly provided for, in which case from the date of this Note, or unless
no interest has been paid or duly provided for on the Notes, in which case from
October 14, 1997, until payment of said principal sum has been made or duly
provided for; provided that if the Company shall default in the payment of
interest due on such April 15 or October 15, then this Note shall bear interest
from the next preceding April 15 or October 15 to which interest has been paid
or duly provided for or, if no interest has been paid or duly provided for on
such Note, from October 14, 1997. The interest so payable on any April 15 or
October 15 will be paid to the person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the record date,
which shall be the April 1 or October 1 (whether or not a Business Day) next
preceding such April 15 or October 15, respectively; provided that any such
interest not punctually paid or duly provided for shall be payable as provided
in the Indenture. Interest shall be paid by check mailed to the registered
holder at the registered address of such person unless other arrangements are
made in accordance with the provisions of the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, including, without limitation, provisions giving the holder
of this Note the right to convert this Note into Common Stock of the Company on
the terms and subject to the limitations referred to on the reverse hereof and
as more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and
A-3
<PAGE>
governed by the laws of said State, without regard to conflicts of laws
principles thereof.
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee, or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
CELLSTAR CORPORATION
By:
-----------------------------------
Name:
Title:
Attest:
- ----------------------------
Secretary
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes described in the within-named indenture.
THE BANK OF NEW YORK, as Trustee
By:
-----------------------------------
Authorized Signatory
A-4
<PAGE>
[FORM OF REVERSE OF NOTE]
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 5% Convertible Subordinated Notes Due 2002 (herein called the
"Notes"), limited to the aggregate principal amount of $150,000,000 all issued
or to be issued under and pursuant to an Indenture dated as of October 14, 1997
(the "Indenture"), between the Company and The Bank of New York, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a complete description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the holders of the Notes. Each Note is subject to, and qualified by, all such
terms as set forth in the Indenture, certain of which are summarized hereon and
each holder of a Note is referred to the corresponding provisions of the
Indenture for a complete statement of such terms. To the extent that there is
any inconsistency between the summary provisions set forth in the Notes and the
Indenture, the provisions of the Indenture shall govern. Capitalized terms used
but not defined in this Note shall have the meanings ascribed to them in the
Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness (as defined
in the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, (a) holders of Senior Indebtedness shall
be entitled to receive payment in full, in cash or cash equivalents, of all
amounts due or to become due thereon before Holders shall be entitled to receive
any payment or dsitribution of any kind or character, whether in cash, cash
equivalents, property, or securities, on or in respect of the Obligations,
A-5
<PAGE>
or for the acquisition of any of the Notes for cash, cash equivalents,
property or securities and (b) until all Senior Indebtedness (as provided in
clause (a) above) is paid in full, in cash or cash equivalents, any payment
or distribution to which Holders would be entitled but for the subordination
provisions of the Indenture shall be made to holders of Senior Indebtedness,
as their interests may appear.
The Company may not make any payment upon or in respect of the Notes
and may not acquire from the Trustee or any Holder any Note for cash, cash
equivalents, property, securities or otherwise until all Senior Indebtedness has
been paid in full, in cash or cash equivalents, if: (a) a Payment Default with
respect to any Senior Indebtedness occurs and is continuing beyond any
applicable period of grace; or (b) a default occurs and is continuing with
respect to any Senior Indebtedness resulting in the acceleration of maturity of
all or any portion of such Senior Indebtedness. No payment on any of the
Obligations shall be made if, and the Company shall not acquire any Notes while,
any other default (a "nonpayment default") occurs and is continuing (or would
occur upon any payment or distribution with respect to the Obligations) with
respect to Senior Indebtedness that permits holders of the Senior Indebtedness
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the Bank
Representative, Representative or Representatives of holders of at least a
majority in principal amount of Senior Indebtedness then outstanding.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
immediately shall be paid over and delivered to, the holders of Senior
Indebtedness or their Representative as their respective interests may appear.
After all Senior Indebtedness is paid in full and until the Notes are paid in
full, the holders of the Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as
provided in the
A-6
<PAGE>
Indenture to execute supplemental indentures adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Notes; provided that no such supplemental indenture shall (i)
extend the fixed maturity of any Note, or reduce the rate or extend the time
of payment of interest thereon, or reduce the principal amount thereof or
premium, if any, thereon, or reduce any amount payable on redemption thereof,
alter the obligation of the Company to redeem the Notes at the option of the
holders upon the occurrence of a Change of Control or impair or affect the
right of any Holder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin
or currency other than that provided in the Notes, modify the subordination
provisions in a manner adverse to the holders of the Notes, or impair the
right to convert the Notes into Common Stock subject to the terms set forth
in the Indenture without the consent of the holder of each Note so affected
or (ii) reduce the aforesaid percentage of Notes, the holders of which are
required to consent to any such supplemental indenture, without the consent
of the holders of all Notes then outstanding. It is also provided in the
Indenture that the holders of a majority in aggregate principal amount of the
Notes at the time outstanding may on behalf of the holders of all of the
Notes waive any past default or Event of Default under the Indenture and its
consequences except a default in the payment of interest or any premium on or
the principal of any of the Notes, a failure by the Company to convert any
Notes into Common Stock of the Company or a default in respect of a covenant
or provision of the Indenture that under Article X thereof cannot be modified
or amended without the consent of the holders of all Notes then outstanding.
Any such consent or waiver by the holder of this Note (unless revoked as
provided in the Indenture) shall be conclusive and binding upon such holder
and upon all future holders and owners of this Note and any Notes that may be
issued in exchange or substitution hereof, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
A-7
<PAGE>
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in connection with
any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of other authorized denominations.
The Notes are not redeemable at the option of the Company prior to
October 18, 2000. At any time on or after that date, the Notes may be redeemed
at the Company's option, upon notice as set forth in the Indenture, in whole at
any time or in part from time to time, at the optional redemption prices set
forth below, together with accrued interest to the date fixed for redemption.
If redeemed after:
Redemption
Date Price
- ---- -----
October 18, 2000 . . . . . . . . . . . . . . . . . . . . . 102%
October 15, 2001 . . . . . . . . . . . . . . . . . . . . . 101%
- --------------------------------------------------------------------
- --------------------------------------------------------------------
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company purchase such holder's Notes in whole or in part in integral multiples
of $1,000, at a purchase price in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance
with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 60 days following the latest date of
original issuance of the Notes and prior to the close of business on October 11,
2002, or, as to all or any portion hereof called for redemption, prior to the
close of business on the last business day prior to the date fixed for
redemption (unless the Company shall default in payment due upon redemption
thereof), to convert the principal hereof or any portion of such principal that
is $1,000 or an integral multiple thereof, into that number of fully paid and
non-assessable shares of Company's Common Stock, as said shares shall be
constituted at the date of conversion, obtained by dividing the principal amount
of this Note or portion thereof to be converted by the
A-8
<PAGE>
conversion price of $55.335 or such conversion price as adjusted from time to
time as provided in the Indenture, upon surrender of this Note, together with
a conversion notice as provided in the Indenture, to the Company at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the option of such holder, the
Corporate Trust Office of the Trustee, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by,
or accompanied by instruments of transfer in form satisfactory to the Company
duly executed by, the holder or by his duly authorized attorney. No
adjustment in respect of interest or dividends will be made upon any
conversion; provided that if this Note shall be surrendered for conversion
during the period from the close of business on any record date for the
payment of interest through the opening of business on the corresponding
interest payment date, this Note (unless it or the portion being converted
shall have been called for redemption) must be accompanied by an amount, in
funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount being converted. The interest
payment with respect to a Note called for redemption on a date during the
period from the close of business on or after any record date to the close of
business on the business day following the corresponding payment date will be
payable on the corresponding interest payment date to the registered Holder
at the close of business on that record date (notwithstanding the conversion
of such Note before the close of business on the corresponding interest
payment date) and a Holder who elects to convert need not include funds equal
to the interest paid. No fractional shares will be issued upon any
conversion, but an adjustment in cash will be made, as provided in the
Indenture, in respect of any fraction of a share that would otherwise be
issuable upon the surrender of any Note or Notes for conversion.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust Office
of the Trustee, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued in the name of the transferee in
exchange thereof, subject to the conditions and limitations provided in the
Indenture, without charge except for any tax, assessment or other governmental
charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this
A-9
<PAGE>
Note shall be overdue and notwithstanding any notation of ownership or other
writing hereon made by anyone other than the Company or any Note registrar),
for the purpose of receiving payment hereof, or on account hereof, for the
conversion hereof and for all other purposes, and neither the Company nor the
Trustee nor any authenticating agent nor any paying agent nor any conversion
agent nor any Note registrar shall be affected by any notice to the contrary.
All payments made to or upon the order of such registered holder shall, to
the extent of the sum or sums paid, satisfy and discharge liability for
monies payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties __________________ Custodian
(Cust)
JT TEN - as joint tenants with right __________________ under
of survivorship and not as (Minor)
tenants in common
Uniform Gifts to
Minors Act ___________________
(State)
A-10
<PAGE>
Additional abbreviations may also be used
though not in the above list.
