<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 11, 1998
REGISTRATION NO. 333-52917
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
KELLSTROM INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 13-3753725
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
</TABLE>
14000 N.W. 4TH STREET
SUNRISE, FLORIDA 33325
(954) 845-0427
(Address, Including Zip Code, and Telephone Number, including Area Code, of
Registrant's Principal Executive Offices)
ZIVI R. NEDIVI
CHIEF EXECUTIVE OFFICER
14000 N.W. 4TH STREET
SUNRISE, FLORIDA 33325
(954) 845-0427
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copies to:
<TABLE>
<S> <C>
BRUCE I. MARCH, ESQ. ROBERT H. CRAFT, JR.
AKERMAN, SENTERFITT & EIDSON, P.A. SULLIVAN & CROMWELL
ONE S.E. THIRD AVENUE 1701 PENNSYLVANIA AVENUE, N.W.
MIAMI, FLORIDA 33131 WASHINGTON, D.C. 20006
(305) 374-5600 (202) 956-7500
</TABLE>
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or reinvestment
plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates (other than the
Securities and Exchange Commission registration fee and the NASDAQ additional
listing fee) of the expenses in connection with the issuance and distribution of
the Notes being registered:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 25,444
Nasdaq National Market additional listing fee............... 17,500
NASD filing fee............................................. 7,500
Printing and engraving expenses............................. 175,000
Blue Sky fees and expenses.................................. 7,500
Legal fees and expenses..................................... 110,000
Accounting fees and expenses................................ 110,000
Trustee's fees and expenses................................. 2,500
Miscellaneous expenses...................................... 19,556
--------
Total............................................. $475,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware permits
indemnification of directors, officers and employees of a corporation under
certain conditions and subject to certain limitations. Article Ten of the
Company's Restated Certificate of Incorporation and Article VIII of the
Company's By-laws contain provisions for the indemnification of directors,
officers and employees within the limitations permitted by Section 145. The
Company has also entered into indemnification agreements with its directors and
officers based on the indemnification provisions in Section 145.
The Company carries a directors' and officers' liability insurance policy
which provides for payment of certain liability claims and the related expenses
of the Company's directors and officers in connection with threatened, pending,
or completed actions, suits or proceedings against them in their capacities as
directors and officers, in accordance with the Company's By-laws and the General
Corporation Law of Delaware.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement(1)
2.1 Stock Purchase Agreement among the Company, Aerocar Aviation
Corp., Aerocar Parts, Inc., Rosa Shashua and Carmel
Shashua(2)
3.1 Restated Certificate of Incorporation of the Company(3)
3.2 By-laws of the Company, as amended(4)
4.1 Form of Common Stock certificate(5)
4.2 Articles 4, 6, 7, 9, 10 and 11 of the Restated Certificate
of Incorporation of the Company(3)
4.3 Articles II, V, VI, VII and IX of the By-laws of the
Company, as amended(4)
4.4 Indenture dated as of June , 1998, by and between the
Company and First Union National Bank, as Trustee(1)
4.5 Form of Note (included in Exhibit 4.4)(1)
5.1 Opinion of Akerman, Senterfitt & Eidson, P.A. with respect
to the legality of the securities being registered(1)
</TABLE>
II-1
<PAGE> 3
<TABLE>
<C> <S>
12.1 Statement re: calculation of ratio of earnings to fixed
charges(6)
23.1 Consent of Akerman, Senterfitt & Eidson, P.A. (included in
Exhibit 5.1)(1)
23.2 Consent of KPMG Peat Marwick LLP(6)
23.3 Consent of KPMG Peat Marwick LLP(6)
24.1 Power of Attorney (included on Signature Page)
25.1 Statement of Eligibility of Trustee on Form T-1(1)
27.1 Financial Data Schedule(6)
</TABLE>
- ---------------
(1) Filed herewith.
(2) Filed as Exhibit 2.1 to the Company's Form 8-K dated May 14, 1998 and
incorporated herein by reference.
(3) Filed as Exhibit 3.1 to the Company's Form 8-K dated June 22, 1995 and
incorporated herein by reference.
(4) Filed as Exhibit 3.2 to the Company's Form 8-K dated June 22, 1995 and
incorporated herein by reference.
(5) Filed as Exhibit 4.1 to the Company's Registration Statement on Form S-1
(No. 33-75750) and incorporated herein by reference.
(6) Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement;
II-2
<PAGE> 4
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed with or furnished to the Commission
by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(c) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer, or controlling person of the
registrant in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
Registration Statement to be signed on its behalf by the undersigned hereunto
duly authorized, in Sunrise, Florida on the 11th day of June, 1998.
Kellstrom Industries, Inc.
By: /s/ ZIVI R. NEDIVI
------------------------------------
Zivi R. Nedivi
President and Chief Executive
Officer
In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the dates stated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board of Directors June 11, 1998
- ---------------------------------------
Yoav Stern
/s/ ZIVI R. NEDIVI President, Chief Executive Officer and June 11, 1998
- --------------------------------------- Director (Principal Executive Officer)
Zivi R. Nedivi
/s/ MICHAEL WALLACE Chief Financial Officer June 11, 1998
- --------------------------------------- (Principal Financial and
Michael Wallace Accounting Officer)
Executive Vice President and Director
- ---------------------------------------
John S. Gleason
June 11, 1998
* Director
- ---------------------------------------
Niv Harizman
* Director June 11, 1998
- ---------------------------------------
David Mitchell
* /s/ MICHAEL WALLACE
- ---------------------------------------
Michael Wallace,
as Attorney-in-fact
</TABLE>
II-4
<PAGE> 1
$75,000,000
KELLSTROM INDUSTRIES, INC.
___% Convertible Subordinated Notes Due 2003
DEBT UNDERWRITING AGREEMENT
June 11, 1998
BT Alex. Brown Incorporated
Brean Murray & Co., Inc.
As Representatives of the
Several Underwriters
c/o BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
Kellstrom Industries, Inc., a Delaware corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as representatives (the
"Representatives") an aggregate of $75,000,000 principal amount of the
Convertible Subordinated Notes, convertible into Common Stock (par value $.001
per share) ("Common Stock") of the Company, specified above (the "Firm
Securities"). The respective amounts of the Firm Securities to be so purchased
by the several Underwriters are set forth opposite their names in Schedule I
hereto. The Company also proposes to sell at the Underwriters' option an
aggregate of up to $11,250,000 additional aggregate principal amount (the
"Option Securities") as set forth below.
As the Representatives, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the amount of Firm Securities set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option
Securities if you elect to exercise the over-allotment option in whole or in
part for the accounts of the several Underwriters. The Firm Securities and the
Option Securities (to the extent the aforementioned option is exercised) are
herein collectively called the "Securities."
In consideration of the mutual agreements contained herein and of the
<PAGE> 2
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the
Underwriters as follows:
(a) A registration statement on Form S-3 (File No. 333-52917)
with respect to the Securities and shares of the Stock issuable upon conversion
thereof has been prepared by the Company in conformity with the requirements of
the Securities Act of 1933, as amended (the "Act"), and the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the Commission.
Copies of such registration statement, including any amendments thereto, the
preliminary prospectuses (meeting the requirements of the Rules and Regulations)
contained therein and the exhibits, financial statements and schedules, as
finally amended and revised, have heretofore been delivered by the Company to
you. Such registration statement, together with any registration statement filed
by the Company pursuant to Rule 462 (b) of the Act, herein referred to as the
"Registration Statement," which shall be deemed to include all information
omitted therefrom in reliance upon Rule 430A and contained in the Prospectus
referred to below, has become effective under the Act and no post-effective
amendment to the Registration Statement has been filed as of the date of this
Agreement. "Prospectus" means the form of prospectus first filed with the
Commission pursuant to Rule 424(b). Each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective is herein referred
to as a "Preliminary Prospectus." Any reference herein to the Registration
Statement, any Preliminary Prospectus or to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference therein, and, in
the case of any reference herein to any Prospectus, also shall be deemed to
include any documents incorporated by reference therein, and any supplements or
amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rules 424(b) or 430A, and prior to the termination of the
offering of the Securities by the Underwriters.
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. Each of the
subsidiaries of the Company as listed in Exhibit A hereto (collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. The Subsidiaries are the
only subsidiaries, direct or indirect, of the
<PAGE> 3
Company. The Company and each of the Subsidiaries are duly qualified to transact
business in all jurisdictions in which the conduct of their business requires
such qualification, except where the failure to so qualify would not have a
material adverse effect on the Company and the Subsidiaries taken as a whole.
Except as otherwise set forth in the Registration Statement, the outstanding
shares of capital stock of each of the Subsidiaries have been duly authorized
and validly issued, are fully paid and non-assessable and are owned by the
Company or another Subsidiary free and clear of all liens, encumbrances and
equities and claims; and no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in the
Subsidiaries are outstanding.
(c) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. All of the Securities
conform to the description thereof contained in the Registration Statement and
all of the issued shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable, the shares
of Common Stock initially issuable upon conversion of the Securities have been
duly and validly authorized and reserved for issuance and, when issued and
delivered in accordance with the provisions of the Securities and the Indenture
referred to below, will be duly and validly issued, fully paid and
non-assessable and will conform to the description of the Common Stock contained
in the Prospectus.
(d) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
indenture dated as of June 15, 1998 (the "Indenture") between the Company and
First Union National Bank, as Trustee (the "Trustee"), under which they are to
be issued, which is substantially in the form filed as an exhibit to the
Registration Statement; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; and the Securities and the Indenture will conform to the
descriptions thereof in the Prospectus.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Securities nor to the best of the Company's knowledge, instituted proceedings
for that purpose. The Registration Statement contains, and the Prospectus and
any amendments or supplements thereto will contain, all statements which are
required to be stated therein by, and will conform to, the requirements of the
Act and the Rules and Regulations. The documents incorporated by reference in
the
<PAGE> 4
Prospectus, at the time filed with the Commission, conformed in all respects to
the requirements of the Securities Exchange Act of 1934 (the "Exchange Act"),
the Act or the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), as applicable, and the rules and regulations of the Commission
thereunder. The Registration Statement and any amendment thereto do not contain,
and will not contain as of the applicable effective date as to the Registration
Statement and any amendment thereto, any untrue statement of a material fact and
do not omit, and will not omit as of the applicable effective date as to the
Registration Statement and any amendment thereto, to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus and any amendments and supplements thereto do not
contain, and will not contain as of the applicable filing date as to the
Prospectus, any untrue statement of material fact; and do not omit, and will not
omit as of the applicable filing date as to the Prospectus, 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; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from the Registration
Statement or the Prospectus, or any such amendment or supplement, in reliance
upon, and in conformity with, written information furnished to the Company by or
on behalf of any Underwriter through the Representatives, specifically for
inclusion therein.
(f) The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules as set forth or
incorporated by reference in the Registration Statement, present fairly the
financial position and the results of operations and cash flows of the Company
and the consolidated Subsidiaries, at the indicated dates and for the indicated
periods. Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, except as disclosed therein, and all
adjustments necessary for a fair presentation of results for such periods have
been made. The summary financial and statistical data included or incorporated
by reference in the Registration Statement presents fairly the information shown
therein and such data has been compiled on a basis consistent with the financial
statements presented therein and the books and records of the company. The pro
forma financial statements and other pro forma financial information included in
the Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(g) KPMG Peat Marwick, who have certified certain of the financial
<PAGE> 5
statements filed with the Commission as part of, or incorporated by reference
in, the Registration Statement, are independent public accountants as required
by the Act and the Rules and Regulations.
(h) Except as set forth in the Registration Statement, there
is no action, suit, claim or proceeding pending or, to the best of the Company's
knowledge, threatened against the Company or any of the Subsidiaries before any
court or administrative agency or otherwise which if determined adversely to the
Company or any of its Subsidiaries could be reasonably expected to result in any
material adverse change in the earnings, business, management, properties,
assets, rights, operations, condition (financial or otherwise) or prospects of
the Company and of the Subsidiaries taken as a whole or which would prevent the
consummation of the transactions contemplated hereby.
(i) The Company and the Subsidiaries have good and marketable
title to all of the properties and assets reflected in the financial statements
(or as described in the Registration Statement) herein above described, subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except those
reflected in such financial statements or the footnotes or schedules thereto (or
as described in the Registration Statement) or which are not material in amount.
The Company and the Subsidiaries occupy their leased properties under valid and
binding leases conforming in all material respects to the description thereof
set forth in the Registration Statement.
(j) The Company and the Subsidiaries have filed all Federal,
State, local and foreign tax returns which have been required to be filed and
have paid all taxes indicated by said returns and all assessments received by
them or any of them to the extent that such taxes have become due. All tax
liabilities, if any, have been adequately provided for in the financial
statements of the Company, and the Company does not know of any actual or
proposed additional material tax assessments.
(k) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise), or prospects of the Company and its Subsidiaries taken as a whole,
whether or not occurring in the ordinary course of business, and there has not
been any material transaction entered into or any material transaction that is
expected to be entered into by the Company or the Subsidiaries, other than
transactions in the ordinary course of business and changes and transactions
described in the Registration Statement, as it may be amended or supplemented.
The Company and the Subsidiaries have no material contingent obligations that
are not disclosed in the Company's financial
<PAGE> 6
statements which are included in the Registration Statement.
(l) Neither the Company nor any of the Subsidiaries is or with
the giving of notice or lapse of time or both, will be, in violation of or in
default under its Restated Certificate of Incorporation, as amended, or By-Laws,
as amended, or under any agreement, lease, contract, indenture or other
instrument or obligation to which it is a party or by which it, or any of its
properties, is bound and which default would have a material adverse effect on
the condition, financial or otherwise of the Company and its Subsidiaries taken
as a whole or the business, management, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the Company and the
Subsidiaries taken as a whole. The execution and delivery of this Agreement, the
Securities and the Indenture and the consummation of the transactions herein and
therein contemplated and the fulfillment of the terms hereof and thereof will
not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any Subsidiary is a party, or of
the Restated Certificate of Incorporation, as amended, or By-Laws, as amended,
of the Company or any order, rule or regulation applicable to the Company or any
Subsidiary of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction, except for such conflicts, breaches
or defaults that in the aggregate would not have a material adverse effect on
the Company and the Subsidiaries taken as a whole.
(m) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body required for the execution and delivery by the Company of this
Agreement, the Securities and the Indenture and the consummation of the
transactions herein and therein contemplated (except such additional steps as
may be required by the Commission, the National Association of Securities
Dealers, Inc. (the "NASD") or such additional steps as may be necessary to
qualify the Securities for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(n) The Company and each of the Subsidiaries holds all
material licenses, certificates and permits from governmental authorities,
including, without limitation, laws or regulations enforced or administered by
the Federal Aviation Administration, which are necessary to the conduct of their
businesses; and neither the Company nor any of the Subsidiaries has infringed
any patents, patent rights, trade names, trademarks or copyrights, which
infringement is material to the business of the Company and the Subsidiaries
taken as a whole. The Company knows of no material infringement by others of
patents, patent rights, trade names, trademarks or copyrights owned by or
licensed to the Company.
(o) Neither the Company, nor to the best of the Company's
<PAGE> 7
knowledge, any of its affiliates, has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the shares of Common Stock to facilitate the sale or resale of the
Securities. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Securities on the NASDAQ Stock Market in
accordance with Rule 103 of Regulation M under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(p) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940, (as amended, the "1940 Act") and the rules and regulations of the
Commission thereunder.
(q) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (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 existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(r) The Company and each of its Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is reasonably
adequate for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar
industries.
(s) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which could reasonably be
expected to cause the loss of such qualification.
<PAGE> 8
(t) To the best of the Company's knowledge, there are no
affiliations or associations between any member of the NASD and any of the
Company's officers, directors or 5% or greater securityholders, except as set
forth in the Registration Statement.
(u) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes.
(v) Other than payments required or allowed by applicable law
of the United States, neither the Company nor any of the Subsidiaries has, nor
to the best of the Company's knowledge, has any officer, director or employee of
the Company or any of the Subsidiaries or any other person acting on behalf of
the Company or any of the Subsidiaries, for the benefit of the Company or any of
the Subsidiaries at any time during the last five years, (i) made any unlawful
gift or contribution to any candidate for federal, state, local or foreign
political office, or failed to disclose fully any such gift or contribution in
violation of law, or (ii) made any payment to any federal, state, local or
foreign governmental officer or official, which would be reasonably likely to
subject the Company or the Subsidiaries to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign). Each of
the Company's and the Subsidiaries' internal accounting controls are sufficient
to cause the Company and the Subsidiaries to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(w) Neither the Company nor any of the Subsidiaries has been
notified or is otherwise aware that it is potentially liable, or is considered
potentially liable, under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or any similar law ("Environmental
Laws"). To the best of the Company's knowledge, the Company and the Subsidiaries
are in substantial compliance with all applicable existing Environmental Laws,
except for such instances of non-compliance which would not have a material
adverse effect on the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries taken as a whole. 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
Environmental Law. To the best of the Company's knowledge, no disposal, release
or discharge of "Hazardous Material" has occurred on, in, at or about any of the
facilities or properties of the Company or any of the Subsidiaries, which could
reasonably be expected to result in a material adverse effect on the Company and
the Subsidiaries taken as a whole.
<PAGE> 9
(x) The Company and its Subsidiaries in the conduct of their
respective businesses are in compliance with all applicable laws related to
economic sanctions and export controls, except where the failure to comply would
not have a material adverse effect upon the Company and the Subsidiaries taken
as a whole.
2. PURCHASE, SALE AND DELIVERY OF THE FIRM SECURITIES.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth, the
Company agrees to issue and sell to the Underwriters and each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of ___% of the principal amount thereof, plus accrued interest, if any
from June ___, 1998 to the Time of Delivery hereunder, the principal amount of
Securities, the number of Firm Securities set forth opposite the name of each
Underwriter in Schedule I hereof, subject to adjustments in accordance with
Section 9 hereof.
(b) Payment for the Firm Securities to be sold hereunder is to
be made by the Underwriters by wire transfer of immediately available funds to a
bank account designated by the Company for the Firm Securities to be sold by it,
and against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters. Such payment and delivery may be made by
credit through full fast transfer to accounts at The Depository Trust Company,
New York, New York, designated by the Representatives, at 10:00 a.m., New York
time, on the third business day after the date of this Agreement or at such
other time and date not later than five business days thereafter as you and the
Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the New
York Stock Exchange and the NASDAQ Stock Market are open for trading and on
which banks in New York are open for business and are not permitted by law or
executive order to be closed.)
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase the Option Securities at the price per share as set forth in the first
paragraph of this Section 2. The option granted hereby may be exercised in whole
or in part, on one occasion only, by giving written notice within 30 days after
the date of this Agreement, by you, as Representatives of the several
Underwriters, to the Company setting forth the number of Option Securities as to
which the several Underwriters are exercising the option, the names and
denominations in which the Option Securities are to be registered and the time
and date at which such certificates are to be delivered. The time and date at
which certificates for Option Securities are to be delivered shall be determined
by the Representatives but shall not be earlier than three nor later than ten
full business days after the exercise of such option, nor in any event
prior to the Closing Date (such time and date being herein referred to as
<PAGE> 10
the "Option Closing Date"). If the date of exercise of the option is three or
more days before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The principal amount of Option Securities to be
purchased by each Underwriter shall be in the same proportion to the aggregate
principal amount of Option Securities being purchased as the principal amount of
Firm Securities being purchased by such Underwriter bears to $75,000,000,
adjusted by you in such manner as to avoid fractional Securities. The option
with respect to the Option Securities granted hereunder may be exercised only to
cover over-allotments in the sale of the Firm Securities by the Underwriters.
You, as Representatives of the several Underwriters, may cancel such option at
any time prior to its expiration by giving written notice of such cancellation
to the Company. To the extent, if any, that the option is exercised, payment for
the Option Securities shall be made on the Option Closing Date by wire transfer
of immediately available funds to a bank account designated by the Company
against delivery of Certificates therefor at the office of BT Alex. Brown
Incorporated, One South Street, Baltimore, Maryland, or through the facilities
of The Depository Trust Company in New York, New York drawn to the order of the
Company.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a
public offering of the Firm Securities as soon as the Representatives deem it
advisable to do so. The Firm Securities are to be initially offered to the
public at the initial public offering price for sale upon the terms and
conditions set forth in the Prospectus. The Representatives may from time to
time thereafter change the public offering price and change other selling terms
if deemed appropriate after consultation with the Company. To the extent, if at
all, that any Option Securities are purchased pursuant to Section 2 hereof, the
Underwriters will offer them for sale on the foregoing terms.
It is further understood that you will act as the
Representatives for the Underwriters in the offering and sale of the Securities
in accordance with a Master Agreement Among Underwriters entered into by you and
the several other Underwriters.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters
that:
(a) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a Prospectus in a form
approved by
<PAGE> 11
the Representatives containing information previously omitted at the time of
effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations, and (B) not file any amendment to the Registration
Statement or supplement to the Prospectus or document incorporated by reference
therein of which the Representatives shall not previously have been advised and
furnished with a copy or to which the Representatives shall have reasonably
objected in writing or which is not in compliance with the Rules and Regulations
and (C) file on a timely basis all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
subsequent to the date of the Prospectus and prior to the termination of the
offering of the Securities by the Underwriters.
(b) The Company will advise the Representatives promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission, (C)
of any request of the Commission for amendment of the Registration Statement or
for supplement to the Prospectus or for any additional information, and (D) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the use of the Prospectus or of the institution of
any proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in
endeavoring to qualify the Securities and the shares of Stock issuable upon
conversion of the Securities for offering or sale under the securities laws of
such jurisdictions as the Representatives may reasonably have designated in
writing and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so
qualified or required to file such a consent. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request for distribution of the
Securities.
(d) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
<PAGE> 12
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested), including documents incorporated by reference therein,
and of all amendments thereto, as the Representatives may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act and the Trust Indenture Act, so as to permit
the completion of the distribution of the Securities as contemplated in this
Agreement, the Indenture and the Prospectus. If during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer, any
event shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances existing at the time the Prospectus is delivered to a
purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
either (i) prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus or (ii) prepare and file
with the Commission an appropriate filing under the Exchange Act which shall be
incorporated by reference in the Prospectus so that the Prospectus as so amended
or supplemented will not contain any 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 when it is so
delivered, not misleading, or so that the Prospectus will comply with the law.