A-11
<PAGE>
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: CELLSTAR CORPORATION
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, into
shares of Common Stock of the Company in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Notes representing any unconverted principal amount
hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this Note
not converted are to be issued in the name of a person other than the
undersigned, the undersigned will check the appropriate box below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid to
the undersigned on account of interest accompanies this Note.
Dated:
-----------------------
-------------------------------------
-------------------------------------
Signature(s)
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an approved
signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule
17Ad-15 if shares of Common Stock are to be
issued, or Notes to be delivered, other than to
and in the name of the registered holder.
A-12
<PAGE>
- ------------------------------------
Signature Guarantee
Fill in for registration of shares if to
be issued, and Notes if to be delivered,
other than to and in the name of the
registered holder:
- ------------------------------------
(Name)
- ------------------------------------
(Street Address)
- ------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less
than all) $_______________________________
-------------------------------------------
Social Security or other Taxpayer
Identification Number
A-13
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: CELLSTAR CORPORATION
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from CELLSTAR CORPORATION (the "Company") as to
the occurrence of a Change of Control with respect to the Company and requests
and instructs the Company to repay the entire principal amount of this Note, or
the portion thereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture
referred to in this Note, together with accrued interest to such date, to the
registered holder hereof.
Dated:
-----------------------------
-------------------------------------------
-------------------------------------------
Signature(s)
-------------------------------------------
Social Security or other Taxpayer
Identification Number
Principal amount to be converted (if less
than all) $_______________________________
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an approved
signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule
17Ad-15 if shares of Common Stock are to be
issued, or Notes to be delivered, other than to
and in the name of the registered holder.
A-14
<PAGE>
- ------------------------------------
Signature Guarantee
[FORM OF ASSIGNMENT]
For value received _____________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________________ (Please insert social
security or other identifying number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ________________________________ attorney
to transfer the said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the within Note occurring prior to
the second anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note are being transferred:
/ / To CELLSTAR CORPORATION or a subsidiary thereof; or
/ / Pursuant to and in compliance with Rule 144A under the Securities Act of
1933, as amended; or
/ / To an Institutional Accredited Investor pursuant to and in compliance with
the Securities Act of 1933, as amended; or
/ / Pursuant to and in compliance with Regulation S under the Securities Act of
1933, as amended; or
/ / Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register the within Note in the name of any person other than the registered
holder thereof (or hereof); provided, however, that the Trustee may, in its sole
discretion, register the transfer of such Note if it has received such
certifications, legal opinions and/or other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
A-15
<PAGE>
In addition, if the transferee is an institutional accredited investor
or a purchaser who is not a U.S. person, the holder must furnish to the Trustee
(i) in the case of an institutional accredited investor, a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the security evidenced by the within Note in such form as may be
reasonably required by the Company and the Trustee and (ii) such other
certifications, legal opinions or other information as it may reasonably require
to confirm that such transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act of 1933, as amended.
Dated:
------------------------
- ------------------------------
- ------------------------------
Signature(s)
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks, stock
brokers, savings and loan associations and
credit unions) with membership in an approved
signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule 17Ad-15.
- ------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect
payment upon a Change of Control or the assignment must correspond with the
name as written upon the face of the Note in every particular without
alteration or enlargement or any change whatever.
A-16
<PAGE>
RESTRICTED GLOBAL NOTE (RULE 144A)
No. 1 $147,000,000.00
CUSIP 150-925-AA3
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS RESTRICTED GLOBAL NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH
IN THE FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR
1
<PAGE>
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN
AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE
THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY AND THE LAST DATE ON WHICH CELLSTAR CORPORATION (THE
"COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE
SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE
"RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE, A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION
TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE. IF THE PROPOSED
TRANSFER IS PURSUANT TO CLAUSE (B), (C), (D) OR (E) ABOVE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS
TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY OR TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE
2
<PAGE>
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
CELLSTAR CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company"), which term
includes any successor Company under the Indenture referred to on the reverse
hereof, for value received hereby promises to pay to CEDE & Co., or
registered assigns, the principal sum of One Hundred Forty-Seven Million
Dollars on October 15, 2002, at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New
York, or, at the option of the holder of this Note, at the Corporate Trust
Office of the Trustee, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest, semi-annually on April 15 and
October 15 of each year, commencing April 15, 1998, on said principal sum at
said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Note, from the April 15 or October 15 as the
case may be, next preceding the date of this Note to which interest has been
paid or duly provided for, unless the date hereof is a date to which interest
has been paid or duly provided for, in which case from the date of this Note,
or unless no interest has been paid or duly provided for on the Notes, in
which case from October 14, 1997, until payment of said principal sum has
been made or duly provided for; provided that if the Company shall default in
the payment of interest due on such April 15 or October 15, then this Note
shall bear interest from the next preceding April 15 or October 15 to which
interest has been paid or duly provided for or, if no interest has been paid
or duly provided for on such Note, from October 14, 1997. The interest so
payable on any April 15 or October 15 will be paid to the person in whose
name this Note (or one or more Predecessor Notes) is registered at the close
of business on the record date, which shall be the April 1 or October 1
(whether or not a Business Day) next preceding such April 15 or October 15,
respectively; provided that any such interest not punctually paid or duly
provided for shall be payable as provided in the Indenture. Interest shall
be paid by wire transfer of immediately available funds to the Depositary or
its nominee, as record holder of this global Note unless other arrangements
are made in accordance with the provisions of the Indenture.
The aggregate principal amount of this Restricted Global Note
represented hereby may from time to time be reduced or increased to reflect
3
<PAGE>
exchanges of a part of this Restricted Global Note for interests in another
Restricted Global Note, the Regulation S Global Note or definitive Notes or
exchanges of interests in another Restricted Global Note, the Regulation S
Global Note or definitive Notes for a part of this Restricted Global Note or
conversions or redemptions of a part of this Restricted Global Note or
cancellations of a part of this Restricted Global Note or transfers of
interests in another Restricted Global Note, the Regulation S Global Note or
definitive Notes in return for a part of this Restricted Global Note or
transfers of a part of this Restricted Global Note effected by delivery of
interests in another Restricted Global Note, the Regulation S Global Note or
definitive Notes, in each case, and in any such case, by means of notations
on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and
Transfers on the last page hereof. Notwithstanding any provision of this
Restricted Global Note to the contrary, (i) exchanges of a part of this
Restricted Global Note for interests in another Restricted Global Note, the
Regulation S Global Note or definitive Notes, (ii) exchanges of interests in
another Restricted Global Note, the Regulation S Global Note or definitive
Notes for a part of this Restricted Global Note, (iii) conversions or
redemptions of a part of this Restricted Global Note, (iv) cancellations of a
part of this Restricted Global Note, (v) transfers of interests in another
Restricted Global Note, the Regulation S Global Note or definitive Notes in
return for a part of this Restricted Global Note and (vi) transfers of a part
of this Restricted Global Note effected by delivery of interests in another
Restricted Global Note, the Regulation S Global Note or definitive Notes may
be effected without the surrendering of this Restricted Global Note, provided
that appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Cancellations and Transfers are made by the Trustee, or the
Custodian at the direction of the Trustee, to reflect the appropriate
reduction or increase, as the case may be, in the aggregate principal amount
of this Restricted Global Note resulting therefrom or as a consequence
thereof.
Reference is made to the further provisions of this Restricted
Global Note set forth on the reverse hereof, including, without limitation,
provisions giving the holder of this Restricted Global Note the right to
convert this Restricted Global Note into Common Stock of the Company on the
terms and subject to the limitations referred to on the reverse hereof and as
more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Restricted Global Note shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be
construed in
4
<PAGE>
accordance with and governed by the laws of said State, without regard to
conflicts of laws principles thereof.
This Restricted Global Note shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have
been manually signed by the Trustee or a duly authorized authenticating agent
under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Restricted Global
Note to be duly executed under its corporate seal.
CELLSTAR CORPORATION
By: /s/ Alan H. Goldfield
-------------------------------------------
Name: Alan H. Goldfield
Title: Chairman of the Board of Directors
and Chief Executive Officer
Attest:
/s/ Elaine Flud Rodriguez
- -------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
Dated: October 14, 1997
This is one of the Notes described in the within-named indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Walter N. Gitlin
-------------------------------------------
Authorized Signatory
5
<PAGE>
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
This Restricted Global Note is one of a duly authorized issue of
Notes of the Company, designated as its 5% Convertible Subordinated Notes Due
2002 (herein called the "Notes"), limited to the aggregate principal amount
of $150,000,000 all issued or to be issued under and pursuant to an Indenture
dated as of October 14, 1997 (the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a complete
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Notes. Each Note is subject to, and qualified by, all such terms as set
forth in the Indenture, certain of which are summarized hereon and each
holder of a Note is referred to the corresponding provisions of the Indenture
for a complete statement of such terms. To the extent that there is any
inconsistency between the summary provisions set forth in the Notes and the
Indenture, the provisions of the Indenture shall govern. Capitalized terms
used but not defined in this Note shall have the meanings ascribed to them in
the Indenture.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in
right of payment to the prior payment in full of all Senior Indebtedness (as
defined in the Indenture). Upon any distribution to creditors of the Company
in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to
the Company or its property, in an assignment for the benefit of creditors or
any marshalling of the Company's assets and liabilities, (a) holders of
Senior Indebtedness shall be entitled to receive payment in full, in cash or
cash equivalents, of all amounts due or to become due thereon before Holders
shall be entitled to receive any payment or distribution of any kind or
character, whether in
6
<PAGE>
cash, cash equivalents, property, or securities, on or in respect of the
Obligations, or for the acquisition of any of the Notes for cash, cash
equivalents, property or securities and (b) until all Senior Indebtedness (as
provided in clause (a) above) is paid in full, in cash or cash equivalents,
any payment or distribution to which Holders would be entitled but for the
subordination provisions of the Indenture shall be made to holders of Senior
Indebtedness, as their interests may appear.