(f) The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later than
15 months after the effective date of the Registration Statement, an earning
statement (which need not be audited) in reasonable detail, covering a period of
at least 12 consecutive months beginning after the effective date of the
Registration Statement, which earning statement shall satisfy the requirements
of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(g) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(h) Other than as set forth in the Registration Statement, the
Company will not offer, sell, contract to sell or otherwise dispose of sale,
short sale or other disposition of any shares of Common Stock of the Company or
other
<PAGE> 13
securities that are substantially similar to the shares of Common Stock or that
are convertible into or exchangeable or exercisable for shares of Common Stock
or derivative of Common Stock (or agreement for such) will be made for a period
of 90 days after the date of this Agreement, directly or indirectly, by the
Company otherwise than hereunder or with the prior written consent of BT Alex.
Brown Incorporated and Brean Murray & Co., Inc., which will not be unreasonably
withheld.
(i) The Company has caused certain officers and directors and
specific shareholders of the Company to furnish to you, on or prior to the date
of this Agreement, a letter or letters, in form and substance satisfactory to
the Underwriters, pursuant to which each such person shall agree, except as set
forth in the Registration Statement, not to offer, sell, sell short, grant any
options to purchase, pledge or otherwise dispose of any shares of Common Stock
of the Company or other capital stock of the Company, or any other securities of
the Company that are substantially similar to the shares of Common Stock or that
are convertible into, exchangeable for, derivative from or exercisable for
Common Stock or substantially similar securities by such person or request the
registration for the offer or sale of any of the foregoing (or as to which such
person has the right to direct the disposition of) for a period of 90 days after
the date of this Agreement, directly or indirectly, except as permitted by such
letters or with the prior written consent of BT Alex. Brown Incorporated
("Lock-Up Agreements"), which will not be unreasonably withheld.
(j) The Company shall apply the net proceeds of its sale of
the Securities as set forth in the Prospectus.
(k) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Securities in such a
manner as would require the Company or any of the Subsidiaries to register as an
investment company under the 1940 Act.
(l) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock issuable upon conversion of the Securities.
(m) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
5. COSTS AND EXPENSES.
The Company will pay all costs, expenses and fees incident to
the performance of the obligations of the Company under this Agreement,
including,
<PAGE> 14
without limiting the generality of the foregoing, the following: accounting fees
of the Company; the fees and disbursements of counsel for the Company; the cost
of printing and delivering to, or as requested by, the Underwriters copies of
the Registration Statement, Preliminary Prospectuses, the Prospectus, this
Agreement, the Listing Application, the Blue Sky Memorandum and any supplements
or amendments thereto; the filing fees of the Commission; the filing fees and
expenses (including disbursements but excluding legal fees of counsel to the
Underwriters) incident to securing any required review by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms of the sale of
the Securities; any fees charged by securities ratings services for rating the
Securities; the Listing Fee of the NASDAQ Stock Market upon conversion of the
Securities; and the expenses) (including disbursements but excluding legal fees
of counsel for the Underwriters) incurred in connection with the qualification
of the Securities and the shares of Common Stock issuable upon conversion of the
Securities under State securities or Blue Sky laws; the cost of preparing the
Securities; the fees and expenses of the Trustee and any agent of the Trustee
and the fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities. The Company shall not, however, be required to pay
for any of the Underwriters' expenses (other than those related to qualification
under NASD regulation and State securities or Blue Sky laws) except that, if
this Agreement shall not be consummated because the conditions in Section 6
hereof are not satisfied, or because this Agreement is terminated by the
Representatives pursuant to Section 11 hereof, or by reason of any failure,
refusal or inability on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement or to comply with any of the terms
hereof on its part to be performed, unless such failure to satisfy said
condition or to comply with said terms be due to the default or omission of any
Underwriter, then the Company shall reimburse the several Underwriters for
reasonable out-of-pocket expenses, including reasonable fees and disbursements
of counsel not to exceed $300,000, reasonably incurred in connection with
investigating, marketing and proposing to market the Securities or in
contemplation of performing their obligations hereunder; but the Company shall
not in any event be liable to any of the several Underwriters for damages on
account of loss of anticipated profits from the sale by them of the Securities.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Securities on the Closing Date and the Option Securities, if any, on the
Option Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and warranties
of the Company contained herein, and to the performance by the Company of its
covenants and obligations hereunder and to the following additional conditions:
(a) The Registration Statement and all post-effective
amendments
<PAGE> 15
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the best of the Company's knowledge, shall be contemplated by the Commission
and no injunction, restraining order, or order of any nature by a Federal or
state court of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance of the Securities.
(b) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of Akerman,
Senterfitt & Eidson, P.A., counsel for the Company, dated the Closing Date or
the Option Closing Date, as the case may be, addressed to the Underwriters (and
stating that it may be relied upon by counsel to the Underwriters) to the effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement; each of
Integrated Technology Holdings, Corp., Kellstrom Commercial Aircraft, Inc. and
Aero Support Holdings, Inc. (the "Domestic Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with corporate power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement; the Company and each of the Domestic Subsidiaries
are duly qualified to transact business in all jurisdictions in which the
conduct of their business requires such qualification, except where the failure
to qualify would not have a materially adverse effect upon the business,
operations or financial condition of the Company and the Subsidiaries taken as a
whole; the outstanding shares of capital stock of each of the Domestic
Subsidiaries have been validly authorized and issued, are fully paid and
non-assessable and are owned by the Company; and, to the best of such counsel's
knowledge, the outstanding Securities of capital stock of each of the
Subsidiaries is owned free and clear of all liens, claims and encumbrances
except for a lien held by Barnett Bank, N.A. to secure, among other things, the
Company's obligations under the Credit Facility (as defined in the Prospectus)
and, to the best of such counsel's knowledge no options, warrants or other
rights to purchase, agreements or other obligations to issue or other rights to
convert any obligations into any shares of capital stock or of ownership
interests in the Domestic Subsidiaries are outstanding.
(ii) The Securities have been duly authorized and,
when executed and delivered to and paid for in accordance with the terms
<PAGE> 16
of this Agreement, will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the indenture dated as of June 16,
1998 (the "Indenture") between the Company and First Union National Bank, as
Trustee (the "Trustee"), under which they are to be issued, which is
substantially in the form filed as an exhibit to the Registration Statement; the
Indenture has been duly authorized and duly qualified under the Trust Indenture
Act and constitutes a valid and legally binding instrument, enforceable against
the Company in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles; and
the Securities and the Indenture will conform to the descriptions thereof in the
Prospectus.
(iii) Except as described in or contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any Securities of capital stock of the
Company and there are no outstanding or authorized options, warrants or rights
of any character obligating the Company to issue any shares of its capital stock
or any securities convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of such stock; and except as described in
the Prospectus, to the best of such counsel's knowledge, no holder of any
securities of the Company or any other person has the right, contractual or
otherwise, which has not been satisfied or effectively waived, to cause the
Company to sell or otherwise issue to them, or to permit them to underwrite the
sale of, any of the Securities or the right to have any shares of Common Stock
or other securities of the Company included in the Registration Statement or the
right, as a result of the filing of the Registration Statement, to require
registration under the Act of any Common Stock or other securities of the
Company.
(v) The Registration Statement has become effective
under the Act and, to the best of the knowledge of such counsel, no stop order
proceedings with respect thereto have been instituted or are pending or
threatened under the Act.
(vi) The Registration Statement, the Prospectus and
each amendment or supplement thereto and the documents incorporated by reference
therein comply as to form in all material respects with the requirements of the
Act or the Securities Exchange Act of 1934, as applicable and the applicable
rules and regulations thereunder (except that such counsel need express no
opinion as to (i) the financial statements, footnotes, related schedules or
financial information derived therefrom included in the Registration Statement
or incorporated by reference therein or excluded therefrom, (ii) the accuracy,
completeness or fairness of the statements contained in the Registration
Statement except as the extent expressly set forth in the final paragraph of
this subsection (b)).
<PAGE> 17
(vii) The statements set forth in the Prospectus
under the caption "Description of Notes," insofar as they purport to constitute
a summary of the terms of the Securities and Common Stock of the Company and
under the captions "Certain Federal Tax Considerations" and "Underwriting,"
insofar as such statements constitute a summary of documents referred to therein
or matters of law, fairly summarize in all material respects the information
called for with respect to such documents and matters.
(viii) Such counsel does not know of any contracts
or documents required to be filed as exhibits to or incorporated by reference in
the Registration Statement or described in the Registration Statement or the
Prospectus which are no so filed, incorporated by reference or described as
required, and such contracts and documents as are summarized in the Registration
Statement or the Prospectus are fairly summarized in all material respects.
(ix) To the best of such counsel's knowledge, except
as disclosed in the Prospectus, there is no action, suit or proceeding at law or
in equity or by or before any governmental authority now pending or threatened
against or affecting the Company or any of the Subsidiaries which would be
required to be disclosed in the Prospectus.
(x) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will not
conflict with or result in a material breach of any of the terms or provisions
of, or constitute a default under, the Restated Certificate of Incorporation, as
amended, or By-Laws, as amended, of the Company, or any material agreement or
instrument known to such counsel to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries may be bound.
(xi) This Agreement has been duly authorized,
executed and delivered by the Company.
(xii) The Securities are convertible into shares of
Common Stock in accordance with the terms of the Indenture, and the shares of
Common Stock initially issuable upon conversion of the Securities have been duly
authorized and reserved for issuance upon such conversion in accordance with the
terms of the Indenture and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable.
(xiii) The Indenture has been duly authorized,
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by the Trustee constitutes a valid and legally
binding instrument of the Company, enforceable in accordance with its terms,
subject, as to enforcement,
<PAGE> 18
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights to general equity
principles.
(xiv) To the best of such counsel's knowledge, no
authorization, consent, approval of or qualification with, any governmental
authority is required for the performance by the Company of its obligations
under this Agreement or the Indenture and the consummation of the transactions
herein contemplated except such as may be required under state or other blue sky
laws in connection with the purchase and distribution of the Securities (on
which we express no opinion) by the Underwriters or as has been obtained, except
as would either not have a material adverse effect on the Company and the
Subsidiaries taken as a whole or on the ability of the Company to perform its
obligations under this Agreement.
(xv) The Company is not, and will not become, as a
result of the consummation of the transactions contemplated by this Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an investment company under the 1940 Act.
In addition to the matters set forth above, such opinion shall
also include a statement to the effect that nothing has come to the attention of
such counsel which leads them to believe that (i) the Registration Statement, at
the time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and (ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, footnotes, related schedules, and other financial or statistical
information derived therefrom). With respect to such statement, Akerman,
Senterfitt & Eidson, P.A. may state that their belief is based upon the
procedures set forth therein, but is without independent check and verification.
In rendering such opinion, counsel may rely as to matters of fact on
certificates of officers of the Company.
(c) The Representatives shall have received from Sullivan &
Cromwell, counsel for the Underwriters, such opinion or opinions dated the
Closing Date or the Option Closing Date, as the case may be, with respect to the
incorporation of the Company, the validity of the Securities being delivered at
the Closing Date or the Option Closing Date, as the case may be, the due
authorization, execution and delivery of this Agreement, the Registration
Statement, the
<PAGE> 19
Prospectus, the Indenture and other related matters as the Representative may
reasonably request.
(d) The Representatives shall have received at or prior to the
Closing Date from Sullivan & Cromwell a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Securities under the State
securities or Blue Sky laws of such jurisdictions as the Representatives may
reasonably have designated to the Company.
(e) You shall have received, on each of the dates hereof, the
Closing Date and the Option Closing Date, as the case may be, a letter dated the
date hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to you, of KPMG Peat Marwick confirming that
they are independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating that in their
opinion the financial statements and schedules examined by them and included in
the Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Act and the related published Rules
and Regulations; and containing such other statements and information as you may
reasonably request with respect to the financial statements including the pro
forma financial statements, of the Company and its Subsidiaries and certain
financial and statistical information contained in the Registration Statement
and Prospectus.
(f) The Representatives shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them severally represents as follows:
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been taken
or are, to the best of his knowledge, contemplated by the Commission;
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made
pursuant to Rules 424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the effective date of
the Registration
<PAGE> 20
Statement, the statements contained in the Registration Statement were true and
correct in all material respects, and such Registration Statement and Prospectus
did not omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and since the effective
date of the Registration Statement, no event has occurred which should have been
set forth in a supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been any material adverse change or any development involving a prospective
material adverse change in or affecting the condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole or the earnings, business,
management, properties, assets, rights, operations, condition (financial or
otherwise) or prospects of the Company and the Subsidiaries taken as a whole,
whether or not arising in the ordinary course of business.
(g) The Company shall have furnished to the Representatives
such further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as the
Representatives may reasonably have requested.
(h) The Firm Securities and Option Securities, if any, have
been duly listed for quotation on the NASDAQ Stock Market.
(i) The Lock-Up Agreements described in Section 4(j)(x)
are in full force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they are
in all material respects reasonably satisfactory to the Representatives and to
Sullivan & Cromwell, counsel for the Underwriters.
If any of the conditions herein above provided for in this
Section 6 shall not have been fulfilled when and as required by this Agreement
to be fulfilled, the obligations of the Underwriters hereunder may be terminated
by the Representatives by notifying the Company of such termination in writing
or by telegram at or prior to the Closing Date or the Option Closing Date, as
the case may be.
In such event, the Company and the Underwriters shall not be
under any obligation to each other (except to the extent provided in Sections 5
and 8 hereof).
<PAGE> 21
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion
of the Securities required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the Option
Closing Date, as the case may be, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
8. INDEMNIFICATION.
(a) The Company agrees:
(1) to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; and will reimburse each Underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
such Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Securities, whether or not such Underwriter or controlling person is a party to
any action or proceeding; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement,
or omission or alleged omission made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(2) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Securities, whether or not such Underwriter or controlling
person is a party to any
<PAGE> 22
action or proceeding. In the event that it is finally judicially determined that
the Underwriters were not entitled to receive payments for legal and other
expenses pursuant to this subparagraph, the Underwriters will promptly return
all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages or
liabilities to which the Company or any such director, officer or controlling
person may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made; and
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was materially prejudiced by the failure to give
such notice, but the failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 8(a) or (b). In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense
<PAGE> 23
thereof, with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation) the fees and
expenses of the counsel retained by the indemnified party in the event (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action. It is understood that the
indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm for all such indemnified parties. Such
firm shall be designated in writing by you in the case of parties indemnified
pursuant to Section 8(a) and by the Company in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. In addition, the
indemnifying party will not, without the prior written consent of the
indemnified party, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party is
an actual or potential party to such claim, action or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action or
proceeding.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Securities.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims,
<PAGE> 24
damages or liabilities, (or actions or proceedings in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Underwriters 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 in this Section
8(d). The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Section 8(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Securities purchased by such Underwriter and (ii)
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this Section 8(d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and
<PAGE> 25
contribution agreements contained in this Section 8 and the representations and
warranties of the Company set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, the
Company, its directors or officers or any persons controlling the Company, (ii)
acceptance of any Securities and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the case
may be, any Underwriter shall fail to purchase and pay for the principal amount
of the Securities which such Underwriter has agreed to purchase and pay for on
such date (otherwise than by reason of any default on the part of the Company),
you, as Representatives of the Underwriters, shall use your reasonable efforts
to procure within 36 hours thereafter one or more of the other Underwriters, or
any others, to purchase from the Company such amounts as may be agreed upon and
upon the terms set forth herein, the Firm Securities or Option Securities, as
the case may be, which the defaulting Underwriter or Underwriters failed to
purchase. If during such 36 hours you, as such Representatives, shall not have
procured such other Underwriters, or any others, to purchase the Firm Securities
or Option Securities, as the case may be, agreed to be purchased by the
defaulting Underwriter or Underwriters, then (a) if the aggregate principal
amount of Securities with respect to which such default shall occur does not
exceed 10% of the Firm Securities or Option Securities, as the case may be,
covered hereby, the other Underwriters shall be obligated, severally, in
proportion to the respective principal amounts of Firm Securities or Option
Securities, as the case may be, which they are obligated to purchase hereunder,
to purchase the Firm Securities or Option Securities, as the case may be, which
such defaulting Underwriter or Underwriters failed to purchase, or (b) if the
aggregate principal amount of Securities or Firm Securities or Option
Securities, as the case may be, with respect to which such default shall occur
exceeds 10% of the Firm Securities or Option Securities, as the case may be,
covered hereby, the Company or you as the Representatives of the Underwriters
will have the right, by written notice given within the next 36-hour period to
the parties to this Agreement, to terminate this Agreement without liability on
the part of the non-defaulting Underwriters or of the Company except to the
extent provided in Section 8 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or
Option Closing Date, as the case may be, may be postponed for such period, not
exceeding seven days, as you, as Representatives, may determine in order that
the required changes in the Registration Statement or in the Prospectus or in
any other documents or arrangements may be effected. The term "Underwriter"
includes any person
<PAGE> 26
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. NOTICES.
All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to BT Alex. Brown
Incorporated, One South Street, Baltimore, Maryland 21202, Attention: Michael
Ott; with a copy to BT Alex. Brown Incorporated, One Bankers Trust Plaza, 130
Liberty Street, New York, New York 10006, Attention: Michael Wallace; if to the
Company, to:
Kellstrom Industries, Inc.
Sawgrass International Corporate Park
14000 N.W. 4th Street
Sunrise, Florida 33325
(954) 858-2449 (fax)
with a copy to:
Bruce I. March
Akerman Senterfitt & Eidson, P.A.
One Southeast Third Avenue, Suite 2800
Miami, Florida 33131
(305) 579-5095 (fax)
11. TERMINATION.
(a) This Agreement may be terminated by you by notice to the
Company at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its Subsidiaries taken as
a whole or the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries taken as a whole, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in your reasonable judgment, make it
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) suspension of trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
<PAGE> 27
NASDAQ Stock Market or limitation on prices (other than limitations on hours or
numbers of days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by United States or New York State authorities, (vi) any downgrading shall have
occurred in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, or such organization
shall have publicly announced that it has under surveillance or review, with
negative implications, its rating of any of the Company's debt securities, (vii)
the suspension of trading of the Company's Common Stock by the NASDAQ Stock
Market, the Commission, or any other governmental authority or, (viii) the
taking of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion has a material
adverse effect on the securities markets in the United States; or
(b) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Underwriters and the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and controlling
persons referred to herein, and no other person will have any right or
obligation hereunder. No purchaser of any of the Securities from any Underwriter
shall be deemed a successor or assign merely because of such purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to the
Company for inclusion in any Prospectus or the Registration Statement consists
of the information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), legends required by
Item 502(d) of Regulation S-K under the Act and the information under the
caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination
<PAGE> 28
of this Agreement, (b) any investigation made by or on behalf of any Underwriter
or controlling person thereof, or by or on behalf of the Company or its
directors or officers and (c) delivery of and payment for the Securities under
this Agreement.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland.
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
KELLSTROM INDUSTRIES, INC.
By
-------------------------------------
Zivi Nedivi
Chief Executive Officer and President
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
BT ALEX. BROWN INCORPORATED
BREAN MURRAY & CO., INC.
As Representatives of the several
Underwriters listed on Schedule I
By: BT Alex. Brown Incorporated
By:
-------------------------------------
Authorized Officer
<PAGE> 29
SCHEDULE I
SCHEDULE OF UNDERWRITERS
PRINCIPAL AMOUNT OF FIRM
UNDERWRITER SECURITIES TO BE PURCHASED
- ----------- --------------------------
BT Alex. Brown Incorporated $
Brean Murray & Co., Inc.
$
---------------
Total $
---------------
<PAGE> 30
SCHEDULE II
Schedule of Option Securities
MAXIMUM AMOUNT PERCENTAGE OF
OF OPTION SECURITIES TOTAL PRINCIPAL AMOUNT
NAME OF SELLER TO BE SOLD OF OPTION SECURITIES
-------------- -------------------- ----------------------
------ ---
Total 100%
------ ---
<PAGE> 31
EXHIBIT A
List of Subsidiaries of Kellstrom Industries, Inc.:
NAME: JURISDICTION OF INCORPORATION:
- ----- ------------------------------
Integrated Technology Holdings, Corp. Delaware
Kellstrom Commercial Aircraft, Inc. Delaware
Aero Support Holdings, Inc. Delaware
Kellstrom International Sales Corporation United States Virgin Islands
<PAGE> 1
KELLSTROM INDUSTRIES, INC.
$75,000,000
___% CONVERTIBLE SUBORDINATED NOTES DUE 2003
------------
Indenture
Dated as of June 17, 1998
------------
FIRST UNION NATIONAL BANK
TRUSTEE
<PAGE> 2
TABLE OF CONTENTS
---------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.................................................................................2
Section 1.2. Other Definitions...........................................................................7
Section 1.3. Rules of Construction.......................................................................8
ARTICLE II
THE NOTES
Section 2.1. Designation, Amount and Issue of Notes......................................................8
Section 2.2. Form of Notes...............................................................................8
Section 2.3. Date and Denomination of Notes; Payments of Interest........................................9
Section 2.4. Execution of Notes.........................................................................11
Section 2.5. Registrar, Paying Agent and Conversion Agent...............................................12
Section 2.6. Paying Agent to Hold Money in Trust........................................................12
Section 2.7. Noteholder Lists...........................................................................12
Section 2.8. Exchange and Registration of Transfer of Notes; Restrictions on
Transfer; Depositary...................................................................13
Section 2.9. Mutilated, Destroyed, Lost or Stolen Notes.................................................17
Section 2.10. Treasury Notes.............................................................................18
Section 2.11. Temporary Notes............................................................................18
Section 2.12. Cancellation...............................................................................18
Section 2.13. Deposit of Funds...........................................................................19
ARTICLE III
REDEMPTION OF NOTES
Section 3.1. Right to Redeem; Notice to Trustee.........................................................19
Section 3.2. Selection of Notes to Be Redeemed..........................................................20
Section 3.3. Notice of Redemption.......................................................................20
Section 3.4. Effect of Notice of Redemption.............................................................21
Section 3.5. Deposit of Redemption Price................................................................21
Section 3.6. Notes Redeemed in Part.....................................................................21
Section 3.7. Conversion Arrangement on Call for Redemption..............................................22
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IV
SUBORDINATION OF NOTES
Section 4.1. Notes Subordinated to Senior Indebtedness..................................................23
Section 4.2. Payments to Holders........................................................................23
Section 4.3. Notes to Be Subrogated to Rights of Holders of Senior Indebtedness.........................26
Section 4.4. Obligations of the Company Unconditional...................................................26
Section 4.5. Notice to Trustee..........................................................................26
Section 4.6. Application by Trustee of Monies Deposited With It.........................................27
Section 4.7 Reinstatement..............................................................................28
Section 4.8 Rights of Holders of Senior Indebtedness...................................................28
Section 4.9 No Modification, etc.......................................................................28
Section 4.10 Specific Performance.......................................................................28
Section 4.11. Subordination Rights Not Impaired by Acts or Omissions
of Company or holders of Senior Indebtedness...........................................29
Section 4.12. Trustee to Effectuate Subordination........................................................29
Section 4.13 Proofs of Claim............................................................................29
Section 4.14. Right of Trustee to Hold Senior Indebtedness...............................................29
Section 4.15. Article IV Not to Prevent Events of Default................................................30
Section 4.16. No Fiduciary Duty Created to Holders of Senior Indebtedness................................30
Section 4.17. Article Applicable to Paying Agent.........................................................30
ARTICLE V
COVENANTS
Section 5.1. Payment of Notes...........................................................................30
Section 5.2. SEC Reports................................................................................31
section 5.3. Maintenance of Office or Agency............................................................31
Section 5.4. Stay, Extension and Usury Laws.............................................................32
Section 5.5. Liquidation................................................................................32
Section 5.6. Compliance Certificates....................................................................33
Section 5.7. Notice of Defaults.........................................................................33
Section 5.8. Payment of Taxes and Other Claims..........................................................33
Section 5.9. Corporate Existence........................................................................34
Section 5.10. Maintenance of Properties..................................................................34
Section 5.11. Further Instruments and Acts...............................................................34
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY THE TRUSTEE
Section 6.1. Holders' Lists.............................................................................34
Section 6.2. Preservation and Disclosure of Lists.......................................................35
Section 6.3. Reports by Trustee.........................................................................35
ARTICLE VII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT
OF DEFAULT
Section 7.1. Events of Default..........................................................................36
Section 7.2. Payment of Notes on Default; Suit Therefor.................................................38
Section 7.3. Application of Monies Collected by Trustee.................................................40
Section 7.4. Proceedings by Holders.....................................................................42
Section 7.5. Proceedings by Trustee.....................................................................42
Section 7.6. Remedies Cumulative and Continuing.........................................................42
Section 7.7. Direction of Proceedings and Waiver of Defaults by
Majority of Holders....................................................................42
Section 7.8. Notice of Defaults.........................................................................43
Section 7.9. Undertaking to Pay Costs...................................................................43
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1. Duties and Responsibilities of Trustee.....................................................44
Section 8.2. Reliance on Documents, Opinions, Etc.......................................................45
Section 8.3. No Responsibility for Recitals, Etc........................................................46
Section 8.4. Trustee, Paying Agents, Conversion Agents or Registrar
May Own Notes.........................................................................46
Section 8.5. Monies to Be Held in Trust.................................................................46
Section 8.6. Compensation and Expenses of Trustee.......................................................47
Section 8.7. Officers' Certificate as Evidence..........................................................47
Section 8.8. Conflicting Interests of Trustee...........................................................48
Section 8.9. Eligibility of Trustee.....................................................................48
Section 8.10. Resignation or Removal of Trustee..........................................................48
Section 8.11. Acceptance by Successor Trustee............................................................49
Section 8.12. Succession by Merger, Etc..................................................................50
Section 8.13. Limitation on Rights of Trustee as Creditor................................................51
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IX
CONCERNING THE NOTEHOLDERS
Section 9.1. Action by Holders.........................................................................51
Section 9.2. Proof of Execution by Holders.............................................................51
Section 9.3. Who are Deemed Absolute Owners............................................................52
Section 9.4. Company-Owned Notes Disregarded...........................................................52
Section 9.5. Revocation of Consents; Future Holders Bound.............................................53
ARTICLE X
NOTEHOLDERS' MEETINGS
Section 10.1. Purpose of Meetings.......................................................................53
Section 10.2. Call of Meetings by Trustee...............................................................53
Section 10.3. Call of Meetings by Company or Holders....................................................54
Section 10.4. Qualifications for Voting.................................................................54
Section 10.5. Regulations...............................................................................54
Section 10.6. Voting....................................................................................55
Section 10.7. No Delay of Rights by Meeting.............................................................56
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without Consent of Holders........................................56
Section 11.2. Supplemental Indentures with Consent of Holders...........................................57
Section 11.3. Effect of Supplemental Indenture..........................................................57
Section 11.4. Notation on Notes.........................................................................59
Section 11.5. Evidence of Compliance of Supplemental Indenture
to Be Furnished Trustee...............................................................59
ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1. Company May Consolidate Etc. on Certain Terms............................................59
Section 12.2. Successor Corporation to Be Substituted..................................................60
Section 12.3. Opinion of Counsel to Be Given Trustee...................................................60
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1. Discharge of Indenture...................................................................61
Section 13.2. Deposited Monies to Be Held in Trust by Trustee..........................................61
Section 13.3. Paying Agent to Repay Monies Held........................................................62
Section 13.4. Return of Unclaimed Monies...............................................................62
Section 13.5. Reinstatement............................................................................62
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
Section 14.1. Indenture and Notes Solely Corporate Obligations.........................................62
ARTICLE XV
CONVERSION OF NOTES
Section 15.1. Right to Convert.........................................................................63
Section 15.2. Exercise of Conversion Privilege; Issuance of Common Stock on
Conversion; No Adjustment for Interest or Dividends...................................63
Section 15.3. Cash Payments in Lieu of Fractional Shares...............................................65
Section 15.4. Conversion Price.........................................................................65
Section 15.5. Adjustment of Conversion Price...........................................................66
Section 15.6. Effect of Reclassification, Consolidation, Merger or Sale................................76
Section 15.7. Taxes on Shares Issued...................................................................77
Section 15.8. Reservation of Shares to Be Fully Paid; Compliance with
Governmental Requirements; Listing of Common Stock....................................77
Section 15.9 Responsibility of Trustee................................................................78
Section 15.10. Notice to Holders Prior to Certain Actions...............................................78
ARTICLE XVI
REPURCHASE OF NOTES AT OPTION OF THE HOLDER
UPON CHANGE IN CONTROL
Section 16.1. Right to Require Repurchase..............................................................79
Section 16.2. Notices; Method of Exercising Purchase Right, Etc........................................80
Section 16.3. Certain Definitions......................................................................82
Section 16.4. Change in Control........................................................................82
Section 16.5. Consolidation, Merger, Etc...............................................................84
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE XVII
MISCELLANEOUS PROVISIONS
Section 17.1. Provisions Binding on Company's Successors..............................................84
Section 17.2. Official Acts by Successor Corporation..................................................84
Section 17.3. Addresses for Notices, Etc..............................................................85
Section 17.4. Governing Law...........................................................................85
Section 17.5. Evidence of Compliance with Conditions Precedent
Certificates to Trustee...............................................................85
Section 17.6. Legal Holidays..........................................................................86
Section 17.7. Trust Indenture Act.....................................................................86
Section 17.8. No Security Interest Created............................................................87
Section 17.9. Benefits of Indenture...................................................................87
Section 17.10. Table of Contents, Headings, Etc........................................................87
Section 17.11. Authenticating Agent....................................................................87
Section 17.12. Execution in Counterparts...............................................................88
</TABLE>
vi
<PAGE> 8
INDENTURE dated as of June 17, 1998, between Kellstrom
Industries, Inc., a Delaware corporation (hereinafter sometimes called the
"Company," as more fully set forth in Section 1.1), and First Union National
Bank, as trustee hereunder (hereinafter sometimes called the "Trustee," as more
fully set forth in Section 1.1).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has
duly authorized the issue of its ____% Convertible Subordinated Notes Due 2003
(hereinafter sometimes called the "Notes"), in an aggregate principal amount not
to exceed $75,000,000 ($86,250,000 if the overallotment option is exercised in
full) 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;
WHEREAS, the Notes, the certificate of authentication to be
borne by the Notes, a form of assignment, a form of option to elect repurchase
upon a Change in Control and a form of conversion notice 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 issue 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:
-1-
<PAGE> 9
ARTICLE I
DEFINITIONS
SECTION 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 Section 1.1. All other terms used in
this Indenture that are defined in the Trust Indenture Act or which are by
reference therein defined in the Securities Act (except as herein otherwise
expressly provided or unless the context otherwise requires) shall have the
meanings assigned to such terms in said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision. The terms defined in this Article include the plural as well as the
singular.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or Conversion Agent
or any successor thereto.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Note or beneficial interest therein, the rules
and procedures of the Depositary for such Security, to the extent applicable to
such transaction and as in effect from time to time.
"Board of Directors" means either the Board of Directors of
the Company or any committee of such Board duly authorized to act for it
hereunder.
"Business Day" means any day other than (i) a Saturday or
Sunday or (ii) a day on which banking institutions in the City of New York,
Richmond, Virginia or
-2-
<PAGE> 10
Charlotte, North Carolina are authorized or required by law or executive order
to remain closed.
"Capitalized Lease Obligation" means indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with generally accepted accounting principles;
the amount of such indebtedness shall be the capitalized amount of such
obligations determined in accordance with such principles.
"Cash" or "cash" means such coin or currency of the United
States as at any time of payment is legal tender for the payment of public and
private debts.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Stock" means the common stock, par value $0.001 per
share, of the Company.
"Company" means Kellstrom Industries, Inc. until a successor
corporation shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by its Chairman of the Board, its
Chief Executive Officer, its President or a Vice President, and by its principal
financial officer, Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal offices of the
Trustee at which at any particular time its corporate trust business shall be
administered, which offices as of the date of this Indenture are located at 901
East Cary Street, 2nd Floor, Richmond, Virginia 23261-3279 and 1525 West W.T.
Harris Boulevard, Charlotte, North Carolina 28262.
"Custodian" means First Union National Bank, as custodian with
respect to the Notes in global form, or any successor entity thereto.
"Default" means any event which is, or after notice or passage
of time, or both, would be, an Event of Default.
-3-
<PAGE> 11
"Depositary" means, with respect to the Notes issued or
issuable in whole or in part in global form, the Person designated as Depositary
by the Company pursuant to Section 2.8 with respect to such Notes (or any
successor thereto).
"Designated Senior Indebtedness" means the Company's
Indebtedness outstanding from time to time under its revolving credit facility
with Barnett Bank, N.A., indebtedness incurred in connection with the Senior
Subordinated Notes Purchase Agreement and the Senior Subordinated Notes issued
thereunder and any particular Senior Indebtedness in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such Senior Indebtedness shall be "Designated Senior Indebtedness"
for purposes of the Indenture (provided that such instrument, agreement or other
document may place limitations and conditions on the right of such Senior
Indebtedness to exercise the rights of Designated Senior Indebtedness).
"Event of Default" means any event specified in Section
7.1(a), (b), (c), (d), (e), (f) or (g).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Global Note" means a Note that has been registered in the
Note Register in the name of a Depositary or a nominee thereof.
"Holder" or "Noteholder" means a Person in whose name a Note
is registered on the Note Register.
"Indebtedness" means, with respect to any Person, and without
duplication, (a) the principal of and premium, if any, and interest on, and
fees, costs, enforcement expenses, collateral protection expenses and other
reimbursement or indemnity obligations in respect to all indebtedness or
obligations of the Company to any Person, including but not limited to banks and
other lending institutions, for money borrowed that is evidenced by a note,
bond, loan agreement, or similar instrument or agreement (including purchase
money obligations with original maturities in excess of one year and
noncontingent reimbursement obligations in respect of amounts paid under letters
of credit), (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank guarantees
or bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) in respect of Capitalized Lease Obligations on the balance sheet of
such Person, (d) all obligations of such Person (contingent or otherwise) with
respect to an interest rate or other swap, cap or collar agreement or other
similar instrument or agreement or foreign currency hedge, exchange, purchase or
similar instrument or agreement, (e) all direct or indirect guaranties
-4-
<PAGE> 12
or similar agreements by such Person in respect of, and obligations or
liabilities (contingent or otherwise) of such Person to purchase or otherwise
acquire or otherwise assure a creditor against loss in respect of indebtedness,
obligations or liabilities of another Person of the kind described in clauses
(a) through (d), (f) any indebtedness or other obligations, excluding any
operating leases the Company is currently (or may become) a party to, described
in clauses (a) through (d) secured by any mortgage, pledge, lien or other
encumbrance existing on property which is owned or held by such Person,
regardless of whether the indebtedness or other obligation secured thereby shall
have been assumed by such Person and (g) any and all deferrals, renewals,
extensions and refundings of, or amendments, modifications or supplements to,
any indebtedness, obligation or liability of the kind described in clauses (a)
through (f).
"Indenture" means this instrument as originally executed or,
if supplemented or amended as herein provided, as so supplemented or amended.
"Officer" means the Chairman of the Board, the President, the
Chief Financial Officer, the Controller, the Secretary, any Assistant Secretary
or any Vice President of the Company.
"Officer's Certificate" means a certificate signed by two
Officers, one of whom must be the Chairman of the Board, the President, the
Chief Executive Officer, the Chief Financial Officer or a Vice President of the
Company.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company, and who shall be acceptable to the Trustee.
"Person" means any individual, corporation, partnership, joint
venture, trust, association, joint stock company, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal" or "principal" of a debt security, including the
Notes, means the principal of the security plus, when appropriate, the premium,
if any, on the security.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Note to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Representative" means the indenture trustee or other trustee,
agent or representative of the holders of any Senior Indebtedness.
"SEC" or "Commission" means the Securities and Exchange
Commission.
-5-
<PAGE> 13
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness (including but not limited to all
Designated Senior Indebtedness) of the Company or any Subsidiary, other than
trade debt and the Company's 5 3/4% Convertible Subordinated Notes Due 2002 (the
"5 3/4% Notes"), whether outstanding on the date of this Indenture or thereafter
created, incurred, assumed, guaranteed or in effect guaranteed by the Company or
any Subsidiary (including all deferrals, renewals, extensions or refundings of,
or amendments, modifications or supplements to, the foregoing), unless in the
case of any particular Indebtedness the instrument creating or evidencing the
same or the assumption or guarantee thereof expressly provides that such
Indebtedness shall not be senior in right of payment to the Notes or expressly
provides that such Indebtedness is "pari passu" with or "junior" to the Notes.
Notwithstanding the foregoing, the term Senior Indebtedness shall not include
any Indebtedness of the Company to any Subsidiary of the Company. It is intended
that the Notes rank PARI PASSU with the 5 3/4% Notes
"Senior Subordinated Notes" means the 11 3/4% Senior
Subordinated Notes due 2004 issued pursuant to the Senior Subordinated Notes
Purchase Agreement.
"Senior Subordinated Notes Purchase Agreement" means the
Securities Purchase Agreement, dated as of January 15, 1997, as amended, between
the Company and The Equitable Life Assurance Society of the United States,
pursuant to which the Company issued its Senior Subordinated Notes and Warrants
to purchase Common Stock.
"Subsidiary" means with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such person or one or more Subsidiaries of such person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or managing
general partner of which is such person or a Subsidiary of such person or (b)
the only general partners of which are such person or one or more Subsidiaries
of such Person (or any combination thereof).
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939 (15 U.S.C. Sections 77aaa-77666), as amended by the Trust Indenture
Reform Act of 1990, and as in effect on the date of this Indenture, except as
provided in
-6-
<PAGE> 14
Sections 11.3, 15.6 and 16.5, and except to the extent any amendment to the
Trust Indenture Act expressly provides for application of the Trust Indenture
Act as in effect on another date.
"Trading Day" or "trading day" means, with respect to any
security, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any
day on which securities are not traded on the exchange or market in which such
security is traded.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture, and thereafter means the successor.
"Trust Officer" means any officer of the Trustee with direct
responsibility for the administration of this Indenture or who is otherwise
exercising judgment with respect to this Indenture.
"U.S. Government Obligations" means direct noncallable
obligations of, or noncallable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States is pledged.
"Vice President" when used with respect to the Company, means
any duly appointed vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
SECTION 1.2. OTHER DEFINITIONS.
TERM
DEFINED IN SECTION
"Change in Control" Section 16.4
"Closing Price" Section 15.5
"Conversion Agent" Section 2.5
"Conversion Price" Section 15.4
"Current Market Price" Section 15.5
"Defaulted Interest" Section 2.3
"Expiration Time" Section 15.5
"Note Register" Section 2.8
"Note Registrar" Section 2.8
"Paying Agent" Section 2.5
"Payment Blockage Notice" Section 4.2
"Purchased Shares" Section 15.5
"Record Date" Section 15.5
-7-
<PAGE> 15
"Registrar" Section 2.5
"Securities" Section 15.5
"Trigger Event" Section 15.5
SECTION 1.3. RULES OF CONSTRUCTION.
Unless the context otherwise requires: (1) a term has the
meaning assigned to it; (2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles in effect on the date hereof, and any other reference in this
Indenture to "generally accepted accounting principles" refers to generally
accepted accounting principles in effect on the date hereof; (3) words in the
singular include the plural, and words in the plural in clude the singular; (4)
provisions apply to successive events and transactions; and (5) "herein,"
"hereof" and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
ARTICLE II
THE NOTES
SECTION 2.1. DESIGNATION, AMOUNT AND ISSUE OF NOTES.
The Notes shall be designated as "____% Convertible
Subordinated Notes Due 2003." Notes not to exceed the aggregate principal amount
of $75,000,000 (or $86,250,000 if the over-allotment option set forth in Section
2(c) of the Debt Underwriting Agreement, dated June 11, 1998, by and between the
Company and the Underwriters (as defined in the Underwriting Agreement) is
exercised in full) upon the execution of this Indenture, or (except pursuant to
Sections 2.8, 2.9, 15.2 and 16.1 hereof) 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 deliver said Notes to or upon the
written order of the Company, signed (manually or by facsimile) by its (a)
President, Senior Vice President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title "Vice President") and (b) Treasurer or Assistant Treasurer or its
Secretary or Assistant Secretary, without any further action by the Company
hereunder.
SECTION 2.2. FORM OF NOTES.
The Notes and the Trustee's certificate of authentication to
be borne by such Notes shall be substantially in the form set forth in Exhibit
A, which is incorporated in and part of this Indenture.
-8-
<PAGE> 16
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
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Note in global form 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 thereby
may from time to time be increased or reduced to reflect transfers or exchanges
permitted hereby. Any endorsement of a Note in global form 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 Note in global form shall be made to the Holder of such
Note in accordance with this Indenture.
The terms and provisions contained in the form of Note
attached as Exhibit A 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.
Neither the Company nor the Trustee shall have any
responsibility for any defect in the CUSIP number that appears on any Note,
check, advice of payment or redemption notice, and any such document may contain
a statement to the effect that CUSIP numbers have been assigned by an
independent service for convenience of reference and that neither the Company
nor the Trustee shall be liable for any inaccuracy in such numbers.
SECTION 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 any integral multiple thereof.
Every Note shall be dated June 15, 1998 and shall bear interest from the
applicable date in each case as specified on the face of the form of Note
attached as Exhibit A hereto. Interest on the Notes shall be paid in arrears on
each June 15 and December 15 commencing December 15, 1998. Interest on the Notes
shall be computed on the basis of a 360-day year comprised of twelve 30-day
months.
-9-
<PAGE> 17
The Person in whose name any 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 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 on or prior to such
interest payment date, provided, that in the case of any Note, or portion
thereof, called for redemption on a Redemption Date or repurchased in connection
with a Change in Control on a repurchase date that is after a record date and
prior to (but excluding) the next succeeding interest payment date, interest
shall not be paid to the Person in whose name the Note, or portion thereof, is
registered on the close of business on such record date and the Company shall
have no obligation to pay interest on such Note or such portion except to the
extent required to be paid upon redemption or repurchase of such Note or portion
thereof pursuant to Section 3.1 or 16.1 hereof. Notes converted after a record
date and before the next succeeding interest payment date are required to be
accompanied by funds equal to the amount of interest payable on such succeeding
interest payment date on the principal amount of the Notes so converted, except
as set forth in the penultimate paragraph of Section 15.2 hereof. Interest may,
at the option of the Company, be paid by check mailed to the address of such
Person on the Note Register provided that, with respect to any Holder of Notes
with an aggregate principal amount equal to or in excess of $5,000,000 at the
request of such Holder in writing to the Company at least five (5) days prior to
the date set for payment of interest (who shall then furnish written notice to
such effect to the Trustee), interest on such Holder's Notes shall be paid by
wire transfer in immediately available funds in accordance with the wire
transfer instructions supplied by such Holder to the Trustee and Paying Agent
(if different from the Trustee). The term "Interest Payment Date" shall mean
June 15 and December 15 of each year commencing on December 15, 1998. The term
"record date" with respect to any interest payment date shall mean the June 1 or
December 1 preceding said June 15 or December 15, respectively.
Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any said June 15 or December 15 (herein
called "Defaulted Interest") shall be paid by the Company, at its election in
each case, as provided in clause (1) or (2) below.
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names 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 payment (which shall
not be 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
-10-
<PAGE> 18
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 ten (10) days prior to
the date of the proposed payment and not less than ten (10) days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such special record date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the special
record date therefor to be mailed, first-class postage prepaid, to each
Noteholder at his address as it appears in the Note Register, not less
than ten (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 were registered at the close of
business on such special record date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Notes
may be listed or designated for listing, and upon such notice as may be
required by such exchange or automated quotation system, if, after
written notice is 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.
SECTION 2.4. EXECUTION OF NOTES.
The Notes shall be signed in the name and on behalf of the
Company by the manual or facsimile signature of its President, any Senior Vice
President or any Vice President (whether or not designated by a number or
numbers or word or words added before or after the title "Vice President") and
attested by the manual or facsimile signature of its Secretary or any of its
Assistant Secretaries (which may be printed, engraved or otherwise reproduced
thereon, by facsimile or otherwise). Only such Notes as shall bear thereon a
certificate of authentication substantially in the form set forth on the form of
Note attached as Exhibit A hereto, manually executed by the Trustee (or an
authenticating agent appointed by the Trustee as provided by Section 17.11),
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 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
-11-
<PAGE> 19
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 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, although at the date of the execution of
this Indenture any such Person was not such an Officer.