The Company may not make any payment upon or in respect of the Notes
and may not acquire from the Trustee or any Holder any Note for cash, cash
equivalents, property, securities or otherwise until all Senior Indebtedness
has been paid in full, in cash or cash equivalents, if: (a) a Payment
Default with respect to any Senior Indebtedness occurs and is continuing
beyond any applicable period of grace; or (b) a default occurs and is
continuing with respect to any Senior Indebtedness resulting in the
acceleration of maturity of all or any portion of such Senior Indebtedness.
No payment on any of the Obligations shall be made if, and the Company shall
not acquire any Notes while, any other default (a "nonpayment default")
occurs and is continuing (or would occur upon any payment or distribution
with respect to the Obligations) with respect to Senior Indebtedness that
permits holders of the Senior Indebtedness as to which such default relates
to accelerate its maturity and the Trustee receives a notice of such default
(a "Payment Blockage Notice") from the Bank Representative, Representative or
Representatives of holders of at least a majority in principal amount of
Senior Indebtedness then outstanding.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of,
and shall immediately be paid over and delivered to, the holders of Senior
Indebtedness or their Representative as their respective interests may
appear. After all Senior Indebtedness is paid in full and until the Notes are
paid in full, the holders of the Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights
of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness to the extent that distributions otherwise payable to the
holders of the Notes have been applied to the payment of Senior Indebtedness.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate
7
<PAGE>
principal amount of the Notes at the time outstanding, evidenced as provided
in the Indenture to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate
or extend the time of payment of interest thereon, or reduce the principal
amount thereof or premium, if any, thereon, or reduce any amount payable on
redemption thereof, alter the obligation of the Company to redeem the Notes
at the option of the holders upon the occurrence of a Change of Control or
impair or affect the right of any Holder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any,
thereon payable in any coin or currency other than that provided in the
Notes, modify the subordination provisions in a manner adverse to the holders
of the Notes, or impair the right to convert the Notes into Common Stock
subject to the terms set forth in the Indenture without the consent of the
holder of each Note so affected or (ii) reduce the aforesaid percentage of
Notes, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Notes then outstanding.
It is also provided in the Indenture that the holders of a majority in
aggregate principal amount of the Notes at the time outstanding may on behalf
of the holders of all of the Notes waive any past default or Event of Default
under the Indenture and its consequences except a default in the payment of
interest or any premium on or the principal of any of the Notes, a failure by
the Company to convert any Notes into Common Stock of the Company or a
default in respect of a covenant or provision of the Indenture that under
Article X thereof cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Any such consent or waiver by the
holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and
owners of this Note and any Notes that may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is
made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium
and interest on this Note at the place, at the respective times, at the rate
and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day
year composed of twelve 30-day months.
8
<PAGE>
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At
the office or agency of the Company referred to on the face hereof, and in
the manner and subject to the limitations provided in the Indenture, without
payment of any service charge but with payment of a sum sufficient to cover
any tax, assessment or other governmental charge that may be imposed in
connection with any registration or exchange of Notes, Notes may be exchanged
for a like aggregate principal amount of Notes of other authorized
denominations.
The Notes are not redeemable at the option of the Company prior to
October 18, 2000. At any time on or after that date, the Notes may be
redeemed at the Company's option, upon notice as set forth in the Indenture,
in whole at any time or in part from time to time, at the optional redemption
prices set forth below, together with accrued interest to the date fixed for
redemption.
If redeemed after:
Redemption
Date Price
- ---- -----
October 18, 2000 102%
October 15, 2001 101%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101%
of the principal amount of such Notes, plus accrued and unpaid interest, if
any, to the repurchase date pursuant to an offer to be made by the Company
and in accordance with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has
the right, at its option, at any time after 60 days following the latest date
of original issuance of the Notes and prior to the close of business on
October 11, 2002, or, as to all or any portion hereof called for redemption,
prior to the close of business on the last business day prior to the date
fixed for redemption (unless the Company shall default in payment due upon
redemption thereof), to convert the principal hereof or any portion of such
principal that is $1,000 or an integral multiple thereof, into that number of
fully paid and non-assessable shares of the Company's Common Stock, as said
shares shall be constituted at the date of conversion, obtained by dividing
the principal amount of this Note or portion thereof to be converted by the
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<PAGE>
conversion price of $55.335 or such conversion price as adjusted from time to
time as provided in the Indenture, upon surrender of this Note, together with
a conversion notice as provided in the Indenture, to the Company at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the option of such holder, the
Corporate Trust Office of the Trustee, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by,
or accompanied by instruments of transfer in form satisfactory to the Company
duly executed by, the holder or by his duly authorized attorney. No
adjustment in respect of interest or dividends will be made upon any
conversion; provided that if this Note shall be surrendered for conversion
during the period from the close of business on any record date for the
payment of interest through the opening of business on the corresponding
interest payment date, this Note (unless it or the portion being converted
shall have been called for redemption) must be accompanied by an amount, in
funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount being converted. The interest
payment with respect to a Note called for redemption on a date during the
period from the close of business on or after any record date to the close of
business on the business day following the corresponding payment date will be
payable on the corresponding interest payment date to the registered Holder
at the close of business on that record date (notwithstanding the conversion
of such Note before the close of business on the corresponding interest
payment date) and a Holder who elects to convert need not include funds equal
to the interest paid. No fractional shares will be issued upon any
conversion, but an adjustment in cash will be made, as provided in the
Indenture, in respect of any fraction of a share that would otherwise be
issuable upon the surrender of any Note or Notes for conversion.
Upon due presentment for registration of transfer of this Note at
the office or agency of the Company in the Borough of Manhattan, The City of
New York, or at the option of the holder of this Note, at the Corporate Trust
Office of the Trustee, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued in the name of the transferee
in exchange thereof, subject to the conditions and limitations provided in
the Indenture, without charge except for any tax, assessment or other
governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying
agent, any conversion agent and any Note registrar may deem and treat the
registered holder hereof as the absolute owner of this Note (whether or not
this Note shall be overdue
10
<PAGE>
and notwithstanding any notation of ownership or other writing hereon made by
anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any
authenticating agent nor any paying agent nor any conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of
the sum or sums paid, satisfy and discharge liability for monies payable on
this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement
of the Company in the Indenture or any indenture supplemental thereto or in
any Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any Successor Company,
either directly or through the Company or any Successor Company, whether by
virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
ABBREVIATIONS
The following abbreviations, when used in the inscription of the
face of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties ________________ Custodian
JT TEN - as joint tenants with right (Cust)
of survivorship and not as ________________ under
tenants in common (Minor)
Uniform Gifts to
Minors Act ________________
(State)
Additional abbreviations may also be used though not in the above list.
11
<PAGE>
[FORM OF CONVERSION NOTICE]
To: CELLSTAR CORPORATION
The undersigned registered owner of this Restricted Global Note
hereby irrevocably exercises the option to convert this Restricted Global
Note, or the portion hereof (which is $1,000 principal amount or an integral
multiple thereof) below designated, into shares of Common Stock of the
Company in accordance with the terms of the Indenture referred to in this
Restricted Global Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional
shares and any Restricted Global Note representing any unconverted principal
amount hereof, be issued and delivered to the registered holder hereof unless
a different name has been indicated below. If shares or any portion of this
Restricted Global Note not converted are to be issued in the name of a person
other than the undersigned, the undersigned will check the appropriate box
below and pay all transfer taxes payable with respect thereto. Any amount
required to be paid to the undersigned on account of interest accompanies
this Restricted Global Note.
Dated:
-----------------
-------------------------------------------------
-------------------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be delivered,
other than to and in the name of the registered
holder.
- ------------------------------------------------------
Signature Guarantee
12
<PAGE>
Fill in for registration of shares if to be issued, and
Notes if to be delivered, other than to and in the name
of the registered holder:
- --------------------------------------------------------
(Name)
- --------------------------------------------------------
(Street Address)
- --------------------------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all) $.
------------------------------------------------------
Social Security or other Taxpayer
Identification Number
13
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: CELLSTAR CORPORATION
The undersigned registered owner of this Restricted Global Note
hereby irrevocably acknowledges receipt of a notice from CELLSTAR CORPORATION
(the "Company") as to the occurrence of a Change of Control with respect to
the Company and requests and instructs the Company to repay the entire
principal amount of this Restricted Global Note, or the portion thereof
(which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Restricted Global Note, together with accrued interest to such date, to the
registered holder hereof.
Dated:
----------------------------
--------------------------------------------
--------------------------------------------
Signature(s)
--------------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less than
all): $
------------------------------------
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be delivered,
other than to and in the name of the registered
holder.
- ------------------------------------------------------
Signature Guarantee
14
<PAGE>
[FORM OF ASSIGNMENT]
For value received _____________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________________ (Please insert
social security or other identifying number of assignee) the within Note, and
hereby irrevocably constitutes and appoints ________________________________
attorney to transfer the said Note on the books of the Company, with full
power of substitution in the premises.
In connection with any transfer of the within Note occurring prior
to the second anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note are being transferred:
/ / To CELLSTAR CORPORATION or a subsidiary thereof; or
/ / Pursuant to and in compliance with Rule 144A under the Securities Act of
1933, as amended; or
/ / To an Institutional Accredited Investor pursuant to and in compliance with
the Securities Act of 1933, as amended; or
/ / Pursuant to and in compliance with Regulation S under the Securities Act of
1933, as amended; or
/ / Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register the within Note in the name of any person other than the registered
holder thereof (or hereof); provided, however, that the Trustee may, in its
sole discretion, register the transfer of such Note if it has received such
certifications, legal opinions and/or other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
In addition, if the transferee is an institutional accredited
investor or a purchaser who is not a U.S. person, the holder must furnish to
the Trustee (i) in the case of an institutional accredited investor, a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the security evidenced by the within Note in such
form as may be reasonably required by the Company and the Trustee and (ii)
such other certifications, legal opinions or other information as it may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or in a
15
<PAGE>
transaction not subject to, the registration requirements of the Securities
Act of 1933, as amended.
Dated:
------------------
- ------------------------
- ------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15.
- ------------------------------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect
payment upon a Change of Control or the assignment must correspond with the
name as written upon the face of the Note in every particular without
alteration or enlargement or any change whatever.
16
<PAGE>
SCHEDULE A
SCHEDULE OF EXCHANGES
The initial principal amount of this Restricted Global Note is U.S.
$147,000,000. The following additions to principal, redemptions, exchanges
of a part of this Restricted Global Note for an interest in another
Restricted Global Note, the Regulation S Global Note or a definitive Note and
conversions into Common Stock have been made:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Date of Principal Principal Remaining Notation Made
Addition to Amount Added Amount Principal by or on
Principal, on Redeemed, Amount behalf of the
Redemption, Exchange of Exchanged for Outstanding Trustee
Exchange or Interest in Interest in Following such
Conversion other Global other Transaction
Notes or Global Notes
Definitive or Definitive
Notes Notes or
Converted into
Common Stock
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
RESTRICTED GLOBAL NOTE (IAI)
No. 1 $0.00
CUSIP 150-925-AB1
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS RESTRICTED GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT
AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE
OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR
BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR
1
<PAGE>
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN
AN OFFSHORE TRANSACTION; (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE
THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY AND THE LAST DATE ON WHICH CELLSTAR CORPORATION (THE
"COMPANY") OR ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE
SECURITIES ACT) OF THE COMPANY WAS THE OWNER OF THE NOTE (THE
"RESTRICTION TERMINATION DATE") RESELL OR OTHERWISE TRANSFER THE NOTE
EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH
NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE, A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION
TERMINATION DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE. IF THE PROPOSED
TRANSFER IS PURSUANT TO CLAUSE (B), (C), (D) OR (E) ABOVE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS
TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY OR TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE
2
<PAGE>
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
CELLSTAR CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company"), which term
includes any successor Company under the Indenture referred to on the reverse
hereof, for value received hereby promises to pay to CEDE & Co., or registered
assigns, the principal sum of Zero Dollars on October 15, 2002, at the office or
agency of the Company maintained for that purpose in the Borough of Manhattan,
The City of New York, or, at the option of the holder of this Note, at the
Corporate Trust Office of the Trustee, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on April
15 and October 15 of each year, commencing April 15, 1998, on said principal sum
at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Note, from the April 15 or October 15 as the case
may be, next preceding the date of this Note to which interest has been paid or
duly provided for, unless the date hereof is a date to which interest has been
paid or duly provided for, in which case from the date of this Note, or unless
no interest has been paid or duly provided for on the Notes, in which case from
October 14, 1997, until payment of said principal sum has been made or duly
provided for; provided that if the Company shall default in the payment of
interest due on such April 15 or October 15, then this Note shall bear interest
from the next preceding April 15 or October 15 to which interest has been paid
or duly provided for or, if no interest has been paid or duly provided for on
such Note, from October 14, 1997. The interest so payable on any April 15 or
October 15 will be paid to the person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the record date,
which shall be the April 1 or October 1 (whether or not a Business Day) next
preceding such April 15 or October 15, respectively; provided that any such
interest not punctually paid or duly provided for shall be payable as provided
in the Indenture. Interest shall be paid by wire transfer of immediately
available funds to the Depositary or its nominee, as record holder of this
global Note unless other arrangements are made in accordance with the provisions
of the Indenture.
The aggregate principal amount of this Restricted Global Note
represented hereby may from time to time be reduced or increased to reflect
3
<PAGE>
exchanges of a part of this Restricted Global Note for interests in another
Restricted Global Note, the Regulation S Global Note or definitive Notes or
exchanges of interests in another Restricted Global Note, the Regulation S
Global Note or definitive Notes for a part of this Restricted Global Note or
conversions or redemptions of a part of this Restricted Global Note or
cancellations of a part of this Restricted Global Note or transfers of
interests in another Restricted Global Note, the Regulation S Global Note or
definitive Notes in return for a part of this Restricted Global Note or
transfers of a part of this Restricted Global Note effected by delivery of
interests in another Restricted Global Note, the Regulation S Global Note or
definitive Notes, in each case, and in any such case, by means of notations
on the Schedule of Exchanges, Conversions, Redemptions, Cancellations and
Transfers on the last page hereof. Notwithstanding any provision of this
Restricted Global Note to the contrary, (i) exchanges of a part of this
Restricted Global Note for interests in another Restricted Global Note, the
Regulation S Global Note or definitive Notes, (ii) exchanges of interests in
another Restricted Global Note, the Regulation S Global Note or definitive
Notes for a part of this Restricted Global Note, (iii) conversions or
redemptions of a part of this Restricted Global Note, (iv) cancellations of a
part of this Restricted Global Note, (v) transfers of interests in another
Restricted Global Note, the Regulation S Global Note or definitive Notes in
return for a part of this Restricted Global Note and (vi) transfers of a part
of this Restricted Global Note effected by delivery of interests in another
Restricted Global Note, the Regulation S Global Note or definitive Notes may
be effected without the surrendering of this Restricted Global Note, provided
that appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Cancellations and Transfers are made by the Trustee, or the
Custodian at the direction of the Trustee, to reflect the appropriate
reduction or increase, as the case may be, in the aggregate principal amount
of this Restricted Global Note resulting therefrom or as a consequence
thereof.
Reference is made to the further provisions of this Restricted Global
Note set forth on the reverse hereof, including, without limitation, provisions
giving the holder of this Restricted Global Note the right to convert this
Restricted Global Note into Common Stock of the Company on the terms and subject
to the limitations referred to on the reverse hereof and as more fully specified
in the Indenture. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Restricted Global Note shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be construed
in
4
<PAGE>
accordance with and governed by the laws of said State, without regard to
conflicts of laws principles thereof.
This Restricted Global Note shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have been
manually signed by the Trustee or a duly authorized authenticating agent under
the Indenture.
IN WITNESS WHEREOF, the Company has caused this Restricted Global Note
to be duly executed under its corporate seal.
CELLSTAR CORPORATION
By: /s/ Alan H. Goldfield
--------------------------------------
Alan H. Goldfield
Chairman of the Board of Directors and
Chief Executive Officer
Attest:
/s/ Elaine Flud Rodriguez
- --------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
Dated: October 14, 1997
This is one of the Notes described in the within-named indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Walter N. Gitlin
--------------------------------------
Authorized Signatory
5
<PAGE>
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
This Restricted Global Note is one of a duly authorized issue of Notes
of the Company, designated as its 5% Convertible Subordinated Notes Due 2002
(herein called the "Notes"), limited to the aggregate principal amount of
$150,000,000 all issued or to be issued under and pursuant to an Indenture dated
as of October 14, 1997 (the "Indenture"), between the Company and The Bank of
New York, as trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a complete description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Notes. Each Note is subject to,
and qualified by, all such terms as set forth in the Indenture, certain of which
are summarized hereon and each holder of a Note is referred to the corresponding
provisions of the Indenture for a complete statement of such terms. To the
extent that there is any inconsistency between the summary provisions set forth
in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Note shall have the meanings
ascribed to them in the Indenture.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness (as defined
in the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, (a) holders of Senior Indebtedness shall
be entitled to receive payment in full, in cash or cash equivalents, of all
amounts due or to become due thereon before Holders shall be entitled to receive
any payment or distribution of any kind or character, whether in
6
<PAGE>
cash, cash equivalents, property, or securities, on or in respect of the
Obligations, or for the acquisition of any of the Notes for cash, cash
equivalents, property or securities and (b) until all Senior Indebtedness (as
provided in clause (a) above) is paid in full, in cash or cash equivalents,
any payment or distribution to which Holders would be entitled but for the
subordination provisions of the Indenture shall be made to holders of Senior
Indebtedness, as their interests may appear.