SECTION 2.5. REGISTRAR, PAYING AGENT AND CONVERSION AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange (the "Registrar"), an
office or agency where Notes may be presented for payment (the "Paying Agent"),
an office or agency where Notes may be presented for conversion (the "Conversion
Agent") and an office or agency where notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served. The Registrar shall
keep a register of the Notes and of their transfer and exchange.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. Such agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to maintain a Registrar, Paying Agent,
Conversion Agent or agent for service of notices and demands, or fails to give
the foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as Registrar,
Paying Agent, Conversion Agent and agent for service of notices and demands in
connection with the Notes.
SECTION 2.6. PAYING AGENT TO HOLD MONEY IN TRUST.
On or prior to each due date of the principal of or interest
on the Notes, the Company shall deposit with the Paying Agent a sum sufficient
to pay such principal or interest so becoming due. Subject to Sections 4.1, 4.2
and 4.3, the Paying Agent shall hold in trust for the benefit of Holders or the
Trustee all money held by the Paying Agent for the payment of principal of or
interest on the Notes, and shall notify the Trustee of any default by the
Company (or any other obligor on the Notes) in making any such payment. If the
Company or an Affiliate of the Company acts as Paying Agent, it shall, on or
before each due date of the principal of or interest on any Notes, segregate the
money and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to pay all money held by it to the Trustee and the Trustee may at
any time during the continuance of any default, upon written request to a Paying
Agent, require such Paying Agent to forthwith pay to the Trustee all sums so
held in trust by such Paying Agent. Upon doing
-12-
<PAGE> 20
so, the Paying Agent (other than the Company) shall have no further liability
for the money.
SECTION 2.7. NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before each interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders, and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.8. EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES;
RESTRICTIONS ON TRANSFER; DEPOSITARY.
(a) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any
other office or agency of the Company designated pursuant to Section
5.3 being herein sometimes collectively referred to as the "Note
Register") in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Notes and
of transfers of Notes. The Note Register shall be in written form or in
any form capable of being converted into written form within a
reasonably prompt 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
in accordance with Section 5.3.
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 2.8, the
Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more
new Notes of any authorized denominations and of a like aggregate
principal amount and bearing such restrictive legends as may be
required by this Indenture.
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 office or agency maintained by
the Company pursuant to Section 5.3. Whenever any Notes are so
surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Notes which the Noteholder making
the exchange is entitled to receive bearing registration numbers not
contemporaneously outstanding.
-13-
<PAGE> 21
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Notes surrendered upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of
transfer or for exchange, redemption, repurchase or conversion shall
(if so required by the Company or the Note Registrar) be duly endorsed,
or be accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company and the Trustee, and the Notes shall
be duly executed by the Noteholder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a
sum sufficient to cover any tax, assessment or other governmental
charge that may be imposed in connection with any registration of
transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note Registrar nor
any co-registrar shall be required to exchange or register a transfer
of (a) any Notes for a period of 15 days next preceding any selection
of Notes to be redeemed or (b) any Notes or portions thereof called for
redemption pursuant to Article III or (c) any Notes or portions thereof
surrendered for conversion pursuant to Article XV.
(b) Each Global Note authenticated under this Indenture shall
be registered in the name of Cede & Co., as nominee for The Depository
Trust Company, New York, New York, as Depositary and delivered to such
Depositary or a nominee thereof or custodian therefor, and each such
Global Note shall constitute a single Note for all purposes of this
Indenture.
Notwithstanding any other provision in this Indenture, no
Global Note may be exchanged in whole or in part for Notes registered,
and no transfer of a Global Note in whole or in part may be registered,
in the name of any Person other than the Depositary for such Global
Note or a nominee thereof unless (i) such Depositary (A) has notified
the Company that it is unwilling or unable to continue as Depositary
for such Global Note or (B) has ceased to be a clearing agency
registered as such under the Exchange Act, and in either case the
Company thereupon fails to appoint a successor Depositary, (ii) there
shall have occurred and be continuing an Event of Default with respect
to such Global Note or (iii) the Company executes and delivers to the
Trustee a Company Order stating that all Global Notes shall be
exchanged in whole for Notes that are not Global Notes (in which case
such exchange shall be effected by the Trustee).
-14-
<PAGE> 22
If any Global Note is to be exchanged for other Notes or
canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Note Registrar, for
exchange or cancellation as provided in this Article Two. If any Global
Note is to be exchanged for other Notes or canceled in part, or if
another Note is to be exchanged in whole or in part for a beneficial
interest in any Global Note, in each case, as provided in Section
2.8(a), then either (i) such Global Note shall be so surrendered for
exchange or cancellation as provided in this Article Two or (ii) the
principal amount thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or canceled, or equal
to the principal amount of such other Note to be so exchanged for a
beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the records of the Trustee, as Note
Registrar, whereupon the Trustee, in accordance with the Applicable
Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon
any such surrender or adjustment of a Global Note, the Trustee shall,
subject to Section 2.8(a) and as otherwise provided in this Article
Two, authenticate and make available for delivery any Notes issuable in
exchange for such Global Note (or any portion thereof) to or upon the
order of, and registered in such names as may be directed by, the
Depositary or its authorized representative. Upon the request of the
Trustee in connection with the occurrence of any of the events
specified in the preceding paragraph, the Company shall promptly make
available to the Trustee a reasonable supply of Notes that are not in
the form of Global Notes. The Trustee shall be entitled to conclusively
rely upon any order, direction or request of the Depositary or its
authorized representative which is given or made pursuant to this
Article Two if such order, direction or request is given or made in
accordance with the Applicable Procedures.
Every Note authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Note or any
portion thereof, whether pursuant to this Article Two or otherwise,
shall be authenticated and delivered in the form of, and shall be, a
Global Note, unless such Note is registered in the name of a Person
other than the Depositary for such Global Note or a nominee thereof.
The Depositary or its nominee, as registered owner of a Global
Note, shall be the Holder of such Global Note for all purposes under
the Indenture and the Notes, and owners of beneficial interests in a
Global Note shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a
Global Note will be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Depositary or
its nominee or its Agent Members and such owners of beneficial
interests in a Global Note will not be considered the owners or holders
of such Global Note for any purpose of this Indenture or the Notes.
-15-
<PAGE> 23
(c) Notwithstanding any other provisions of this Indenture
(other than the provisions set forth in Section 2.8(b)), a Global Note may not
be transferred as a whole or in part 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. The Global Note shall be issued
to the Depositary, registered in the name of Cede & Co., as the nominee of the
Depositary, and deposited with the Custodian for Cede & Co.
The Trustee is hereby authorized and requested to execute and
deliver a Letter of Representation to the Depositary and, in connection with any
successor nominee for the Depositary or any successor Depositary, enter into
comparable arrangements, and shall have the same rights with respect to its
actions thereunder as it has with respect to its action under this Indenture.
If at any time the Depositary for the Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for the Note,
the Company may appoint a successor Depositary with respect to such Note. If a
successor Depositary is not appointed by the Company within 90 days after the
Company receives such notice, the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate for the authentication and delivery of
Notes, will authenticate and deliver, Notes in certificated form, in an
aggregate principal amount equal to the principal amount of the Global Note, in
exchange for the Global Note.
If a Note in certificated form is issued in exchange for any
portion of a Global Note after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such Note, but
will be payable on such interest payment date only to the Person to whom
interest in respect of such portion of such Global Note is payable in accordance
with the provisions of this Indenture.
Notes in certificated form issued in exchange for all or a
part of a Global Note pursuant to this Section 2.8 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instruction from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. Upon execution and authentication, the Trustee
shall deliver such Notes in certificated form to the Persons in whose names such
Notes in certificated form are so registered.
-16-
<PAGE> 24
At such time as all interests in a Global Note have been
redeemed, repurchased, converted, canceled, exchanged for Notes in certificated
form, or transferred to a transferee who receives Notes in certificated form,
such Global Note shall, upon receipt thereof, be 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 Notes in certificated form, redeemed,
converted, repurchased or canceled, or transferred to a transferee who receives
Notes in certificated form therefor or any Note in certificated form 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 appropriately 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.
SECTION 2.9. 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 the Trustee or an
authenticating agent appointed by the Trustee, upon receipt of an Officers'
Certificate for the authentication and delivery of Notes, shall authenticate and
deliver, 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. 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 for 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 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 or the
Trustee 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 which 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
-17-
<PAGE> 25
authenticating agent such security or indemnity as may be required by them to
save each of them harmless for 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 2.9 by virtue of the fact that any Note 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 found at any time,
and shall be entitled to all the benefits of (but shall be subject to all the
limitations set forth in) this Indenture equally and proportionally 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.
SECTION 2.10. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any notice, direction, waiver or consent,
Notes owned by the Company or any other obligor on the Notes or by any Affiliate
of the Company or of such other obligor on the Notes shall be disregarded,
except that, for purposes of determining whether the Trustee shall be protected
in relying on any such notice, direction, waiver or consent, only Notes which
the Trustee knows are so owned shall be so disregarded. Notes so owned which
have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to the Notes and that the pledgee is not the Company or any other
obligor on the Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.11. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may
prepare and execute, and, upon the order of the Company, the Trustee shall
authenticate and deliver temporary Notes. Temporary Notes shall be substantially
in the form of definitive Notes but may have variation that the Company with the
consent of the Trustee considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
and deliver definitive Notes in exchange for temporary Notes.
-18-
<PAGE> 26
SECTION 2.12. CANCELLATION.
All Notes surrendered for the purpose of payment, redemption,
repurchase, 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 provided that any Note or portion thereof
surrendered for repurchase shall only be canceled at such time as such Note or
portion thereof has been repurchased pursuant to Article XVI hereof. The Trustee
shall destroy canceled Notes (unless the Company directs it to do otherwise)
and, after such destruction, shall, if requested by the Company, deliver a
certificate of such destruction to the Company. If the Company shall acquire any
of the Notes, such acquisitions 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.
SECTION 2.13. DEPOSIT OF FUNDS.
Prior to 10:00 a.m. New York City time on each Interest
Payment Date and the maturity date, the Company shall deposit with the Paying
Agent immediately available funds sufficient to make cash payments, if any, due
on such Interest Payment Date or maturity date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the Holders on such
Interest Payment Date or maturity date, as the case may be.
ARTICLE III
REDEMPTION OF NOTES
SECTION 3.1. RIGHT TO REDEEM; NOTICE TO TRUSTEE.
The Notes may not be redeemed otherwise than at the option of
the Holder as provided in Section 16.1 or at the election of the Company, as a
whole or from time to time in part, at any time after June 15, 2001, at the
Redemption Prices specified in paragraph nine of the form of Note (reverse side)
attached hereto as Exhibit A, together with accrued interest up to but not
including the Redemption Date, provided, however, that prior to the payment in
full of the principal of, premium, if any, and interest and all other amounts
payable in respect of the Senior Subordinated Notes, the Company shall have no
right to elect to redeem the Notes pursuant to this Section 3.1 (and shall have
no right to make any payment on the Notes in respect thereof) unless the Company
can incur one dollar of additional Debt (as such term is defined in the Senior
Subordinated Notes Purchase Agreement) pursuant to Section 11.1(i) of the Senior
Subordinated Notes
-19-
<PAGE> 27
Purchase Agreement at the time of and after giving effect to such redemption and
the payment of the Notes in respect thereof.
If the Company elects to redeem Notes pursuant to this Section
3.1 and paragraph eight of the Notes, it shall notify the Trustee in writing at
least 45 days prior to the Redemption Date as fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee) of the Redemption Date and
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 3.2. If fewer than all of the Notes are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and given to the Trustee, which record date shall not be less than ten
days after the date of notice to the Trustee.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed, the Trustee
shall, not more than 60 days prior to the Redemption Date, select the Notes to
be redeemed by lot or by a method the Trustee considers fair and appropriate;
provided, however, that such method is not prohibited by any stock exchange or
automated quotations system on which the Notes are then listed or traded. The
Trustee shall make the selection from the Notes outstanding and not previously
called for redemption. The Trustee shall select for redemption portions of the
principal of Notes that have denominations larger than $1,000. Provisions of
this Indenture that apply to Notes called for redemption also apply to portions
of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 15 days but not more than 60 days before a Redemption
Date, the Company shall mail or cause to be mailed a notice of redemption by
first-class mail to the Trustee and to each Holder of Notes to be redeemed at
such Holder's address as it appears on the Note Register.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the then current Conversion Price;
(4) the name and address of the Paying Agent and the
Conversion Agent;
-20-
<PAGE> 28
(5) that Notes called for redemption must be presented and
surrendered to the Paying Agent to collect the Redemption Price;
(6) that the Notes called for redemption may be converted at
any time before the close of business on the fifth Business Day
immediately preceding the Redemption Date;
(7) that Holders who wish to convert Notes must satisfy the
requirements in paragraph 11 of the Notes;
(8) that, unless the Company defaults in making the redemption
payment, the only remaining right of the Holder shall be to receive
payment of the Redemption Price upon presentation and surrender to the
Paying Agent of the Notes;
(9) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, upon presentation and surrender of such Note, a new
Note or Notes in principal amount equal to the unredeemed portion
thereof will be issued; and
(10) that interest on Notes called for redemption ceases to
accrue on and after the Redemption Date.
At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Notes called for
redemption become due and payable on the Redemption Date and at the Redemption
Price stated in the notice, except for Notes that are converted in accordance
with the provisions of Section 15.1. Upon presentation and surrender to the
Paying Agent, Notes called for redemption shall be paid at the Redemption Price,
plus accrued interest up to but not including the Redemption Date.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
On or before 10:00 a.m. New York City time on any Redemption
Date, the Company shall deposit with the Paying Agent money sufficient to pay
the Redemption Price of and accrued interest on all Notes to be redeemed on that
date, other than Notes or portions thereof called for redemption on that date
which have been delivered by the Company to the Trustee for cancellation or have
been converted. The Paying Agent shall promptly return to the Company any money
not required for that purpose because of the
-21-
<PAGE> 29
conversion of Notes pursuant to Article XV or otherwise. If such money is
instead held by the Company or an Affiliate of the Company in trust and is not
required for such purpose, it shall be discharged from the trust.
SECTION 3.6. NOTES REDEEMED IN PART.
Upon presentation and surrender of a Note that is redeemed in
part, the Company shall execute and the Trustee shall authenticate for and
deliver to the Holder a new Note equal in principal amount to the unredeemed
portion of the Note surrendered.
Notwithstanding the foregoing, the Trustee shall not pay the
Redemption Price of any Notes or mail any notice of redemption during the
continuance of a default in payment of interest on the Notes or of any Event of
Default of which a Trust Officer has knowledge. 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.
SECTION 3.7. 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 paying to
the Trustee in trust for the Holders, on or before the date fixed for
redemption, an amount not less than the applicable Redemption Price, together
with interest accrued to (but excluding) that 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 (but excluding) 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 surrendered by such purchasers
for conversions, all as of immediately prior to the close of business on the
date fixed for redemption (and the right to convert any such Notes shall be
extended through such time), subject to payment of the above amount as
aforesaid. At the written 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
-22-
<PAGE> 30
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 to
which the Trustee has not consented in writing, including the costs and
expenses, including reasonable legal fees, 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.
ARTICLE IV
SUBORDINATION OF NOTES
SECTION 4.1. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and each Holder of Notes
issued hereunder by his or her acceptance thereof likewise covenants and agrees,
that all Notes shall be issued subject to the provisions of this Article IV; and
each Person holding any Note, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions.
The payment of the principal of, and interest on all Notes
issued hereunder (including, without limitation, in connection with any
redemption of Notes) shall, to the extent and in the manner hereinafter set
forth, be subordinated and subject in right of payment to the prior payment in
full of all Senior Indebtedness, whether outstanding at the date of this
Indenture or thereafter created, incurred, assumed or guaranteed.
SECTION 4.2. PAYMENTS TO HOLDERS.
No payment shall be made with respect to the principal of, or
premium, if any, or interest on the Notes (including, but not limited to, the
Redemption Price with respect to the Notes to be called for redemption in
accordance with Section 3.2 or submitted for repurchase in accordance with
Section 16.2, as the case, may be, as provided in the Indenture), if:
(a) a default in the payment of principal, premium, interest,
rent or other obligations due on any Senior Indebtedness occurs and is
continuing (or, in the case of Senior Indebtedness for which there is a
period of grace, in the event of such a default that continues beyond
the period of grace, if any, specified in the instrument or lease
evidencing such Senior Indebtedness), unless and until such default
shall have been cured or waived or shall have ceased to exist, or
(b) a default, other than a payment default, on any Designated
Senior Indebtedness occurs and is continuing that then permits any
holders of such
-23-
<PAGE> 31
Designated Senior Indebtedness to accelerate its maturity and the
Trustee receives a written notice of the default (a "Payment Blockage
Notice") from a Representative or the Company.
If the Trustee receives any Payment Blockage Notice pursuant
to clause (b) above, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section unless and until (A) at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice, and (B) all scheduled payments of principal, premium, if any,
and interest on the Notes that have come due have been paid in full in cash. No
nonpayment 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.
The Company, after providing written notice to the Trustee,
shall resume payments on and distributions in respect of the Notes upon the
earlier of: (a) the date upon which the default is cured or waived or ceases to
exist, or (b) in the case of a default referred to in clause (b) above, 179 days
pass after notice is received if the maturity of such Designated Senior
Indebtedness has not been accelerated; unless this Article IV otherwise
prohibits the payment or distribution at the time of such payment or
distribution.
Upon any payment by the Company, or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment in form
and substance satisfactory to the holders of such Senior Indebtedness, or
payment thereof in accordance with its terms provided for in cash or other
payment in form and substance satisfactory to the holders of such Senior
Indebtedness, before any payment is made on account of the principal of,
premium, if any, or interest on the Notes (except payments made pursuant to
Article XIII from monies deposited with the Trustee pursuant thereto prior to
commencement of proceedings for such dissolution, winding up, liquidation or
reorganization) and upon any such dissolution or winding up or liquidation or
reorganization of the Company or bankruptcy, insolvency, receivership or other
proceeding, any payment by the Company, or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to which the
holders of the Notes or the Trustee would be entitled, except for the provision
of this Article IV, shall (except as aforesaid) be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the holders of the Notes or by the
Trustee under this Indenture if received by them or it, directly to the holders
of Senior Indebtedness (pro rata to such holders on the basis of the respective
amounts of Senior Indebtedness held by such holders, or as otherwise required by
law or a court order) or their representative or
-24-
<PAGE> 32
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay all
Senior Indebtedness in full, in cash or other payment in form and substance
satisfactory to the holders of such Senior Indebtedness, after giving effect to
any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution or provision therefor is made
to the holders of the Notes or to the Trustee.
For purposes of this Article IV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article IV with respect
to the Notes to the payment of all Senior Indebtedness which may at the time be
outstanding provided that (i) the Senior Indebtedness is assumed by the new
corporation, if any, resulting from any reorganization or readjustment, and (ii)
the rights of the holders of Senior Indebtedness (other than leases which are
not assumed by the Company or the new corporation, as the case may be) are not,
without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance or transfer of its property as an entirety, or
substantially as an entirety, to another corporation upon the terms and
conditions provided for in Article XII shall not be deemed a dissolution,
winding up, liquidation or reorganization for the purposes of this Section 4.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article XII.
In the event of the acceleration of the Notes because of an
Event of Default, no payment or distribution shall be made to the Trustee or any
holder of Notes in respect of the principal of, premium, if any, or interest on
the Notes (including, but not limited to, the Redemption Price with respect to
the Notes, called for redemption in accordance with Section 3.2 or submitted for
repurchase in accordance with Section 16.2, as the case may be, as provided in
the Indenture), except payments and distributions made by the Trustee as
permitted by the first or second paragraph of Section 4.5, until all Senior
Indebtedness has been paid in full in cash or other payment in form and
substance satisfactory to the holders of Senior Indebtedness or such
acceleration is rescinded in accordance with the terms of this Indenture. If
payment of the Notes is accelerated because of an Event of Default, the Company
shall promptly notify holders of Senior Indebtedness of the acceleration.
In the event that, notwithstanding the foregoing provisions,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing, shall be received by the
Trustee or the Holders before all
-25-
<PAGE> 33
Senior Indebtedness is paid in full in cash or other payment in form and
substance satisfactory to the holders of such Senior Indebtedness, or provision
is made for such payment thereof in accordance with its terms in cash or other
payment in form and substance satisfactory to the holders of such Senior
Indebtedness, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, as calculated by the Company, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in cash or other payment in form and substance satisfactory
to the holders of such Senior Indebtedness, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 8.6. This Section 4.2
shall be subject to the right to rescind and annul acceleration of the notice
pursuant to Section 7.1.
SECTION 4.3. NOTES TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the prior payment in full of all Senior
Indebtedness then due, the Holders shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of assets of
the Company applicable to the Senior Indebtedness until the principal of and
interest on the Notes shall be paid in full, and, for purposes of such
subrogation, no payments or distributions to the holders of Senior Indebtedness
of assets, whether in cash, property or securities, distributable to the holders
of Senior Indebtedness under the provisions hereof to which the Holders would be
entitled except for the provisions of this Article IV, and no payment pursuant
to the provisions of this Article IV to the holders of Senior Indebtedness by
the Holders shall, as among the Company, its creditors other than the holders of
Senior Indebtedness, and the Holders, be deemed to be a payment by the Company
to or on account of the Notes, it being understood that the provisions of this
Article IV are, and are intended, solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
SECTION 4.4. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article IV or elsewhere in this
Indenture or in any Note is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Indebtedness, and the Holders,
the obligation of the Company, which is absolute and unconditional, to pay to
the Holders the principal of and interest on the Notes, as the same shall become
due and payable in accordance with the terms of the Notes, or to affect the
relative rights of the Holders and other creditors of the Company
-26-
<PAGE> 34
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon the happening of an Event of Default under this
Indenture, subject to the provisions of Article VIII and this Article IV.
SECTION 4.5. NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Notes. Notwithstanding the provisions of
this Article IV or any other provision of this Indenture, the Trustee shall not
at any time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee, unless and until a
Trust Officer of the Trustee shall have received written notice thereof from the
Company or from the holder or holders of Senior Indebtedness or from their
Representative or Representatives; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 8.1 and 8.2, shall be
entitled to assume conclusively that such facts do not exist.
The Trustee shall be entitled to rely on the delivery to it of
a written notice by a Person representing himself or herself to be a holder of
Senior Indebtedness (or a Representative of such holder) to establish that such
notice has been given by a holder of Senior Indebtedness or a Representative 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 IV, 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 of which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
each Person under this Article IV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of Person to receive such payment.