The Company may not make any payment upon or in respect of the Notes
and may not acquire from the Trustee or any Holder any Note for cash, cash
equivalents, property, securities or otherwise until all Senior Indebtedness has
been paid in full, in cash or cash equivalents, if: (a) a Payment Default
with respect to any Senior Indebtedness occurs and is continuing beyond any
applicable period of grace; or (b) a default occurs and is continuing with
respect to any Senior Indebtedness resulting in the acceleration of maturity of
all or any portion of such Senior Indebtedness. No payment on any of the
Obligations shall be made if, and the Company shall not acquire any Notes while,
any other default (a "nonpayment default") occurs and is continuing (or would
occur upon any payment or distribution with respect to the Obligations) with
respect to Senior Indebtedness that permits holders of the Senior Indebtedness
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the Bank
Representative, Representative or Representatives of holders of at least a
majority in principal amount of Senior Indebtedness then outstanding.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
shall immediately be paid over and delivered to, the holders of Senior
Indebtedness or their Representative as their respective interests may appear.
After all Senior Indebtedness is paid in full and until the Notes are paid in
full, the holders of the Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
7
<PAGE>
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, evidenced as
provided in the Indenture to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental indenture
shall (i) extend the fixed maturity of any Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
or premium, if any, thereon, or reduce any amount payable on redemption thereof,
alter the obligation of the Company to redeem the Notes at the option of the
holders upon the occurrence of a Change of Control or impair or affect the right
of any Holder to institute suit for the payment thereof, or make the principal
thereof or interest or premium, if any, thereon payable in any coin or currency
other than that provided in the Notes, modify the subordination provisions in a
manner adverse to the holders of the Notes, or impair the right to convert the
Notes into Common Stock subject to the terms set forth in the Indenture without
the consent of the holder of each Note so affected or (ii) reduce the aforesaid
percentage of Notes, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of all Notes then
outstanding. It is also provided in the Indenture that the holders of a
majority in aggregate principal amount of the Notes at the time outstanding may
on behalf of the holders of all of the Notes waive any past default or Event of
Default under the Indenture and its consequences except a default in the payment
of interest or any premium on or the principal of any of the Notes, a failure by
the Company to convert any Notes into Common Stock of the Company or a default
in respect of a covenant or provision of the Indenture that under Article X
thereof cannot be modified or amended without the consent of the holders of all
Notes then outstanding. Any such consent or waiver by the holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such holder and upon all future holders and owners of this Note and any
Notes that may be issued in exchange or substitution hereof, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
8
<PAGE>
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At the
office or agency of the Company referred to on the face hereof, and in the
manner and subject to the limitations provided in the Indenture, without payment
of any service charge but with payment of a sum sufficient to cover any tax,
assessment or other governmental charge that may be imposed in connection with
any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of other authorized denominations.
The Notes are not redeemable at the option of the Company prior to
October 18, 2000. At any time on or after that date, the Notes may be redeemed
at the Company's option, upon notice as set forth in the Indenture, in whole at
any time or in part from time to time, at the optional redemption prices set
forth below, together with accrued interest to the date fixed for redemption.
If redeemed after:
Redemption
Date Price
- ---- ----------
October 18, 2000........................................... 102%
October 15, 2001........................................... 101%
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company purchase such holder's Notes in whole or in part in integral multiples
of $1,000, at a purchase price in cash in an amount equal to 101% of the
principal amount of such Notes, plus accrued and unpaid interest, if any, to the
repurchase date pursuant to an offer to be made by the Company and in accordance
with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, at any time after 60 days following the latest date of
original issuance of the Notes and prior to the close of business on October 11,
2002, or, as to all or any portion hereof called for redemption, prior to the
close of business on the last business date prior to the date fixed for
redemption (unless the Company shall default in payment due upon redemption
thereof), to convert the principal hereof or any portion of such principal that
is $1,000 or an integral multiple thereof,
9
<PAGE>
into that number of fully paid and non-assessable shares of the Company's
Common Stock, as said shares shall be constituted at the date of conversion,
obtained by dividing the principal amount of this Note or portion thereof to
be converted by the conversion price of $55.335 or such conversion price as
adjusted from time to time as provided in the Indenture, upon surrender of
this Note, together with a conversion notice as provided in the Indenture, to
the Company at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, or at the option
of such holder, the Corporate Trust Office of the Trustee, and, unless the
shares issuable on conversion are to be issued in the same name as this Note,
duly endorsed by, or accompanied by instruments of transfer in form
satisfactory to the Company duly executed by, the holder or by his duly
authorized attorney. No adjustment in respect of interest or dividends will
be made upon any conversion; provided that if this Note shall be surrendered
for conversion during the period from the close of business on any record
date for the payment of interest through the opening of business on the
corresponding interest payment date, this Note (unless it or the portion
being converted shall have been called for redemption) must be accompanied by
an amount, in funds acceptable to the Company, equal to the interest payable
on such interest payment date on the principal amount being converted. The
interest payment with respect to a Note called for redemption on a date
during the period from the close of business on or after any record date to
the close of business on the business day following the corresponding payment
date will be payable on the corresponding interest payment date to the
registered Holder at the close of business on that record date
(notwithstanding the conversion of such Note before the close of business on
the corresponding interest payment date) and a Holder who elects to convert
need not include funds equal to the interest paid. No fractional shares will
be issued upon any conversion, but an adjustment in cash will be made, as
provided in the Indenture, in respect of any fraction of a share that would
otherwise be issuable upon the surrender of any Note or Notes for conversion.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, or at the option of the holder of this Note, at the Corporate Trust Office
of the Trustee, a new Note or Notes of authorized denominations for an equal
aggregate principal amount will be issued in the name of the transferee in
exchange thereof, subject to the conditions and limitations provided in the
Indenture, without charge except for any tax, assessment or other governmental
charge imposed in connection therewith.
10
<PAGE>
The Company, the Trustee, any authenticating agent, any paying agent,
any conversion agent and any Note registrar may deem and treat the registered
holder hereof as the absolute owner of this Note (whether or not this Note shall
be overdue and notwithstanding any notation of ownership or other writing hereon
made by anyone other than the Company or any Note registrar), for the purpose of
receiving payment hereof, or on account hereof, for the conversion hereof and
for all other purposes, and neither the Company nor the Trustee nor any
authenticating agent nor any paying agent nor any conversion agent nor any Note
registrar shall be affected by any notice to the contrary. All payments made to
or upon the order of such registered holder shall, to the extent of the sum or
sums paid, satisfy and discharge liability for monies payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Note, or because of the creation of any indebtedness represented thereby, shall
be had against any incorporator, stockholder, officer or director, as such,
past, present or future, of the Company or of any Successor Company, either
directly or through the Company or any Successor Company, whether by virtue of
any constitution, statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the acceptance hereof and
as part of the consideration for the issue hereof, expressly waived and
released.
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties ___________________ Custodian
JT TEN - as joint tenants with right (Cust)
of survivorship and not as ___________________ under
tenants in common (Minor)
Uniform Gifts to
Minors Act ____________________
(State)
Additional abbreviations may also be used though not in the above list.
11
<PAGE>
[FORM OF CONVERSION NOTICE]
To: CELLSTAR CORPORATION
The undersigned registered owner of this Restricted Global Note hereby
irrevocably exercises the option to convert this Restricted Global Note, or the
portion hereof (which is $1,000 principal amount or an integral multiple
thereof) below designated, into shares of Common Stock of the Company in
accordance with the terms of the Indenture referred to in this Restricted Global
Note, and directs that the shares issuable and deliverable upon such conversion,
together with any check in payment for fractional shares and any Restricted
Global Note representing any unconverted principal amount hereof, be issued and
delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Restricted Global Note not
converted are to be issued in the name of a person other than the undersigned,
the undersigned will check the appropriate box below and pay all transfer taxes
payable with respect thereto. Any amount required to be paid to the undersigned
on account of interest accompanies this Restricted Global Note.
Dated:
-----------------------
----------------------------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor
Institution (banks,stock brokers, savings and loan
associations and credit unions) with membership in an
approved signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule 17Ad-15 if
shares of Common Stock are to be issued, or Notes to be
delivered, other than to and in the name of the registered
holder.
- ----------------------------------------------------------
Signature Guarantee
12
<PAGE>
Fill in for registration of shares if to be issued, and Notes
if to be delivered, other than to and in the name of the
registered holder:
- ----------------------------------------------------------
(Name)
- ----------------------------------------------------------
(Street Address)
- ----------------------------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than
all) $
----------------------------------------------
Social Security or other Taxpayer
Identification Number
13
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: CELLSTAR CORPORATION
The undersigned registered owner of this Restricted Global Note hereby
irrevocably acknowledges receipt of a notice from CELLSTAR CORPORATION (the
"Company") as to the occurrence of a Change of Control with respect to the
Company and requests and instructs the Company to repay the entire principal
amount of this Restricted Global Note, or the portion thereof (which is $1,000
principal amount or an integral multiple thereof) below designated, in
accordance with the terms of the Indenture referred to in this Restricted Global
Note, together with accrued interest to such date, to the registered holder
hereof.