SECTION 4.6. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT.
Money or U.S. Government Obligations deposited with the
Trustee or any Paying Agent (whether or not in trust) for the payment of the
principal of or interest on any Notes shall be subject to the provisions of
Sections 4.1, 4.2, 4.3 and 4.4; except that, if two (2) Business Days prior to
the date on which by the terms of this Indenture any such monies or U.S.
Government Obligations may become payable for any purpose (including, without
limitation, the payment of either the principal of or interest on any Note) the
Trustee shall not have received with respect to such monies or U.S. Government
Obligations the notice provided for in Section 4.5, then the Trustee or any
Paying Agent shall have full power and authority to receive such monies and to
apply such monies to the purpose for which they were received, and shall not be
affected by any
-27-
<PAGE> 35
notice to the contrary which may be received by it on or after such date. This
Section 4.6 shall be construed solely for the benefit of the Trustee and the
Paying Agent and shall not otherwise affect the rights that holders of Senior
Indebtedness may have to recover any such payments from the Holders in
accordance with the provisions of this Article IV.
SECTION 4.7 REINSTATEMENT.
If, at any time, all or part of any payment with respect to
Senior Indebtedness theretofore made by the Company is rescinded for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of the Company), the subordination provisions set forth in this
Article IV shall continue to be effective or be reinstated, as the case may be,
all as though such payment had not been made.
SECTION 4.8. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Each Holder agrees and consents that without notice to or
assent by Holders, and without affecting the liabilities and obligations of the
Company and the rights and benefits of the holders of Senior Indebtedness set
forth in this Article IV:
(a) the obligations and liabilities of the Company with
respect to the Senior Indebtedness may, from time to time, be
increased, renewed, refinanced, extended, modified, amended, restated,
compromised, supplemented, terminated, waived or released;
(b) the holders of Senior Indebtedness, and any
Representative or Representatives acting on behalf thereof, may
exercise or refrain from exercising any right, remedy or power granted
by or in connection with any agreements relating to the Senior
Indebtedness; and
(c) any balance or balances of funds with any holder of Senior
Indebtedness at any time outstanding to the credit of the Company may,
from time to time, in whole or in part, be surrendered or released, all
as the holders of any Senior Indebtedness, or any Representative or
Representatives acting on behalf thereof, may deem advisable, and all
without impairing, abridging, diminishing, releasing or affecting the
subordination of the Notes to Senior Indebtedness.
SECTION 4.9 NO MODIFICATION, ETC.
The provisions of this Article IV are for the benefit of the
holders of Senior Indebtedness, and, so long as any Senior Indebtedness remains
outstanding, may not be modified, rescinded or canceled in whole or in part
without the prior written consent thereto of all holders of Senior Indebtedness.
-28-
<PAGE> 36
SECTION 4.10. SPECIFIC PERFORMANCE.
The Company and the Holders hereby expressly agree that the
holders of Senior Indebtedness may enforce any and all rights derived herein by
suit, either in equity or at law, for specific performance of any agreement
contained in this Article IV or for judgment at law and any other relief
whatsoever appropriate to such action or procedure.
SECTION 4.11. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of any Senior
Indebtedness to enforce subordination, as herein provided, shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of any Senior Indebtedness may
extend, renew, modify or amend the terms of such Senior Indebtedness or any
security therefor and release, sell or exchange such security and otherwise deal
freely with the Company, all without affecting the liabilities and obligations
of the parties to this Indenture or the Holders. No provision in any supplement
to, modification of or replacement of this Indenture which affects the rights or
obligations of the holders of the Senior Indebtedness shall be effective against
the holders of the Senior Indebtedness unless the holders of such Senior
Indebtedness (required pursuant to the terms of such Senior Indebtedness to give
such consent) have consented thereto.
SECTION 4.12. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of a Note by his or her acceptance thereof
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to effectuate the subordination provided in this
Article IV and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
SECTION 4.13 PROOFS OF CLAIM.
So long as any Senior Indebtedness is outstanding, if any
Event of Default under Section 7.1(f) or (g) occurs, and if any Holder of Notes
fails to file any claim or proof of claim necessary to enforce the obligations
of the Company in respect of such Notes at least ten days before the time to
file such claim or proof of claim has expired, any holder of Senior Indebtedness
may (but shall have no obligation to) file any such claim or proof of claim, and
each Holder of Notes hereby acknowledges that any holder of Senior Indebtedness
may so file any such claims and proofs of claim.
-29-
<PAGE> 37
SECTION 4.14. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee, in its individual capacity, shall be entitled to
all of the rights set forth in this Article IV in respect of any Senior
Indebtedness at any time held by it to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall be construed to deprive
the Trustee of any of its rights as such holder. Nothing in this Article IV
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 8.6.
SECTION 4.15. ARTICLE IV NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of the principal of
or interest on the Notes by reason of any provision in this Article IV shall not
be construed as preventing the occurrence of an Event of Default under Section
7.1.
SECTION 4.16. NO FIDUCIARY DUTY CREATED TO HOLDERS OF SENIOR INDEBTEDNESS.
Notwithstanding any other provision in this Article IV, the
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness by virtue of the provisions of this Article IV and shall not be
liable to any such holders if it shall in good faith mistakenly pay over or
distribute to Holders of Notes or to the Company or to any other Person cash,
property or securities to which holders of Senior Indebtedness shall be entitled
by virtue of this Article IV or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article IV, and
no implied covenants or obligations with respect to the holders of Senior
Indebtedness shall be read into this Article IV against the Trustee.
SECTION 4.17. ARTICLE APPLICABLE TO PAYING AGENT.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article IV shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such Paying
Agent were named in this Article IV in addition to or in place of the Trustee.
Notwithstanding the foregoing, neither the Company nor any Affiliate shall be
eligible to (i) serve as Paying Agent or (ii) assume responsibilities similar to
those typically performed by a paying agent.
-30-
<PAGE> 38
ARTICLE V
COVENANTS
SECTION 5.1. PAYMENT OF NOTES.
The Company shall promptly make all payments in respect of the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent (other than the Company or an Affiliate of
the Company) holds on that date money deposited by the Company or an Affiliate
thereof and sufficient to pay the installment. The Company shall pay interest on
overdue principal at the rate borne by the Notes per annum; it shall pay
interest on overdue installments of interest at the same rate to the extent
lawful.
SECTION 5.2. SEC REPORTS.
The Company shall file all reports and other information and
documents which it is required to file with the SEC pursuant to Section 13 or
15(d) of the Exchange Act, and within 15 days after it files them with the SEC,
the Company shall file copies of all such reports, information and other
documents with the Trustee. The Company will cause any annual reports which it
mails to its stockholders to be mailed to the Holders.
SECTION 5.3. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in Richmond, Virginia, an office or
agency (which may be the Corporate Trust Office) 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 will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency not designated or appointed by
the Trustee. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office or the office or agency of the Trustee in Charlotte,
North Carolina.
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 Richmond, Virginia,
for such purposes. The Company
-31-
<PAGE> 39
will give prompt written notice to the holders 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 each of the Corporate
Trust Office of the Trustee and the office or agency of the Trustee in
Charlotte, North Carolina, as one such office or agency of the Company for each
of the aforesaid purposes.
SECTION 5.4. 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 which would prohibit or forgive the Company from paying
all or any portion of the principal of, or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture, and the Company (to
the extent it may lawfully do so) hereby expressly waives all benefits or
advantage of any such law, and covenants that it will not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 5.5. LIQUIDATION.
Subject to the provisions of Article IV, so far as they may be
applicable hereto, the Board of Directors or the stockholders of the Company may
not adopt a plan of liquidation, which plan provides for, contemplates or the
effectuation of which is preceded by (a) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company otherwise
than substantially as an entirety (any such sale, lease, conveyance or other
disposition substantially as an entirety being governed by Article VII) and (b)
the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and of the remaining assets of the
Company to the holders of the capital stock of the Company, unless the Company
shall in connection with the adoption of such plan make provision for, or agree
that prior to making any liquidating distributions it will make provision for,
the satisfaction of the Company's obligations hereunder and under the Notes as
to the payment of the principal and interest thereof. The Company shall be
deemed to make provision for such payments only if (1) the Company irrevocably
deposits in trust with the Trustee money or U.S. Government Obligations maturing
as to principal and interest in such amounts and at such times as are
sufficient, without consideration of any reinvestment of such interest, to pay
the principal of and interest on the Notes then outstanding to maturity and to
pay all other sums payable by it hereunder or (2) there is an express assumption
of the due and punctual payment of the Company's obligations hereunder and under
the Notes and the performance and observance of all covenants and conditions to
be performed by the
-32-
<PAGE> 40
Company hereunder, by the execution and delivery of a supplemental indenture in
form satisfactory to the Trustee by a Person who acquires, or will acquire
(otherwise than pursuant to a lease), all or substantially all of the assets of
the Company, and which Person will have assets (immediately after the
acquisition) and aggregate earnings (for such Person's four full fiscal quarters
immediately preceding such acquisition) at least equal to the assets of the
Company (immediately preceding such acquisition) and the aggregate earnings of
the Company (for its four (4) full fiscal quarters immediately preceding the
acquisition), respectively, and which is a corporation organized under the laws
of the United States, any State thereof or the District of Columbia; provided,
however, that the Company shall not make any liquidating distribution until
after the Company (x) has certified to the Trustee with an Officers' Certificate
at least five (5) days prior to the making of any liquidating distribution that
it has complied with the provisions of this Section 5.5 and (y) delivered to the
Trustee an Opinion of Counsel that all conditions precedent to such liquidation
have been complied with.
SECTION 5.6. COMPLIANCE CERTIFICATES.
The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company, an Officers' Certificate as to the
signer's knowledge of the Company's compliance with all conditions and covenants
on its part contained in this Indenture and stating whether or not the signer
knows of any default or Event of Default. If such signer knows of such a default
or Event of Default, the Officers' Certificate shall describe the default or
Event of Default and the efforts to remedy the same. The Officers' Certificate
need not comply with Section 17.5 hereof.
SECTION 5.7. NOTICE OF DEFAULTS.
In the event (a) that Indebtedness of the Company in an
aggregate amount in excess of $10,000,000 is declared due and payable before its
maturity because of the occurrence of any default under such Indebtedness, or
(b) of the occurrence of any event which, with the giving of notice or the
passage of time, or both, would entitle the holder or holders of such
Indebtedness to declare such Indebtedness due and payable before its maturity,
the Company will promptly give written notice to the Trustee of such
declaration.
SECTION 5.8. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company,
directly or by reason of its ownership of any Subsidiary or upon the income,
profits or property of the Company and (b) all material lawful claims for labor,
materials and supplies, which, if unpaid, might by law become a lien upon the
property of the Company; provided, however, that the
-33-
<PAGE> 41
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 adequate provision has been made.
SECTION 5.9. CORPORATE EXISTENCE.
Subject to Article XII, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any right if the Board of
Directors shall determine in good faith that the preservation is no longer
desirable in the conduct of the Company's business and that the loss thereof is
not, and will not be, adverse in any material respect to the Holders.
SECTION 5.10. MAINTENANCE OF PROPERTIES.
Subject to Section 5.5, the Company and its Subsidiaries will
cause all material properties (real and personal) owned, leased or licensed in
the conduct of their business to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof and thereto, all as in the reasonable judgment of the Board
of Directors may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times while any
Notes are outstanding, provided, however, that nothing in this Section 5.10
shall prevent the Company and its Subsidiaries from discontinuing the
maintenance of any such properties if, in the reasonable judgment of the Board
of Directors, such discontinuance is desirable in the conduct of the Company's
business and is not, and will not be, adverse in any material respect to the
Holders.
SECTION 5.11. FURTHER INSTRUMENTS AND ACTS.
Upon request of the Trustee, the Company will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purposes of this
Indenture.
ARTICLE VI
NOTEHOLDERS' LISTS AND REPORTS BY THE TRUSTEE
SECTION 6.1. HOLDERS' LISTS.
The Company covenants and agrees that it will furnish or cause
to be furnished to the Trustee, semiannually, not more than 15 days after each
June 1 and
-34-
<PAGE> 42
December 1 in each year beginning with 1998, and at such other times as the
Trustee may request in writing, within 30 days after receipt by the Company of
any such request (or such lesser time as the Trustee may reasonably request in
order to enable it to timely provide any notice to be provided by it hereunder),
a list in such form as the Trustee may reasonably require of the names and
addresses of the Holders of Notes as of a date not more than 15 days (or such
other date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished so long as the Trustee is acting as Note Registrar.
SECTION 6.2. PRESERVATION AND DISCLOSURE OF LISTS.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses
of the Holders of Notes contained in the most recent list furnished to
it as provided in Section 6.1 or maintained by the Trustee in its
capacity as Note Registrar, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 6.1 upon receipt of a new
list so furnished.
(b) The rights of Holders to communicate with other Holders of
Notes with respect to their rights under this Indenture or under the
Notes, and the corresponding rights and duties of the Trustee, shall be
as provided by the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any Agent of either of them shall be held accountable
by reason of any disclosure of information as to names and addresses of
Holders of Notes made pursuant to the Trust Indenture Act.
SECTION 6.3. REPORTS BY TRUSTEE.
(a) Within 60 days after December 31 of each year commencing
with the year 1998, the Trustee shall transmit to Holders of Notes such
reports dated as of December 31 of the year in which such reports are
made concerning the Trustee and its actions under this Indenture as may
be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(b) A copy of such report shall, at the time of such
transmission to Holders of Notes, be filed by the Trustee with each
stock exchange or automated quotation system upon which the Notes may
be listed or traded with the Company. The Company will notify the
Trustee in writing within a reasonable time if the Notes are listed on
any stock exchange or automated quotation system.
-35-
<PAGE> 43
ARTICLE VII
REMEDIES OF THE TRUSTEE AND NOTEHOLDERS
ON AN EVENT OF DEFAULT
SECTION 7.1. 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) default in the payment of any installment of interest upon
any of the Notes as and when the same shall become due and payable, and
continuance of such default for a period of 30 days, whether or not
such payment is permitted under Article IV hereof; or
(b) default in the payment of the principal of or premium, on
any of the Notes as and when the same shall become due and payable
either at maturity or in connection with any redemption pursuant to
Article III or repurchase pursuant to Article XVI, by acceleration or
otherwise, whether or not such payment is permitted under Article IV
hereof; or
(c) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company in the Notes or in this Indenture (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere
in this Section 7.1 specifically dealt with) continued 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 Trust 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
9.4; or
(d) failure on the part of the Company or any Subsidiary with
respect to its obligation to pay principal of or interest on
Indebtedness for borrowed money which default shall have resulted in
Indebtedness in an amount in excess of $10,000,000; or
(e) default by the Company with respect to any Indebtedness
for borrowed money of the Company, which default results in
acceleration of any such Indebtedness which is in an amount of in
excess of $10,000,000 without
-36-
<PAGE> 44
such Indebtedness having been discharged, or such acceleration having
been rescinded or annulled within the applicable grace period; or
(f) 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 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; or
(h) the entry by a court having jurisdiction in the premises
of a final judgment, decree or order against the Company or any
Subsidiary which shall require the payment by the Company or any
Subsidiary of an amount (to the extent not covered by insurance) in
excess of $10,000,000 and the continuance of any such judgment, decree
or order unstayed or unsatisfied and in effect for a period of 60
consecutive days which is not being contested in good faith by
appropriate judicial proceedings; then, and in each and every such case
(other than an Event of Default specified in Section 7.1(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 9.4, by notice in writing to the
Company (and to the Trustee if given by Holders), may declare the
principal of all 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 specified in Section 7.1(f) or (g)
occurs, the principal of all the Notes and the interest accrued thereon shall be
immediately and automatically due and payable without necessity of further
action. This provision, however, is subject to the condition that if, at any
time after the decree for the payment of the monies due shall have been obtained
or entered as hereinafter provided, the Company
-37-
<PAGE> 45
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 which 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 8.6,
and if any and all defaults under this Indenture, other than the nonpayment of
principal of and premium, if any, and accrued interest on Notes which shall have
become due by acceleration, shall have been cured or waived pursuant to Section
7.7, then and in every such case the Holders of a majority in aggregate
principal amount of the Notes then outstanding determined in accordance with
Section 9.4, 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 thereon. The Company shall notify a Trust Officer of the
Trustee, promptly upon becoming aware thereof, of any Event of Default.
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.
SECTION 7.2. PAYMENT 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 period of 30 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 or repurchase, under this Indenture, by declaration or
otherwise, then, upon demand of the Trustee, the Company will pay to the
Trustee, for the benefit of the Holders, the whole amount that then shall have
become due and payable on all such Notes for principal and premium, if any, or
interest, or both, as the case may be, with interest upon the overdue principal
and 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.
-38-
<PAGE> 46
Until such demand by the Trustee, the Company may pay the principal of and
premium, if any, and interest on the Notes to the 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 7.2, 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 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 8.6,
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 which the Holders may be entitled to receive in
such proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
-39-
<PAGE> 47
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 at 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.
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, and it shall not be necessary to make any Holders parties to any
such proceedings.
SECTION 7.3. APPLICATION OF MONIES COLLECTED BY TRUSTEE.
Any monies collected by the Trustee pursuant to this Article
VII 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 8.6;
Second: subject to the provisions of Article IV, 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;
Third: subject to the provisions of Article IV, 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 owing and
unpaid upon the Notes for principal and 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 payments 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 and 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; and
-40-
<PAGE> 48
Fourth: subject to the provisions of Article IV, to the
payment of the remainder, if any, to the Company or any other Person lawfully
entitled thereto.
SECTION 7.4. PROCEEDINGS BY HOLDERS.
No Holder 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
determined in accordance with Section 9.4 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
7.7, 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 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, or 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 of all Holders (except as otherwise
provided herein). For the protection and enforcement of this Section 7.4, each
and every Noteholder 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 and premium, if any, and interest on such Note, on or after the
respective due dates therefor, 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.
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.
-41-
<PAGE> 49
SECTION 7.5. 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.
SECTION 7.6. REMEDIES CUMULATIVE AND CONTINUING.
Except as provided in the last paragraph of Section 2.9, all
powers and remedies given by this Article VII to the Trustee or to the Holders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any thereof or of any other powers and remedies available to the Trustee or the
Holders, 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 7.4, every power and remedy
given by this Article VII 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.
SECTION 7.7. 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 determined in accordance with Section 9.4 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, however, 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 which 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 9.4 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, (iii) a default in the
payment of the Redemption Price pursuant to Article III or repurchase price
pursuant to Article XVI or (iv) a default in respect of a covenant or provisions
hereof which under Article XI cannot be modified or amended without the consent
of the Holders of all Notes then outstanding. Upon any such waiver, the Company,
the Trustee and the Holders shall be restored to
-42-
<PAGE> 50
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. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 7.7, 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, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 7.8. NOTICE OF DEFAULTS.
The Trustee shall, within 90 days after a Trust Officer has
actual knowledge of 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 Trust Officer, unless such defaults shall have been cured or
waived before the giving of such notice and provided that, except in the case of
default in the payment of the principal of, or 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 officers of the Trustee in
good faith determines that the withholding of such notice is in the interest of
the Holders.
SECTION 7.9. 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,
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 7.9 (to the extent permitted by law) shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Noteholder, or group of Holders, holding in the aggregate more than ten percent
in principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4, or to any suit instituted by any Noteholder for the
enforcement of the payment of the principal of or premium, if any, or interest
on any Note on or after the due date therefor or to any suit for the enforcement
of the right to convert any Note in accordance with the provisions of Article XV
or to require the Company to repurchase any Note in accordance with Article XVI.
-43-
<PAGE> 51
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1. DUTIES AND RESPONSIBILITIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default has occurred (which has not
been cured or waived), the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree of care and skill in
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Indenture and the Trust Indenture Act, and the Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into
this Indenture or the Trust Indenture Act against the Trustee;
and
(2) in the absence of bad faith and willful
misconduct on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture but, in the
case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer or Officers, unless the Trustee
was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in principal
amount of the Notes at the time outstanding determined as provided in
Section 9.4 relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee,
-44-
<PAGE> 52
or exercising any trust or power conferred upon the Trustee, under
this Indenture; and
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or
affording protection to, the Trustee as Trustee, Paying Agent, Note
Registrar, Custodian or Conversion Agent shall be subject to the
provisions of this Section.
None of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers.
SECTION 8.2. RELIANCE ON DOCUMENTS, OPINIONS, ETC.
(a) the Trustee may rely and shall be protected in acting upon
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, note, 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) and any resolution of the Board of Directors
shall be sufficiently evidenced by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel, 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 thereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) 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, Note 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
-45-
<PAGE> 53
entitled to examine the books, records and premises of the Company,
personally or by Agent or attorney, provided, however, that if the
payments within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity against such
expenses or liability as a condition to so proceeding and the
reasonable expenses of every such examination shall be paid by the
Company or, if paid by the Trustee or any predecessor Trustee, shall be
repaid by the Company upon demand;
(f) 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; and
(g) the Trustee shall not be deemed to have notice of an Event
of Default or of any event or conditions which, with the giving of
notice, the passage of time, or both, might constitute an Event of
Default unless (i) a Trust Officer has received written notice thereof
from the Company or any Noteholder or (ii) a Trust Officer shall have
actual knowledge thereof.
SECTION 8.3. 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.
SECTION 8.4. TRUSTEE, PAYING AGENTS, CONVERSION AGENTS OR REGISTRAR MAY OWN
NOTES.
The Trustee, any Paying Agent, any Conversion Agent or 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.
SECTION 8.5. MONIES TO BE HELD IN TRUST.
Subject to the provisions of Section 13.4, 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 thereunder need not be
-46-
<PAGE> 54
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 from time to time by the Company and the Trustee.
SECTION 8.6. 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, reasonable compensation 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 will pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances reasonably
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 the Trustee's
negligence, willful misconduct, recklessness or bad faith. The Company also
covenants to indemnify the Trustee in any capacity under this Indenture and its
agents and any authenticating agent for, and to hold them harmless against, any
loss, liability or expense incurred without negligence, willful misconduct,
recklessness, 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 offer and sale of the Notes or 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. All
indemnifications and releases from liability granted hereunder to the Trustee
shall extend to its officers, directors, employees, agents, successors and
assigns. The obligations of the Company under this Section 8.6 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. The
obligation of the Company under this Section 8.6 shall survive the resignation
or removal of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee and its agents and any authenticating agent
incur expenses or render services after an Event of Default specified in Section
7.1(f) or (g) occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any bankruptcy,
insolvency or similar laws.