Dated:
-------------------------------
----------------------------------------
----------------------------------------
Signature(s)
----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less
than all): $___________________________
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Notes to be
delivered, other than to and in the name of the
registered holder.
- --------------------------------------
Signature Guarantee
14
<PAGE>
[FORM OF ASSIGNMENT]
For value received _____________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________________ (Please insert social
security or other identifying number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ________________________________ attorney
to transfer the said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the within Note occurring prior to
the second anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note are being transferred:
/ / To CELLSTAR CORPORATION or a subsidiary thereof; or
/ / Pursuant to and in compliance with Rule 144A under the Securities Act of
1933, as amended; or
/ / To an Institutional Accredited Investor pursuant to and in compliance with
the Securities Act of 1933, as amended; or
/ / Pursuant to and in compliance with Regulation S under the Securities Act of
1933, as amended; or
/ / Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register the within Note in the name of any person other than the registered
holder thereof (or hereof); provided, however, that the Trustee may, in its sole
discretion, register the transfer of such Note if it has received such
certifications, legal opinions and/or other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
In addition, if the transferee is an institutional accredited investor
or a purchaser who is not a U.S. person, the holder must furnish to the Trustee
(i) in the case of an institutional accredited investor, a signed letter
containing certain representations and agreements relating to the restrictions
on transfer of the security evidenced by the within Note in such form as may be
reasonably required by the Company and the Trustee and (ii) such other
certifications, legal opinions or other information as it may reasonably require
to confirm that such transfer is being made pursuant to an exemption from, or in
a
15
<PAGE>
transaction not subject to, the registration requirements of the Securities
Act of 1933, as amended.
Dated:
--------------------------------
- --------------------------------------
- --------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible Guarantor Institution (banks,
stock brokers, savings and loan associations and credit unions) with membership
in an approved signature guarantee medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15.
- --------------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect
payment upon a Change of Control or the assignment must correspond with the
name as written upon the face of the Note in every particular without
alteration or enlargement or any change whatever.
16
<PAGE>
SCHEDULE A
SCHEDULE OF EXCHANGES
The initial principal amount of this Restricted Global Note is U.S.
$0.00. The following additions to principal, redemptions, exchanges of a part
of this Restricted Global Note for an interest in another Restricted Global
Note, the Regulation S Global Note or a definitive Note and conversions into
Common Stock have been made:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Date of Principal Principal Remaining Notation Made
Addition to Amount Added Amount Principal by or on
Principal, on Redeemed, Amount behalf of the
Redemption, Exchange of Exchanged for Outstanding Trustee
Exchange or Interest in Interest in Following such
Conversion other Global other Transaction
Notes or Global Notes
Definitive or Definitive
Notes Notes or
Converted into
Common Stock
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
REGULATION S GLOBAL NOTE
No. 1 $3,000,000.00
CUSIP U12-623-AA9
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS REGULATION S GLOBAL NOTE MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR
DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
REGULATION S GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
1
<PAGE>
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION; (2) AGREES THAT IT WILL NOT PRIOR TO THE DATE THAT IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED
HEREBY AND THE LAST DATE ON WHICH CELLSTAR CORPORATION (THE "COMPANY") OR
ANY "AFFILIATE" (AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY WAS THE OWNER OF THE NOTE (THE "RESTRICTION TERMINATION DATE")
RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO THE COMPANY OR
ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE BANK OF NEW YORK, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED
FROM SUCH TRUSTEE), (D) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE
904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THE NOTE EVIDENCED HEREBY BEFORE THE RESTRICTION TERMINATION
DATE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE. IF THE PROPOSED
TRANSFER IS PURSUANT TO CLAUSE (B), (C), (D) OR (E) ABOVE, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW YORK, AS
TRUSTEE, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
COMPANY OR TRUSTEE MAY REASONABLY REQUIRE TO
2
<PAGE>
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE RESTRICTION
TERMINATION DATE. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
CELLSTAR CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Delaware (the "Company"), which term
includes any successor Company under the Indenture referred to on the reverse
hereof, for value received hereby promises to pay to CEDE & Co., or registered
assigns, the principal sum of Three Million Dollars on October 15, 2002, at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or, at the option of the holder of this Note,
at the Corporate Trust Office of the Trustee, in such coin or currency of the
United States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest, semi-annually on April
15 and October 15 of each year, commencing April 15, 1998, on said principal sum
at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Note, from the April 15 or October 15 as the case
may be, next preceding the date of this Note to which interest has been paid or
duly provided for, unless the date hereof is a date to which interest has been
paid or duly provided for, in which case from the date of this Note, or unless
no interest has been paid or duly provided for on the Notes, in which case from
October 14, 1997, until payment of said principal sum has been made or duly
provided for; provided that if the Company shall default in the payment of
interest due on such April 15 or October 15, then this Note shall bear interest
from the next preceding April 15 or October 15 to which interest has been paid
or duly provided for or, if no interest has been paid or duly provided for on
such Note, from October 14, 1997. The interest so payable on any April 15 or
October 15 will be paid to the person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the record date,
which shall be the April 1 or October 1 (whether or not a Business Day) next
preceding such April 15 or October 15, respectively; provided that any such
interest not punctually paid or duly provided for shall be payable as provided
in the Indenture. Interest shall be paid by check mailed to the registered
holder at the registered address of such person unless other arrangements are
made in accordance with the provisions of the Indenture.
3
<PAGE>
The aggregate principal amount of this Regulation S Global Note
represented hereby may from time to time be reduced or increased to reflect
exchanges of a part of this Regulation S Global Note for interests in a
Restricted Global Note or definitive Notes or exchanges of interests in a
Restricted Global Note or definitive Notes for a part of this Regulation S
Global Note or conversions or redemptions of a part of this Regulation S Global
Note or cancellations of a part of this Regulation S Global Note or transfers of
interests in a Restricted Global Note or definitive Notes in return for a part
of this Regulation S Global Note or transfers of a part of this Regulation S
Global Note effected by delivery of interests in a Restricted Global Note or
definitive Notes, in each case, and in any such case, by means of notations on
the Schedule of Exchanges, Conversions, Redemptions, Cancellations and Transfers
on the last page hereof. Notwithstanding any provision of this Regulation S
Global Note to the contrary, (i) exchanges of a part of this Regulation S Global
Note for interests in a Restricted Global Note or definitive Notes, (ii)
exchanges of interests in a Restricted Global Note or definitive Notes for a
part of this Regulation S Global Note, (iii) conversions or redemptions of a
part of this Regulation S Global Note, (iv) cancellations of a part of this
Regulation S Global Note, (v) transfers of interests in a Restricted Global Note
or definitive Notes in return for a part of this Regulation S Global Note and
(vi) transfers of a part of this Regulation S Global Note effected by delivery
of interests in a Restricted Global Note or definitive Notes may be effected
without the surrendering of this Regulation S Global Note, provided that
appropriate notations on the Schedule of Exchanges, Conversions, Redemptions,
Cancellations and Transfers are made by the Trustee, or the Custodian at the
direction of the Trustee, to reflect the appropriate reduction or increase, as
the case may be, in the aggregate principal amount of this Regulation S Global
Note resulting therefrom or as a consequence thereof.
Reference is made to the further provisions of this Regulation S
Global Note set forth on the reverse hereof, including, without limitation,
provisions giving the holder of this Regulation S Global Note the right to
convert this Regulation S Global Note into Common Stock of the Company on the
terms and subject to the limitations referred to on the reverse hereof and as
more fully specified in the Indenture. Such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
This Regulation S Global Note shall be deemed to be a contract made
under the laws of the State of New York, and for all purposes shall be construed
in accordance with and governed by the laws of said State, without regard to
conflicts of laws principles thereof.
4
<PAGE>
This Regulation S Global Note shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have been
manually signed by the Trustee or a duly authorized authenticating agent under
the Indenture.
IN WITNESS WHEREOF, the Company has caused this Regulation S Global
Note to be duly executed under its corporate seal.
CELLSTAR CORPORATION
By: /s/ Alan H. Goldfield
-------------------------------------
Alan H. Goldfield
Chairman of the Board of Directors and
Chief Executive Officer
Attest:
/s/ Elaine Flud Rodriguez
- -------------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
Dated: October 14, 1997
This is one of the Notes described in the within-named indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Walter N. Gitlin
-------------------------------------
Authorized Signatory
As Authenticating Agent
(if different from Trustee)
5
<PAGE>
CELLSTAR CORPORATION
5% Convertible Subordinated Notes Due 2002
This Regulation S Global Note is one of a duly authorized issue of
Notes of the Company, designated as its 5% Convertible Subordinated Notes Due
2002 (herein called the "Notes"), limited to the aggregate principal amount of
$150,000,000 all issued or to be issued under and pursuant to an Indenture dated
as of October 14, 1997 (the "Indenture"), between the Company and The Bank of
New York, as trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a complete description of the
rights, limitations of rights, obligations, duties and immunities thereunder of
the Trustee, the Company and the holders of the Notes. Each Note is subject to,
and qualified by, all such terms as set forth in the Indenture, certain of which
are summarized hereon and each holder of a Note is referred to the corresponding
provisions of the Indenture for a complete statement of such terms. To the
extent that there is any inconsistency between the summary provisions set forth
in the Notes and the Indenture, the provisions of the Indenture shall govern.
Capitalized terms used but not defined in this Note shall have the meanings
ascribed to them in the Indenture.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of, premium, if any, and accrued
interest on all Notes may be declared, and upon said declaration shall become,
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The payment of principal of, premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness (as defined
in the Indenture). Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities, (a) holders of Senior Indebtedness shall
be entitled to receive payment in full, in cash or cash equivalents, of all
amounts due or to become due thereon before Holders shall be entitled to receive
any payment or distribution of any kind or character, whether in
6
<PAGE>
cash, cash equivalents, property, or securities, on or in respect of the
Obligations, or for the acquisition of any of the Notes for cash, cash
equivalents, property or securities and (b) until all Senior Indebtedness (as
provided in clause (a) above) is paid in full, in cash or cash equivalents,
any payment or distribution to which Holders would be entitled but for the
subordination provisions of the Indenture shall be made to holders of Senior
Indebtedness, as their interests may appear.
The Company may not make any payment upon or in respect of the Notes
and may not acquire from the Trustee or any Holder any Note for cash, cash
equivalents, property, securities or otherwise until all Senior Indebtedness
has been paid in full, in cash or cash equivalents, if: (a) a Payment Default
with respect to any Senior Indebtedness occurs and is continuing beyond any
applicable period of grace; or (b) a default occurs and is continuing with
respect to any Senior Indebtedness resulting in the acceleration of maturity of
all or any portion of such Senior Indebtedness. No payment on any of the
Obligations shall be made if, and the Company shall not acquire any Notes while,
any other default (a "nonpayment default") occurs and is continuing (or would
occur upon any payment or distribution with respect to the Obligations) with
respect to Senior Indebtedness that permits holders of the Senior Indebtedness
as to which such default relates to accelerate its maturity and the Trustee
receives a notice of such default (a "Payment Blockage Notice") from the Bank
Representative, Representative or Representatives of holders of at least a
majority in principal amount of Senior Indebtedness then outstanding.
In the event that the Trustee (or paying agent if other than the
Trustee) or any holder of the Notes receives any payment of principal or
interest with respect to the Notes at a time when such payment is prohibited
under the Indenture, such payment shall be held in trust for the benefit of, and
shall be immediately paid over and delivered to, the holders of Senior
Indebtedness or their representative as their respective interests may appear.
After all Senior Indebtedness is paid in full and until the Notes are paid in
full, the holders of the Notes shall be subrogated (equally and ratably with all
other Indebtedness pari passu with the Notes) to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to the holders of the Notes have
been applied to the payment of Senior Indebtedness.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate
7
<PAGE>
principal amount of the Notes at the time outstanding, evidenced as provided
in the Indenture to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the
Indenture or of any supplemental indenture or modifying in any manner the
rights of the holders of the Notes; provided that no such supplemental
indenture shall (i) extend the fixed maturity of any Note, or reduce the rate
or extend the time of payment of interest thereon, or reduce the principal
amount thereof or premium, if any, thereon, or reduce any amount payable on
redemption thereof, alter the obligation of the Company to redeem the Notes
at the option of the holders upon the occurrence of a Change of Control or
impair or affect the right of any Holder to institute suit for the payment
thereof, or make the principal thereof or interest or premium, if any,
thereon payable in any coin or currency other than that provided in the
Notes, modify the subordination provisions in a manner adverse to the holders
of the Notes, or impair the right to convert the Notes into Common Stock
subject to the terms set forth in the Indenture without the consent of the
holder of each Note so affected or (ii) reduce the aforesaid percentage of
Notes, the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of all Notes then outstanding.
It is also provided in the Indenture that the holders of a majority in
aggregate principal amount of the Notes at the time outstanding may on behalf
of the holders of all of the Notes waive any past default or Event of Default
under the Indenture and its consequences except a default in the payment of
interest or any premium on or the principal of any of the Notes, a failure by
the Company to convert any Notes into Common Stock of the Company or a
default in respect of a covenant or provision of the Indenture that under
Article X thereof cannot be modified or amended without the consent of the
holders of all Notes then outstanding. Any such consent or waiver by the
holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and
owners of this Note and any Notes that may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is
made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the place, at the respective times, at the rate and in the coin
or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day year
composed of twelve 30-day months.
8
<PAGE>
The Notes are issuable in registered form without coupons in
denominations of $1,000 principal amount and integral multiples thereof. At
the office or agency of the Company referred to on the face hereof, and in
the manner and subject to the limitations provided in the Indenture, without
payment of any service charge but with payment of a sum sufficient to cover
any tax, assessment or other governmental charge that may be imposed in
connection with any registration or exchange of Notes, Notes may be exchanged
for a like aggregate principal amount of Notes of other authorized
denominations.
The Notes are not redeemable at the option of the Company prior to
October 18, 2000. At any time on or after that date, the Notes may be
redeemed at the Company's option, upon notice as set forth in the Indenture,
in whole at any time or in part from time to time, at the optional redemption
prices set forth below, together with accrued interest to the date fixed for
redemption.
If redeemed after:
Redemption
Date Price
- ---- -----
October 18, 2000.............................................. 102%
October 15, 2001.............................................. 101%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
If a Change of Control (as defined in the Indenture) shall occur at
any time, then each holder of Notes shall have the right to require that the
Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price in cash in an amount equal to 101%
of the principal amount of such Notes, plus accrued and unpaid interest, if
any, to the repurchase date pursuant to an offer to be made by the Company
and in accordance with the procedures set forth in the Indenture.
Subject to the provisions of the Indenture, the holder hereof has
the right, at its option, at any time after 60 days following the latest date
of original issuance of the Notes and prior to the close of business on
October 11, 2002, or, as to all or any portion hereof called for redemption,
prior to the close of business on the last business day prior to the date
fixed for redemption (unless the Company shall default in payment due upon
redemption thereof), to convert the principal hereof or any portion of such
principal that is $1,000 or an integral multiple thereof, into that number of
fully paid and non-assessable shares of the Company's Common Stock, as said
shares shall be constituted at the date of conversion, obtained by dividing
the principal amount of this Note or portion thereof to be converted by the
9
<PAGE>
conversion price of $55.335 or such conversion price as adjusted from time to
time as provided in the Indenture, upon surrender of this Note, together with
a conversion notice as provided in the Indenture, to the Company at the
office or agency of the Company maintained for that purpose in the Borough of
Manhattan, The City of New York, or at the option of such holder, the
Corporate Trust Office of the Trustee, and, unless the shares issuable on
conversion are to be issued in the same name as this Note, duly endorsed by,
or accompanied by instruments of transfer in form satisfactory to the Company
duly executed by, the holder or by his duly authorized attorney. No
adjustment in respect of interest or dividends will be made upon any
conversion; provided that if this Note shall be surrendered for conversion
during the period from the close of business on any record date for the
payment of interest through the opening of business on the corresponding
interest payment date, this Note (unless it or the portion being converted
shall have been called for redemption) must be accompanied by an amount, in
funds acceptable to the Company, equal to the interest payable on such
interest payment date on the principal amount being converted. The interest
payment with respect to a Note called for redemption on a date during the
period from the close of business on or after any record date to the close of
business on the business day following the corresponding payment date will be
payable on the corresponding interest payment date to the registered Holder
at the close of business on that record date (notwithstanding the conversion
of such Note before the close of business on the corresponding interest
payment date) and a Holder who elects to convert need not include funds equal
to the interest paid. No fractional shares will be issued upon any
conversion, but an adjustment in cash will be made, as provided in the
Indenture, in respect of any fraction of a share that would otherwise be
issuable upon the surrender of any Note or Notes for conversion.
Upon due presentment for registration of transfer of this Note at
the office or agency of the Company in the Borough of Manhattan, The City of
New York, or at the option of the holder of this Note, at the Corporate Trust
Office of the Trustee, a new Note or Notes of authorized denominations for an
equal aggregate principal amount will be issued in the name of the transferee
in exchange thereof, subject to the conditions and limitations provided in
the Indenture, without charge except for any tax, assessment or other
governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any paying
agent, any conversion agent and any Note registrar may deem and treat the
registered holder hereof as the absolute owner of this Note (whether or not
this Note shall be overdue and notwithstanding any notation of ownership or
other
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<PAGE>
writing hereon made by anyone other than the Company or any Note registrar),
for the purpose of receiving payment hereof, or on account hereof, for the
conversion hereof and for all other purposes, and neither the Company nor the
Trustee nor any authenticating agent nor any paying agent nor any conversion
agent nor any Note registrar shall be affected by any notice to the contrary.
All payments made to or upon the order of such registered holder shall, to
the extent of the sum or sums paid, satisfy and discharge liability for
monies payable on this Note.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement
of the Company in the Indenture or any indenture supplemental thereto or in
any Note, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any Successor Company,
either directly or through the Company or any Successor Company, whether by
virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
ABBREVIATIONS
The following abbreviations, when used in the inscription of the
face of this Regulation S Global Note, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
TEN ENT - as tenants by the entireties __________________ Custodian
JT TEN - as joint tenants with right (Cust)
of survivorship and not as __________________ under
tenants in common (Minor)
Uniform Gifts to
Minors Act ___________________
(State)
Additional abbreviations may also be used though not in the above list.