SECTION 8.7. OFFICERS' CERTIFICATE AS EVIDENCE.
Except as otherwise provided in Section 8.1, wherever 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
-47-
<PAGE> 55
prescribed) may, in the absence of negligence,willful misconduct, recklessness,
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.
SECTION 8.8. CONFLICTING INTERESTS OF TRUSTEE.
If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, 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.
SECTION 8.9. ELIGIBILITY OF TRUSTEE.
There shall at all times be a Trustee hereunder which shall be
a Person that is eligible pursuant to the Trust Indenture Act to act as such and
which shall have (or, in the case of a corporation included in a bank holding
company system, the related bank holding company shall have) 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
supervising or examining authority, then for the purposes of this Section 8.9,
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 8.9, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article VIII.
SECTION 8.10. RESIGNATION OR REMOVAL OF TRUSTEE.
(a) The Trustee may at any time resign by giving written
notice of such resignation to the Company and to the Holders of Notes. 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. If no successor Trustee
shall have been so appointed and have accepted appointment within 60 days after
the mailing of such notice of resignation to the Holders, the resigning Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee, or any Noteholder who has been a bona fide Holder of a Note
or Notes for at least six months may, subject to the provisions of Section 7.9,
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.
-48-
<PAGE> 56
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8
after written request therefor by the Company or by any
Noteholder who has been a bona fide Holder of a Note or Notes
for at least six (6) months; or
(2) the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.9 and shall fail
to resign after written request therefor by the Company or by
any such Noteholder; or
(3) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation; then, in any such case, 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, subject to the provisions of Section
7.9, any Noteholder who has been a bona fide Holder of a Note
or Notes for at least six (6) 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.
(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 (10) days after notice to the
Company of such nomination, the Company objects thereto, in which case
the Trustee so removed or any Noteholder, upon the terms and conditions
and otherwise as in Section 8.10(a) provided, may petition any court of
competent jurisdiction for an appointment of 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 8.10 shall become effective upon acceptance of appointment by
the successor Trustee as provided in Section 8.11 and payment of all
fees and expenses owed to the resigning or removed Trustee in
accordance with Section 8.6.
-49-
<PAGE> 57
SECTION 8.11. ACCEPTANCE BY SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 8.10
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, nevertheless, on the written request of the Company or of its successor
Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due
it pursuant to the provisions of Section 8.6, 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 8.6.
No successor Trustee shall accept appointment as provided in
this Section 8.11 unless at the time of such acceptance, such successor Trustee
shall be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor Trustee as
provided in this Section 8.11, the Company (or the former Trustee, at the
written direction of the Company) shall mail or cause to be mailed notice of the
succession of such Trustee hereunder 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 (10) 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.
SECTION 8.12. SUCCESSION 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 (including any trust created by this
Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation succeeding to all
or substantially all of the corporate trust business of the Trustee, such
corporation shall be qualified under the provisions of Section 8.8 and eligible
under the provisions of Section 8.9.
-50-
<PAGE> 58
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture, any of the Notes shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee or
authenticating agent appointed by such predecessor Trustee, and deliver such
Notes so authenticated and in case at that time any of the Notes shall not have
been authenticated, any successor to the Trustee or an authenticating agent
appointed by such successor Trustee may authenticate such Notes either in the
name of any predecessor Trustee hereunder or in the name of the successor
Trustee and in all such cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided that the certificate
of the Trustee shall have provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 8.13. 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), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of the claims
against the Company (or any such other obligor).
ARTICLE IX
CONCERNING THE NOTEHOLDERS
SECTION 9.1. ACTION BY HOLDERS.
When 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, or (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 X, 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, the Company or the Trustee may
fix in advance of such solicitation, a date as the 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.
-51-
<PAGE> 59
SECTION 9.2. PROOF OF EXECUTION BY HOLDERS.
Subject to the provisions of Sections 8.1, 8.2 and 10.5, proof
of the execution of any instrument by a Noteholder or his 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 provided by the registry of such
Notes or by a certificate of the Note Registrar.
The record of any Holders' meeting shall be proved in the
manner provided in Section 10.6.
SECTION 9.3. WHO ARE DEEMED ABSOLUTE OWNERS.
The Company, any other obligor on the Notes, the Trustee, any
authenticating agent, any Paying Agent, any Conversion Agent and any Note
Registrar may deem the Person in whose name such Note shall be registered upon
the Note Register to be, and may treat him 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
any authenticating 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 his order, 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 such
Note.
SECTION 9.4. 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 which 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, 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 which a Trust
Officer knows are so owned shall be so disregarded. Notes so owned which have
been pledged in good faith may be regarded as outstanding for the purpose of
this Section 9.4 if the pledgee shall establish to the satisfaction of the
Trustee the pledgee'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 of 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
-52-
<PAGE> 60
Persons and, subject to Section 8.1, 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.
SECTION 9.5. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND.
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 9.1, 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 which 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 9.2, revoke such
action so far as it 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.
ARTICLE X
NOTEHOLDERS' MEETINGS
SECTION 10.1. PURPOSE OF MEETINGS.
A meeting of Holders may be called at any time and from time
to time pursuant to the provisions of this Article X for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee or to
give any directions to the Trustee permitted under this Indenture, or
to consent to the waiving of any default or Event of 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 VII;
(b) to remove the Trustee and nominate a successor Trustee
pursuant to the provisions of Article VIII;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 11.2; or
(d) 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 provision of this Indenture or under
applicable law.
-53-
<PAGE> 61
SECTION 10.2. CALL OF MEETINGS BY TRUSTEE.
The Trustee may at any time call a meeting of Holders to take
any action specified in Section 10.1, to be held at such time and at such place
at a location within ten (10) miles of the Corporate Trust Office or in New
York, 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 and the establishment of
any record date pursuant to Section 9.1, shall be mailed to Holders of Notes at
their addresses as they shall appear on the Note Register. Such notice shall
also be mailed to the Company. Such notices shall be mailed not less than 20 nor
more than 90 days prior to the date fixed for the meeting.
Any meeting of Holders shall be valid without notice if the
Holders of all Notes then outstanding are present in Person or by proxy or if
notice is waived before or after the meeting by the Holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
SECTION 10.3. CALL OF MEETINGS 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 ten percent in aggregate
principal amount of the Notes then outstanding, shall have requested the Trustee
to call a meeting of Holders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall not
have mailed the notice of such meeting within 20 days after receipt of such
request, then the Company or such Holders may determine the time and the place
at any location within 10 miles of the Corporate Trust Office or New York, New
York for such meeting and may call such meeting to take any action authorized in
Section 10.1, by mailing notice thereof as provided in Section 10.2.
SECTION 10.4. QUALIFICATIONS FOR VOTING.
To be entitled to vote at any meeting of Holders a Person
shall (a) be a Holder of one or more Notes on the record date pertaining to such
meeting or (b) be a Person appointed by an instrument in writing as proxy by a
Holder of one or more Notes. 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.
-54-
<PAGE> 62
SECTION 10.5. REGULATIONS.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders, in regard to proof of the holding of Notes and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders as provided in Section 10.3, in which case the Company
or the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote at the
meeting.
Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxy Holder shall be entitled to one vote for each $1,000
principal amount of Notes then outstanding and held or represented by him,
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Note challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote other than by virtue of Notes held by him or instruments in
writing as aforesaid duly designating him as the proxy vote on behalf of other
Holders. Any meeting of Holders duly called pursuant to the provisions of
Section 10.2 or 10.3 may be adjourned from time to time by the Holders of a
majority of the aggregate principal amount of Notes represented at the meeting,
whether or not constituting a quorum, and the meeting may be held as so
adjourned without further notice.
SECTION 10.6. VOTING.
The vote upon any resolution submitted to any meeting of
Holders shall be by written ballot on which shall be subscribed the signatures
of the Holders of Notes or of their representative by proxy and the principal
amount of the Notes held or represented by them. The permanent chairman of the
meeting shall appoint two inspectors of votes who shall count all votes cast at
the meting 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 10.2. The record
shall show the principal amount of the Notes voting in favor of or against any
resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be
-55-
<PAGE> 63
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 10.7. NO DELAY OF RIGHTS BY MEETING.
Nothing in this Article X 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 hindrance 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.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
The Company, when authorized by resolutions of the Board of
Directors, 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 provisions with respect to the conversion rights
of the Holders of Notes pursuant to the requirements of Section 15.6 or
the repurchase obligations of the Company pursuant to the requirements
of Section 16.5;
(b) subject to Article IV, 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 corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article XII;
(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, however, that in respect of any such additional
-56-
<PAGE> 64
covenant, restriction or conditions 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 which may
be defective or inconsistent with any other provisions contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture which shall
not materially adversely affect the interests of the Holders;
(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 as shall be necessary to effect the
qualification of this Indenture under the Trust Indenture Act, or under
any similar federal statue hereafter enacted.
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 which 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 which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of
this Section 11.1 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 11.2.
SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent (evidenced as provided in Article IX) of the
Holders of not less than a majority in aggregate principal amount of the Notes
at the time outstanding determined in accordance with Section 9.4, the Company,
when authorized by the resolutions of the Board of Directors, and the Trustee
may from time to time and at any
-57-
<PAGE> 65
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, provided, however, 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, or impair the right of any Noteholder 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, or modify the provisions of this Indenture with
respect to the subordination of the Notes in a manner adverse to the Holders in
any material respect, or change the obligation of the Company to repurchase any
Note upon the occurrence of a Change in Control in a manner adverse to the
Holder of Notes, or impair the right to convert the Notes into Common Stock in
any material respect, 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 indentures, without the consent
of the Holders of all Notes then outstanding.
Upon the request of the Company, accompanied by a copy of the
resolutions of the Board of Directors certified by its Secretary or an Assistant
Secretary authorizing the execution of any such supplemental indentures, 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 indentures 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 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURE.
Any supplemental indenture executed pursuant to the provisions
of this Article XI shall comply with the Trust Indenture Act, as then in effect,
provided that this Section 11.3 shall not require such supplemental indenture or
the Trustee to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act or
the Indenture has been qualified under the Trust Indenture Act, nor shall it
constitute any admission or acknowledgment by any party to such supplemental
indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act or
the Indenture has been qualified under the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article XI, this Indenture shall
-58-
<PAGE> 66
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.
SECTION 11.4. NOTATION ON NOTES.
Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article XI may bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company or the Trustee shall so determine, new
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 17.11) and delivered in exchange
for the Notes then outstanding, upon surrender of such Notes then outstanding.
SECTION 11.5. EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL
INDENTURE TO BE FURNISHED TRUSTEE
The Trustee, subject to the provisions of Sections 8.1 and
8.2, may require 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 XI.
ARTICLE XII
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 12.1. COMPANY MAY CONSOLIDATE ETC. ON CERTAIN TERMS.
Subject to the provisions of Sections 12.2 and 16.1, nothing
contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company), or successive
consolidations or mergers in which the Company or its successor or successors
shall be a party or parties, or shall prevent any sale, conveyance or lease (or
successive sales, conveyances or leases) of the property of the Company,
substantially as an entirety, to any other corporation (whether or not
affiliated with the
-59-
<PAGE> 67
Company), authorized to acquire and operate the same and which, in each case,
shall be organized under the laws of the United States of America, any state
thereof or the District of Columbia, provided, that upon any such consolidation,
merger, sale, conveyance or lease, if the Company is not the surviving entity,
the due and punctual payment of the principal of and premium, if any, and
interest on all of the Notes, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by the Company, shall be expressly assumed, by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee by the corporation (if other than the Company) formed
by such consolidation, or into which the Company shall have been merged, or by
the corporation which shall have acquired or leased such property, and such
supplemental indenture shall provide for the applicable conversion rights set
forth in Section 15.6.
SECTION 12.2. SUCCESSOR CORPORATION TO BE SUBSTITUTED.
In case of any such consolidation, merger, sale, conveyance or
lease referenced in Section 12.1 and upon the assumption by any successor
corporation, by supplemental indenture required by Section 12.1, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and 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 Company, such successor
corporation shall succeed to and be substituted for the Company, with the same
effect as if it had been named herein as such. Such successor corporation
thereupon may cause to be signed and may issue either in its own name or in the
name of Kellstrom Industries, Inc. any or all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee and, upon the order of such successor corporation instead of the Company
and subject to all the terms, conditions and limitations in this Indenture
prescribed, the Trustee shall authenticate and shall deliver, or cause to be
authenticated and delivered, any Notes which previously shall have been signed
and delivered by the Officers of the Company to the Trustee for authentication,
and any Notes which such successor corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All the Notes so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the Notes theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Notes had been issued at the date of the
execution hereof. In the event of any such consolidation, merger, sale or
conveyance (but not in the event of any such lease), the Person named as the
"Company" in the first paragraph of this Indenture or any successor which shall
thereafter have become such in the manner prescribed in this Article XII shall
be released from its liabilities as obligor and maker of the Notes and from its
obligations under this Indenture.
-60-
<PAGE> 68
In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form (but not in substance) may be made
in the Notes thereafter to be issued as may be appropriate.
SECTION 12.3. OPINION OF COUNSEL TO BE GIVEN TRUSTEE.
The Trustee, subject to Sections 8.1 and 8.2, shall receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
such consolidation, merger, sale, conveyance or lease and any such assumption
complies with the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 13.1. DISCHARGE OF INDENTURE.
When (a) the Company shall deliver to the Trustee for
cancellation all Notes theretofore authenticated (other than any Notes which
have been destroyed, lost or stolen and in lieu of or in substitution for which
other Notes shall have been authenticated and delivered) and not theretofore
canceled, or (b) all the Notes not theretofore canceled or 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 canceled for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, monies sufficient to pay at maturity or upon redemption of
all of the Notes (other than any Notes which shall have been mutilated,
destroyed, lost or stolen and in lieu of or in substitution for which other
Notes shall have been authenticated and delivered) not theretofore canceled or
delivered to the Trustee for cancellation, including principal and premium, if
any, and interest due or to become due to such date of maturity or Redemption
Date, as the case may be, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect (except as to (i) remaining rights
of registration of transfer, substitution and exchange and conversion of Notes,
(ii) rights hereunder of Holders to receive payments of principal of and
premium, if any, and interest on, the Notes and the other rights, duties and
obligations of Holders, as beneficiaries hereof with respect to the amounts, if
any, so deposited with the Trustee and (iii) the rights, obligations and
immunities of the Trustee hereunder), and the Trustee, on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel as required by
Section 17.5 and at the cost of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee and to compensate the
Trustee for any services thereafter reasonably and properly
-61-
<PAGE> 69
rendered by the Trustee in connection with this Indenture or the Notes.
SECTION 13.2. DEPOSITED MONIES TO BE HELD IN TRUST BY TRUSTEE.
Subject to Section 13.4, all monies deposited with the Trustee
pursuant to Section 13.1 and not in violation of Article IV shall be held in
trust for the sole benefit of the Holders and not to be subject to the
subordination provisions of Article IV, and such monies shall be applied by the
Trustee to the payment, either directly or through any Paying Agent (including
the Company if acting as its own Paying Agent), to the Holders of the particular
Notes for the payment or redemption of which such monies have been deposited
with the Trustee, of all sums due and to become due thereon for principal and
interest and premium, if any.
SECTION 13.3. PAYING AGENT TO REPAY MONIES HELD.
Upon the satisfaction and discharge of this Indenture, all
monies then held by any Paying Agent for the Notes (other than the Trustee)
shall, upon written request of the Company, be repaid to the Company or paid to
the Trustee, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 13.4. RETURN OF UNCLAIMED MONIES.
Subject to the requirement of applicable law, any monies
deposited with or paid to the Trustee for payment of the principal of, premium,
if any, or interest on Notes and not applied but remaining unclaimed by the
Holders of Notes for two years after the date upon which the principal of,
premium, if any, or interest on such Notes, as the case may be, shall have
become due and payable, shall be repaid to the Company by the Trustee on demand
and all liability of the Trustee shall thereupon cease with respect to such
monies, and the Holder of any of the Notes shall thereafter look only to the
Company for any payment which such Holder may be entitled to collect except if
an applicable abandoned property law does not so permit.
SECTION 13.5. REINSTATEMENT.
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 13.2 by reason of any order or judgment of any
court of 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 13.1 until such time as the Trustee or the Paying Agent is permitted to
apply all such money in accordance with Section 13.2, provided, however, that if
the Company makes any payment of interest or premium, if any, on or principal of
any Note following the reinstatement of its
-62-
<PAGE> 70
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 14.1. 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, employee, agent, Officer, or
director or subsidiary, as such, past, present or future, of the Company or of
any successor corporation, either directly or through the Company or any
successor corporation, 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 issue of the Notes.
ARTICLE XV
CONVERSION OF NOTES
SECTION 15.1. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this
Indenture, the Holder of any Note shall have the right, at his option, at any
time on or after 60 days following the latest date of original issuance of the
Notes and prior to the close of business on June 15, 2003 (except that, with
respect to any Note or portion of a Note which shall be called for redemption,
such right shall terminate, except as provided in Section 15.2 or Section 3.4,
at the close of business on the fifth Business Day preceding 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 which is $1,000 or an
integral multiple thereof, into that number of fully paid and non-assessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the principal amount of the Note or portion thereof surrendered for
conversion by the Conversion Price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided, together
with any required funds, in Section 15.2. A Holder of Notes is not entitled to
any rights of a Holder of Common Stock until such Holder has converted
-63-
<PAGE> 71
his Notes to Common Stock, and only to the extent such Notes are deemed to have
been converted to Common Stock under this Article XV.
SECTION 15.2. 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 certificated 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 5.3, accompanied by the
funds, if any, required by the penultimate paragraph of this Section 15.2, and
shall give written notice of conversion in the form provided on the Notes (or
such other notice which is acceptable to the Company) to such 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 or
addresses) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued, and shall be
accompanied by transfer taxes, if required pursuant to Section 15.7. Each such
Note surrendered for conversion shall, unless the shares issuable on conversion
are to be issued in the same name as the registration of such Note, 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.
In order to exercise the conversion privilege with respect to
any interest in a Note in global form, the beneficial Holder must complete the
appropriate instruction form for conversion pursuant to the Depositary's
book-entry conversion program, deliver by book-entry delivery an interest in
such Note in global form, furnish appropriate endorsements and transfer
documents if required by the Company or the Trustee or Conversion Agent, and pay
the funds, if any, required by this Section 15.2 and any transfer taxes if
required pursuant to Section 15.7.
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 Noteholder (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 5.2, a certificate or certificates
for the number of full shares of Common Stock issuable upon the conversion of
such Note or portion thereof in accordance with the provisions of this Article
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 15.3. 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 deliver to the Holder of the Note so
surrendered, without charge to him, a new Note or Notes in
-64-
<PAGE> 72
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 15.2 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, however, 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 be surrendered.
Any Note or portion thereof, not called for redemption, which
is surrendered for conversion during the period from the close of business on
the record date for any interest payment date to the close of business on the
Business Day next preceding the following interest payment date shall be
accompanied by payment, in New York Clearing House funds or other funds
acceptable to the Company, of an amount equal to the interest payable on such
interest payment date on the principal amount being converted, provided,
however, that no such payment will be required if such Notes or portion thereof
being converted have been called for redemption and, as a result, the right to
convert such Notes or portion thereof would terminate the period between the
record date for such interest payment date, and the close of business on the
Business Day preceding the next succeeding interest payment date; and, provided,
further, 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. No other
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.
Upon the conversion of an interest in a Note in global form,
the Trustee, or the Custodian at the direction of the Trustee, shall make a
notation on such Note in global form as to the reduction in the principal amount
represented thereby as a result of such conversion.
SECTION 15.3. 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 full shares which shall be issuable upon conversion shall be computed
on the basis of the aggregate principal amount of the Notes (or specified
portions thereof to the extent permitted
-65-
<PAGE> 73
hereby) so surrendered. If any fractional share of stock would be issuable upon
the conversion of any Note or Notes, the Company shall make an adjustment and
payment therefor in cash at the current market value thereof to the Holder of
Notes. The current market value of a share of Common Stock shall be the Closing
Price on the first Trading Day immediately preceding the day on which the Notes
(or specified portions thereof) are deemed to have been converted.
SECTION 15.4. CONVERSION PRICE.
The conversion price shall be as specified in the form of Note
(herein called the "Conversion Price") attached as Exhibit A hereto, subject to
adjustment as provided in this Article XV.
SECTION 15.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by
the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make
a distribution to all Holders of the outstanding Common Stock in shares
of Common Stock, the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately
after the opening of business on the day following the date fixed for
such determination. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company. If any dividend or distribution of the type described in this
Section 15.5(a) is declared but not so paid or made, the Conversion
Price shall again be adjusted to the Conversion Price which would then
be in effect if such dividend or distribution had not been declared.
(b) In case the Company shall issue rights 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 or warrants) to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Market Price (as defined below) on the date fixed
for determination of stockholders entitled to receive such rights or
warrants, the Conversion Price shall be adjusted so that the same shall
equal the price
-66-
<PAGE> 74
determined by multiplying the Conversion Price in effect immediately
prior to the date fixed for determination of stockholders entitled to
receive such rights or warrants by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for determination of stockholders
entitled to receive such rights and warrants plus the number of shares
which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Common Stock outstanding
on the date fixed for determination of stockholders entitled to receive
such rights and warrants plus the total number of additional shares of
Common Stock offered for subscription or purchase. Such adjustment
shall be successively made whenever any such rights and warrants are
issued, and shall become effective immediately after the opening of
business on the day following the date fixed for determination of
stockholders entitled to receive such rights or warrants. To the extent
that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to
the Conversion Price which would then be in effect had the adjustments
made upon the issuance of such rights 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 or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price
which would then be in effect if such date fixed for the determination
of stockholders entitled to receive such rights or warrants had not
been fixed. In determining whether any rights 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 by the Company for such rights
or warrants, the value of such consideration, if other than cash, to be
determined by the Board of Directors.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case outstanding shares
of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of business
on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) 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 15.5(a) applies) or
-67-
<PAGE> 75
evidences of its Indebtedness or assets (including securities, but
excluding any rights or warrants referred to in Section 15.5(b), and
excluding any dividend or distribution paid exclusively in cash (any of
the foregoing hereinafter in this Section 15.5(d) called the
"Securities")), then, in each such case (unless the Company elects to
reserve such Securities for distribution to the Holders upon the
conversion of the Notes so that any such Holder converting Notes will
receive upon such conversion, in addition to the shares of Common Stock
to which such Holder is entitled, the amount and kind of such
Securities which such Holder would have received if such Holder had
converted its Notes into Common Stock immediately prior to the Record
Date (as defined in Section 15.5(h) for such distribution of the
Securities)), the Conversion Price shall be reduced so that the same
shall be equal to the price determined by multiplying the Conversion
Price in effect on the Record Date (as defined below) with respect to
such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on such Record Date
less the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive, and described in a resolution
of the Board of Directors) on the Record Date of the portion of the
Securities so distributed applicable to one share of Common Stock and
the denominator shall be the Current Market Price per share of the
Common Stock, such reduction to become effective immediately prior to
the opening of business on the day following such Record Date provided,
however, 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 of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each
Noteholder shall have the right to receive upon conversion the amount
of Securities 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 which would then be in effect if
such dividend or distribution had not been declared. If the Board of
Directors determines the fair market value of any distribution for
purposes of this Section 15.5(d) by reference to the actual or when
issued trading market for any securities, it must in doing so consider
the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.
Rights 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 or warrants, until the
occurrence of a specified event or events ("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 be deemed not to have been distributed for purposes
of this
-68-
<PAGE> 76
Section 15.5 (and no adjustment to the Conversion Price under this
Section 15.5 will be required) until the occurrence of the earliest
Trigger Event, whereupon such rights and warrants shall be deemed to
have been distributed and an appropriate adjustment (if any is
required) to the Conversion Price shall be made under this Section
15.5(d). If any such right or warrant, including any such existing
rights or warrants distributed prior to the date of this Indenture, are
subject to events, upon the occurrence of which such rights or warrants
become exercisable to purchase different securities, evidences of
Indebtedness or other assets, then the date of the occurrence of any
and each such event shall be deemed to be the date of distribution and
record date with respect to new rights or warrants with such rights
(and a termination or expiration of the existing rights or warrants
without exercise by any of the Holders thereof). In addition, in the
event of any distribution (or deemed distribution) of rights or
warrants, or any Trigger Event or other event (of the type described in
the preceding sentence) with respect thereto that was counted for
purposes of calculating a distribution amount for which an adjustment
to the Conversion Price under this Section 15.5 was made, (1) in the
case of any such rights or warrants which 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 or holders of
Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights 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 or warrants which shall have expired or been
terminated without exercise by any holders thereof, the Conversion
Price shall be readjusted as if such rights and warrants had not been
issued.
For purposes of this Section 15.5(d) and Sections 15.5(a) and
(b), any dividend or distribution to which this Section 15.5(d) is
applicable that also includes shares of Common Stock, or rights 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 or warrants (and any further
Conversion Price reduction required by this Section 15.5(d) 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 or warrants (and any further Conversion
Price reduction required by Sections 15.5(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 date fixed for the determination of stockholders entitled to
receive such dividend or other distribution" and "the date fixed for
such determination" within the meaning of Sections 15.5(a) and (b), and
(B) any shares of Common Stock
-69-
<PAGE> 77
included in such dividend or distribution shall not be deemed
"outstanding at the close of business on the date fixed for such
determination" within the meaning of Section 15.5(a).
(e) 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
15.6 applies or as part of a distribution referred to in Section
15.5(d)) 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 15.5(e) 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 resolution of the Board of Directors) of consideration
payable in respect of any tender offer by the Company 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 15.5(f) has been made, exceeds 10% of
the product of the Current Market Price (determined as provided in
Section 15.5(h)) on the Record Date with respect to such distribution
times the number of shares of Common Stock outstanding on such date,
then, and in each such case, immediately after the close of business on
such date, 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 10% 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
Record Date provided, however, that, if 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 Noteholder shall have the right to receive upon
conversion the amount of cash such Holder would have received had such
Holder converted such Note immediately prior to such Record Date. If
such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not been
declared.
(f) In case a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock expires and
such tender offer (as amended upon the expiration thereof) requires 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
-70-
<PAGE> 78
fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors) 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
resolution of the Board of Directors), as of the expiration of such
tender offer, of consideration payable in respect of any other tender
offers, 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 this Section 15.5(f) has been made and (2) the aggregate
amount of any distributions to all Holders of the 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
15.5(e) has been made, exceeds 10% of the product of the Current Market
Price (determined as provided in Section 15.5(h)) 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) at the
Expiration Time, 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 the 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) at 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) at the Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction (if any) to become effective
immediately prior to the opening of business on the day following the
Expiration Time. If 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 which would then be in effect if
such tender offer had not been made. If the application of this Section
15.5(f) to any tender offer would result in an increase in the
Conversion Price, no adjustment shall be made for such tender offer
under this Section 15.5(f).
-71-
<PAGE> 79
(g) In case of a tender or exchange offer made by a Person
other than the Company or any subsidiary of the Company for an amount
which increases the offeror's ownership of Common Stock to more than
25% of the Common Stock outstanding and shall involve the payment by
such Person of consideration per share of Common Stock having a fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive, and described in a resolution of the
Board of Directors) at the Expiration Time that exceeds the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, and in which, as of the Expiration Time the Board of
Directors is not recommending rejection of the offer, 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 Expiration Time by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding (including any
tendered or exchanged 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 or exchange offer) of
all shares validly tendered or exchanged 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 as of immediately prior to the
opening of business on the day following the Expiration Time. In the
event that such Person is obligated to purchase shares pursuant to any
such tender or exchange offer, but such Person 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 which would then be in effect if such tender
or exchange offer had not been made. Notwithstanding the foregoing, the
adjustment described in this Section 15.5(g) shall not be made if, as
of the Expiration Time, the offering documents with respect to such
offer disclose a plan or intention to cause the Company to engage in
any transaction described in Article XII.
(h) For purposes of this Section 15.5, 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,
-72-
<PAGE> 80
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 or, to the
extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive.
(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, however, that (1) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an
adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e), (f) or (g) 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 or distribution
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) or (g) 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 or distribution 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 or, to the extent permitted by
applicable law, a duly authorized committee thereof in a
manner consistent with any determination of such value for
purposes of Section 15.5(d), (f) or (g), whose determination
shall be conclusive and described in a resolution of the Board
of Directors or such duly authorized committee thereof, as the
case may be) of the
-73-
<PAGE> 81
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 15.5(f) or (g), 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, however, 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 15.5(a), (b), (c), (d), (e), (f) or
(g) 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
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 Time of such offer.
(3) "fair market value" shall mean the amount which 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, the Nasdaq Stock Market (National Market) or
another national security exchange, a
-74-
<PAGE> 82
day on which the New York Stock Exchange, the Nasdaq Stock
Market (National Market) or another 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.
(i) The Company may make such reductions in the Conversion
Price, in addition to those required by Sections 15.5(a), (b), (c),
(d), (e), (f) and (g), 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. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the
Company shall mail to 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 during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at
least 1.00% in such price provided, however, that any adjustments which
by reason of this Section 15.5(j) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Article XV shall be made by the Company and
shall be made to the nearest cent or to the nearest one hundredth of a
share, as the case may be.
(k) 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 adjustment becomes
effective and shall mail 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
-75-
<PAGE> 83
of this Indenture, within 20 days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of any
such adjustment.
(l) In any case in which this Section 15.5 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 such conversion by reason of the
adjustment required by such event 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 15.5.
(m) For purposes of this Section 15.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
SECTION 15.6. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any of the following events occur, namely (i) any
reclassification or change of the outstanding shares of Common Stock (other than
a subdivision or combination to which Section 15.5(c) applies), (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 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)
providing that such 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 shares
of stock and other securities or
-76-
<PAGE> 84
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance (provided that,
if the kind or 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 is not the same for each
share of Common Stock in respect of which such rights of election shall not have
been exercised ("nonelecting share"), then for the purposes of this Section 15.6
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 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 which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article.
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 of this Indenture,
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 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence,
Section 15.5 shall not apply.
SECTION 15.7. TAXES ON SHARES ISSUED.
The issue of stock certificates on conversions of Notes shall
be made without charge to the converting Noteholder for any tax in respect of
the issue thereof. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of 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 issue
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.
SECTION 15.8. RESERVATION OF SHARES TO BE FULLY PAID; COMPLIANCE WITH
GOVERNMENTAL REQUIREMENTS; LISTING OF COMMON STOCK.
The Company shall reserve, free from preemptive rights, out of
its authorized but unissued shares or shares held in treasury, sufficient shares
of Common
-77-
<PAGE> 85
Stock to provide for the conversion of the Notes from time to time as such Notes
are presented for conversion.
Before taking any action which 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 will take all
corporate action which 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 which
may be issued upon conversion of Notes will upon issue be fully paid and
non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.
The Company covenants that if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible endeavor to secure such registration
or approval, as the case may be.
The Company further covenants that so long as the Common Stock
shall be listed or quoted on the New York Stock Exchange, the Nasdaq Stock
Market (National Market), or any other national securities exchange the Company
will, if permitted by the rules of such exchange, list and keep listed so long
as the Common Stock shall be so listed on such market or exchange, all Common
Stock issuable upon conversion of the Notes.
SECTION 15.9. 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 either
calculate the Conversion Price or determine whether any facts exist which 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, which 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 8.1, 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 Note for the purpose of conversion or
to comply with any of the duties,
-78-
<PAGE> 86
responsibilities or covenants of the Company contained in this Article. Without
limiting the generality of the foregoing, neither the Trustee nor any Conversion
Agent shall be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture entered into pursuant to
Section 15.6 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 15.6 or to
any adjustment to be made with respect thereto, but, subject to the provisions
of Section 8.1, 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.
SECTION 15.10. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in
the Conversion Price pursuant to Section 15.5; or
(b) the Company shall authorize the granting to all or
substantially al the Holders of its Common Stock of rights or warrants
to subscribe for or purchase any share of any class or any other rights
or warrants; or
(c) of any reclassification or reorganization of the Common
Stock of the Company (other than a subdivision or combination of its
outstanding Common Stock, or a change in par value, or from par value
to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale
or transfer of all or substantially all of the assets of the Company;
or
(d) 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 provided for in Section 2.5 of this
Indenture, 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 is to be taken for the purpose of such
dividend, distribution or rights 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, or rights or warrants are
to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, 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 Common Stock of record shall be
-79-
<PAGE> 87
entitled to exchange their Common Stock for securities or other
property deliver-able upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding-up. Failure
to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or
winding-up.
ARTICLE XVI
REPURCHASE OF NOTES AT OPTION OF THE HOLDER
UPON CHANGE IN CONTROL
SECTION 16.1. RIGHT TO REQUIRE REPURCHASE.
In the event that a Change in Control (as hereinafter defined)
shall occur, then each Holder shall have the right, at the Holder's option, to
require the Company to repurchase, and upon the exercise of such right the
Company shall repurchase, all of such Holder's Notes, or any portion of the
principal amount thereof that is an integral multiple of $1,000 (provided that
no single Note may be repurchased in part unless the portion of the principal
amount of such Note to be outstanding after such repurchase is equal to $1,000
or an integral multiple of $1,000), on the date (the "Repurchase Date") that is
30 days after the date of the Company Notice (as defined in Section 16.2) for
cash at a purchase price equal to 100% of the principal amount (the "Repurchase
Price") plus interest accrued and unpaid to, but excluding, the Repurchase Date.
If the Repurchase Date is between a record date for an interest payment date and
such interest payment date, then the interest payable on such interest payment
date shall be paid to the Holder of Record on the Note on such interest payment
date.
Whenever in this Indenture there is a reference, in any
context, to the principal of any Note as of any time, such reference shall be
deemed to include reference to the Repurchase Price payable in respect of such
Note to the extent that such Repurchase Price is, was or would be so payable at
such time, and express mention of the Repurchase Price in any provision of this
Indenture shall not be construed as excluding the Repurchase Price in those
provisions of this Indenture when such express mention is not made.
SECTION 16.2. NOTICES; METHOD OF EXERCISING PURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for
redemption all of the outstanding Notes pursuant to Article III, on or
before the 15th day after the occurrence of a Change in Control, the
Company or, at the written request of the Company on or before the
tenth (10th) day after receipt of such request, the Trustee, shall give
to all Holders of Notes notice (the "Company Notice") of the
-80-
<PAGE> 88
occurrence of the Change in Control and of the repurchase right set
forth herein arising as a result thereof. The Company shall also
deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must
exercised,
(3) the Repurchase Price,
(4) a description of the procedure which a Holder
must follow to exercise a repurchase right,
(5) that on the Repurchase Date the Repurchase Price
will become due and payable upon each such Note designated by
the Holder to be repurchased, and that interest thereon shall
cease to accrue on and after said date,
(6) the Conversion Price, the date on which the right
to convert the Notes to be repurchased will terminate and the
places where such Notes may be surrendered for conversion, and
(7) the place or places where such Notes are to be
surrendered for payment of the Repurchase Price and accrued
interest, if any.
No failure of the Company to give the foregoing notices or
defect therein shall limit any Holder's right to exercise a repurchase
right or affect the validity of the proceedings for the repurchase of
Notes.
If any of the foregoing provisions or other provisions of this
Article are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to
the Trustee or any Paying Agent on or before the 30th day after the
date of the Company Notice (i) written notice of the Holder's exercise
of such right, which notice shall set forth the name of the Holder, the
principal amount of the Notes to be repurchased (and, if any Note is to
be repurchased in part, the serial number thereof, the portion of the
principal amount thereof to be repurchased and the name of the Person
in which the portion thereof to remain outstanding after such
repurchase is to be registered) and a statement that an election to
exercise the repurchase right is
-81-
<PAGE> 89
being made thereby, and (ii) the Notes with respect to which the
repurchase right is being exercised.
(c) In the event a repurchase right shall be exercised in
accordance with the terms hereof, the Company shall pay or cause to be
paid to the Trustee or the Paying Agent the Repurchase Price in cash,
for payment to the Holder on the Repurchase Date, together with accrued
and unpaid interest to, but excluding, the Repurchase Date payable with
respect to the Notes as to which the repurchase right has been
exercised.
(d) If any Note (or portion thereof) surrendered for
repurchase shall not be so paid on the Repurchase Date, the principal
amount of such Note (or portion thereof, as the case may be) shall,
until paid, bear interest from the Repurchase Date at the rate of ____%
per annum, and each Note shall remain convertible into Common Stock
until the principal of such Note (or portion thereof, as the case may
be) shall have been paid or duly provided for.
(e) Any Note which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or his attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and deliver
to the Holder of such Note without service charge, a new Note or Notes,
containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for
the portion of the principal of the Note so surrendered that was not
repurchased.
(f) Any Holder that has delivered to the Trustee its written
notice exercising its right to require the Company to repurchase its
Notes upon a Change in Control shall have the right to withdraw such
notice at any time prior to the close of business on the Repurchase
Date by delivery of a written notice of withdrawal to the Trustee prior
to the close of business on such date. A Note in respect of which a
Holder is exercising its option to require repurchase upon a Change in
Control may be converted into Common Stock in accordance with Article
XV only if such Holder withdraws its notice in accordance with the
preceding sentence.
SECTION 16.3. CERTAIN DEFINITIONS.
For purposes of this Article XVI,
(a) the term "beneficial owner" shall be determined in
accordance with Rule 13d-3 promulgated by the Commission pursuant to
the Exchange Act; and
-82-
<PAGE> 90
(b) the term "Person" shall include any syndicate or group
which would be deemed to be a "Person" under Section 13(d)(3) of the
Exchange Act.
SECTION 16.4. CHANGE IN CONTROL.
A "Change in Control" shall be deemed to have occurred at such
time after the original issuance of the Notes as:
(a) any Person, other than the Company, any subsidiary of the
Company or any entity Controlled (as defined below) by the foregoing,
or any employee benefit plan of the Company or any such subsidiary, is
or becomes the beneficial owner, directly or indirectly, through a
purchase or other acquisition transaction or series of transactions
(other than a merger or consolidation involving the Company), of shares
of capital stock of the Company entitling such Person to exercise in
excess of 50% of the total voting power of all shares of capital stock
of the Company entitled to vote generally in the election of directors;
(b) there occurs any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another
Person into the Company, or any sale or transfer of the assets of the
Company as, or substantially as, an entirety to another Person (other
than (i) any such transaction pursuant to which the Holders of the
Common Stock immediately prior to such transaction have, directly or
indirectly, shares of capital stock of the continuing or surviving
corporation immediately after such transaction which entitle such
Holders to exercise in excess of 50% of the total voting power of all
shares of capital stock of the continuing or surviving corporation
entitled to vote generally in the election of directors and (ii) any
merger (1) which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock or (2)
which is effected solely to change the jurisdiction of incorporation of
the Company and results in a reclassification, conversion or exchange
of outstanding shares of Common Stock solely into shares of Common
Stock and separate series of Common Stock carrying substantially the
same relative rights as the Common Stock); or
(c) a change in the Board of Directors of the Company in which
the individuals who constituted the Board of Directors of the Company
at the beginning of the one-year period immediately preceding such
change (together with any other director whose election by the Board of
Directors of the Company or whose nomination for election by the
stockholders of the Company was approved by a vote of at least a
majority of the directors then in office either who were directors at
the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute
a majority of the directors then in office; provided, however, that a
Change in Control shall
-83-
<PAGE> 91
not be deemed to have occurred if either (a) the Closing Price per
share of the Common Stock for any ten (10) Trading Days within the
period of 20 consecutive Trading Days ending immediately before the
Change in Control shall equal or exceed 105% of the Conversion Price in
effect on each such Trading Day, or (b) (i) at least 90% of the
consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change in Control consists
of shares of Common Stock with full voting rights traded on a national
securities exchange or quoted on the Nasdaq National Market (or which
will be so traded or quoted when issued or exchanged in connection with
such Change in Control) (such securities being referred to as "Publicly
Traded Securities") and as a result of such transaction or transactions
such Notes become convertible solely into such Publicly Traded
Securities and (ii) the consideration in the transaction or
transactions constituting the Change of Control consists of cash,
Publicly Traded Securities or a combination of cash and Publicly Traded
Securities with an aggregate fair market value (which, in the case of
Publicly Traded Securities, shall be equal to the average Closing Price
of such Publicly Traded Securities during the ten (10) consecutive
Trading Days, commencing with the sixth Trading Day, following
consummation of the transaction or transactions constituting the Change
in Control) is at least 105% of the Conversion Price in effect on the
date immediately preceding the date of consummation of such Change in
Control. The term "Controlled" shall mean ownership or control of more
than 50% of the voting power of such entity.
SECTION 16.5. CONSOLIDATION, MERGER, ETC.
In the case of any reclassification, change, consolidation,
merger, combination, sale or conveyance to which Section 15.6 applies, in which
the Common Stock of the Company is changed or exchanged as a result into the
right to receive shares of stock and other securities or property or assets
(including cash) which includes shares of Common Stock of the Company or Common
Stock of another Person that are, or upon issuance will be, traded on a United
States national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States and such shares
constitute at the time such change or exchange becomes effective in excess of
50% of the aggregate fair market value of such shares of stock and other
securities, property and assets (including cash) (as determined by the Company,
which determination shall be conclusive and binding), then the Person formed by
such consolidation or resulting from such merger or combination or which
acquires the properties or assets (including cash) of the Company, as the case
may be, shall execute and deliver to 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) modifying the provisions of this Indenture
relating to the right of Holders to cause the Company to repurchase the Notes
following a Change in Control, including without limitation the applicable
provisions of this Article XVI and the definitions of the
-84-
<PAGE> 92
Common Stock and Change in Control, as appropriate, and such other related
definitions set forth herein as determined in good faith by the Company (which
determination shall be conclusive and binding), to make such provisions apply to
the Common Stock and the issuer thereof if different from the Company and Common
Stock of the Company (in lieu of the Company and the Common Stock of the
Company).
ARTICLE XVII
MISCELLANEOUS PROVISIONS
SECTION 17.1. PROVISIONS BINDING ON COMPANY'S SUCCESSORS.
All the covenants, stipulations, promises and agreements by
the Company contained in this Indenture shall bind its successors and assigns
whether so expressed or not.
SECTION 17.2. OFFICIAL ACTS BY SUCCESSOR CORPORATION.
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, 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.
SECTION 17.3. ADDRESSES FOR NOTICES, ETC.
Any notice or demand which 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 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 Michael W. Wallace,
Chief Financial Officer, Kellstrom Industries, Inc., 14000 N.W. 4th Street,
Sunrise, Florida 33325, with a copy to Bruce I. March, Esq. Akerman, Senterfitt
& Eidson, P.A., One Southeast Third Avenue, Suite 2800, Miami, Florida 33131.
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 deposited postage prepaid by registered or certified mail in a
post office letter box addressed to the Corporate Trust Office, which office is,
at the date as of which this Indenture is dated, located at 901 East Cary
Street, 2nd Floor, Richmond, Virginia 23261-3279 Attention: Corporate Trust
Department.
The Trustee, by notice to the Company, may designate
additional or different addresses for subsequent notices or communications.
-85-
<PAGE> 93
Any notice or communication mailed to a Noteholder shall be
mailed to him by first class mail, postage prepaid, at his address as it appears
on the Note Register and shall be sufficiently given to him if so mailed within
the time prescribed.
Failure to mail a notice or communication to a Noteholder 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.
SECTION 17.4. GOVERNING LAW.
This Indenture and each 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 the laws of the State of New York.
SECTION 17.5. 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, 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, such Person has made
such examination or investigation as is necessary to enable such Person 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.
SECTION 17.6. LEGAL HOLIDAYS.
In any case where the date of maturity of interest on or
principal of the Notes or the date fixed for redemption or repurchase of any
Note will not be a Business Day, then payment of such interest on or principal
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
-86-
<PAGE> 94
effect as if made on the date of maturity or the date fixed for redemption or
repurchase, and no interest shall accrue for the period from and after such
date.
SECTION 17.7. TRUST INDENTURE ACT.