[FORM OF CONVERSION NOTICE]
To: CELLSTAR CORPORATION
11
<PAGE>
The undersigned registered owner of this Regulation S Global Note
hereby irrevocably exercises the option to convert this Regulation S Global
Note, or the portion hereof (which is $1,000 principal amount or an integral
multiple thereof) below designated, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this Regulation S Global Note,
and directs that the shares issuable and deliverable upon such conversion,
together with any check in payment for fractional shares and any Notes
representing any unconverted principal amount hereof, be issued and delivered
to the registered holder hereof unless a different name has been indicated
below. If shares or any portion of this Regulation S Global Note not
converted are to be issued in the name of a person other than the
undersigned, the undersigned will check the appropriate box below and pay all
transfer taxes payable with respect thereto. Any amount required to be paid
to the undersigned on account of interest accompanies this Regulation S
Global Note.
Dated:
----------------------------------
----------------------------------------
----------------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be delivered,
other than to and in the name of the registered
holder.
- ------------------------------------------------------
Signature Guarantee
12
<PAGE>
Fill in for registration of shares if to be issued,
and Notes if to be delivered, other than to and in
the name of the registered holder:
- ------------------------------------------------------
(Name)
- ------------------------------------------------------
(Street Address)
- ------------------------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less than all)
$____________
---------------------------------------------------
13
<PAGE>
[FORM OF OPTION TO ELECT REPAYMENT
UPON A CHANGE OF CONTROL]
To: CELLSTAR CORPORATION
The undersigned registered owner of this Regulation S Global Note
hereby irrevocably acknowledges receipt of a notice from CELLSTAR CORPORATION
(the "Company") as to the occurrence of a Change of Control with respect to
the Company and requests and instructs the Company to repay the entire
principal amount of this Regulation S Global Note, or the portion thereof
(which is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Regulation S Global Note, together with accrued interest to such date, to the
registered holder hereof.
Dated:
----------------------------
---------------------------
---------------------------
Signature(s)
---------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if
less than all): $
------------------
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of Common
Stock are to be issued, or Notes to be delivered,
other than to and in the name of the registered
holder.
- ------------------------------------------------------
Signature Guarantee
14
<PAGE>
[FORM OF ASSIGNMENT]
For value received ________________________ hereby sell(s),
assign(s) and transfer(s) unto _________________ (please insert social
security or other identifying number of assignee) the within Note, and hereby
irrevocably constitutes and appoints _____________________ attorney to
transfer the said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the within Note occurring prior
to the second anniversary of the date of original issuance of such Note, the
undersigned confirms that such Note are being transferred:
/ / To CELLSTAR CORPORATION or a subsidiary thereof; or
/ / Pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
/ / To an Institutional Accredited Investor pursuant to and in compliance
with the Securities Act of 1933, as amended; or
/ / Pursuant to and in compliance with Regulation S under the Securities
Act of 1933, as amended; or
/ / Pursuant to and in compliance with Rule 144 under the Securities Act
of 1933, as amended.
Unless one of the boxes above is checked, the Trustee will refuse to
register the within Note in the name of any person other than the registered
holder thereof (or hereof); provided, however, that the Trustee may, in its
sole discretion, register the transfer of such Note if it has received such
certifications, legal opinions and/or other information as the Company has
reasonably requested to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
In addition, if the transferee is an institutional accredited
investor or a purchaser who is not a U.S. person, the holder must furnish to
the Trustee (i) in the case of an institutional accredited investor, a signed
letter containing certain representations and agreements relating to the
restrictions on transfer of the
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<PAGE>
security evidenced by the within Note in such form as may be reasonably
required by the Company and the Trustee and (ii) such other certifications,
legal opinions or other information as it may reasonably require to confirm
that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities
Act of 1933, as amended.
Dated:
--------------------------
- --------------------------------
- --------------------------------
Signature(s)
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations and credit unions) with
membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15.
- ------------------------------------------------------
Signature Guarantee
NOTICE: The signature on the conversion notice, the option to elect payment
upon a Change of Control or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
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SCHEDULE A
SCHEDULE OF EXCHANGES
The initial principal amount of this Regulation S Global Note is
U.S.$3,000,000.00. The following additions to principal, redemptions,
exchanges of a part of this Regulation S Global Note for an interest in a
Restricted Global Note, a definitive Note and conversions into Common Stock
have been made:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Date of Principal Principal Remaining Notation Made
Addition to Amount Added Amount Principal by or on
Principal, on Redeemed, Amount behalf of the
Redemption, Exchange of Exchanged for Outstanding Trustee
Exchange or Interest in a Interest in a Following such
Conversion Restricted Restricted Transaction
Global Notes Global Notes
or Definitive or Definitive
Note Notes or
Converted into
Common Stock
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
17
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EXHIBIT 99.1
CELLSTAR PRICES $130.0 MILLION CONVERTIBLE NOTES OFFERING
CARROLLTON, TEXAS, OCTOBER 8, 1997 -- CellStar Corporation [Nasdaq: CLST]
announced today that it had priced $130.0 million of Convertible Subordinated
Notes (the "Notes"). The offering was made in reliance on Rule 144 and other
registration exemptions under the Securities Act of 1933, as amended (the "Act")
to qualified institutional buyers. The Notes will be unsecured obligations,
bear interest at an annual rate of 5.0%, are convertible into CellStar
Corporation common stock at a price of $55.335 per share and mature on October
15, 2002. The Notes are not callable for three years. In addition, the Company
granted the initial purchasers a 30-day option to purchase an additional $20.0
million principal amount of the Notes to cover over-allotments, if any. The
Company stated that it will use the net proceeds of the offering to repay
certain indebtedness and intends to use any remaining net proceeds for working
capital and other general corporate purposes, including investments in support
of the Company's growth strategy.
The Notes and the underlying common stock have been registered under the Act or
any securities laws of any state or other jurisdiction and may not be offered or
sold in the U.S. or any state thereof or other jurisdiction absent registration
or an applicable exemption from registration requirements.
<PAGE>
EXHIBIT 99.2
CELLSTAR CLOSES $150.0 MILLION CONVERTIBLE NOTES OFFERING
CARROLLTON, TEXAS, NOVEMBER 14, 1997 -- CellStar Corporation [Nasdaq: CLST]
announced today that it has consummated its offering of $150.0 million of
Convertible Subordinated Notes (the "Notes"). The offering was made in reliance
on Rule 144A and other registration exemptions under the Securities Act of 1933,
as amended (the "Act") to qualified institutional buyers. The Notes will be
unsecured obligations, bear interest at an annual rate of 5.0%, are convertible
into CellStar Corporation common stock at a price of $55.335 per share and
mature on October 15, 2002. The Notes are not callable for three years. The
Company stated that it will use the net proceeds of the offering to repay
certain indebtedness and intends to use any remaining net proceeds for working
capital and other general corporate purposes, including investments in support
of the Company's growth strategy.
The Notes and the underlying common stock have not been registered under the Act
or any securities laws of any state or other jurisdiction and may not be offered
or sold in the U.S. or any state thereof or other jurisdiction absent
registration or an applicable exemption from registration requirements.
<PAGE>
EXHIBIT 99.3
CELLSTAR COMPLETES NEW CREDIT FACILITY
CARROLLTON, TEXAS, OCTOBER 17, 1997 -- CellStar Corporation [Nasdaq: CLST]
announced today that it has completed a new $135.0 million multicurrency
revolving credit facility, which was arranged by Chase Securities Inc. and led
by Texas Commerce Bank National Association, The First National Bank of Chicago
and National City Bank of Kentucky, as co-agents, for a syndicate of banks that
also includes Credit Lyonnais, The Fuji Bank, Limited and Wells Fargo Bank
(Texas), National Association.
The new facility has a term of approximately five years, replaces the
Company's previous $90.0 million revolving credit facility and provides the
ability to borrow in multiple currencies to support the Company's working
capital requirements and growth plans.
"We are very pleased with our new bank group which gives us geographic
coverage around the globe," stated Mark Q. Huggins, Senior Vice President and
Chief Financial Officer. "This new bank facility furnishes us with more
attractive financing costs and much greater financial flexibility."
Dick Gozia, President and Chief Operating Officer of CellStar noted, "The
completion of this new $135.0 million bank facility combined with the $150.0
million offering of convertible subordinated notes that was closed on Tuesday of
this week provides CellStar with over $190.0 million in additional capital to
allow us to take advantage of attractive business opportunities on a timely
basis and to help us grow in the future."
CellStar Corporation is a global integrated wholesaler and retailer of
wireless phones and other wireless communications products with operations in
the United States, the Asia-Pacific Region, Latin American and the United
Kingdom. The Company is one of the world's largest non-carrier wholesale
distributors of wireless phones for Motorola, Inc., Nokia Phones, Inc. and
Ericcson, Inc. and is also a wholesale distributor of wireless phones for
QUALCOMM and NEC Corporation in the United States.