This Indenture is hereby made subject to, and shall be
governed by, the provisions of the Trust Indenture Act provided, however, that,
unless otherwise required by law, notwithstanding the foregoing, this Indenture
and the Notes issued hereunder shall not be subject to the provisions of
subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the Trust Indenture Act
as now in effect or as hereafter amended or modified provided, further, that
this Section 17.7 shall not require this Indenture or the Trustee to be
qualified under the Trust Indenture Act prior to the time such qualification is
in fact required under the terms of the Trust Indenture Act, nor shall it
constitute any admission or acknowledgment by any party to such supplemental
indenture that any such qualification is required prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act. If
any provision hereof limits, qualifies or conflicts with another provision
hereof which is required to be included in an indenture qualified under the
Trust Indenture Act, such required provision shall control.
SECTION 17.8. 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.
SECTION 17.9. 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 Custodian, any Conversion Agent, any Note
Registrar and their successors hereunder, the Holders of Notes and the Holders
of Senior
SECTION 17.10. 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.
-87-
<PAGE> 95
SECTION 17.11. AUTHENTICATING AGENT.
The Trustee may appoint an authenticating agent which 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, 3.3, 15.2 and 16.2, 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 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 8.9.
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 corporation is otherwise
eligible under this Section 17.11, 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 corporation.
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 either promptly appoint a successor authenticating agent or
itself assume the duties and obligations of the former authenticating agent
under this Indenture, and upon such appointment of a successor authenticating
agent, if made, shall give written notice of such appointment of a successor
authenticating agent to the Company and shall mail notice of such appointment of
a successor authenticating agent to all Holders of Notes as the names and
addresses of such Holders appear on the Note Register.
The Trustee agrees to pay to the authenticating agent from
time to time reasonable compensation for its services (to the extent
pre-approved by the Company in writing), and the Trustee shall be entitled to be
reimbursed for such pre-approved payments, subject to Section 8.6.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section
17.11 shall be applicable to any authenticating agent.
-88-
<PAGE> 96
SECTION 17.12. EXECUTION IN COUNTERPARTS
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such countervails shall together
constitute but one and the same instrument.
First Union National Bank hereby accepts the trusts in this
Indenture declared and provided, upon the terms and conditions hereinabove set
forth.
-89-
<PAGE> 97
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly signed, all as of the date first written above.
KELLSTROM INDUSTRIES, INC.
By:
--------------------------------------------
Name: Zivi R. Nedivi
Title: President and Chief Executive Officer
Attest:
- ------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK, as Trustee
By:
--------------------------------------------
Name: Patricea A. Welling
Title: Vice President
-90-
<PAGE> 98
EXHIBIT A
[IF THE NOTE IS A GLOBAL NOTE, THEN INSERT -- THIS NOTE IS A GLOBAL NOTE WITHIN
THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR
IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY
OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.]
[IF THE NOTE IS A GLOBAL NOTE AND THE DEPOSITORY TRUST COMPANY
IS TO BE THE DEPOSITARY THEREFOR, THEN INSERT -- 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 IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO 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.]
KELLSTROM INDUSTRIES, INC.
____% CONVERTIBLE SUBORDINATED NOTE DUE 2003
No. _______
CUSIP 488035AE6
Kellstrom Industries, Inc., a corporation duly organized and
validly existing under the laws of the State of Delaware (herein called the
"Company"), which term includes any successor corporation under the indenture
referred to on the reverse hereof, for value received hereby promises to pay to
_____________ [for global Note, insert: CEDE & CO.] or registered assigns, the
principal sum of [___________ ($____________)] [for Global Note only (as
increased or decreased from time to time in accordance with the procedures of
DTC)] on _____________, at the office or agency of the Company maintained for
that purpose in Richmond, Virginia, or, at the option of the Holder of this
Note, at the Corporate Trust Office, 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 June
15 and December 15 of each year, commencing December 15, 1998, on said principal
sum at said office or
-91-
<PAGE> 99
agency, in like coin or currency, at the rate per annum of ____%, from the date
of this Note. The interest payable on this Note pursuant to the Indenture on any
June 15 or December 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 June 1 or December 1 (whether or not a Business
Day) next preceding such June 15 or December 15, as provided in the Indenture
provided that any such interest not punctually paid or duly provided for shall
be payable as provided in the Indenture. Interest may, at the option of the
Company, be paid by check mailed to the registered address of such person
provided that with respect to any Holder with an aggregate principal amount
equal to or in excess of $5,000,000 interest may be paid by wire transfer as
more fully specified in the Indenture.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, including, without limitation, provisions
subordinating the payment of principal of and premium, if any, and interest on
the Notes to the prior payment in full of all Senior Indebtedness, as defined in
the Indenture, and 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 governed by the laws of said State.
-92-
<PAGE> 100
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.
-93-
<PAGE> 101
IN WITNESS WHEREOF, the Company has caused this Note to be
duly executed under its corporate seal.
DATED:
KELLSTROM INDUSTRIES, INC.
By:
--------------------------------------------
Name: Zivi R. Nedivi
Title: President and Chief Executive Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
FIRST UNION NATIONAL BANK, as Trustee
By:
--------------------------------------------
Name: Patricia A. Welling
Title: Vice President
-94-
<PAGE> 102
[FORM OF REVERSE OF NOTE]
KELLSTROM INDUSTRIES, INC.
____% CONVERTIBLE SUBORDINATED NOTE DUE 2003
1. This Note is one of a duly authorized issue of Notes of the
Company, designated as its ____% Convertible Subordinated Notes Due 2003 (herein
called the "Notes"), limited to aggregate principal amount of $75,000,000
($86,250,000 if the over-allotment option is exercised in full) issued or to be
issued under and pursuant to an indenture dated as of June 17, 1998 (herein
called the "Indenture"), between the Company and First Union National Bank, as
trustee (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders.
2. In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of 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.
3. 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 as the time outstanding, evidenced as in
the Indenture provided, 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 provided, however, 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, or impair
the right of any Noteholder 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 Note, or modify the provisions
of the Indenture with respect to the subordination of the Notes in a manner
adverse to the Holders in any material respect, or change the obligation of the
Company to repurchase any Note upon the occurrence of a Change in Control in a
manner adverse to the Holder of the Notes, or impair the right to convert the
Notes into Common Stock in any material respect, 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 (i) a
-95-
<PAGE> 103
default in the payment of interest or any premium, if any, on, or the principal
of, the Notes, (ii) a failure by the Company to convert any Notes into Common
Stock, (iii) a default in the payment of the Redemption Price pursuant to
Article III or repurchase price pursuant to Article XVI or (iv) a default in
respect of a covenant or provisions which under Article XI 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 which 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.
4. The indebtedness evidenced by the Notes is, to the extent
and in the manner provided in the Indenture, expressly subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness of
the Company, as defined in the Indenture, whether outstanding at the date of the
Indenture or thereafter incurred, and this Note is issued subject to the
provisions of the Indenture with respect to such subordination. Each Holder of
this Note by accepting the same, agrees to and shall be bound by such provisions
and authorizes the Trustee on his behalf to take such action as may be necessary
or appropriate to effectuate the subordination so provided and appoints the
Trustee his attorney-in-fact for such purpose.
5. 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.
6. Interest on the Notes shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
7. The Notes are issuable in registered form without coupons
in minimum denominations of $1,000 or any integral multiple of $1,000. 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 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.
8. The Notes are redeemable at the option of the Company at
any time on or after June 15, 2001 and prior to maturity, from time to time, as
a whole or in part, upon mailing a notice of such redemption not less than 15
nor more than 60 days before the date fixed for redemption to the Holders of
Notes at their registered addresses, all as provided in the Indenture, at the
following optional Redemption Prices (expressed as
-96-
<PAGE> 104
percentages of .the principal amount), together in each case with accrued
interest to, but excluding, the date fixed for redemption.
If redeemed during the 12-month period beginning June 15:
YEAR PERCENTAGE
---- ----------
2001
2002
and 100% at maturity on June 15, 2003, provided that if the date fixed for
redemption is a June 15 or December 15, then the interest payable on such date
shall be paid to the Holder of record of the Note on the next preceding June 1
or December 1, respectively.
9. The Notes are not subject to redemption through the
operation of any sinking fund.
10. 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 the maturity date, subject to prior redemption or repurchase, or, as to all
or any portion hereof called for redemption, prior to the close of business on
the fifth Business Day preceding 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 which is $1,000 or an integral
multiple thereof, into that number of shares of the Company's Common Stock
obtained by dividing the principal amount of this Note or portion thereof to be
converted by the Conversion Price of $____ 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 Richmond,
Virginia, or at the option of such Holder, the Corporate Trust Office, 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, however, 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 to the close of business on the Business
Day preceding the interest payment date, this Note must be accompanied by an
amount, in New York Clearing House funds or other funds acceptable to the
Company, of an amount equal to the interest payable on such interest payment
date on the principal amount being converted, provided, however, that no such
payment will be required if such Notes or portion thereof being converted have
been called for redemption and, as a result, the right to convert such Notes or
portion thereof would terminate the period between the record date for such
interest payment date, and the close of business on the Business Day preceding
the next succeeding interest
-97-
<PAGE> 105
payment date; and, provided further, 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. 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 which would otherwise be issuable upon the surrender of any
Note or Notes for conversion.
11. Any Notes called for redemption, unless surrendered for
conversion on or before the close of business on the date fixed for redemption,
may be deemed to be purchased from the Holder of such Notes at an amount equal
to the applicable Redemption Price, together with accrued interest to the date
fixed for redemption, by one or more investment bankers or other purchasers who
may agree with the Company to purchase such Notes from the Holders thereof and
convert them into Common Stock of the Company and to make payment for such Notes
as aforesaid to the Trustee in trust for such Holders.
12. Upon due presentment for registration of transfer of this
Note at the office or agency of the Company in Richmond, Virginia, or at the
option of the Holder of this Note, at the Corporate Trust Office, a new Note or
Notes of authorized denominations for an equal aggregate principal amount will
be issued to the transferee in exchange thereof, subject to the limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.
13. 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), 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 other authenticating agent nor any paying agent
nor any other 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.
15. No recourse for the payment of the principal 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, employee, agent,
officer or director or subsidiary, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, 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
of the issue
-98-
<PAGE> 106
hereof, expressly waived and released.
16. Terms used in this Note and defined in the Indenture are
used herein as therein defined.
-99-
<PAGE> 107
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
_____Custodian_______
(Cust) (Minor)
ENT TEN- as tenants by the entireties under Uniform Gifts to Minors Act
--------------------------
(State)
JT TEN- as joint tenants with
right to survivorship and not as tenants in common
Additional abbreviations may also be used though not in the
above list.
-100-
<PAGE> 108
CONVERSION NOTICE
To: KELLSTROM INDUSTRIES, INC.
The undersigned registered owner of this Note hereby
irrevocably exercises the option to convert this Note, or the portion hereof
(which is $1,000 or an integral multiple thereof) below designated, into shares
of Common Stock of Kellstrom Industries, Inc. 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.
-----------------------------------
Signature Guarantee
-101-
<PAGE> 109
Fill in for registration of shares of Common Stock if to be
issued, and Notes it 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
-102-
<PAGE> 110
OPTION TO ELECT REPURCHASE
UPON A CHANGE IN CONTROL
To: KELLSTROM INDUSTRIES, INC.
The undersigned registered owner of this Note hereby
irrevocably acknowledges receipt of a notice from Kellstrom Industries, Inc.
(the Company") as to the occurrence of a Change in 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 or an integral
multiple thereof) below designated, in accordance with the terms of the
Indenture referred to in this Note at the repurchase price, together with
accrued interest to, but excluding, such date, to the registered Holder hereof.
Dated: ______________________
-----------------------------------
-----------------------------------
Signature(s)
NOTICE: The above signatures of the Holder(s) hereof must correspond with the
name as written upon the face of the Note in every particular without
alteration, enlargement or any change whatever.
Principal amount to be repurchased (if less than all):
$_____________
- ---------------------------------------
Social Security or Other Taxpayer Identification Number
-103-
<PAGE> 1
EXHIBIT 5.1
[AKERMAN, SENTERFITT & EIDSON, P.A. LETTERHEAD]
June 11, 1998
Kellstrom Industries, Inc.
14000 NW 4th Street
Sunrise, FL 33325
Gentlemen:
Kellstrom Industries, Inc., a Delaware corporation (the "Company"), has
filed with the Securities and Exchange Commission a Registration Statement on
Form S-3, as amended (Registration No. 333-52917) (the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Act"). Such
Registration Statement relates to the sale by the Company of up to $75,000,000
aggregate principal amount of Convertible Subordinated Notes due 2003 (the
"Notes"), and up to an additional $11,250,000 aggregate principal amount of
Notes upon the exercise of the underwriters' over-allotment option. We have
acted as counsel to the Company in connection with the preparation and filing of
the Registration Statement.
In connection with the Registration Statement, we have examined, considered
and relied upon copies of the following documents: (i) the Company's Restated
Certificate of Incorporation, as amended, and the Company's Bylaws, as amended;
(ii) resolutions of the Company's Board of Directors authorizing the offering
and the issuance of the Notes to be sold by the Company and related matters;
(iii) the Registration Statement and schedules and exhibits thereto; and (iv)
such other documents and instruments that we have deemed necessary for the
expression of the opinions herein contained. In making the foregoing
examinations we have assumed, without investigation, the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
the conformity to authentic original documents of all documents submitted to us
as copies, and the veracity of the documents. As to various questions of fact
material to the opinion expressed below, we have relied solely upon the
representations or certificates of officers and/or directors of the Company and
upon documents, records and instruments furnished to us by the Company, without
independently verifying the accuracy of such certificates, documents, records or
instruments.
Based upon the foregoing examination, and subject to the qualifications set
forth below, we are of the opinion that: (i) the Notes have been duly and
validly authorized and, when issued, delivered and paid for in accordance with
the terms of the Debt Underwriting Agreement and the Indenture filed as Exhibits
1.1 and 4.4, respectively, of the Registration Statement, will be validly issued
and binding obligations of the Company, enforceable in accordance with their
terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and (ii) the common stock, par value $.001 per
share, of the Company which may be issued by the Company upon conversion
<PAGE> 2
of the Notes in accordance therewith has been duly and validly authorized, and
when issued and delivered in exchange for the Notes as described in the
Indenture filed as Exhibit 4.4 of the Registration Statement and the
Registration Statement, will be validly issued, fully paid and non-assessable.
Although we have acted as counsel to the Company in connection with the
preparation and filing of the Registration Statement, our engagement has been
limited to certain matters about which we have been consulted. Consequently,
there may exist matters of a legal nature involving the Company in which we have
not been consulted and have not represented the Company. We express no opinion
as to the laws of any jurisdiction other than the General Corporation Law of the
State of Delaware and the laws of the States of Florida. The opinions expressed
herein concern only the effect of the laws (excluding the principles of conflict
of laws) of the General Corporation Law of the State of Delaware and the States
of Florida and as currently in effect. This opinion letter is limited to the
matters stated herein and no opinions may be implied or inferred beyond the
matters expressly stated herein. The opinions expressed herein are given as of
this date, and we assume no obligation to update or supplement our opinions to
reflect any facts or circumstances that may come to our attention or any change
in law that may occur or become effective at a later date.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the prospectus comprising a part of the Registration Statement. In
giving such consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations promulgated thereunder.
Sincerely,
AKERMAN, SENTERFITT & EIDSON, P.A.
/s/ Akerman, Senterfitt & Eidson, P.A.
<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM T-1
---------------------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT FOR 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a trustee pursuant to
Section 305(b)(2) _____
---------------------------
FIRST UNION NATIONAL BANK
(Exact name of Trustee as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
230 SOUTH TRYON STREET, 9TH FL.
CHARLOTTE, NC 28288-1179 22-1147033
(Address of principal executive office) (Zip Code) (I.R.S. Employer Identification No.)
</TABLE>
Patricia A. Welling, (804) 788-9663
901 E. Cary Street, Richmond, Virginia 23219
---------------------------
KELLSTROM INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Delaware 13-3753725
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
14000 N.W. 4th Street
Sunrise, FL 33325
(Address of principal executive offices) (Zip Code)
</TABLE>
---------------------------
__% CONVERTIBLE SUBORDINATED NOTES DUE 2003
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
1. GENERAL INFORMATION.
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
The Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Richmond, Richmond, Virginia.
Federal Deposit Insurance Corporation, Washington, D.C.
Securities and Exchange Commission, Division of Market
Regulation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR.
The obligor is not an affiliate of the Trustee.
3. VOTING SECURITIES OF THE TRUSTEE.
Not applicable.
(See answer to Item 13)
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
Not applicable.
(See answer to Item 13)
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.
Not applicable.
(See answer to Item 13)
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Not applicable.
(See answer to Item 13)
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Not applicable.
(See answer to Item 13)
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
Not applicable.
(See answer to Item 13)
2
<PAGE> 3
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
Not applicable.
(See answer to Item 13)
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
Not applicable.
(See answer to Item 13)
11. OWNERSHIP OF HOLDERS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
Not applicable.
(See answer to Item 13)
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Not applicable.
(See answer to Item 13)
13. DEFAULTS BY THE OBLIGOR.
A. None
B. None
14. AFFILIATIONS WITH THE UNDERWRITERS.
Not applicable.
(See answer to Item 13)
15. FOREIGN TRUSTEE.
Trustee is a national banking association organized under the
laws of the United States.
16. LIST OF EXHIBITS.
(1) *Articles of Incorporation.
(2) Certificate of Authority of the Trustee to conduct business. No
Certificate of Authority of the Trustee to commence business is
furnished since this authority is continued in the Articles of
Association of the Trustee.
3
<PAGE> 4
(3) *Certificate of Authority of the Trustee to exercise corporate
trust powers.
(4) *By-Laws.
(5) Inapplicable.
(6) Consent by the Trustee required by Section 321(b) of the Trust
Indenture Act of 1939. Included at Page 6 of this Form T-1
Statement.
(7) Report of condition of Trustee.
(8) Inapplicable.
(9) Inapplicable.
* Exhibits thus designated have heretofore been filed with the
Securities and Exchange Commission, have not been amended since filing
are incorporated herein by reference (See Exhibit T-1 Registration
Number 333-43241).
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, FIRST UNION NATIONAL BANK, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Richmond, and Commonwealth of Virginia on the 11th day of June, 1998.
FIRST UNION NATIONAL BANK
(Trustee)
BY: /s/ Patricia A. Welling
-------------------------------------
Patricia A. Welling, Vice President
EXHIBIT T-1 (6)
CONSENTS OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939 and in
connection with the proposed issuance by Kellstrom Industries, Inc. of its
Convertible Subordinated Notes due 2003, First Union National Bank, as the
Trustee herein named, hereby consents that reports of examinations of said
Trustee by Federal, State, Territorial or District authorities may be furnished
by such authorities to the Securities and Exchange Commission upon requests
therefor.
FIRST UNION NATIONAL BANK
BY: /s/ Dante M. Monakil
--------------------------------
Dante M. Monakil, Vice President
Dated: June 11, 1998
-------------
5
<PAGE> 6
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
First Union National Bank Charlotte
Name of Bank City
in the state of North Carolina, at the close of business on March 31, 1998,
published in response to call made by Comptroller of the Currency, under
title 12, United States Code, Section 161. Charter Number 02737 Comptroller
of the Currency Southeastern District
Statement of Resources and Liabilities
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C> <C>
1 Cash and balances due from depository institutions:
a. Noninterest-bearing balances and currency and coin................ 7,346,667
b. Interest-bearing balances......................................... 12,481
2 Securities:
a. Held-to-maturity securities........................................ 1,937,159
b. Available-for-sale securities...................................... 31,508,601
3 Federal funds sold and securities purchased under agmts to resell:..... 4,501,133
4 Loans and lease financing receivables:
a. Loans and leases, net of unearned income........................... 98,043,231
b. LESS: Allowance for loan and lease losses.......................... 1,213,121
c. LESS: Allocated transfer risk reserve.............................. 0
d. Loans and leases, net of unearned income, allowance, and reserve... 96,830,110
5 Assets held in trading accounts........................................ 3,818,431
6 Premises and fixed assets (including capitalized leases)............... 2,660,908
7 Other real estate owned................................................ 112,869
8 Investments in unconsolidated subsidiaries and associated companies.... 269,234
9 Customers' liability to this bank on acceptances outstanding........... 575,447
10 Intangible assets...................................................... 2,896,263
11 Other assets........................................................... 7,274,331
12 Total assets........................................................... 159,743,634
</TABLE>
1
<PAGE> 7
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
13 Deposits:
a. In domestic offices........................................................ 101,438,219
(1) Noninterest-bearing.................................................... 19,061,893
(2) Interest-bearing....................................................... 82,376,326
b. In foreign offices, Edge and Agmt subsidiaries, and IBFs................... 5,487,257
(1) Noninterest-bearing.................................................... 29,619
(2) Interest-bearing....................................................... 5,457,638
14 Federal funds purchased and securities sold under agmts to repurchase......... 24,525,123
15 a. Demand notes issued to the U.S. Treasury................................... 426,758
b. Trading liabilities........................................................ 4,547,787
16 Other borrowed money:
a. With a remaining maturity of one year or less.............................. 3,391,194
b. With a remaining maturity of more than one year through three year......... 635,109
c. With a remaining maturity of more than three years......................... 416,618
17 Not applicable
18 Bank's liability on acceptances executed and outstanding...................... 575,222
19 Subordinated notes and debentures............................................. 2,797,773
20 Other liabilities............................................................. 3,662,892
21 Total liabilities............................................................. 147,903,952
22 Not applicable
EQUITY CAPITAL
23 Perpetual preferred stock and related surplus................................. 160,540
24 Common stock.................................................................. 82,795
25 Surplus....................................................................... 8,532,323
26 a. Undivided profits and capital reserves..................................... 2,823,904
b. Net unrealized holding gains (losses) on available-for-sale securities .... 240,120
27 Cumulative foreign currency translation adjustments........................... 0
28 Total equity capital.......................................................... 11,839,682
29 Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21 and 28)..................................................... 159,743,634
</TABLE>
2
<PAGE> 8
We, the undersigned directors, attest to the correctness of
this statement of resources and liabilities. We declare that it
has been examined by us, and to the best of our knowledge
and belief has been prepared in conformance with the
instructions and is true and correct.
Directors I, Gary R. Sessions
Warner N. Dalhouse Name
Benjamin P. Jenkins, III Vice President
Robert W. Helms Title
of the above-named bank do hereby
declare that this Report ofCondition
is true and correct to the best of my
knowledge and belief.
report.condition 3/31/98
3
